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Rise Above Any MBA by Paying Attention to Company Culture

September 13, 2012

In 2011, SCORE posted a blog about how businesses can create and maintain company cultures of winning. In today’s post by Julianna Davies, a researcher and writer for the MBA resource, http://www.mbaonline.com, she further explores the subject of company culture and why it is an important, but too often neglected, key to success in business. As both Julianna and the SCORE post point out, although company culture is experienced by the organization at large, it is the responsibility of executive and management teams to spearhead the foundation of and adherence to a positive company culture.

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Rise Above Any MBA by Paying Attention to Company Culture

Many businesses have achieved success in large part by building a strong company culture – and by the same token, businesses that overlook this aspect of workplace management are often prone to failure.

 

According to a recent Huffington Post interview with Executive Coach Meredith Haberfield, ‘company culture’ starts with leaders and ends with the entire organization. CEOs, managers and other superiors must be clear about company values and how employees are expected to represent them. But the workplace environment should also inspire creativity and innovation – not fear of one’s boss. Key intermediaries between employers and workers, she says, are ‘influencers,’ or key stakeholders within the company. Ultimately, the strongest cultures are built when every employee understands and respects their employer’s vision. Haberfield notes, “Where a company’s culture can go awry is if it has people in it who don’t value the things that the company esteems.”

 

Company culture is much more than just a buzz-term. According to a Harvard Business Review report titled, ‘What Great Companies Know About Culture’, companies with “effective culture” stand to outperform “unremarkable competitors” by a margin of 20 to 30%. There are several reasons for this strong performance. First, employees are much more productive when their company provides incentives like work-life programs, flexible schedules and health benefits. Second, companies that “communicate brand mission and provide career development opportunities” are seen as strong and financially viable by the individuals who work for them, a key consideration during an economic recession. Third, employers that recognize the importance of company culture also tend to fare well with employee recruitment and retention. Finally, a strong company understands that culture should ultimately cater to its audience, namely, customers, investors and other stakeholders.

 

Hewlitt-Packard is one example of a corporation that attended to its unsatisfactory culture after experiencing a series of financial problems. The company effectively changed its culture to cope with these losses. A key factor in this shift was a program that encouraged employees to formulate three personal goals and three professional goals each year. Two years after the program was launched, no losses had been reported and employee retention rates had increased.

 

In an article by Diana Ransom, she writes that culture-driven companies often succeed because they are able to connect with their audiences more effectively. She notes that recreational clothing supplier, Patagonia, appeals to a customer base best defined as “outdoorsy types,” a demographic, it turns out, that also works for the company. Vice President Rob BonDurant says individual time away from the office is essential for productivity; this led to the company’s implementation of ‘Let Me Go Surfing’ days, which are periodically available to more than 1,300 employees. “The time we spend outside the office helps us manage the storytelling process around our products,” he said.

 

On the other hand, some companies choose to either foster negative company culture or completely ignore the importance of positive culture. Both attitudes can lead to detrimental consequences.

 

For instance, clothing brand American Apparel has suffered in recent years due to a series of missteps based in the company’s culture. First, in 2010, the company was under fire for several sexual harassment lawsuits; allegedly, the CEO himself would often walk around the office in only his underwear and refer to female employees by derogatory names. The following year, a company employee made disparaging remarks about plus-size women. Despite these controversies, the company apparently took no action, and its ‘cultural’ reputation has remained tarnished ever since.

 

Investing in company culture is a process that takes time, energy and focus from company leaders – but the impressive returns make the whole undertaking worthwhile. For further reading, please consult the following resources:

 

 

 

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