Posted On: July 16, 2019

Why Does Workplace Culture Matter?

Workplace culture is a slippery topic. Pinning down a solid definition is like nailing pudding to the wall. Because it's everything. Every choice you make creates your culture. There's only one aspect that we have persuasive data for: your treatment of employees. How you hire, manage, and motivate employees is hands-down the most critical element of company culture. It's the difference between making your mark on the world or just eking by with middling results. And the data suggests most of us are doing it wrong.

Engagement: The Magic Ingredient

For almost twenty years, Gallup has been gathering some very interesting data on employee engagement. In other words, they've been monitoring how mentally and emotionally committed employees are to their workplace. How many employees are putting in their best effort? How many are checked out? How many are so miserable that they're actively taking away from productivity? What difference do those attitudes make, and what shapes them? It turns out that cultivating employee engagement translates into big bucks. Teams in the top quartile of engagement outperform teams in the bottom quartile with:

21% Higher Profitability
20% Higher Sales
17% Higher Productivity
10% Higher Customer Metrics
24% Lower Turnover
41% Lower Absenteeism

Organizations that are the best at engaging their employees see earnings-per-share growth over FOUR TIMES that of their competitors. It makes sense. Employees that are emotionally committed to their employer throw more of their energy into their work. They innovate, problem-solve, and leverage their talents fully. They perform at a level that you'll never wring out of them with discipline or benefits. There's a degree of "discretionary effort" from employees that you can only buy with love, not money.

Invest Where It Counts

Earning the devotion of employees isn't simple. There's no magic bullet. Compensation and core benefits matter to the degree that they allow your employees to meet their needs. But they don't inspire devotion. Exotic benefits that usually top the "best workplace culture" lists might attract talent, but won't help you keep them or fully leverage their abilities. To get employees invested in you, you need to demonstrate that you're invested in them.

Discover and Leverage Their Strengths

When you encourage people to do what they're good at, they feel successful, motivated, and satisfied. You get their best work. People who work to their strengths every day are six times more likely to be engaged in their job. They're also more productive and less likely to quit. It comes down to the manager. Employees who strongly agree that their manager coaches them based on their strengths have a stunning 93% engagement rate. Strength-based management is, on a pragmatic level, efficient resource allocation. But it also fosters a very personalized management experience. Employees feel seen, understood, and valued. Not as a cog, but as a unique individual with something to offer.

Recognize Employee Accomplishments

It can be as flashy or as humble as you want it to be, but employee recognition is essential to an engaged workforce. Recognition increases engagement, productivity, and loyalty— and it lowers turnover. One global study found that, the world over, feeling appreciated at work is the most important factor in happiness on the job. Don't save recognition of the exceptional. Managers should also provide positive feedback for reliability, efforts at improvement, and smaller accomplishments. Praise means more when it's deserved, so it always should be. But nothing is more demotivating for a solid-but-steady performer than to feel like nobody notices.

Encourage Learning & Development

It's a natural human need to learn and grow. When LinkedIn conducted a workplace learning survey, 94% of employees said they would stay longer at companies that invested in their development. And yet such development has dropped precipitously in recent years. Research out of the Wharton School says:

In 1979, we spent an average of 2.5 weeks a year developing young employees.
In 1995, we spent an average of 11 hours a year.
In 2011, only 1 in 5 employees reported any on-the-job training in five years.
In 2021, 76% of millennials said professional development opportunities are one of the most important aspects of company culture.

The typical justification is that developing employees is a waste because they'll leave. But employees leave because they don't get the chance to develop. See the problem?

Provide Opportunities to Advance

The lack of development is tightly tangled with a problematic hiring trend. These days, 2 of every 3 vacancies are filled with an outside hire. A generation ago, that number was just 10%. Most vacancies were filled by internal transfer or promotion, instead. That's a huge shift. Of course, it's better to hire externally if no current employee is right for the job. But these days, we aren't even looking to promote. Harvard Business Review notes that hiring managers want to find someone who already possesses the skill set we need, so they turn to recruiters immediately. The development of those skills has to come from somewhere, but we're no longer willing to invest in potential. We want certainty. That makes it impossible for current employees to advance their careers within the company. Their only chance is to jump ship. The job-hopping we lament is just the logical result of our hiring priorities and unwillingness to grow talent.

Empower Employees

According to Gallup's research, 70% of the variation in employee engagement is directly due to the quality of their manager or team leader. And no wonder—active manager buy-in is critical to all the initiatives above. The magic of employee engagement happens when you put the right managers in place, empower them to develop employees to their strengths, and hold them to those standards. That may mean changing the way you choose workgroup-level managers. It's a specific skill set all its own, and it doesn't necessarily correlate with subject matter expertise or technical skill. Pick managers based on their aptitude for coaching and supporting a team. Then develop them, too. Provide them with the tools they need to fulfill their mandate. Make it clear that employee engagement and development is a priority.

Bottom Line

The only way to get exceptional performance from your workforce is to invest in human assets like humans. Not assets. You can rely on ready-made courses for compliance and risk management. In fact, you should—save that time and energy for initiatives that are unique to your business needs and culture. But to cultivate employee engagement, there is no one-size-fits-all solution. That's a good thing. It means not just any company can pull it off. But those steely enough to put in the work will reap amazing rewards.