How Company Culture Drives Employee Performance

When you work in the HR department, it’s easy to become enmeshed in all the ins and out of compensation, benefits packages, and employee performance reviews — it’s a big part of the job! But money isn’t everything, and employees know it. In a survey of talent trends, three things in particular rose to the top of employee wish lists: flexibility, wellness, and purpose.

These perks are cultural, largely built into the ethos of a company rather than spelled out in a benefits package. It’s just one more bit of evidence leading to an overwhelming conclusion: Company culture matters.

The link between a strong culture and employee performance

A positive company culture is linked to many favorable outcomes for businesses, including increased innovation, better employee retention, and even an advantage in marketing, as more people are choosing to do business with companies they perceive to be doing good in the world.

But the most important benefit of a strong company culture is its outsized impact on employee performance — indeed, improved employee performance is the driving force behind the other outcomes listed above. It’s not rocket science, either. A strong culture leads to happier employees, and happier workers have been shown to be 12 percent more productive. A study of strong and weak organizational cultures points out that this productivity boost is likely due to employee motivation, which increases significantly in companies where employee’s basic needs are met through a strong culture. Those needs, by the way, are the same as they are for all humans according to Maslow’s Hierarchy: basic physical needs for safety and comfort, as well as a feeling of belonging, self-esteem, and the chance to become the best you can be.

How Company Culture Drives Employee Performance

The feeling of belonging that comes with a strong company culture goes hand-in-hand with increased employee engagement —?another strong driver of employee performance. Gallup has found that companies with a highly engaged workforce achieve a 10 percent increase in customer satisfaction ratings and a 20 percent increase in sales, all of which leads to an overall boost in profitability of 21 percent.

Creating a positive culture

Every company has a culture. The question is: How will you ensure that your company culture is a positive one that supports your employees and leads to better outcomes?

Building a strong company culture is an intentional act, and one that requires the concentrated effort of both the HR department and the C-suite. As you work to build a stronger culture, these are some of the most important features to work on:

A shared sense of purpose

Workers want to feel that their company’s values match their own — yet 33 percent of employees report a misalignment that leaves them feeling disconnected from their work. The first step in building a strong company culture is to develop a mission statement that clearly articulates your purpose. Nearly 75 percent of purpose-focused workers are happy with their jobs, so defining your values and mission is a major step toward improving engagement and employee performance — it’s a step you cannot skip.

A culture of recognition

Regularly recognizing employees for their hard work is a crucial component of a successful company culture, as it makes people feel valued and integral to their company’s success. Social recognition programs have been shown to boost employee engagement and productivity to nearly double of those companies without social recognition programs. Also, 90 percent of workers say when they receive recognition it motivates them to work harder and 92 percent agree when they’re recognized for a specific action, they’re more likely to take that action again in the future.

For a deeper dive into how a strong recognition program can improve employee performance and engagement, read a case study on how General Motors (GM) launched a program that resulted in over 80,000 unique recognitions being sent within 30 days. After GM’s program launch, employee recognition became one of the five most improved areas in the company’s engagement survey.

A responsive work environment

It’s remarkably easy to forget that your facilities are a major contributor to company culture. A Harvard Business Review survey found that over half of workers wanted good air quality and comfortable lighting in their workspaces. Remarkably, many people wanted basics like climate control and soothing soundscapes more than other perks or wellness benefits. This is low-hanging fruit: Design a comfortable and motivating (rather than just trendy) workspace for your employees, and you’ll be doing a great deal to improve your overall culture as well.

How Company Culture Drives Employee Performance

A focus on cultural fit

Building a strong culture is a long game, and it can take years to develop. Fortunately, HR can support the process through hiring by making sure you bring on people who are the best fit for the values you wish to instill across your business. SHRM recommends designing interview questions that specifically gauge how well candidates fit into your established (or better yet, your aspirational) corporate culture to make sure every new worker enhances rather than detracts from it.

The most effective way to strategize your culture plan is to assess how employees currently feel about your culture. You can’t begin to change until you can describe what you already have. The best way to get their opinions? Ask! Gather honest employee feedback to find out what’s working and what’s not. Be sure to ask for their suggestions for changes — then act on that input. Beginning with listening builds trust and lays the foundation for lasting change.

For more information about how recognition can improve your overall company culture, download our free white paper, “Recognition Culture: The MVP of Employee Experience.”

 

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Author: Kellie Wong

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