As an executive, manager or leader, you know that company culture matters. Over the last few years, you have probably worked hard to establish an effective corporate culture. But how do you know if it’s “effective”? Is it really making a difference in your bottom line or in the lives of your employees?
Measure Effectiveness with 3 Criteria
Organizational culture is a complex attribute of a company. It’s difficult to analyze, difficult to measure, difficult to change or manage, and even difficult to define. However, below are three key criteria you can use to define and assess the effectiveness of your company’s culture:
1. Drives Business Results
An effective corporate culture must drive business results. Every division of your organization has performance criteria that are intricately linked to your core mission. An effective culture should help your organization achieve these outcomes. The best way to assess the culture’s ability to enhance these business results is by assessing it through the lens of strategy.
Company strategy captures how an organization intends to compete and deliver value while maximizing profit. An effective culture is aligned with this strategy. When there is alignment between strategy and culture, the attitudes, beliefs and resulting behaviors are those which are required to execute the strategy.
What happens if strategy and culture are at odds? As Peter Drucker once said, “Culture eats strategy for breakfast.” This statement does not mean that strategy is unimportant. On the contrary, it is vital to any organization’s success. However, when strategy and culture are in conflict, culture always wins.
Therefore, one critical strategy in creating an effective culture is to intentionally design it around your strategy. Start by defining your strategy and ensuring that it is clear, understood, and supported by leadership. This strategy becomes the North Star for aligning your culture and organizational design. Keep in mind that this is not a linear process but a feedback loop, where your culture naturally influences the strategy you select and the strategy influences the design of your culture.
2. Increases Employee Engagement
An effective culture must drive employee engagement. A Gallup study found that companies with the highest levels of engagement were 22% more profitable and 21% more productive. In addition, it was found that companies with engaged employees outperformed competitors by 147% in earnings per share. On the opposite end, another study found that each disengaged employee can cost a company as much as $12,000 per year, and it’s estimated that companies are losing over $500 billion annually due to disengagement.
Because these figures are so astronomical, employee engagement is a key criterion to measuring a culture’s effectiveness. To what extent do employees feel passionate about their jobs? How committed are they to the company? How willing are they to go above and beyond?
3. Improves Lives
This third and final criterion of an effective culture may sound idealistic, but the reality is that providing an engaging and healthy work environment can truly improve the lives of employees. At least a third of our adult lives are spent at work, and the quality of the work environment directly impacts an employee’s quality of life. For many, that impact reaches beyond the walls of the office as they take it home with them.
As a result, creating a healthy work environment through an effective culture often improves the lives of both employees and their families. By creating a positive work environment and reducing the negative impacts of stress and burnout, an effective culture can have a tremendous impact on people’s lives.
How Can Innolect Help?
If you want help in measuring and optimizing the effectiveness of your organization’s culture, contact us today. At Innolect, we help build the foundation for you to bring your best self to work, and we thrive on building high-integrity workplaces. The bottom line? We are committed to helping leaders develop and grow themselves, their teams and their organizations. Learn more about our approaches HERE.
To set up a consultation or training, contact us today. Additionally, our products and assessments help leaders develop the skills and capabilities needed to grow exponentially. Read our latest book: Ignite Your Imagination: 21 Ways to Learn.
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