How Company Culture Shapes Business Outcomes

Company culture is more than just having a ping pong table and the occasional happy hour. It’s the essence of a business: the pervasive vision, values, and systems pulsing within employees, management, atmosphere and more. Some like to call it the genetic code of a company, though in some circumstances it can be more malleable than that.

More and more, good company culture is being recognized as vital to a company’s success; on the flip side, toxic culture has been witnessed contributing to huge failures. Built into business at its most basic level, company culture is both the result of a company’s structure and the support that keeps it standing. It’s both an outcome of hiring choices, and the force that drives them. It’s a self-perpetuating cycle: a company shapes its culture and the culture shapes the company, over and over or all at once.

Company culture is often developed gradually and without intention. At a company’s onset, certain things are decided implicitly: what goals are most important, the attitude it takes to get there, and even common personality traits and values. Even if the company starts with just one person — its founder — a culture is born from that individual’s choices when it comes to hiring and leadership. With each new decision and addition, the culture grows for better or for worse.

Company culture as motivation

The idea of company culture as a success factor isn’t new, but it seems the extent of its value is only on the precipice of realization. Some believe it is just as important, if not more so, than pay. Money is certainly a powerful motivator — as demonstrated with rats by B.F. Skinner in 1938, “operant conditioning” occurs when individuals are rewarded when their behavior is good and penalized when it’s bad. This method of compensation has been the primary model of employment for ages.

But reward and punishment aren’t enough to get the best out of people, Abraham Maslow’s theory of hierarchical needssuggested in 1943. Basic needs like food, water and shelter can be met by money, yes, but a whole pyramid of needs exist beyond the staples of life — like safety, love and belonging, self-esteem, and self-actualization. A workplace that makes employees (and clients) feel safe, welcome, proud and confident will yield higher result than monetary value alone.

Company culture is what either succeeds or fails at meeting these extra needs. Factors like robust benefits, comfortable office space, amenities, extracurriculars and relationship building shape the culture, which in turn motivates employees and impacts productivity.

The benefits of good culture

So, we know that company culture is important. But what can it actually accomplish? We can look at some success stories to get a better idea of what returns may come from investment in culture.

There are various companies that are known for their culture, and are likely successful, in part, because of it. Well-known innovation hubs like Google, Facebook, Twitter and Adobe boast impressive cultures that prioritize inclusion, teamwork and perks. Hiring the right people who will fit and thrive within the culture (in some cases, over qualification and education) differentiates these companies from the rest.

Research suggests that companies with strong, substantial, and adaptive cultures outperform their counterparts when they emphasize customers, employees and investors, fit the business environment and adapt to change. In this way, culture has a strong influence on economic performance.

Culture is more than just perks. It’s onboarding, work-life integration, and an ignition of passion that leaves workers positive about everything from mundane tasks to advancement opportunities. Positive culture makes for happier employees, better business, and also leads to employee retention, which saves time and money on hiring and training.

The risks of toxic culture

There are many qualities that signify a potentially toxic culture, or at the very least a dysfunctional one. Many of these stem from bad leadership, which tends to trickle down into management and employee well-being. Some signs include poor health, high stress, discomfort, fear, and a host of other issues that compromise the hierarchy of needs, as mentioned previously.

In other words, when employees feel unsafe, unwelcome, unmotivated and unheard, it is likely due to a toxic culture. Bad culture costs more than just feelings — productivity is lower, communication is strained, leading to bad business. Equally harmful can be a bad reputation, or worse, lawsuits.

A Gallup State of the American Workplace found that unhappy workers cost U.S. businesses $450 to $550 billion dollars a year in lost productivity. When these unhappy workers leave, it’s not much better: the cost of turnover from just 12 employees is about $250,000 when you factor in hiring costs. When employees are subject to incivility, they spend as little time at work as possible and decreased work quality; those that witness it like clients and coworkers are impacted for the worse, too. In other words, the toxins leak, affecting everyone in the workplace and beyond.

Turning a culture around

In the end, company culture shapes business through all sorts of aspects, like employee well-being, management style, and office environment. And because it often grows organically as a reflection of company values, it can be extremely difficult to turn around.

Changing a culture entirely is a daunting and possibly impossible task. But culture can always be improved, if those with the most influence are willing. And there are better ways than simply implementing a Taco Tuesday — like engaging employees with tasks, policies, and initiatives that keep them motivated and happy, or simply making them know their input matters.

Articulating company vision and ethics, supporting worker health and wellbeing, providing opportunities for training and development, fostering camaraderie, and encouraging healthy work-life balance can also go a long way. At worst, these steps will give employees a slight boost; at best, they will shape the entire business for the better.

Originally published on BennatBerger.net

About The Author

Bennat Berger is an entrepreneur versed in commercial real estate acquisitions and multifamily property development. As a principal of Novel Property Ventures, he seeks properties throughout Manhattan and Brooklyn as well as certain areas of the Southeast. He oversees Novel’s acquisitions, property management, and development, and hopes to continue to diversify Novel’s portfolio and build a model organization for property development and management. Bennat credits Novel’s success to great personnel and even better teamwork.

Bennat Berger is Co-Founder of Novel Property Ventures and founder of Novel Private Equity. To read more about him, visit: www.BennatBerger.com

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