Eight Critical Culture Factors of the Human Experience
The culture of a company takes into consideration the human experience as well as “the values, beliefs, behaviors, artifacts, and rewards systems that influence people’s behavior on a day-to-day basis.” Research show that the culture of an office has a significant impact on an organization’s revenue and productivity.
In the 1992 book Corporate Culture and Performance, James Heskett and John Kotter found that strong corporate cultures are closely associated with positive financial results. Organizations that develop a distinct brand identity and “highly value employees, customers, and owners”1 experience increased revenue, employment growth, and higher net income for the organization.The book highlights the difference in financial results in an eleven-year period between twelve companies that had performance-enhancing cultures and twenty companies that did not have these cultures. Heskett and Kotter’s data is summarized in the chart below:
Exhibit 1: Heskett and Kotter’s comparison of companies with and without performance-enhancing cultures over a twelve-year period in the 2012 book Corporate Culture and Performance.
Average Increase of Twelve Firms with Performance-Enhancing Culture |
Average Increase of Twelve Firms with Performance-Enhancing Culture |
|
|---|---|---|
Revenue Growth |
682% |
166% |
Employment Growth |
282% |
36% |
Stock Price Growth |
901% |
74% |
Net Income Growth |
756% |
1% |
Source: Kotter, J. (2011). Does corporate culture drive financial performance? Forbes. February 10, 2011. Available at: https://www.forbes.com/sites/johnkotter/2011/02/10/does-corporate-culture-drivefinancial-performance/#5acb545a7e9e. [Accessed November 19, 2018].
The results from their study are staggering. Organizations with performance-enhancing cultures experienced a revenue growth that was four times higher than companies that did not encourage all-inclusive participation and performance. These companies also experienced employment growth that was almost 8 times higher, stock prices that were twelve times higher, and net income growth that was 756 times higher than the average annual increase of companies without performance-enhancing cultures.2
Ultimately, shifts in culture and organizational performance start from the ground up. Heskett and Kotter found that “if a customer needs change, a firm’s culture almost forces people to change their practices to meet the new needs. And anyone, not just a few people, is empowered” to make that change.3 The findings of their study still hold true today.
“If a customer needs change, a firm’s culture almost forces people to change their practices to meet the new needs. And anyone, not just a few people, is empowered”
Companies with performance-enhancing cultures build a distinct brand identity. According to Kotter, Zappos is a great example of this type of high-performance culture that empowers employees and drives business. Zappos’ website highlights the importance of culture in stating, “We know that companies with a strong culture and a higher purpose perform better in the long run.” The company’s values include a range of cultural aspects focused on positive change and individual empowerment. Some core values include embracing and driving change; being adventurous, creative and open-minded; building a positive team and family spirit; being passionate and determined; and pursuing growth and learning.4
“We know that companies with a strong culture and a higher purpose perform better in the long run.”
Zappos’ website integrates a positive work culture with shoe retail by publishing articles on the culture of the company, a lifestyle blog, and documenting their philanthropy program. Performance-enhancing cultures like the one Zappos celebrates encourage employees to develop leadership qualities that will help them grow in their roles and as part of a team. The following statistics, compiled by Culture IQ, demonstrate how important it is to have a corporate culture that supports the human experience:
Exhibit 2: Entrepreneur and Culture IQ’s 2017 report which polled 28,371 employees from hundreds of companies across industries determined that following aspects as key to high-performance cultures.
94% of executive and 88% of employees believe a distinct workplace culture is important to business success.5
86% of employees at organizations with strong cultures believe their senior leadership listens to employees, compared with 70% of employees at non-winning cultures.6
Source: Kotter, J. (2011). Does corporate culture drive financial performance? Forbes. February 10, 2011. Available at: https://www.forbes.com/sites/johnkotter/2011/02/10/does-corporate-culture-drivefinancial-performance/#5acb545a7e9e. [Accessed November 19, 2018].
“Over a period of seven years, companies with more engaged workers grew revenue 2.5x as much as companies with less engaged workers. ”
Additionally, a Gallup 2017 report on the “State of the American Workplace” found that only 33% of U.S. employees are engaged in their work. Only 22% of employees strongly agree that their leadership has a clear direction of the organization that will drive a positive work culture. The human experience is an essential part of a company’s culture that will impact success, revenue and productivity. It is important for leadership to look more closely at the human experience and organizational culture to design and deliver a compelling message that will encourage employees to perform at their best.
The following short was inspired by and based on GSC blog. Click here to see the original post.
Resources
- Deloitte Shape Culture https://www2.deloitte.com/insights/us/en/focus/human-capital-trends/2016/impact-of-culture-on-business-strategy.html?id=us:2el:3dc:dup3020:awa:cons:hct16
- Kotter, J. (2011). Does corporate culture drive financial performance? Forbes. February 10, 2011. Available at: https://www.forbes.com/sites/johnkotter/2011/02/10/does-corporate-culture-drive-financial-performance/#5acb545a7e9e. [Accessed November 19, 2018].
- Kotter, J. (2011). Does corporate culture drive financial performance? Forbes. February 10, 2011. Available at: https://www.forbes.com/sites/johnkotter/2011/02/10/does-corporate-culture-drive-financial-performance/#5acb545a7e9e. [Accessed November 19, 2018].
- Zappos. Our Purpose. Undated. Available at: https://www.zappos.com/about/purpose. [Accessed November 29, 2018].
- Deloitte (2012). Core beliefs and culture: Chairman’s survey findings. Deloitte. Available at: https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-core-beliefs-and-culture.pdf. [Accessed November 19, 2018].
- Culture IQ (2017). 2017 TCC Report: Building a High-Performance Culture: Key Lessons from Top Cultures. Available at: https://go.pardot.com/l/455712/2017-11-23/d2qyhn. [Accessed November 19, 2018].
- Azzarello, D., Debruyne, F., and Mottura, L. (2012). The Chemistry of Enthusiasm. Bain and Company, May 4, 2012. Available at: https://www.bain.com/insights/the-chemistry-of-enthusiasm. [Accessed November 20, 2018].
- Gallup (2017). State of the American Workforce 2017 Report. Available at: https://news.gallup.com/reports/178514/state-american-workplace.aspx?g_source=link_NEWSV9&g_medium=TOPIC&g_campaign=item_&g_content=State%2520of%2520the%2520American%2520Workplace. [Accessed November 20, 2018].
