Most business leaders stress the importance of a strong company culture. Hours are spent strategizing your company’s mission and defining the values that will act as your compass to achieve your goals.
So, the issue isn’t whether or not a defined company culture is important, but rather that there is little research that quantifies culture in terms of a company’s bottom line performance. But even with a lack of research, many will argue—even your employees themselves—that a strong culture is critical to market success.
In fact, a recent survey by Deloitte Insights found that 82 percent of respondents said that culture is a potential competitive advantage. However, only 28 percent of survey respondents believe they understood their culture well, while just 19 percent believe they had the “right culture,” according to the survey.
Studies are emerging about the importance of culture and core values on a company’s bottom line, and Profile has identified key areas where culture has directly influenced success.
Reduce Employee Turnover
Recruitment is expensive. There’s advertising for the position, time spent sorting through résumés, and the interview process itself. The average cost-per-hire for companies is a little more than $4,000, while the average time to fill a position is forty-two days, according to a recent report from the Society for Human Resource Management.
In today’s war for talent, retaining employees is just as important as recruiting, which is why a strong culture can be a key strategy in avoiding expenses. It’s also why the interview process at Meherrin Agriculture and Chemical Company stands out to Rene Veilleux, who is now the vice president of human resources. In his interview with the company, rather than focusing exclusively on his expertise and experience, he recalls how most of the time was spent talking about the company’s values, culture, and mission.
A strong family mind-set is embedded in Meherrin’s DNA, which is why employees are encouraged to take care of what matters most in their lives.
“We are very flexible with employees when it comes to family matters and personal matters regardless of the level,” says Veilleux, adding that Meherrin even initiated regional “Caring Teams,” who are able to provide help to employees in need.
Because of those core values, Veilleux stresses how important it is to consider whether a business decision is in line with Meherrin’s culture both from a compliance standpoint, as well as an ethical one. “If we are not aligned with our values, then I have to question our decision,” he says.
No Micromanagement Required
Time is money. And the more time business leaders have to spend managing the workforce the less time they have to focus on the business itself. One of the greatest benefits to a well-defined company culture is that it enables your teams to accomplish success by taking initiative.
Tracy Skeans, chief transformation and people officer for Yum! Brands, says it’s crucial to structure an organization “very deliberately” so that everyone understands how they contribute.
“Our people and our unique culture remain our biggest competitive advantage,” Skeans explains. “I want to fiercely protect it, and I feel a huge responsibility to ensure that I personally cast the right shadow.”
As a result, Skeans initiated a training program for employees and franchisees worldwide with Yum! Brands’ CEO Greg Creed called Leading Culture to Fuel Results. The training centers around the idea that, by using culture as a foundation for establishing strategy and structure, the company creates an atmosphere for successful results.
“Financial performance is not enough,” Skeans explains. “Leading Culture to Fuel Results is about inspiring employees and franchisees around the world to innovate, to work dynamically, and to be forward-thinking. A company’s culture should be something people can talk about. Our values are something they can describe, that they can live by. That kind of culture enables people to be able to fuel the business.”
It was a little more than seven years ago that GGP, a high-quality real estate company that specializes in shopping malls, emerged from bankruptcy. But James Cummings doesn’t credit financial strategies with that renaissance. Instead, he points immediately to the company’s core values: Humility, Attitude, Do the Right Thing, Together, and Own It.
Since crafting those core values, the senior vice president and controller says GGP’s success has soared immensely. One could even say that financial turmoil was a blessing in disguise. It allowed GGP to regroup, reassess, and strategically plan the next move. Now with the core values top of mind, Cummings says when mistakes are made, communication is key, which has led to finding solutions immediately rather than letting them linger.
“I’d much rather have bad news right away than have it as a problem down the road,” Cummings says. “I tend to be level-headed. When mistakes happen, they happen. We just have to talk it through.”
Now, Cummings says the core values have prioritized communication, innovation, and transparency, resulting in better productivity and remaining proactive in solving any business challenge.
All of that is evidence that in today’s business climate, culture isn’t solely a product from the HR department. Instead, strong values and cultures are driving financial impact and defining strategic initiatives.
Illustration: Jany Zhang