Company culture is a ubiquitous buzzword in business today. With countless articles and leadership conferences touting the importance of culture, we know at this point that it’s important and we need to be doing it. Don’t get lost in the hype though – your company’s culture has all sorts of consequences, some that may not be as obvious as others. By improving your company culture today, right now, you’ll be reaping rewards and possibly creating huge growth potential for your company’s future.
Money Lost Through Turnover
A company with weak or inconsistent company culture is much more likely to have employees that are willing to part ways. One study showed that the probability of turnover at companies with bad culture is as high as 48%, compared to companies with strong culture at just under 14%. That’s a big difference! And it can have a huge impact on your bottom line too. Industry experts believe a good rule of thumb for cost of losing a salaried employee, on average, is six to nine months’ worth of their annual pay. Even for younger, less seasoned positions, those numbers add up fast! Building up your company culture and making sure your employees feel valued and loyal to their teams can pay dividends long after their hire date.
Culture Leads to Happy Employees
In companies that started maybe with one or two founders, culture may not be a concern in the beginning. In a startup scenario, your brand and the work you do each day is largely dictated by your own personality and work ethic. As you introduce new team members and grow, more and more of the customer and vendor interactions will be taken on by your employees. Without showing yourself as a business with a higher purpose, you may have employees coming to work every day unhappy, unengaged and with the wrong attitude to serve your mission optimally.
One study noted by the Harvard Business Review found that “disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects. In organizations with low employee engagement scores, they experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time.” Those are some pretty impressive numbers! Obviously, working on culture and showing value to your employees leads to higher external success and ultimately a more sustainable future for your business.
No matter what industry you’re in, word travels fast. Whether it’s through networks of friends or industry chatter, it is obvious to everyone when a company has a great company culture or is running their employees ragged. By investing in culture and giving back to your employees, you’ll have the automatic added bonus of perking up the ears of potential candidates for future job openings. That same Gallup study referenced by HBR found that companies with engaged employees received 100% more job applications. Glassdoor found that in the most important things candidates want to know before they apply, what makes the company attractive to work for and the company’s values and mission are in the top five. By building a strong employer brand through your internal culture, these valuable hires will be more likely to seek you out and apply.
As you can see, the potential rewards of investing in and maintaining a healthy company culture can have huge consequences for the development of your external brand and the sustainability of your workforce. Taking concrete steps to give your employees a voice, and making their future part of your company’s mission will lead you directly to increased productivity and profits in the long run.
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