THE COMMON DENOMINATOR OF ALL SUCCESSFUL FIRMS: CULTURE
Some may argue that the notion of “company culture” has lost its meaning due to the overabundance of content and discussion around it. In fact, as the modern workplace continues to evolve, it has become more important than ever. This is true for all companies regardless of their industry or size. As Simon Sinek puts it; “Customers will never love a company until the employees love it first.”
There are simple yet effective ways to kickstart a company’s culture, yet founders often underestimate the benefits of doing so and pay a hefty price for it later on.
Company culture refers to the shared values and beliefs of a company and its employees. It encompasses elements such as work environment, management style, attitudes, ethics, expectations and goals. Simply put, it is what shapes your identity as a firm and your image in the eyes of both your customers and the talent pool available to you in the market.
An effective company culture leads to higher engagement and lower turnover. It boosts brand identity and productivity, and accounts for an overall healthy workplace. Conversely, when company culture falters, it can lower employee engagement, undermine customer relations, increase turnovers and lower profits.
Take health spending. The American Psychological Association estimates that more than $500 Bn is lost each year due to workplace stress, a bi-product of ineffective company culture. According to the studies carried out by Queens School of Business and by the Gallup Organization, disengaged employees have 37% higher absenteeism, 49% more accidents, and 60% more errors and defects on duty. Moreover, in organizations with disengaged employees, productivity decreases on average by 18% and job growth by 37%. This in return translates to 16% lower profits and 65% lower share price over time.
Robust company culture is the common denominator of top tier companies. We can see this, simply by looking at how much they spend on culture enhancing operations. These “Value Based Organizations” invest millions of their resources each year to empower their staff and to improve the workplace environment. At times, they even go back to the drawing board to rename and reshape their departments and major policies. Take Insider, an Endeavor Company that prioritized the development of its culture from the very early stages. The company even changed the name of the HR department to “People & Culture”, and reshaped their corporate ethos. Today, the company continues to pioneer innovations in culture, enhancing and empowering their employees and have its overall success to show up for it.
In 2020, the world was hit by COVID-19. Multinational corporations were suddenly forced to change the way they operated for decades. The digital transformation of firms was forced to take place almost overnight. In difficult times like this, the benefits of a robust culture quickly surfaced.
According to a survey conducted by Endeavor Turkey, “Team Management”, the 5th biggest concern of scaleup founders back in March 2020, rapidly became number one soon after the long-term effects of COVID-19 struck later into that year. Consequently, around 22% of the companies reported that their productivity decreased by at least 30%. However, the story was quite different for companies that spent more on culture as they reported stability if not an increase in their productivity, together with higher growth rates and annual revenues during the crisis.
So how exactly did they pull this off? Is there a single model that fits all? Sadly, this isn’t the case as companies have different ways of doing business. However, as we compare the best-known practices and fish for correlations among them, we see three basic yet critical notions that are always present in successful firms.
The first one is “nurturing people and skills”. The most successful companies value people. They provide their employees with career opportunities and encourage them to participate in outside programs and activities. This in return gives people room for self-actualization and contributes to the overall wellbeing of the company. Here, Insider once again poses as a really good example as their employees are always encouraged to take personal development courses and as the company often provides employees free admittance to different online programs.
The second notion that can be found in robust cultures is the concept of “open communication and community”. Employees tend to perform better if they feel comfortable in sharing their opinions freely and without hesitation. In order for not to impede the way of innovation and growth, ideas and opinions must be discussed openly as a community within the workplace. Here, the role of upper management is thought to be critical as they are the ones that set an example. Endeavor Companies Iyzico, and Commencis are among those that managed to provide this environment for their employees. A common practice often carried out by these companies is the monthly Q&A sessions or discussion meetings organized by the executives of the firm to meet and exchange thoughts on various topics with all employees.
Last but not least, the third one appears to be the notion of “agreed pillars”. Successful organizations make pillars out of their shared beliefs and values. While company goals articulate a company’s purpose, pillars offer a set of guidelines for actions and mindsets needed to achieve those goals. Endeavor, being an international organization operating in 30-plus countries with more than 500 employees from different backgrounds, is a good example of how this notion should be executed. Given its sector leading net promoter scores, high employee engagement and retention rates, it is safe to say that the benefits of such approach outweigh the endured cost in building it.
While building a robust company culture is not an easy task to achieve, not doing so will most likely be more costly for founders in the long term. Thus, investing in and building your company culture starting as early as today is very critical. Do not forget; successful businesses depend on people.
Güzey Şıkman
