The Effects of Company Culture on Business Performance

The Effects of Company Culture on Business Performance

In 1951, Dr. Elliott Jaques published his book, “The Changing Culture of the Factory.” Jaques had studied the daily operations at a factory in England. In his book, he detailed his observations of the organizational culture. He noted that there were unspoken procedures in the factory of how day-to-day operations were handled. He also observed that beliefs and attitudes, which closely aligned with the factory owners’ standards, were held in common amongst all employees. Jaques was one of the first to study company culture and publish his findings. Since then, interest in the implications of establishing positive cultural attitudes in the workplace has grown considerably, enhancing our understanding of the far-reaching effects culture can have on business performance.

Evolving American Office Culture

At the time that Dr. Jaques was observing factory culture in England, companies in the United States operated under similar circumstances. A typical office consisted of a large, open room with desks closely spaced in rows. Employees worked extensive hours each day seated side by side, and cigarette smoke filled the room. The only exception to this layout was the private offices. If you excelled in your assignments, you might be promoted and earn yourself an office. The coveted corner office with all the windows was reserved for the person in charge. The entire operation was very hierarchical, and interactions were formal.

The physical appearance of offices and the management structure under which they operated transformed rapidly in the decades that followed. The 1960s and ‘70s we saw the addition of cubicles, lunch and coffee breaks, providing privacy and a more community-oriented work environment. Middle management became a popular method for delegating responsibility and tasks among different employee groups during the 1980s. Expansion of the internet and technology advances from 1990-2010 changed the way day-to-day business operations were carried out and opened the door for rising entrepreneurs. The workplace was recently transformed again in 2020 as many employees retired from the daily commute and set up offices at home.

All of these advances in business culture have led to changes in business methods and outcomes. In many cases the 1950s worker lacked the ownership of their projects that team members have today. Employees lacked the motivation to push the envelope, innovate, or raise the bar. Shortcomings with this model pushed us toward a company culture that supports advancement, innovation, and ultimately success.

Vision and Outcomes

The company culture can either elevate a business to new heights or drive it into the ground. It’s all about vision and outcomes. The board’s sound vision and goals for business success cannot be achieved without the right culture to support its achievement. To achieve the desired result, the culture must mesh fluidly with that vision.

Modern businesses operate similarly to a manufacturing supply chain, where raw materials enter the system, are changed through each step of the process, and emerge as the final product. The business goals the board hands down to employees enter the workplace flow. If the company culture, values, procedures, and behaviors support this vision, the business can successfully meet these established goals by merging vision and culture. However, if the culture is at odds with the vision expressed by company leadership, the resulting outcome will most likely miss the mark.

Reinventing Company Culture

A misalignment in company culture necessitates a change in order to achieve company goals. However, these deeply entrenched attitudes and practices can be challenging to modify. It is vital to focus your efforts and choose your battles wisely. Be thoughtful and methodical in your efforts. Build-up employees rather than breaking them down and empower them with new skills and attitudes.

Observe – Take time to sufficiently assess business operations. Explore the answers to questions such as: If the company was functioning optimally, what behaviors would be present that are not? Which ones are present that are hindering success? Employ inclusive leadership skills as you involve employees at all levels. Listen to observations and suggestions.

Recognize Strengths – Cultural strengths can express themselves in different ways. Taking pride in the company may lead employees to be loyal. However, it may also cause a reluctance to compromise on price, materials, or processes. Acknowledge and offer praise for the positive company culture that you observe and channel existing attitudes towards acquiring more desirable behaviors.

Introduce Changes – Seek to incentivize employees on two different levels. First, appeal to their emotions. Effective change can be expressed as a matter of pride or “doing the right thing.” Second, make changes logical. The majority of people will do the right thing for the right reason, but almost everyone will do it for themselves. Help employees understand how adaptations benefit them specifically.

Set the Example – Exceptional employees may already reflect the desired values. Empower these individuals to be trend-setters in key areas of your organization. Moving such employees to positions of greater visibility may expand their circle of influence.

Monitor Progress – Establish benchmarks, performance metrics, and other measurable means of monitoring the adoption of cultural changes. Keeping an eye on these critical factors will allow you to not only keep track of progress but make course corrections along the way.

There are many ways to measure culture as well as additional metrics that play a part in the big picture of how your business is performing. Establishing an internal culture task force team, employee engagement surveys to make employees feel their voices are heard, and internal improvement initiatives can be eye-opening. Promoting a company culture that aligns well with company values is worth the time and effort required to establish and maintain it.

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