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The Undeniable ROI of Company Culture

Oct 20, 2014 3:22:39 AM
By TPD

in Creating Your Dream Team 101, HR Trends

When management fails to see the value in spending time and resources on company culture initiatives, HR professionals are given the opportunity to convince the naysayers that company culture is not a meaningless program, but instead a critical driver of business success.

Several studies demonstrate the direct relationship between company culture and improved business performance. One of the earliest studies was done more than 20 years ago by Harvard professor John Kotter and co-author James Heskett. In studying and comparing the performance of organizations that made company culture a key aspect of their strategy and those that did not, they discovered that the difference was both surprising and significant. They discovered that for companies that focus on company culture:

  • Revenues increased four times faster
  • Job creation rates grew 7 times higher
  • Stock prices increased 12 times faster
  • Profits climbed 750% higher
  • Net income grew 700%
  • Customer satisfaction doubled.

Specific initiatives implemented during a company culture change produce higher ROI than others. Research from Success Profiles revealed that businesses that excel in the areas of communicating their vision, mission, and values saw profit per employee increase from $7,802 to $27,401. Those that focus on engagement and feedback see revenue growth jump from 18.6% to 113.1%

Another surprising fact is that companies in high turnover industries such as lodging, hospitality, and call centres, experienced even better results. For example, the Ritz-Carlton, has less than a quarter the employee turnover that other hotels do. 

The notion that happy, engaged employees create customer satisfaction and higher profits isn’t new, but it has been slow to catch fire. If you have wanted to make company culture a central focus of your business strategy, you now have the facts to support your decision. If you need to convince others, show don’t tell. Use the facts to support your business case and educate colleagues on the value of your project.



For a more in depth look at developing your company culture and employer brand, access TPD's Employer Branding 101 resource below for FREE!
Free Guide: Employer Branding 101

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