The Impact of Corporate Culture on Business Performance

Corporate culture is the character and personality of your organization. It is also the “summary” of a company’s values, traditions, interactions, behaviors and attitudes.

Additionally, generally speaking, corporate culture needs to be unique. This is exactly why you need to put thought and energy into yours and exactly how it should drive, lead, and focus your organization. Furthermore, it needs to compliment your business and employees. Created wisely, your corporate culture can be a very positive impact to – and within – your organization. 

The Focus of Corporate Culture 

As previously mentioned, your corporate culture should reflect what your employees already do and believe. This is why it is so important for each employee to “buy in” to the development and enactment of both its creation and implementation. This also helps to focus the staff amongst themselves, giving a unified impression to vendors, clients, and partners. Being unified as an organization improves the chances that a strategy will succeed. 

3 Ways a Healthy Corporate Culture Impacts Business Performance

  1. Productivity Rises

People work more exceptionally when they feel a positive relationship with their workplace. When they truly feel that positive relationship, they will do their best work. They are also more likely to trust in your organization. Trust is key in any happy relationship. Happy relationships also translate to more productivity. Research shows that a happy employee is 12% more productive. On the other hand, unhappy employees are 10% less productive. Just remember… corporate culture doesn’t have an immediate impact; it’s a process that takes time. 

  1. Business Goals Are Supported 

A strong corporate culture, wisely developed, can help your business or organization avoid mistakes in a way that other executive actions, formal institutions, and corporate assets cannot.

Some experts even say that corporate culture has a larger impact on a business’ success than strategy. A company will be more of a success with a strong culture and a weak strategy, rather than a weak culture and a strong strategy. The reasoning behind this belief is that if you have a strong culture, it will keep everyone on the same page together, no matter how imperfect the strategy is. When everyone is on the same page and on track, you are one step closer to accomplishing your company goals.

  1. Business Performance is Improved

Employees who live by an organization’s corporate culture are proven to outwork those who don’t. Strong corporate cultures that are adaptive to a changing environment are affiliated with an increase in financial results.

“Over half of senior executives believe that corporate cultures is a top-three driver firm value and 92% believe that improving their culture would increase their firm’s value. Surprisingly, only 16% believe their culture is where it should be.” (http://www.nber.org/papers/w23255)

With this being said, you can likely see how important it is to have a strong culture. If you already have a solid corporate culture, but you’re not getting the results you’d like, it is easier than you think to change your culture to better your business or organization.

A corporate culture should never be created in isolation or withheld from employees because that can cause distrust amongst your staff. Allowing that mistrust into the atmosphere of your culture also makes it more difficult to execute employee retention plans. This is because they will tend to not believe what the company tells them.

Do yourself a favor and create your corporate culture deliberately and with transparency. Your employees – and your business or organization – will thank you for it.