What if I said you were in the culture business and not the outdoor recreation and adventure business? Would you think I had fallen out of my harness?
As leaders, we are responsible for creating an environment that is enjoyable for both customers and employees. That environment includes the facilities and physical location plus the atmosphere, spirit, or however else you want to describe the tone and tenor of the place. Let’s call it your corporate culture.
This year, Insider Management will explore corporate culture in its many facets. A theme that will recur is the leader’s role in creating an environment of mutual trust between all levels of the business: front line employees, seasonal workers, shift and department leaders, full time executives, and owners.
We will also talk about the role trust plays with your business and external stakeholders, including regulators, nearby businesses, policymakers, community organizations, and even competitors.
Why would we dedicate this much space to the issue of business culture, in general—and the topic of trust, in particular? Is it all that important, or is it just a nice-to-have? Based on the success of companies that have made culture and trust major organizational priorities, I’d say it’s worth every pixel and drop of ink.
It Starts at the Top
Leaders at every level of your company impact the day-to-day experience of their teams. They set the standard for team culture.
The basis for strong relationships between managers and employees is trust. Leaders earn the trust of their workers by demonstrating credibility, fairness, and respect. Employees deliver greater value to the business when they have a trusting relationship with their manager, strong camaraderie with their co-workers, and pride in their jobs.
Consider this:
- Companies that focus on culture reap 246 percent more employment growth than companies that don’t—and are able to attract top talent.[1]
- Companies that create high trust/high performance cultures experience far less turnover. For example, in industries similar to ours:
| Voluntary Turnover Rates[2] | ||
| FORTUNE 100 Best Companies to Work | Industry Average | |
| Retail Industry | 21% | 32% |
| Hospitality Industry | 23% | 41% |
- American Customer Satisfaction Index ratings for FORTUNE 100 Best Companies to Work For are 2.3 to 3 percentage points higher than average and 4.2 to 4.6 percentage points higher than their industry counterparts.[3]
- Companies that focus on culture experience 4.1 times the revenue growth and 756 percent greater net income compared to companies that do not[4], and see a 13 percent increase in sales per employee.[5]
- Fortune 100 Best Companies experience 11 percent annualized stock market returns compared to the broader market—6.8 percent for the Russell 3000, and 6.5 percent for the S&P 500.[6]
The world is changing. Culture matters. Your current and prospective employees are seeking intrinsic as well as extrinsic value from their experience working for you. Culture can be your competitive advantage in winning loyal employees and creating happy customers.
In short, companies that focus on high-trust cultures
- perform better financially
- receive more qualified job applicants
- experience less voluntary turnover
- have greater employee well being
- have lower healthcare costs
- have higher customer satisfaction rates
- innovate more, and with better result
- benefit from more employee discretionary effort
- enhance the public perception of their brands
So, this year, as the industry grows more competitive and sophisticated, commit to getting into the culture business. Develop your company the way the most admired and successful companies have—by building a high trust culture.
[1] Kotter, John P and James L Heskett. Corporate Culture and Performance. New York. Free, 2011
[2] Great Place to Work(r)
[3] Simon, D.H. & DeVaro, J. (2005) Do the Best Companies to Work For Provide Better Customer Satisfaction? Retrieved from Cornell University, School if Industrial Relations site: http://www.digitalcommons.llr.cornell.edu/articles/105
[4] Kotter, John P and James L Heskett. Corporate Culture and Performance. New York. Free, 2011
[5] Faleye, O. and Trahan, E (2011). Labor-friendly Corporate Practices: Is What Is Good for Employees Good for Shareholders?. Journal of Business Ethics. 101(1), 1-27.
[6] Source: Russell Investment Group
