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Company culture is the top driver of business performance, according to the latest research.
The link between company culture and financial performance has seen a significant boost in consideration for leaders over the last few years.
Chief executives have highlighted culture as the number one factor that positively influences financial performance, according to the Aligning culture with the bottom line: Putting people first report by Heidrick & Struggles. In 2021, just 26 per cent of CEOs agreed.
“Company culture can no longer be separated from business strategy,” explained Gaby Riddington, partner and consulting lead at Heidrick & Struggles Australia and New Zealand.
“Rather, it must be positioned at the core of any organisation. When properly implemented and consistently maintained, culture can lead to significant financial returns. Our report reveals that investing in your people will better position your organisation to succeed in today’s volatile market.”
According to the data, in Australia, 98 per cent of CEOs agree that company culture improves retention rates, and another 92 per cent are putting in work to improve their workplace culture.
Retention is the main goal when implementing this policy, and 52 per cent of CEOs said that improving company culture is the best way to achieve this. Other strategies include flexibility in work locations at 44 per cent and compensation and benefits at 40 per cent.
Tonny Loh, partner and consulting lead at Heidrick & Struggles Singapore, commented: “CEOs in the region are increasingly placing a spotlight on their people and how they work together.”
“It is clear that culture has a positive influence on business and talent management strategies, employee retention, and financial performance. All thriving cultures begin at the top with purposeful leadership, as the model of the leader affects the entire organisation.”
Sixty-nine per cent of CEOs have listed direction and purpose as the top factor driving culture, up from 37 per cent in 2021. Other factors were agility, innovation, and growth mindset at 57 per cent and a positive spirit and vitality at 46 per cent.
The benefits are not purely financial, with half of Aussie CEOs claiming that increased attention to company culture has improved diversity, equity, and inclusion (DEI). Another 48 per cent have said that engagement has increased, and 40 per cent said that organisational purpose has been boosted.
In the post-COVID-19 era of work, employees have the upper hand in the talent market and will use this to their advantage to find a job that aligns with their needs and wants. If employers are to attract and retain talent while remaining relevant, company culture should be a top priority.
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Your organization's culture determines its personality and character. The combination of your formal and informal procedures, attitudes, and beliefs results in the experience that both your workers and consumers have. Company culture is fundamentally the way things are done at work.
Jack Campbell
Jack is the editor at HR Leader.
