Employees are a company’s greatest asset – they’re your competitive advantage. You want to attract and retain the best; provide them with encouragement, stimulus, and make them feel that they are an integral part of the company’s mission.”

– Anne M. Mulcahy (CEO of Xerox Corporation) 1

Every organization has its own mantra in order to achieve its objectives. One common and vital requirement in order to fulfill this prophecy is having a competent human capital. Everything – from the company’ vision and values, innovative products and services, or the company culture itself – exists within and due to the people and minds associated with the company.

Company Goals can neither be formulated nor be achieved in the absence of human capital that work towards it. It is, therefore, only wise for organizations to commit to employees, considering they are the sole reason for its very existence. Once this is accepted as a fact, companies should begin by introspecting and formulating ways to move towards a perfect culture.

Why the Need to Focus on Employees is Gaining Momentum

Companies such as Google, Zappos, W. L. Gore, Southwest Airlines, etc., have long been profitable, and a recurring quality among these is the value they provide to their employees. Furthermore, all of this is maintained without ever losing focus on the organisational goals.

How do these companies do it so effortlessly while some others struggle? The answer to this may seem simple, but takes consistent efforts by the company to implement the same. Following are the two broader aspects that successful organisations focus on in order to ensure profitability.

  • Employee Stability & Relevance: Processes such as hiring, on-boarding, training, etc., require company’s time, energy, and money. Even as companies invest here, new hires tend to make more mistakes which adds to the company costs. Furthermore, they require more time to settle in and become good at their jobs.  Considering all this, employee attrition can cost about 1.5 to 2.0x the outgoing employee’s annual salary.2 According to Employee Benefit News (EBN), 33% of an employee’s annual salary is gone in figuring out and hiring its replacement. Moreover, the Work Institute’s 2017 Retention Report which studies 34,000 respondents concluded that 75% of the reasons behind employees leaving their companies are preventable.3

 “I am convinced that nothing we do is more important than hiring and developing people. At the end of the day, you bet on people, not on strategies.

                        – Lawrence Bossidy (retired CEO of AlliedSignal) 4

Some of the underlying factors behind employees leaving their jobs are, career development (22%), work and personal life balance (12%), managers’ behaviour (11%), compensation and benefits (9%), and wellbeing (9%).3 When the cost of employee turnover is so high, companies, aiming to survive in the long run, put immense focus on hiring the right and perfectly fitting employee for their organisation. In doing so, they guarantee that their employees feel less distracted because of the above mentioned reasons. Employees, in return, try their best and commit themselves to perform well.

  • Employee Productivity: Company’s financial KPIs are looked at to assess whether the company is performing well or not. However, company’s growth and its financial performance is dependent on the productivity of every single employee in the company. To make sure that this productivity is in place, companies invest in feedbacks and value employee inputs so they can improve. All they focus on is providing the right environment and having faith in their employees to do right. According to a Gallup poll, it was noticed how engaged employees performed better with higher productivity when compared with their competitors. Around 87% of engaged employees are more likely to stay with their companies, simultaneously helping companies to remove expenses incurred in finding replacements.5

How Does Culture Guarantee Productive Employees?

Human resources are like natural resources; they’re often buried deep. You have to go looking for them, they’re not just lying around on the surface. You have to create the circumstances where they show themselves.”

― Sir Ken Robinson (internationally recognized leader in the development of innovation and human resources.)6

Organizational culture is a set of shared assumptions that guide what happens in organizations by defining appropriate behaviour for various situations” (Ravasi and Schultz, 2006).7 Moreover, organizational culture is a strong estimator for organizational effectiveness. According to the ‘Theory of Organizational Culture and Effectiveness’ by Denison and Mishra (1995), organisational culture (involvement, consistency, adaptability, and mission) has an important influence on employee effectiveness, and has a positive effect on return on asset and sales of the company.8 Number of research reported that companies who focus on participation of employees in decision making, establish clear goals, etc., perform at a level higher than other organisations (Likert, 1961). Academicians suggest the company values should be communicated well and shared comprehensively as the organisational performance is dependent on it (Denison, 1990).9

When organizations develop positive, virtuous cultures they achieve significantly higher levels of organizational effectiveness — including financial performance, customer satisfaction, productivity, and employee engagement.”

― Emma Seppala (Author) 10

According to the American Psychological Association, 550 million workdays are lost to job stress each year. Queens School of Business and Gallup found out that employees who’re disengaged have a 37% absenteeism rate, and harmful organisational cultures have 18% lower productivity rate.11 Apart from these figures, which prove the importance of culture empirically, it can become more apparent if we consider the top firms in today’s world and their views about organizational culture. It is, thus, imperative that companies accept the importance of workplace culture and by doing so, lead it towards a more prospering future.

REFERENCES:

  1. https://www.businesswire.com/news/home/20030516005369/en/LifeCare-Conference-Features-Xerox-CEO-Anne-Mulcahy
  2. https://www.huffingtonpost.com/entry/how-much-does-employee-turnover-really-cost_us_587fbaf9e4b0474ad4874fb7
  3. https://www.hrdive.com/news/study-turnover-costs-employers-15000-per-worker/449142/
  4. https://www.hr.com/en/app/blog/2015/03/%E2%80%9Ci-am-convinced-that-nothing-we-do-is-more-importa_i6vx8jle.html
  5. https://recruitloop.com/blog/much-can-disengaged-employees-cost-business-infographic/
  6. https://www.goodreads.com/quotes/499226-human-resources-are-like-natural-resources-they-re-often-buried-deep
  7. Ravasi, D.; Schultz, M. (2006). “Responding to organizational identity threats: Exploring the role of organizational culture”. Academy of Management Journal. 49(3): 433–458. doi:5465/amj.2006.21794663
  8. http://www.trustiseverything.com/wp-content/uploads/2012/07/denison-mishra-toward-a-theory-of-org-culture-and-effect-org-sci-1995.pdf
  9. https://www.researchgate.net/publication/309547251_Impact_of_Organizational_Culture_on_Organizational_Performance_An_Overview
  10. https://blog.kainexus.com/continuous-improvement/culture-of-continuous-improvement/the-economic-cost-of-a-negative-company-culture
  11. https://hbr.org/2015/12/proof-that-positive-work-cultures-are-more-productive
Culturro
knowledge@culturro.com
Culturro helps companies build the right workplace experience to drive towards their desired strategic objectives. It enables organizations to assess, execute, and measure these experiences through its proprietary methodologies. Culturro not only recommends but helps in executing the right interventions for organization culture, leadership, and processes.

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