The ROI of company culture: Why companies should look at culture’s impact on profit

Organizations that purposefully craft and develop their culture experience a 14% turnover rate, whereas organizations that ignore their culture experience a 48% turnover rate, writes PDR Senior Consultant Christine Mikhail.

July 29, 2016 |
PDR Blog

Though profitability is important, every employer also desires engaged employees.

Engaged employees are working to make their organization more successful, move projects forward and come up with innovative ideas. Disengaged employees come to work, complete their tasks and leave at a predetermined time. While this may seem harmless, disengaged employees simply do the bare minimum of what is required, putting no extra effort or passion into their daily activities. The 16.5% of the workforce that is actively disengaged comprises disruptive employees who are not only unproductive, but also negatively impact the productivity of those around them1.  

Although you may be familiar with these statistics, you might not know why 66% of your workforce is disengaged or actively disengaged. A strong positive culture can enhance employee engagement by 30%2, resulting in up to a 19% increase in operating income, and a 28% increase in earnings growth3.

A strong positive company culture is not an organic adoption of employee behaviors, but a well-planned component of your business strategy. Organizational culture is found in the values of your business, the systems in place to run the business, the artifacts describing historical successes, and the behaviors4 of the individuals in your organization. A thoughtfully planned culture has the power to align your organization’s people, processes, and workplace.

The culture of your organization is powerful enough to encourage and inspire your employees, or conversely, negatively affect their satisfaction and performance.  Organizations that purposefully craft and develop their culture experience a 14% turnover rate, whereas, organizations that ignore their culture experience a 48% turnover rate, which can cost up to 2.5x a person’s salary. Ignoring your company’s culture may also lead to a 33% decrease in operating income and an 11% decrease in earnings growth.

Businesses understand the value to strategizing for success, but all too often, culture develops organically. Identify the culture that you have and determine if it requires change. Then align your business goals with your cultural values to influence your profit margins.

For more, check out our infographic on the ROI of company culture:

 

About the Author: Christine Mikhail is a Senior Consultant at PDR who specializes in the early stages of a design project. As a member of our workplace performance team, Christine has guided several clients through the discovery phase of their projects. Christine excels at the intersection where culture and leadership meet. Her passion for design begins with understanding her clients’ vision for the future and translating that into a workplace that enables that vision. Christine is a member of the Society for Industrial and Organizational Psychology, and is a leader in PDR’s Organizational Design’s  consulting practice that specializes in leadership alignment, coaching and organizational development. cmikhail@pdrcorp.com

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Based in Houston, PDR specializes in the delivery of innovative workplace design and solutions. As a world-class, workplace consultancy and a premier creative design firm, our integrated services address both business requirements and the work environment to create high performance spaces designed to evolve over time. We have worked with global companies, real estate advisors, and developers to continuously redefine the high performance workplace. We are a hybrid design firm; 1/3 business consulting, 2/3 workplace architecture. PDR recognizes the workplace as a key strategic asset in promoting the effective integration of talent, process, and technology to maximize business performance and enable business success.

We know how companies work, how different generations of people want to work, and how to create a workplace that is as agile as your business.

PDR has spent many years working everyday INSIDE our clients’ companies, developing the next generation workplace.  Together we have studied 100 great campuses and workplaces.  We learn a great deal from working INSIDE our clients’ teams. Above all, we have learned that great places to work are always focused on the people who work there.

 So we start INSIDE. Check out our blog for more.

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