The ROI of company culture: Why companies should look at culture’s impact on profit

Though profitability is important, every employer also desires engaged employees.

Engaged employees are working to make their organization more successful, move projects forward and come up with innovative ideas. Disengaged employees come to work, complete their tasks and leave at a predetermined time. While this may seem harmless, disengaged employees simply do the bare minimum of what is required, putting no extra effort or passion into their daily activities. The 16.5% of the workforce that is actively disengaged comprises disruptive employees who are not only unproductive, but also negatively impact the productivity of those around them¹.  

Although you may be familiar with these statistics, you might not know why 66% of your workforce is disengaged or actively disengaged. A strong positive culture can enhance employee engagement by 30%², resulting in up to a 19% increase in operating income, and a 28% increase in earnings growth³.

A strong positive company culture is not an organic adoption of employee behaviors, but a well-planned component of your business strategy. Organizational culture is found in the values of your business, the systems in place to run the business, the artifacts describing historical successes, and the behaviors⁴ of the individuals in your organization. A thoughtfully planned culture has the power to align your organization’s people, processes, and workplace.

The culture of your organization is powerful enough to encourage and inspire your employees, or conversely, negatively affect their satisfaction and performance.  Organizations that purposefully craft and develop their culture experience a 14% turnover rate, whereas, organizations that ignore their culture experience a 48% turnover rate, which can cost up to 2.5x a person’s salary. Ignoring your company’s culture may also lead to a 33% decrease in operating income and an 11% decrease in earnings growth.

Businesses understand the value to strategizing for success, but all too often, culture develops organically. Identify the culture that you have and determine if it requires change. Then align your business goals with your cultural values to influence your profit margins.

For more, check out our infographic on the ROI of company culture:

About the Author: Christine Mikhail is a Senior Consultant at PDR who specializes in the early stages of a design project. As a member of our workplace performance team, Christine has guided several clients through the discovery phase of their projects. Christine excels at the intersection where culture and leadership meet. Her passion for design begins with understanding her clients’ vision for the future and translating that into a workplace that enables that vision. Christine is a member of the Society for Industrial and Organizational Psychology, and is a leader in PDR’s Organizational Design’s  consulting practice that specializes in leadership alignment, coaching and organizational development. cmikhail@pdrcorp.com