The Statistical Case for Company Culture [Infographic]

team culture

Note: Infographic is at the bottom of the post.

“Culture” has been a buzzword in the corporate world for several years, but what does it mean and why is it important? defines company culture as “a blend of the values, beliefs, taboos, symbols, rituals and myths all companies develop over time.”

In other words, company culture is the personality of an organization from the employee perspective, and includes the company’s mission, expectations, and work atmosphere. Whether it’s written down, symbolized in the business logo, or simply an unspoken but understood definition, culture determines a company’s environment.

An often-cited example of good company culture is Google. With an employee count of47,756 it hardly qualifies as a mom and pop shop, and yet people who work there describe it as having a small-company feel where no one hesitates to “spike a volleyball across the net at a corporate officer.”

But the culture of a company is not just about whether you’re allowed to chuck balls at your boss—it’s also determined by what the company stands for and how it treats others. Google gives back to the community as well as to countries around the world in the form of financial aid, restoring public parks, and Googlers volunteering their time.

To win in the marketplace, you must first win in the workplace.”

Doug Conant, Campbell Soup

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The Link between Employee Happiness and Productivity

Statistics show that a company’s culture has a direct impact on employee turnover, which affects productivity, and therefore success. A Columbia University study shows that the likelihood of job turnover at an organization with high company culture is a mere 13.9 percent, whereas the probability of job turnover in low company cultures is 48.4 percent.

The reason for this is simple: unhappy employees don’t tend to do more than the minimum, great workers who don’t feel appreciated quit, and poor managers negatively affect workers and productivity. In Rob Markey’s Harvard Business Review blog post “Transform Your Employees into Passionate Advocates” he states, “Loyal, passionate employees bring a company as much benefit as loyal, passionate customers. They stay longer, work harder, work more creatively, and find ways to go the extra mile. They bring you more great employees. And that spreads even more happiness — happiness for employees, for customers, and for shareholders.”

The Link Between Employee Happiness and Profit

Although you don’t have to be a math whiz to understand the correlation between happiness and productivity, it should interest you to know the Department of Economics at the University of Warwick found that happy workers are 12 percent more productive than the average worker, and unhappy workers are 10 percent less productive. In fact, unhappy employees cost American business over $300 billion each year. So it literally pays to make sure your employees are happy.

Statistics from New Century Financial Corporation indicate that employees who are actively engaged in their job, i.e. happy, produce better results. For instance, account executives at a banking company who were actively disengaged produced 28 percent less revenue than those who were engaged. On the other hand, companies with happy employees outperform the competition by 20 percent, earn 1.2-1.7 percent more than their peer firms, and are 2.1 percent above industry benchmarks. Happy workers are also more likely to solve difficult problems faster.

To make customers happy, we have to make sure our employees are happy first.”


The Current State of Employee Engagement

A joke that was told at an executive workshop on leadership sheds some humorous light on employee engagement: “A CEO was asked how many people work in his company: ‘About half of them,’ he responded.” Ensuring your workers’ happiness is not just some new age, hippy-dippy, feel-good notion; it translates directly to the success, financial and otherwise, of your business.

According to Tim Rutledge’s book Getting Engaged: The New Workplace Loyalty, an employee who is engaged actually cares about the company beyond his paycheck or the quality of coffee in the break room. These are the workers who are willing to make the extra effort, with or without being asked, to ensure that the job is done to perfection and, directly or indirectly, that the business succeeds.

A 142-country Gallup report on the “State of the Global Workplace” shows that 63 percent of employees are not engaged at work and 24 percent are actively disengaged, leaving a mere 13 percent of workers who are engaged in the work that they do. Another way of saying this is that 900 million employees are not engaged and 340 million are actively disengaged around the world. That’s a lot of online Sudoku being played.

More importantly, this means that the overwhelming majority of people working for you lack motivation and enthusiasm and are not performing at their full potential. This makes a fertile environment for negativity, and just as happiness is infectious (have you ever been able to suppress laughter when someone around you is in stitches?), so is unhappiness. Employee engagement goes beyond making your staff happy; it separates the great companies from the average ones.

Engagement is a renewable daily decision that is voluntarily given when the company has proven worthy of it.”

Jason Lauritsen, Talent Anarchy

Negativity and the Bottom Line

Are you starting to see the picture? Unhappy employees are disengaged at work which leads to negative attitudes and low productivity, and ultimately affects your business’ bottom line.

In fact, low-level engagement within companies results in a 33 percent decrease in operating income and an 11 percent decrease in earnings growth, whereas companies with high-level engagement have a 19 percent increase in operating income and a 28 percent increase in earnings growth.

Your business can stand out from the crowd by making using of your greatest asset: your employees. Marketing Innovators makes it clear that satisfied employees equals satisfied customers, who then spend more on your service or product and provide free marketing via great word-of-mouth.

They say that money can’t buy you happiness, but according to the data, happiness sure can buy you money, so to speak.

BONUS: I’ve made a company culture cheat sheet that summarizes the key points and lists every link in this post for easy reference. Save it to read later or email to coworkers. Get the free bonus here.

The Staples of a Strong Company Culture

When you were in grade school and causing trouble the teacher would usually send you to the principal’s office. If the principal was able to invoke the right amount of fear into you, you’d return to class with your tail between your legs and throw yourself into the assignment to avoid being disciplined again. Your change of behavior probably lasted until the end of the week, if you were lucky, before the cycle started again.

This method of forcing people to do the work—and love it, by God!—isn’t effective for the long term because it doesn’t address the deeper issue: what is causing this person’s unhappiness?

The Energy Project joined forces with Harvard Business Review and found that when four basic needs were met, employees were happy. These core needs are physical, emotional, mental, and spiritual well-being. This means getting adequate rest, exercise and nutrition, feeling seen and valued at work, having the space and time to focus and think creatively, and experiencing a deeper sensation of being part of something worthwhile. Employers who treat their staff like robots rather than flesh and blood humans with all the emotions, requirements, and limitations that come with our species will wind up running them into the ground—and out the door.

When The Energy Project worked with Sony Pictures to address the problem of employee disengagement, the entertainment company made a change: instead of pushing their workers to perform better, they started fulfilling these four core needs. Despite the 2008 recession, Sony had its most profitable year that year.

Coming together is the beginning, keeping together is progress. Working together is success.”

Henry Ford

Measuring Employee Engagement

Whether you’re a Fortune 500 company or a start-up, you can turn your company culture around and watch both enthusiasm and revenue skyrocket. But first you need to take the time to measure employee engagement. According to The Next Web, the information you gather will help you “predict, prevent, and improve everything from manager effectiveness to your churn rate.”

How do you do this? First and foremost, you must be open to observing and listening without getting defensive. Schedule weekly one-on-ones with each employee and give them a safe place to talk about what’s going on. Organize company outings like to promote camaraderie and get to know each other outside of the cubicle walls. And track employee absenteeism: unhappy employees take fifteen more sick days each year than the average worker.

There are also a lot of great analytics tools to help you measure engagement by collecting employee feedback: Apple uses the fairly new metric employee Net Promoter Score (eNPS), Atlassian uses the app MoodApp, and Single Grain uses the cloud-based survey platform TINYPulse. 15Five CEO David Hassell suggests these ten questions to ask your team every week, explaining that “answers become conversations about what is most essential and meaningful for the team and the company, and those conversations transform into action.”

Engaging the hearts, minds, and hands of talent is the most sustainable source of competitive advantage.”

Greg Harris, Quantum Workplace

Finding the Perfect Fit

Before you even survey your employees or analyze the data from all those fancy metrics you’ve put into place, consider not only who you’re hiring, but how you’re hiring them.

Zappos conducts two sets of interviews, one with the hiring manager who focuses on resume and ability, and one with the HR team which evaluates whether the candidate fits in with their culture. They also offer all trainees $2,000 to quit after the first week of training because they want only those who absolutely love the company culture to stay.

Buffer has a 45-day trial period, called Buffer Bootcamp, to see if the company is a good fit for the employee. They liken it to the dating process, where each party gets to know each other before committing to a long-term relationship.

Chipotle uses a list of thirteen characteristics that every new hire must possess. They also started a restaurateur program for its employees, allowing hourly crew members to become managers. When selected, they get a one-time bonus and stock options, and an extra $10,000 each time they train a crew member to become a general manager.

Successful companies like The Walt Disney Company have strong values that are so essential to their way of life that the company name and company culture are practically the same thing. Disney requires specific work experience for landing a dream job with them: childhood dreams.

Southwest Airlines, a service leader, zeros in on behavior, not just the resume; when they fly candidates in for an interview, gate and flight crew report back on their attitude and how they behaved. You may be able to fake a good attitude in an interview, but your true colors come out when dealing with travel, large groups of people, and small spaces.

If you are lucky enough to be someone’s employer, then you have a moral obligation to make sure people look forward to coming to work in the morning.”

John Mackey, Whole Foods Market

BONUS: I’ve made a company culture cheat sheet that summarizes the key points and lists every link in this post for easy reference. Save it to read later or email to coworkers. Get the free bonus here.

Company Culture Makes a Difference!

Beyond keeping employees happy so that they positively affect your revenue, having a great company culture can encourage solutions, inventions or innovations that might not have come to light in a more oppressive environment. When a worker feels valued and respects her organization, the productivity possibilities are endless.

3M implemented a program called “15 Percent Time” which allows employees to use some of their paid work time to “chase rainbows and hatch their own ideas.” It was during this time that scientist Art Fry invented one of the most renowned products of all time, the Post-It Note.

Taking its cue from 3M, Google started its own “20% Time” program which resulted in the creations of Gmail, Google Earth, and Google Talk, to name a few. Similarly, Hewlett-Packard Labs gives its employees personal creative time during which new products have been created, such as clear bandages and optical films that reflect light which are both on the market.

No company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it.”

Jack Welch, former General Electric CEO

It’s clear that there is an exceptionally strong case for company culture. When your organization’s culture is in alignment with your goals and you hire people who share your values and enthusiasm, you are paving the way to financial success and building an outstanding reputation.

So what are you doing for your company culture?

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