What’s the Right Company Culture for Your Business?
We write a lot about company culture on this blog, which is not surprising really in these gentler and more discerning times where employees need much more than a crack of the whip, a pay packet and Taylorist work methodologies to be engaged.
Today, companies are have to build positive cultures to attract, motivate and retain talent. But, it would be folly to think that building a positive culture was just about people pleasing. Actually, an effective company culture is one that drives internal employees to engage in behaviors that mean the organization as a whole can compete more effectively in the marketplace. Internal culture and behavior must be closely attuned to what is required in the marketplace or you could find yourself in a situation akin to ship mariners rearranging the deck chairs on the stricken titanic.
So, if company culture is not first and foremost about people pleasing, what is it about? People pleasing should not be overlooked because you need to develop a culture which attracts, engages and motivates, but your culture needs to drive behaviors that lead to a more effective organization overall. This could be friendly, fun, supportive and flexible (people pleasers), but it might also include encouraging employees to be adaptable, flexible, to take risks, think creatively and generally pushing them out of their comfort zone. These latter cultural traits may not please all employees, but they make the company more competitive in the marketplace. This shows that a positive company culture can be a combination of traits that both please and disrupt employees.
So now we understand the internal and external aspects of company culture, what is the overriding inside-out company culture that companies should be looking to develop to ensure high performance?
There is a lot of research on this but a couple of studies caught my attention, which focus on the concept of an adaptive culture being the ideal company culture. The first study was by Kotter and Heskettt in 1992, which looked at over 200 companies, including well-known success stories such as HP, Xerox, Nissan and ICI, and discovered that a strong adaptive culture led to high organizational performance. And so, what was this adaptive culture? It was defined as an environment which encourages employees to trust each other, to take risks, to act pro-actively and to continuously seek for opportunities, improvement and change’ . Companies that are equipped with such an adaptive culture are much more able to handle fast, changing dynamic environments that characterize the modern marketplace where most sectors have been turned on their head by competition from disruptive new technologies and emerging markets.
Further research sponsored by Crawford International and HR.com explored the link between an adaptive culture and performance. In their 10-year longitudinal study between 1994 and 2004, they looked at the financial performance of 94 large organizations, including 3M, Apple, Bank of America, Cisco Systems, Barclays, BMC, HP, Genentech, GSK and Intuit. All the companies that had adaptive/agile cultures (listed above) outperformed those with non adaptive cultures by 900-1.
Below you can see the exact performance differentials between companies with and without adaptive cultures.
Net Income Growth:
- Adaptive Corporate Culture 989%
- Non-Adaptive Corporate Culture -47%
Net Income Index Growth:
- Adaptive Corporate Culture 11.5
- Non-Adaptive Corporate Culture 1.7
Stock Price Growth:
- Adaptive Corporate Culture 204%
- Non-Adaptive Corporate Culture 70%
So, based on this research; a business environment characterized by fast change; disruption; and where no one is safe; it would seem that an adaptive company culture is the right culture for a business to develop.