The Correlation Between Company Culture and Productivity

Posted by: Rachel Lopez on June 22, 2017 — GET FREE UPDATES OF NEW POSTS HERE

The term “company culture” is a wide umbrella that encompasses several elements of business. As Tech Target defines it, “Company culture is the pervasive values, beliefs, and attitudes that characterize a company and guide its practices.” In other words, it’s the overarching personality of a company.

The interesting thing is that culture is much more than a buzzword that defines a business’s style. It has a profound impact on productivity and can often make or break your bottom line.

 

Different Types of Culture

To understand the correlation between company culture and productivity, we must first understand the various ways that culture affects your employees because they are what ultimately drives productivity. To do this, let’s create two hypothetical companies — one with a great culture and the other with a lousy one.

Company A has a great culture, which can be defined as unified, cohesive and adaptable. There’s a strong emphasis on keeping employees happy, healthy and ensuring their mental well-being.

Company B has a lousy culture, which is polarized and employees are at odds with one another. It’s more of a cut-throat culture where team members are under perpetual stress and feel undervalued. The employer doesn’t really care about their employees’ health, happiness, etc., and is consumed solely by maximizing profits.

 

How Company Culture Affects Productivity

Which company do you think will be more productive?

It’s safe to choose company A. When you put it all together, company A is pretty much guaranteed to have happier and better-adjusted employees than company B. Research shows a definite link between employee happiness and profit.

There is an infographic from Growth Everywhere that puts things into perspective. It states that companies with happy employees:

  • Outperform the competition by 20 percent
  • Earn 1.2 – 1.7 percent more than peer firms
  • Are 2.1 percent above industry benchmarks

 

They also state, “Happiness makes people 12 percent more productive, and unhappy workers are 10 percent less productive.” Quantifiable data such as this makes it abundantly clear that company culture does in fact impact productivity in a big way.

 

Common Issues Associated with Poor Culture

If your culture stinks, it can hurt your business in several ways. There are five specific issues that are the most profound.

  • Stress
  • Health problems – “Health care expenditures at high-pressure companies are nearly 50 percent greater than at other organizations.”
  • Disengagement
  • Absenteeism – “Disengaged workers had 37 percent higher absenteeism.”
  • Increased turnover

 

The Benefits of a Great Culture

On the other hand, a positive company culture means happier, healthier, more engaged employees. They’re more unified and actually get something out of their jobs. They view it as more than just a means of earning a paycheck and are truly invested in the company they work for. Often, there’s a sense of loyalty to their employer and they’re genuinely compelled to work hard.

When you put all of this together, it means one thing — increased productivity. It goes without saying that having a productive workforce will positively impact your company in a host of different ways. This ultimately leads to increased revenue and a better overall bottom line.