The business benefits of culture

by 30 Oct 2007

By Craig Donaldson

Culture has traditionally been seen as one of those warm and fuzzy things that falls under the domain of HR. This is often because executives and management are happy to relegate the responsibility of culture change to the too hard basket, and are not willing to engage with their people in a real and meaningful way. However, there are an increasing number of executives that are putting culture on their agenda.

There has been much research into the link between financial performance and the intangible of culture. Culture is a key ingredient in how well regarded companies are to work for by their people. There has also been more research around the business benefits of a good culture. Companies with healthy, robust and engaging cultures record nearly double digit growth compared to other organisations. Not only that, but they also boast average profit growth of 21 per cent, compared to just 12 per cent for other organisations.

Over the past few years I’ve had many opportunities to visit organisations considered employers of choice and which stand out in the area of culture. It’s always interesting to get an inside look at how people feel working for these organisations and measure that against the ‘vibe’ as one walks the floor. There’s inevitably a link between the two, and consequently organisational performance. So why is it so hard for management to get it?

It has been observed that a company’s culture is born out of a business founder’s own personal set of values, beliefs and behaviours, which shape the initial work environment. A culture evolves out of this rather than being a deliberate creation.

Employers are beginning to cotton on. With a strong and people savvy CEO at the helm for a few years, large companies can change their culture. It’s a bit like steering the Titanic – it takes many people to make it happen and carry out the orders, but ultimately it’s the captain of the ship that sets the direction.

Yes, it does takes time and leadership from the top to effect culture change, but as those with great cultures have shown, the results are well and truly worth it.