How does Company Culture Impact Performance?

Rachel Antrobus, Fahrenheit Finance Senior Consultant September 4, 2013

Company culture can be hard to change. But startup companies possess a distinct advantage – they can proactively create and build their desired culture from the ground up.   How important is it?  Important enough that many institutional investors believe company culture trumps even strategy as a harbinger of long-term success.    In turn, this reality has forced many new companies to focus on a key question:  How does culture impact our performance?

Gallup’s 2013 State of the American Workplace report found that 70 percent of workers are either “not engaged” or “actively disengaged.” As a result, startups know they must create the thriving environment and near cult-like atmosphere of the Fortune Best Companies to Work For in order to attract, motivate, and retain the high caliber employees needed to grow their businesses in the highly competitive marketplace.

So what is the definition of company culture? The simplest definition I hear repeated is that company culture is “the way we do things around here.” Clearly, this definition suggests that, when it comes to culture, what is right for one company may be wrong for another. Your company’s vision or mission statement should encompass your intended philosophy and values, but the true test lies in how you execute and embed those values into your operations.

The state of business has passed the days when company culture was fashioned by a checklist of items around the office (Ping pong table?  Check!  Annual company outing?  You betcha!). Letting your employees dress casually and bringing in lunch occasionally builds some minimal support, but such measures do not encompass what the business is about, what it intends to do, and how it plans to do it.

Here are three mileposts on the road to an effective company culture:

(1) Leadership – A common cause for the discrepancy between a company’s desired culture and its cultivated culture is company leaders not “practicing what they preach.” Check for indications that leaders’ actions match their words. If they don’t, there is likely a disconnect between what is said to be important and the informal rules made clear through leaders’ actions and decisions. Such inconsistencies can undermine leadership credibility and employees resort to following what they observe or what they surmise will work.

(2) Accountability – Leaders are not the only ones who must fight for company culture. Operations of the company must be aligned with the company’s vision in order for the company culture to survive. Who gets hired, who gets rewarded, who gets promoted, and who gets fired are the output messages to your employees demonstrating your culture is stable, strong, and moving forward. Holding employees and leaders accountable for not only what they accomplish but how they get there is a key ingredient to supporting a company’s mission.

(3) Communication – Knowing how your employees feel about your organization and their perception of the company’s execution of its mission is crucial information to create and control your company culture. Annual surveys are great (especially if employees are highly encouraged to be open and honest with their views), but with the quickly evolving and fast paced nature of a startup, creating an environment for frequent, low pressure communication is essential. People will always act differently in a conversation with a supervisor at a conference table than they would with a friend at a bar. You want to know the bar chatter! The real stuff! Creating an environment where employees feel comfortable to express what they perceive and give their best, honest suggestions to management will provide leaders the feedback they need to confirm if they’re on the path to achieving the culture they intended and possible suggestions on how to change direction if they’re not!

It only takes a few people rowing half-heartedly, or out of time, or even in a different direction to halt all progress of the boat trying to cross the lake ahead of rivals. When leaders and employees of the company are in sync and rowing in the same direction, the company will feel the momentum of what a cohesive culture can do for its company’s growth and success.

Rachel Antrobus is a Senior Consultant with Fahrenheit Finance, LLC.   She is a CPA with both Big 4 public accounting and private industry experience in an extremely high growth company.  Rachel has hands-on experience challenging and restructuring accounting and operational teams at multiple national and international locations to support a company's rapid growth while improving accounting operational efficiencies via process automation and increasing responsibilities of team members. In her last position, Rachel played a critical role in the company's transition from a single product line retailer (with 27 employees when she arrived), to a multi-product line manufacturer (with over 500 employees.)

To contact Rachel about your business and ways to improve the efficiency of your accounting and operational processes, call 804-955-4430 Or email rantrobus@fahrenheitfinance.com