Culture has risen dramatically in importance for businesses over the past year. Not only is it key for attracting and retaining the right staff, it also impacts your bottom line. No surprise then that “culture eats strategy for breakfast”.
Quick takeaways if you’re in a hurry
- 87 percent of organisations surveyed in Deloitte’s Global Human Capital Trends 2015 research cited culture and engagement as one of their top challenges
- The growth in the importance of culture has been driven by a young workforce who increasingly choose their employee based on non-financial factors like culture
- Culture that aligns with employee values has the potential to increase employee retention while driving increased profitability.
Read on: The importance of building a better business culture
(estimated reading time: 6 minutes)
Business culture has traditionally taken a back seat to strategy. But 2015 saw the importance of corporate culture rise dramatically. 87 percent of organisations surveyed in Deloitte’s Global Human Capital Trends 2015 research cited culture and engagement as one of their top challenges.
The reason for this turnaround is easy to understand. The recovery in unemployment levels after the financial crisis of 2008 has created a skill shortage. There has been a shift in power from the employer to the employee. Businesses now find themselves with a new challenge – attracting and retaining the right staff. Employees are becoming increasingly selective about who they want to work for and the new generation of top candidates are choosing based increasingly on company culture. Businesses are beginning to realise that they ignore their culture at their peril.
What is a company’s culture?
The culture of a company is the sum of its values and the attitudes of its employees. Culture is comprised of the way you translate your values into the way you behave, the infrastructure of your business, any key routines or events, and your reward systems. Where these are aligned a culture may be strong, and where they pull in different directions they create a disconnect that can have a far reaching impact.
Why is culture important?
Having the right culture is not only a solution that helps you to recruit the right employees. When your values and those of your employees align, the cultural harmony has a wide impact that reaches your bottom line. A strong business culture that is brought to life in actions leads to: satisfied employees; easier recruitment; higher productivity; and improved customer service. In combination these mean that your assets are working harder to deliver your business goals, and your profitability increases.
The recent Glassdoor study “Does company culture pay off” found direct correlations between companies that were rated as top cultural performers and their performance against averages on the US stock market. Consistently those with the best cultures exceeded stock market performance and those who underperformed on culture measured below average against the market.
The only way is up
Accepting that a positive culture has a positive impact, many businesses have a hill to climb to turn their cultures around. According to a 2013 poll from Gallup only 13 percent of the global workforce is “highly engaged” and close to half the workforce would not recommend their employer to their peers.
For previous generations it was the newest technology or highest wages that drove their motivation to work but, for millennials and their colleagues, culture has become important in managing the blurred lines between work life and personal life. Mobile technology means that employees are always connected and the hours of work are increasing. Today’s employee has a holistic view of their life and a requirement that their personal values align with the values of the business where they work.
Culture that fits with life
Taking into consideration the merging of work and personal life, today’s workforce expects a culture that supports the way that they live their life. This puts additional pressure on business culture and requires companies to bring to life values which matter to their work force. In the Deloitte Millennial Research of 2014, millennials demonstrated their belief that businesses were in operation to do more than just make money. When asked if businesses could do more to help society: 68 percent said yes regarding resource scarcity; and 65 percent sought more action around climate change.
This in turn flows through to the infrastructure of businesses – where they bring their cultures to life. Favourite company cultures as listed on sites such as Glassdoor, cite key features that are valued by employees. These include examples such as flexible working arrangements, continuous investment in learning and developing people, working in teams, and clear and transparent goals.
In addition there are the physical infrastructures that create a positive living/working environment within which employees can carry out their roles. The top performers in the marketplace today include culture giants like Google who were one of the first to transform the workplace from a place to work to a place to live. Culturally aware businesses offer services such as free laundry or grocery deliveries to the office, to allow their employees to manage their lives in their entirety: not just balance work and play.
The opportunity ahead
Culture has the potential to positively impact your businesses bottom line. Recruiting and retaining the right people for your company will ensure you can deliver your goals and you don’t have to waste money dealing with poor retention issues. Satisfied staff deliver increased productivity and improved customer service. But investing in culture is a long term strategy and changing culture is especially challenging for businesses who are already established. The first step is to be aware of the opportunity, the next step will be to plan how to seize it.
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