The Alternative Board (TAB), an international provider of executive peer advisory boards with over 3,000 members worldwide, recently released the results of their September 2016 Small Business Pulse Survey. If you’ve not yet heard of it, this is a survey that obtained input from hundreds of business owners to determine the qualities that separate a strong company culture from one that is weak. What did they find?
Out of those surveyed—of which 67% were business-to-business companies, 59% had been in business more than 20 years, and 56% were earning more than $1 million per year as of 2014—93% believed that productivity and creativity are boosted when company culture is promoted. Additionally, owners of stronger companies said that having this type of culture also improved profitability, whereas only 20% of the owners from weaker cultured companies said the same.
So what exactly is “company culture” and why is it so important to business success?
What “Company Culture” Is
The Balance, a site dedicated to providing its readers with financial empowerment by “making money personal,” sums up this concept by saying that, “Company culture is the personality of a company. It defines the environment in which employees work.” In this study specifically, when the business owners were asked what came to mind when they heard the phrase company culture, they stated that style of management or leadership, employee experience, and company reputation topped the list.
To understand company culture more deeply, it helps to imagine your company as if it is a living, breathing person. Once you have that vision in your head, based on the feel of the internal environment of your company alone, what qualities or traits would you say your “person” has? For example, is it compassionate and caring? Upfront and honest? Strict or flexible?
And, as a person, would you say that, overall, it is strong or weak? Would it stand up to others and fight for what it believes in or cower in the corner when faced with conflict or confrontation? While these may be difficult questions to answer, the more honest you are about the dynamics of your company’s environment, the better because, as they say, you can’t fix something you don’t realize is broken.
Improving Company Culture From the Top Down
Another revelation from TAB’s survey is that the majority of respondents agreed that business owners are the individuals with the most impact on company culture. This puts you in the #1 slot when it comes to making positive change.
Additionally, it’s important to note that 43% of the owners responded that the most important factor when it comes to promoting company culture is empowering people. A majority also said that the most important benefit to the company and employee alike is “shared goals between management and employees.” (Are you starting to get an image of what makes a company strong?)
Based on these results, it’s pretty clear that improving company culture starts at the top. It involves giving your staff the power to make decisions and offer input. It also requires bringing all of your team together—from the bottom to the top—to make sure you’re all working toward the same thing.
Impact of Company Culture on a Small Business
At this point, you’re probably wondering what impact company culture really has on your ability to be a success. These results provide a hint of an answer, as a good deal of the respondents felt that the greatest impact of a company’s environment is on employee productivity and morale.
Research agrees that both of these issues affect how well a company does. For instance, in December of 2015, Harvard Business Review published a post discussing the fact that staff that is “disengaged” call in sick more often, have a higher rate of accidents, and make more errors. Ultimately, for you the business owner, Harvard says that this results in “18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time.”
This same article addressed the morale issue as well, citing that individuals who are not happy in their current jobs leave 50% more of the time. This means higher training costs, loss of productivity while working to get the new employee up to speed, and added stress on other staff members, who are left to pick up the slack.
How to Create a More Effective Company Culture
Now that your head is swimming in numbers and stats, let’s talk about how to use this information to promote your small business in real-world terms. Specifically, there are a number of things you can do that can help you create a more effective (read: more profitable) company culture.
#1: Hire the Right People
According to survey results, 91% of those questioned said that hiring people who fit into your company culture is more effective than hiring someone who would have to adapt. What makes a person a good fit?
While survey results suggest the importance of getting feedback from current employees and observing how job prospects interact with others, Los Angeles based journalist for Kiplinger’s Personal Finance and InformationWeek, Jeff Bertolucci, reports that one way to answer this question is to look for potential warning signs when engaged in the interview process.
Some tips he offers include paying attention to whether the person is a complainer, assessing whether they’re willing to evolve with the job, and noticing if they have a healthy respect for employee-supervisor boundaries. If not, then you probably want to pass.
#2: Be Flexible with Your Schedule
In this survey, 88% of the respondents who felt that their company has a strong company culture said that having flexible schedules increased employee productivity. That makes this one factor alone something to consider, as working with your staff to ensure that they can tend to their families and other obligations while still getting their work done appears to pay off by enhancing the culture of your business.
Additionally, survey subjects who reported having a strong company culture were also “13% more likely to see telecommuting as a productivity-boosting practice” when compared to owners with weaker cultures.
Therefore, looking at your own business, are there any positions that could be potentially handled from home? Even if not on a full-time basis, what about part-time?
#3: Promote Trust with Your Employees
When asked what is most effective when it comes to motivating employees, 44% of the business owners responded that it was giving more trust. In fact, this ranked higher than transparency (24%) and control (21%) combined. What can you do to promote trust?
Atman Co., a company that provides psychometrics for business strength and growth, says that this involves being genuine and honest with your staff, taking responsibility for your mistakes, seeing the positives in your employees, and thanking them for their efforts…preferably in the presence of other company staff.
#4: Create a Pleasant Working Environment
With 91% of the survey respondents citing an enjoyable work environment as a factor in increased staff productivity, it benefits you to ask how you can make changes to your company culture to make it more pleasurable for your employees. If you’re stumped as to how to achieve this goal, Tatyana Sussex, manager of LiquidPlanner’s blog, offers a few ideas.
For starters, Sussex suggests that you “make the effort to connect with your team members in person—individually and as a group…” It also helps to share when you appreciate their hard work as this motivates them to do more, says Sussex. Be open to their ideas and don’t be afraid to “be spontaneous and have a little fun.”
Sure, work needs to be finished, but sometimes giving staff a well-deserved break breathes life back into them. That way, when they return, they will do so with even more energy to help them get everything done.
#5: Offer Education and Training Opportunities
Another clear finding in TAB’s survey is that 82% of those with strong company cultures said that continuing education and training had a positive productivity response as well.
Research confirms this as one meta-analysis published in the Indian Journal of Industrial Relations referenced how one study alone “concluded that training is one of the most pervasive methods for enhancing the productivity of individuals and communicating organizational goals to new personnel.”
Realistically, a lot of training can probably be conducted in-house; however, offering your staff offsite training or the opportunity to build on their education and experience via trade shows, conferences, or networking events will likely be well worth the investment, as your small business will benefit in return.
#6: Develop a Mentor Program
A whopping 90% of business owners surveyed felt that mentoring brought out the best in their employees. So, if you’re not already providing your staff with someone to help them along the way, you might be missing out.
One option is to create a formal mentor program. Franchise Growth Partners shares that a good mentor has these qualities: a willingness to share expertise, a positive attitude, is enthusiastic, offers “constructive feedback,” is respected, sets and meets goals, and motivates by example.
Thus, picking out the individuals in your business who display these qualities and making them mentors can advance your staff personally…and your business as a whole.
#7: Lead by Example
Finally, when asked what their greatest challenge was when it comes to having a strong company culture, the top answer by all responding business owners was “ensuring that we practice what we preach.” In other words, implementing all of these suggestions is great and all, but if you aren’t living them yourself, then your results probably won’t be as amazing as they can be.
Overcoming this particular hurdle requires that you take the changes you need to make and instill them in your heart. It requires not only asking your staff to create this type of company culture, but also making a commitment yourself to strengthening your company’s personality.
It means stepping up and being the coach of the team—a team that will soon be led to victory. Thanks largely to the strong company culture you’ve created.