How Important is Culture to your company’s bottom line?
Big, very big! Analysis shows when cultures align with the demands of their business lines they consistently outperform organizations that are not aligned. Here is what those companies surveyed reported:
• 571% gains in operating earnings
• 471% higher returns in investments
• Stock prices increased 383%
as reported in “The New Corporate Culture: Deals and Kennedy, 1999.”
According to an article published in the September 03 issue of Professional Services Journal, “Organizations with adaptive cultures increased net income 756 percent over an 11-year period compared to a one-percent increase for everybody else.”
The impact of culture on the bottom line is clear. Harvard Business School professors John Kotter and James Heskett studied over 200 companies for several years and found that culture has a significant impact on a firm’s long-term economic performance. The role of culture in determining financial performance is becoming even greater in today’s fast-changing, more competitive business environment.
Organizational culture is a powerful force. It significantly impacts profitability, sets the climate for innovative ideas, and determines an organization’s capacity to change. The power of culture is perhaps best seen when organizations are forced to adapt to change, resulting in either success or failure of initiatives. Executives know they must get their organizations to seek and embrace change, but often feel challenged with cultures that resist change, causing dependence on the leader or defensive attitudes that inhibit collaboration, threaten innovative initiatives and reduce organizational effectiveness. The greater the degree of change required, the more important it is to examine the existing culture to determine whether it will serve as a catalyst in moving forward or whether it will act as a deterrent in support of the status quo.
Organizations that have not yet successfully made the connection between strategy and culture have yet to realize the benefit, which culture plays in an organization’s growth and performance. Leadership is centric to establishing the vision and values that foster the culture within an organization. Often, in organizations where performance is declining and employee morale is low, the senior management’s view of its current organization’s culture is based more on hope than a view grounded in objective fact. It is difficult at best to be objective when you are your own sounding board.
Until recently, accurately assessing organizational culture and readiness to change has been virtually impossible. Peer Synergy Group has several tools that enable organizations to see and understand their present state of culture without biases and we provide the experience and expertise to assist in developing effective and adaptive cultures. Cultural alignment initiatives can be very concrete, with measurable goals and clear return on investment. Additionally, the ability to leverage the creative capital in an organization through continuous innovation can yield tremendous economic benefits. Aligned and dynamic organizational cultures drive effective idea exploration and the willingness to seek change. Peer Synergy Group believes an organization’s future success is dependent upon the ability to continuously innovate.
Corporate culture is often ill defined and misunderstood.
“Culture is the cornerstone of today’s corporations. More than any other force it shapes the attitude, the hopes, the creativity, and the values of the employee.
Culture bonds and motivates individual behavior, both internal and external relations; it impacts a company’s values, how it processes information, and how it functions at all levels from the subconscious to the visible. Regardless of how you view culture in your organization, it should emphasize what’s really important and directly support your vision and strategy. People and the culture within which they exist are the driving determination behind every great leader. Together they are what drive a company to greatness and they can also drive a company to failure. Leaders who make this connection understand that culture models corporate values, generates motivation, innovation, drives performance and builds company reputation. As Lou Gerstner said, “I came to see in my time at IBM that “culture” isn’t just one aspect of the game—it is the game.”
Imagine how successful you could be if your organization had a dynamic and innovative culture where employees continuously demonstrated passionate engagement amidst their work and in support of your customers. Peer Synergy Group, Inc. is passionate about helping our clients develop strategic roadmaps and processes for developing leadership relevance, vision, values, dynamic culture, and continuous innovation to build company reputation and market share. We have the tools to help you see and understand your organization’s present state of being without biases, and we provide the experience and expertise to successfully help you deliver your organization into the 21st Century global marketplace.
How important is culture to your company’s bottom line? It could make the difference between success and failure in today’s ever changing business environment.
Roger Blackstock is Founder & CEO of Peer Synergy Group (www.peersynergygroup.com), an Atlanta based organizational leadership and executive performance enhancement firm. Roger also serves as a Group Chairman for Vistage International (www.vistage.com), the world’s leading chief executive organization with more than 14,000 members in 16 countries. Blackstock is a U.S. Army Veteran, business executive, and trusted advisor to CEO’s with over thirty years experience. For more information you can reach Blackstock at roger@peersynergygroup.com or 770.530.2383.
