Amenities and perks, such as free sodas and snacks or being able to bring your dog to work, reflect aspects of your company’s culture, but don’t rely on them to create it. Organizational culture is your company’s personality. It’s the unique set of philosophies, beliefs and behaviors that drives your business and employees, and it influences how you react to problems and opportunities.
Though culture may seem intangible, it has some very real effects on the bottom line through:
- Employee retention.
When companies take strides to improve their culture, productivity can jump anywhere from 20% to 100% within a year, depending on company size, says Barry Phegan, founder of The Meridian Group, a Berkeley, Calif.-based consulting firm.
What’s more, a healthy culture leads to greater innovation, less turnover and reduced absenteeism. Happy employees not only stay longer, but their longevity can boost revenues by strengthening relationships with customers.
"One of the benefits I can crow about to clients is that we don’t have a revolving door," says Judy Kirpich, founder of Grafik Marketing Communications, a brand-identity company in Alexandria, Va., with 36 employees and more than $10 million in annual revenues. "In most agencies, someone is in for a year, then they’re leapfrogging off to somewhere else," she explains.
Kirpich chalks up much of her low turnover to flexibility, one of Grafik’s cultural underpinnings. Being flexible means understanding what’s important to employees, explains Kirpich: "Certainly if someone has a sick parent or child, they take off. But what if they have a sick horse?" One of her employees owns a horse and needed to leave when it was ill. Another Grafik employee has a passion for acting and singing, and there are times he needs to be away from work to participate in theater productions.
Granted, there is a price for being flexible. When those workers are gone, someone else has to step in for them. Yet the resulting loyalty and high quality of work are a much larger payoff, says Kirpich: "Though our corporate culture is warm and fuzzy, I have the highest level of professionalism. People really go the distance here."
Your employee’s behavior reflects the culture, but as the owner, you are responsible for establishing and managing your culture. You set the pace.
The biggest threat to a growth-oriented culture is when hierarchy and politics perpetuate instead of collaboration and innovation. Entrepreneurs tend to be decisive people; if that strength becomes exaggerated, you could turn into an autocrat.
Autocratic cultures are not productive because they suppress creativity. And with mounting competition and shrinking product cycle times, you want to foster a culture that encourages independent thinking in your employees — instead of second-guessing themselves and being afraid to make mistakes.
Guidelines for growth
Open communications. As headcount grows, it’s easy to become estranged from your troops.
Take time in management meetings to discuss your culture and people. Establish communication systems that allow you and senior managers to have constant contact with your front lines. Don’t rely on memos — you need interactive dialogue so that employees can feed information back to you. Also take steps to make sure different departments are communicating with each other.
Open the decision-making process. Involve people in decisions that affect them. Simply asking employees for their input can dramatically impact their attitude and motivation — and it can even alter your perspective of a problem.
Your workers usually know what to do to solve a problem, but cultural blocks may impede them from taking action. For example, if past ideas have been stifled, an employee may be hesitant to make a recommendation when asked.
So be careful how you solicit suggestions. For example, you might get employees together and ask, "What can I do as a manager to let you work more efficiently?" When someone says something, don’t respond in a manner that sounds as though you’re grading his or her answer. Instead, write down what they say on a flip chart and proceed to the next person. After everyone has had a chance to speak, ask them to propose solutions based on the collective knowledge that has been shared.
Open your books. Business owners often ask employees to operate more efficiently, but don’t arm them with enough details to do so. If you’re asking workers to cut costs, share information about cash flow and operations, so they understand why reductions are important.
Sharing more fiscal information also helps connect employees to the larger system; they understand how their work impacts other departments, which provides them with a context to make better suggestions and act more responsibly.
Reward desirable behavior. Make it clear to employees precisely what kind of behavior you seek. This recognition doesn’t have to be monetary; it could be a ceremony — just as long as it is public and personal.
Build in flexibility. Too often managers like to keep people in the same department. But allowing employees to move around your company encourages growth and development; they also gain a more holistic perspective.
Walk the talk. Whatever values you’re trying to promote in your organization, make sure that you are a living example.
Icing on the cake
If you establish a strong culture where employees feel good about their environment and know how to make decisions, there’s an intangible payoff: peace of mind. By giving control away, you’re developing self-control for the organization.
That means you don’t have to be there every single minute; you can go on vacation or attend a conference without worrying about things falling apart. Instead of needing to be there to push control, you’ve taught your employees how to push control.
Writer: TJ Becker