Investopedia defines a business asset as ‘an item of value owned by a company’.
It gives examples of tangible goods such as vehicles, property, computers, office furniture, and intangible assets, such as intellectual property. It does not list employees as examples of intangible assets. No wonder then that when entrepreneurs are asked about the greatest assets of their company, they mention their products, their clients, their offices. If employees are even mentioned, they rarely top a business owners’ list.
It is only when you ask an entrepreneur: ‘What is your company without its workforce?’ that the realisation comes and panic shows in their eyes, and then they admit that they did not think about it this way. The Value of Company Culture is too often underappreciated.
And it is most regrettable because if they did, then they would have drawn a greater benefit from their employees. This is because an engaged workforce is 17% more productive. Loyal and passionate employees bring as much value as loyal clients. The truth is that customers’ satisfaction depends on employees’ satisfaction. So, unhappy employees can lose a business its clients. Unhappy employees do the bare minimum, unappreciated employees simply leave. Various research and surveys consistently show that over 50% of employees are actively looking for a new job. What the entrepreneurs often forget is that employee retention saves business costs and time.
So what would encourage employees to stay, be loyal and devoted?
A survey carried out by LinkedIn in 2018 revealed that most employees do not care about cool perks like office food, game rooms or a gym. What is more important to them, is that they have the possibility of paid time off and work life balance. These findings are in alignment with Maslow’s hierarchy of needs shown in his famous Pyramid of Employee Satisfaction. These findings also show that what is most important is the company culture.
Company culture is the company’s greatest weapon
Company culture impacts on employees turnover. This in turn impacts on a company’s productivity. The lower the turnover is, the less time needs to be spent on induction and basic training and this time can be spent on improving the quality of goods and services and employee training. The quality of the company is determined by how it treats employees and others. A study carried out by Columbia University shows that staff turnover for a company with a good culture is 13% whilst for a company with a poor culture such turnover is 48%.
The elements of company culture
There are three vital elements that constitute company culture:
- Core Values– they shape company’s culture, they are like a company’s DNA. They have to be considered, set and followed.
- Company Mission– this is a statement that explains why the company exists.
- Company Vision– this is a statement of the company’s goals and direction.
These statements have to be thought over by the founder or the board, they have to be a true reflection of the reasons why the company does what it does and what it wants to achieve. They have to be put in a document and shared with the employees. There is no point in drafting fancy statements and hiding them in a drawer. The point is to believe in these statements and never lose sight of them. The reason to share them with employees is that, firstly they are the part of the company and they co-create its culture, and secondly for transparency and employees’ involvement. Not only will the employees be happy to be a meaningful part of the company instead of a nameless clog in a corporate machine, but also it is vital to ensure that everybody is on the same page and moves in the same directions. Only then can a company make steady progress towards its goals.
Start building the Value of Company Culture when you hire
In order to make company culture come alive, you should start at the hire level. The core values should be included in the job description and discussed at the interview. A candidate should be asked about their views on company values in order to ensure that they are aware of the values and that they share similar views.
Existing employees have to be reminded of the values, mission and vision and actively engaged in order to impact the value of company culture. They have to be reassured that their opinion counts and that they contribute to company culture. A good example has to come from the top. Transparency is key. Even if a company is in trouble, it should share the information about its direction with its employees. Very often employees are aware that things are not good but because of lack of information, they are afraid of the worst and very often start looking for a different role automatically losing interest in their current role. This is especially true in the current time when fears of redundancy are unfortunately very real.
Involving employees is very important but what needs to be remembered is that people and processes keep the company running. So the procedures, policies and contracts are of paramount importance. They silently help an entrepreneur operate the business vehicle. They keep the engine room of the company running smoothly.
Whilst we tend to work longer, the workforce becomes more varied when various generations mix and work together. Their needs have to be tended to and different interests have to understood and cared for. This has to be combined with an increased use of Artificial Intelligence and people’s varied understanding of AI and relative fear of what it can bring. A company with good culture will tame these fears and differences and successfully combine and use AI alongside the people in a company that remains humane and good to work for.