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Company culture could be eating your profits


Company culture could be eating your profits

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IF YOU’RE A business leader trying to grow your business, it’s highly likely that you’re always on the hunt for ways to make your business more profitable. In fact, you and your team have probably already identified a list of “usual suspects” that may be eating away at your profit margins.

Chances are that right now you’re looking at ways to reduce your energy costs, prevent spoilage and minimise downtime. Focussing on all of these areas can be a really great way to outmanoeuvre the “cost gremlins” that are gnawing away at your bottom line. But if you’re serious about improving your financial position, you should also take a look at your company culture. Here’s why:

Your culture has an impact on employee morale

In his fascinating book Drive: The Surprising Truth About What Motivates Us, author Daniel Pink outlines three elements of what he calls “true motivation”. These elements are autonomy (the desire to direct our own lives), mastery (the urge to get better and better at something that matters) and purpose (the yearning to do what we do in the service of something larger than ourselves).

If you’ve got a company culture that lacks these elements, it is likely that your employees are feeling deflated and demoralised. That could lead to low productivity, and by extension, could have an impact on profitability.  

Here’s something else to consider. Throwing money, perks and benefits at demoralised employees doesn’t necessarily make those employees any more productive. As Pink points out in his book, in the absence of the three elements of true motivation, sometimes, extrinsic rewards can actually decrease productivity and creativity! If you’re interested in finding out more on the topic of motivation, be sure to pick up Pink’s awesome book.

Your culture has an impact on your customer service

It is unreasonable to expect your employees to deliver outstanding customer service if they are operating in an environment that is disruptive, disrespectful or divisive.

And if your customers are on the receiving end of poor service, they won’t stick around for long. Having a revolving door of unhappy customers is a great recipe for dissolving company profits. Remember, your culture has an impact on your customer service, and your customer service has an impact on your profitability.

Your culture impacts your ability to recruit and keep top talent

Your company has an “employer brand”, whether you choose to acknowledge it or not. If you have a terrible company culture, pretty soon your reputation as an employer will spread outside the walls of your business.

When it does, you shouldn’t be surprised that your industry’s top talent would rather not work with you. And if, perchance, top talent decides to try out your company for size, they probably won’t stick around for very long. If your culture is chasing away your industry’s best, brightest and most productive individuals, you could be losing out on opportunities to increase your profitability.

Your culture has an impact on your company’s ability to solve problems

If your company has any chance of maximising its profitability, you need everyone focussed on finding solutions to the operational challenges that will inevitably pop up from time to time. Not just you or your senior managers or your board of directors, and not just your bright-eyed, bushy-tailed new recruits trying to make a good first impression.

Everyone in each department should be looking for ways to cut costs, increase revenues and improve product quality. And this simply isn’t going to happen if your employees are working in an environment where they don’t feel respected, trusted or valued. If you’re feeling frustrated because it seems like you’re the only one trying to fix problems or to ‘go the extra mile’, maybe you need to dig a bit deeper and find out how your employees really feel about working in your organisation.

Culture eats strategy for breakfast

Even if you’ve got the best strategy on paper, you won’t be able to properly implement it if you’ve got a company culture where your employees aren’t interested in supporting your various strategic initiatives.

Even if you’ve got great strategic ideas, you simply can’t do it alone – you need the support of a highly engaged, highly committed team.

And this won’t happen if you’ve got a divisive culture where management and employees don’t trust each other. If you’re having challenges implementing your various strategic initiatives, it may be time to take a look at your company culture. Because any time that strategic objectives and company culture are at odds, company culture will win out.

Of course, there are many other ways that culture can have an impact on your profitability, but these five points provide a useful summary for business leaders who want to leverage their company culture to outperform their competitors.

Ron Johnson is managing director of Blueprint Creative, an award-winning branding agency specialising in brand strategy, communications, design, employee brand engagement and customer experience.