The coronavirus pandemic has completely disrupted business as we know it. The response to COVID-19 has created the unexpected need to geographically disperse our teams, reprioritize organizational goals and, most importantly, strategize for an unpredictable future.
Companies rooted in a strong organizational culture leveraged their cultural “capital” by activating their long-held values while navigating these tumultuous times. These companies have a reserve of goodwill and mission focus that employees have been able to draw upon as they faced previously unimaginable circumstances. Strong cultural values established long before the onset of the coronavirus have enabled companies whose cultures promote flexibility, collaboration and resilience to withstand the waves of change brought about by the pandemic.
The last recession showed us that culture cannot be ignored, even in times of economic disruption. The Wall Street Journal reported that during the Great Recession, companies that successfully instilled corporate values in their teams as their leadership demonstrated those same values posted profit gains of 26%, compared to a 14% drop in similar companies .
As we emerge from the economic shutdown precipitated by COVID-19 and businesses of all sizes and industries chart their path to a new normal, there are five reasons why refocusing engagement is more important than ever. build and maintain organizational culture.
1. Culture is The strategy.
Companies that dominate their industry do so by making culture their strategy. Culture is at the core, not an afterthought added to a business plan. It becomes a differentiator by determining the expressed and unexpressed expectations and rules of engagement regarding how employees interact and communicate with customers and solve problems together.
Not so long ago, CEOs rarely talked about culture. According to Lou Gerstner’s book “Who Says Elephants Can’t Dance?” when he took over IBM in 1993, the company recorded a loss of $8 billion and IBM shares sold for around $13. Mr. Gerstner didn’t think “culture is just one aspect of the game”, he said “it’s the game”, an unusual statement for a CEO at the time. Nine years after becoming CEO, IBM has made $8 billion in profit, a stock price of more than $100, and a market value that has increased tenfold to $208 billion.
Today, companies like Amazon, 3M, and Costco continue to dominate their industries because they don’t leave culture to chance. It is embedded into their business goals and will fuel their potential to thrive in this new normal.
2. A healthy culture creates healthy revenues, profits and shareholder value.
Companies that make culture a priority put people above profits. When executed consistently, cultivating a people-centric culture is followed by profits, revenue and shareholder value, even in times of crisis.
Quite simply, a healthy culture makes it easier to get results. Grant Thornton Business Consultant reports that from 2017 to 2019, companies that established strong organizational cultures were 2.5 times more likely to report significant share price increases and 1.5 times more likely to report average revenue growth of more than 15 % per year.
3. Unhealthy cultures are breeding grounds for unethical behavior.
We need look no further than the headlines to see how an unhealthy culture becomes a breeding ground for unethical behavior. And the employees noticed it. A recent to study by United Minds reports that 25% of employees say their company has recently gone through a cultural crisis. More alarmingly, 30% of employees expect a cultural crisis in the next two years.
In February 2020, shortly after Wells Fargo agreed to pay $3 billion to settle its fake accounts scandal, CEO Charlie Scharf referenced the culture when he concluded that “today’s settlement heartland conduct and the past culture that spawned it are reprehensible and utterly inconsistent with the values on which Wells Fargo was built.”
Culture dictates the code by which employees live and work in an organization. Leadership determines whether this code is one of high values, ethical behavior and respect.
4. Noble values that are not practiced become a liability.
Many organizations have principles that are visible on a boardroom wall, written in the employee handbook, and shared with newcomers during the onboarding process. But when there are lofty values that are documented but not practiced and modeled by leadership, those values quickly become a liability. When employees perceive a discrepancy between their company’s actions and its stated values, it fosters contempt. Contempt is a highly toxic element in an organizational climate and it is very difficult to eradicate.
Organizations need to identify the non-negotiable behaviors that everyone is expected to engage in and held accountable for. This requires leaders to facilitate meaningful dialogue about what values really mean, to constantly recognize and celebrate when those values are honored by team members, and to be unwilling to tolerate behavior that does not support team values. organization.
5. Perks don’t cut it anymore; you have to go further.
Your organization’s ability to recruit and retain top talent is highly dependent on your cultural reputation. Future employees and your future leaders consider your culture before applying for a job or accepting a promotion.
A Glassdoor 2019 to study indicates that culture, values and senior management are the main predictors of employee satisfaction, while compensation and benefits rank about 50% lower. As we all begin to recover from the disruption of COVID-19, employees want to be part of something they believe in and feel their work has a higher purpose than profit.
Today’s uncertainty reminds us that our businesses must remain anchored in the values and beliefs that are the basis of our existence in the market. During storms, these values support us, help us lead the way and contribute to sustainable growth. A healthy culture that permeates all aspects of your business can generate employee loyalty, community goodwill, and profits beyond shareholder expectations.