Company Culture as a Competitive Advantage

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A lot has been written on the importance of a healthy company culture in the advancement of Diversity and Inclusion initiatives.  And while these are important aspects of building an engaged workforce, it’s also important to remember that company culture is multi-faceted and can impact business and overall financial health as well.

In many ways, company culture is like a fingerprint, unique to the entity to which it belongs.  And just as a fingerprint identifies a person as an individual, so too does the “fingerprint” of company culture identify that company and its specific blend of attributes.  If a company has a strong and positive culture, others try and duplicate it.  And if it is perceived to have a negative or toxic culture, others may use it as an example of what not to do.  But regardless of a company’s perceived reputation, that culture is unique to them.

Competitive Advantages of a Healthy Culture

As the importance of a healthy company culture become more apparent to company leaders, there is growing evidence that a positive environment impacts the bottom line in many different areas. One of the most sobering figures impacting company culture issues today is summed up in a Gallup study that found that 63% of a company’s workforce is not engaged.  The good news is that while culture issues may drive feelings of a lack of engagement, for companies that are willing to take steps to improve and evolve their culture, benefits will accrue almost immediately to the bottom line.  Areas where improving engagement to build a more positive company culture can provide a competitive advantage include:

  • Lower Turnover – Losing valuable employees is difficult.  Missed tasks, dropped follow-up, advancement of critical projects and a host of other practical problems arise when someone leaves a team.  But there is a cost to the company beyond that employee’s daily workload.  Training, interviewing and securing new candidates costs companies additional time and money.  It is estimated that the cost of losing an employee can run as high as 1.5-2.0 times that employees annual salary.  By evolving the culture into a more positive fingerprint, critical job functions will not go undone and added overhead costs for finding and training replacements isn’t necessary.

  • Improved Attendance – Unhappy workers are more likely to take additional time off.  One study in the Harvard Business Review states that unhappy, unengaged workers result in 37% more absenteeism.  This lowers overall team performance and adds operational cost.  Engaged workers in an improved culture are more likely to report to work regularly and in a frame of mind to contribute more, both of which have a measurable impact on profit.

  • Less Burnout – Fatigue can be physical due to long and difficult work schedules.  But it can also be the result of stress imparted by a negative or toxic culture.  It is estimated that burnout issues from disengaged employees can result in 49% more accidents and 60% more errors and defects.  By facing these issues head on and working to address harsh schedules that provide for a fuller quality of life, companies can reduce burnout to improve their competitive advantage.  This is true of the tangible cost savings but also in the intangible benefits that result from an engaged workforce happily focused on clear missions and well-defined goals.

Evolving a Strong Culture

From day one, every company has a culture in place.  It is the cumulative body of experiences and guidance exerted by leadership and executed by staff that develops over time into a working culture behaving almost organically.  As such, company culture can’t be built.  However, with the right input from leadership and with introspection and genuine purpose, it can be evolved into a vehicle that drives competitive advantage instead of inhibiting it.

Leaders looking to evolve their company culture to improve their competitive advantage must take the initiative to guide that culture to a more positive place.  This requires honest introspection from the leader and clearly defined expectations to define the culture and company values, align it to create norms of behavior and monitor it to keep the momentum going and  lead by example.  To aim the culture down the path of positive evolution, leaders can create clearly defined parameters and expectations such as:

1.     Vision Statement – An overarching statement that describes what the leader wants the company to become.

2.     Mission Statement – A company mission statement defines the company’s purpose.  It states what the company does and whom the product benefits.

3.     Values Statement – This is a critical step that defines how the company will achieve it.  It is here where the stake is placed in the ground to let employees know that the environment will be a positive place where everyone is welcome and comfortable and where company and individual integrity and dignity are guaranteed.

Good Company/Good Culture

Once the definition of vision, mission and values are in place, a strong framework must be implemented to ensure that those definitions are implemented.  One way to do this is through use of an accountability model called a PACT, which stands for Professionalism, Appreciation, Consistency and Trust:

  • Professionalism – This structures the organization with standards that hold employees and managers accountable for a set of accepted behavior standards for dealing with one another within the company and with customers and clients.

  • Appreciation – This helps employees feel valued and helps foster the drive to contribute and adhere to the defined cultural expectations since they are perceived as positive.

  • Consistency – This helps provide stability and alleviates uncertainty as the focus on how to deal with one another, how to resolve issues and how to conduct business isn’t shifting or erratic but visibly adhered to by all.

  • Trust – With positively defined expectations of behavior and guaranteed dignity in resolution of issues, employees are free to build trust among one another and toward management. 

As the improvement in culture begins to solidify, leaders will have additional avenues to continue the process.  One way to do this is to hire others who match the defined values.  There will always be differences in philosophy or management style and those differences should be welcomed.  But the mix of style and philosophy should always include the expectations that regardless the difference in style, adherence to defined values are the foundation of the new culture.

Communication as an ongoing cultural development tool is also critical.  Many companies looking to evolve and improve their culture will need to deploy in-depth culture analysis to understand what needs improving and how.  But once the understanding and introspection is complete, and once the values and vision have been communicated, it will require an ongoing and genuine two-way street to continue.  Leaders should always keep this communication going and encourage others to do so by remembering that the change to culture isn’t a task but an evolution.  It requires constant communication and the willingness to adopt new ideas and new approaches.

A Self-Sustaining Culture

The goal of improving culture for competitive advantage will not need “rolling out”.  Truly positive culture with high engagement more or less rolls itself out.  As word spreads through referrals and through positive feedback, the company will be perceived as positive place to work.  And that reputation will carry over to customers and future employees.  A full 50% of potential incoming talent research what past and current employees have said about a company online.

That culture change can be tapped to encourage employees to be the positive drivers of that reputation.  Many companies with strong cultures have found that with appropriate guidelines, engaged employees are willing to take to social media to praise and encourage those seeking the brand both as recruits and as customers.

And with the instantaneous access afforded us by the internet, it is vital for companies to be aware that the internet polices a company’s reputation in a way that is beyond the company’s control.  Positive cultures can find increased brand awareness, positive brand impression and new business through this publicity.  While negative cultures will see their fortunes fall as a result.  And both the positive and negative information serve as a lens, multiplying the positive  impression of the “good” companies as well as the negative impression of the “bad”.

As an example of a self-sustaining culture, the recent scandals of pet and passenger injury at the hands of United Airlines staff, as well as passenger safety and sexual assault claims against Uber resulted in extremely negative public impressions of those company’s cultures.  On the other hand, stories of Lowe’s employees repairing a veteran’s wheelchair when the VA would not supply him a new one, and those of Chick-Fil-A employees offering overnight shelter and free food to travelers in the south stuck on the road in a snowstorm played for weeks online and in the news to the benefit of those brands.  Speaking to the power of company culture and its impact on competitive advantage; articles, commentary and assessment of those cases were expressed predominantly in terms of each company’s culture, lauding the culture of the good deeds and indicting the culture of the bad.

Every company seeks to gain a competitive advantage within their industry.  And in business there are always risks and uncontrollable variables.  However, one thing that can be influenced and developed is a positive and healthy company culture.  As it matures and evolves to become self-sustaining, the benefits will return in the form of increased productivity, higher organizational effectiveness,  improved teamwork, better quality and true engagement. It can be relatively easy to imitate another company’s strategy, product, or mode of operations. But since company culture is so unique and complex, an opportunity to leverage a strong one can go a very long way.

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Pedro Suarez