Bottom line benefits of a strong organisational culture

Culture, it’s been a buzzword for years but do you really understand it’s significance or how to drive it?

At PeopleStart we spend a significant amount of time working with business leaders to define, understand and drive their ideal organisational culture. This is because of the considerable financial and operational benefits associated with a strong culture from a business perspective, and also the positive benefits to employees.

In a recent study by Deloitte, it was reported that 94% of executives believe a distinct workplace culture is important to business success. However, only 12% of executives believed their companies were driving the ‘right culture’ and fewer than one in three said they understood their organisation’s culture.

Organisational culture is described as a system of shared assumptions, values, and beliefs, which governs how people behave in organisations. These shared values have a strong influence on the people in the organisation and influence how they behave and perform their jobs.

To understand it’s importance from a business leader perspective, let’s consider at how organisational culture affects the bottom line.

Increased revenue

According to research from John Knotter in his book “Corporate Culture & Performance” which looked at 200 companies during an 11-year period, companies with strong cultures saw a fourfold increase in revenue growth.

Strong company culture and purpose is also shown to be one of the three major contributing factors to employee engagement. In a 2007 Towers Perrin survey of nearly 90,000 employees, it reported that companies which showed high levels of employee engagement (satisfaction) reported a 19% increase in operating income and 28% growth in earnings per share.

Decreased costs

As seen in research undertaken by LinkedIn, companies with strong culture and employee brand also cut their cost of hire by as much as half as it helps them to hire the right people, thereby enforcing the culture further.

Statistics show that a company’s culture has a direct impact on employee turnover, which also affects productivity and therefore success and your bottom line.

A Columbia University study showed that the likelihood of job turnover at an organisation with a high company culture is a mere 13.9%, whereas the probability of job turnover in low company cultures is 48.4%.

Companies with a strong culture and happier employees have been shown to outperform the competition by up to 20% and employees also solve problems faster.

So it’s fair to say that concentrating on improving or nurturing your culture is well worth the investment

If you would like help to define and drive your organisational culture, contact us for an obligation free consultation.