A Good Workplace Culture Is Like Money In The Bank

6 reasons why a great work culture is precious

Managers might think of workplace culture as just a warm and fuzzy concept, but it actually has a concrete effect on a firm’s balance sheet. Perhaps much more than other intangible assets that are balance-sheet staples—such as customers’ lists and copyrights. Culture bolsters a firm’s strategic goals and well-being and is a proven driver of better performance and growth. There are plenty of reasons why a good work culture should be treated as one of your organization’s most precious assets. Here are just a few of them:
 

1. Prevents employee turnover. Keeping your talent happy has a tangible cost benefit: if good workers walk out the door, it may cost you up to 1.5 x 2x their salary to replace them. The only way to inoculate your workers from seeing greener pastures elsewhere is to invest in your culture. Losing an employee may cost you up to twice his/her salary to find, select, and train a replacement. That cost goes up when the departure is an important employee or from a job that is difficult to fill. You could decide to pump money directly into employees’ salaries, but that action tends to only charge workers’ batteries for so long. They may stay because they can’t find a higher salary elsewhere, but will they just stay and not roll up their sleeves to tackle the most pressing problems in the most effective way? A culture that creates teamwork and engagement is a much better investment. Do the math. If your investments in culture can prevent 20% of your most valued employees from leaving this year, then you not only save 1.5 to 2 times their salaries by keeping them but you also can grow their contributions by engaging them.

 

2. Increases performance. Research has shown that employees reporting more engagement (pride, optimism, energy) are more productive and have more potential to improve. What does that mean in terms of financial value? Research in the field of Industrial/Organizational psychology provides a rule of thumb to monetize the difference between an employee with average performance and one who is a standard deviation above average (i.e., the 85^th percentile). That difference in performance has a monetary value equivalent to 40% of the total annual salary for that job. Again, do the math. Raise the performance level for 20% of your most valued employees, and you are gaining 40% of the salary for each of those employees in terms of added work output. If those employees are customer-facing, then there is even more value to be returned.

 

3. Raises employee satisfaction—which, in turn, can increase customer satisfaction—and together, this is a recipe for greater customer engagement and sales. For decades, organizational research has shown a correlation between employee satisfaction (a precursor to the construct of engagement) and customer satisfaction in situations where the employees are in direct contact with customers (such as bank tellers and retail employees). Likewise, engagement scores for sales groups have predicted future attainment levels of sales goals. Perhaps these findings have given rise to the power of making the employee’s culture match the company’s marketing brand. You see how loyal and passionate some Apple customers are because they feel a part of what Apple stands for and the values associated with its products. So called “Apple fanboys” tout the simplicity of use, the interconnection across products, and the growing uses for the products. What company wouldn’t want fanboys (and fangirls) like that? 
 

4. Saves managers’ time. When you have a trusting, self-motivated culture, managers can focus on more on making their firms successful and less on managing your employees’ behavior. Not only can building a positive culture retain and motivate employees while improving customer retention, but it can also free up people managers to contribute on a larger scale. If managers could eliminate a portion of their time dealing with tardiness, absenteeism, loafing, sabotage, and just micro-managing in order to get their teams to be productive, then what other problems might they be free to address? When the company’s culture motivates employees to perform, leaders can move from preventing bad outcomes to maximizing good outcomes – whether that is modeling a new sales strategy or preparing better for an upcoming product release. Imagine leaders anticipating change instead of just reacting to it!

 

5. Builds effective teams that are aligned and focused on your company’s growth and revenue goals. The same thing applies to coworkers. With fewer instances of a peer dragging down the team (or at least the team’s morale), you and your coworkers can communicate more positively, more frequently, and more openly. We all have read or maybe experienced what a “toxic” culture can do to a company – sexual harassment, violence, bullying, and more. The opposite of that is a team that demonstrates respect, collaboration, and perhaps even genuine friendship. Companies that actively work to open up communication among workers across departments, functions, and geographies are more likely to improve their collective performance. There is literally value in networking within your own company so that one person’s expertise or information access becomes many people’s source for quick answers and faster processes. This is how organizations improve agility and change management.  

 

6. Is cost-effective to build. Building a strong culture that is aligned with your strategy need not be a major investment. Start small by associating employee feedback regarding strengths and frustrations about the culture with actual projects or metrics or products/services. If managers ask for innovations but then punish any failure, then what effect will that behavioral pattern have on the R&D team’s work, or efforts to cut product design time, or the attempts to empower call center employees to solve customer problems more quickly? If each manager looks for ways to use employee feedback to save or create just $5,000 over the next 3 months, they’ll easily cover the cost of a culture survey and associated action planning.
 

Now you can see why a good work culture is golden. It’s time to make it one of your organization’s most valuable assets.

Paul Mastrangelo is Principal Strategist for CultureIQ, 50-year-old startup company (legacy CEB, Genesee Survey Services). With 25+ years’ experience in organization development, HR research, and adult education, Paul has delivered executive presentations in 13 countries, 25+ professional publications and is a co-author of the book, Employee Surveys in Management Connect Paul M. Mastrangelo Follow @paulmastrangelo Visit https://cultureiq.com