2 Things on Company Culture You’ll Wish You Knew Before

Company culture has long been linked to company performance. But exactly how strong is the relation and what comes first? I recently came across interesting research. The first answers the chicken and egg question of what comes first - a.k.a. the causality dilemma. And the second quantifies the impact of culture.

1. Culture comes first

Many studies highlight the link between company culture and company performance. But the direction of the relationship is often left unproven. The question is like "What comes first, the chicken or the egg?".

In a 2015 study "Which comes first, organizational culture or performance?" they set out to prove causality. The researchers looked at 95 organisations over 6 years.

They found culture causes performance - and not vice versa!

But the payoff from a positive culture takes time. In their sample companies, the sales department's culture influenced customer satisfaction two years down the route. And that satisfaction drove sales two years from that point.
Culture influences performance four years down the route

2. Culture can quadruple your revenue growth

The Strategy& team at PwC worked with the Bertelsmann Foundation to study how culture links to performance. First they analysed EBIT performance relative to EuroStoxx Sectorindex for twenty-six European companies. Then they looked at their organizational culture scores. And finally they related these two elements over a period of ten years. The conclusion: a very strong positive link between culture and company finances.

In the Harvard Business School classic professors Kotter and Heskett quantified culture's impact. Revenue growth over an eleven year period was four times higher for companies with a good culture.

Differences in company culture account for a four times higher revenue growth

These results are staggering!

But isn't it hard to change culture?

Yes of course it is. It takes time and effort to successfully transform culture.

But every organization needs a culture strategy. Because culture exists at all companies. Whether it is actively managed or left to chance is your choice. Just know it can be a liability or an asset.

Interested to find out how you are doing well on culture? Have a look at the post "5 Warning Signs of a Serious Company Culture Problem"

Koen Schreurs
Motivation & Recognition Expert








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HR News: 2 Things on Company Culture You’ll Wish You Knew Before
2 Things on Company Culture You’ll Wish You Knew Before
HR News
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