Culture has definitely moved to the front burner in the corporate mindset. Almost every article and comment regarding the workplace is, directly or indirectly, a comment on culture—what works, or not; what’s needed, or not. Want to innovate? Change the culture. Increase retention? Fix/keep the culture. It’s a case of ignore culture at your peril for Boards, CEOs, executives and managers at all levels. Keeping people (customers, employees and investors) is the key to sustainable success and culture is one of the main reasons that people join/buy/invest in a company—and its demise is a major reason why they leave.
Think of a tripod, with customers, investors/stockholders, and employees comprising each of the legs. Over-favor one leg and it will get too long, ignore another leg and it will shrink, but the end result is the same—the tripod tips over.
Two of these legs have long alternated as management’s approach du jour, the much hyped “customer is king” and “maximizing shareholder value.” The idea being that concentrating completely on one leg or the other would assure success. Worse, the third leg, employees, has generally been ignored. It is the shortest, scrawniest, and weakest leg of the tripod because the prevailing attitude has been either that people could be bought and replaced as needed; or that their paycheck was of such importance, and their insecurities so great, that they would tolerate any environment or treatment in order to keep their jobs.
However, (as they say) the times they are a changin’, in part, thanks to Frederick Reichheld, who’s written numerous books on the economic effects of loyalty, and shown in carefully researched studies that a 5% improvement in retention translates to a 25%-100% gain in earnings. (Loyalty Rules). Loyalty happens because people like the stuff the company says it believes in, and that stuff is embodied in its culture. In other words, good culture pays!
Another major change for companies in terms of its employees is the changed mindset regarding what used to be called “job hopping.”
- Generation Y thinks nothing of having “several jobs in their first five years out of college.”
- Generation X grew up amid the corporate upheaval of the eighties and nineties, which resulted in a willingness to change jobs with a frequency unheard of in the past.
- The Boomers have learned from their children and are far more willing to change, too.
- Demographics are killing business—starting with the Boomers putting off having children and Gen X and Y waiting longer, too—there is a shortage of people, skilled or not.
For everything that’s being written regarding creating good, let alone great, cultures you need to start with the basics:
- Open, honest, constant communications
- Never kill the messenger
- Accept and act on input from all levels
- Walk your talk
Sure, there’s tons more you can do, but I guarantee that if you do only these four you’ll enjoy a quantum leap in loyalty.