Why Your Poor Company Culture Is Making You Lose Money

by Sabrina Son on Apr 23, 2015 2:21:12 PM

iStock_000015064502_SmallIt seems like a no-brainer that a company with hardworking employees will make more money. Ensuring your employees are working hard comes down to your company’s focus on engagement. From there, connect the dots from a strong financial performance to hard workers to employee engagement — it all leads down to organizational culture.

Both Gallup and Hewitt have shown that an engaged workforce will bring higher financial returns:

  • Working groups in the top quarter of employee engagement outperformed the bottom quarter by 21% productivity and 22% profitability

  • Companies with an average 9.3 engaged employees per actively disengaged employee showed 147% higher earnings per share than competition

  • Companies with 2.6 engaged employees per actively disengaged, on the other hand, saw 2% lower EPS

  • Companies with a 60 to 70% engaged workforce had an average total shareholders' return at 24.2%

  • Companies with 49 to 60%, a 9.1% TSR

  • Companies with engagement below 25% showed a negative TSR

Engagement makes money, and to have strong engagement, you know that your company must have a strong organizational culture. But that is not enough.

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Positivity = Productivity = Money

According to a second Hewitt study, at leading performing companies, 86% of the workforce is engaged. High performance, of course, will bring high financial returns.

Every leader worth their salt knows that a positive work experience leads to an engaged workforce. But the key is finding just how to make that work experience positive. It’s not enough to just have a commitment to culture. More important is cultural alignment.

Imagine a Venn diagram: your culture’s values are in one bubble, and your employee’s values are in another. That overlapping space in the middle? That’s cultural alignment. A company’s values are what shape the culture, echoing through every policy and procedure. People are going to strive to work hard for a company that shares the same values, morals, and goals that they do.

Engaged Employees Don’t Quit

The Corporate Leadership Council found that highly engaged employees were 87% less likely to quit than their disengaged peers. Many studies show that the cost of one employee leaving is equal to one year of that worker’s salary — and sometimes much, much more.

Employee retention means your company isn’t investing millions into recruiting, hiring, and training new staff in a revolving door. Instead, an engaged workforce that believes in the culture will stick around, work hard, and get promoted, allowing your company to save money by hiring from within.

A Study in What Not to Do

So what company values don’t often align with employee values?

In the second Hewitt study, research found that lower-performing companies had employees needing recognition and accountability. Meanwhile, higher-performing companies sought higher-level goals, such as more innovation and better strategic alliances. We can all assume the latter workers are involved with an organizational culture that ensures every employee already has recognition for achievements and accountability for their work.

Don’t allow hierarchies and bureaucracy get in your own way to empowering and recognizing your employees. They’ll work harder for it.

Engagement and organizational culture will together create a successful employee base that will work hard and earn you money.


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This post was written by Sabrina Son

Sabrina is the managing editor for the TINYpulse blog. A Seattle native, she loves her morning (or anytime) coffee, spending her weekends on the mountains, and of course, the famous rain.

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