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Why You Can’t Afford Not to Invest in Your Business’ Culture

It would be fair to say that “culture” is one of those terms that plenty of people in business use, but if you scratch below the surface as to their level of understanding, it is generally no more than a cliché. For those professionals, its limited to – ‘the way we do things around here’, ‘what we do when nobody is watching’ or ‘in order for me to fit in I am expected to…’. Ask a supplementary question like ‘what does that actually mean?’ and you’ll likely be met with either a blank look or a repetition of the previous statement.

Defining Workplace Culture

As a starting point, let’s understand what organisational culture actually is. The offerings mentioned above are actually correct, but understanding culture requires you to dig deeper to fully understand the sum of all the moving parts and what contributes to it. Organisational Culture is about the organisational personality. It is the signs, symbols, structures, processes, values, and behaviours that define, determine, and dictate how people within an organisation interact with each other, and with customers and stakeholders. This is incredibly significant, and one of the most important things to get right in any organisation or any size. Particularly when you consider how vital culture is to all aspects of a business, and how it impacts the financial performance of the organisation.

Organisations with ‘Great Cultures’ generally have enthusiastic and engaged staff who rarely think about leaving, because it is a great place to work. Customers remain loyal and are avid advocates of your business and what it does. Organisations with ‘Poor Cultures’ don’t always struggle, but they definitely fail to realise their full potential. Their poor culture can bring about further consequences, be it for the organisation’s performance, staff experience or customer experience.

And therein lies part of the problem. Organisations with poor cultures be performing well from a financial perspective. But how is that possible? Doesn’t poor culture lead to poor performance?  Generally, yes, however rules do often have exceptions. An organisation may be in the fantastic position of operating in a Monopoly or Oligopoly, provide an essential service, or have a business that is so successful that it is so in spite of its culture. It is worth noting, however, that those organisations are fairly rare.

In the main, if the culture of an organisation is lacking in quality and investment, the costs in terms of its people will be significant. If the staff experience is poor, they will often pay it forwards to customers, and without customers you don’t have a business. So, given how important Organisational Culture is, why is there a lack of investment?

Addressing a Lack of Culture Investment

Lack of Understanding: As mentioned previously, there is generally a lack of understanding of what organisational Culture actually is, let alone whether an organisation’s existing culture is good or bad. Additionally, if organisations did have a level of interest, it can be hard to know what to do to find out either way. This often prompts business leaders to resign to the fact that they don’t understand it, they don’t know what it is, or they don’t understand the impact on their business – so why would they spend money on it?

Accompanying a lack of understanding of what culture is (or what it does), is a lack of understanding of the financial benefit of a good culture, versus the financial downside of a poor one. Individual decision makers often don’t understand or don’t know, and as ignorance is bliss, the status quo remains.

Affordability: For some organisations, a lack of culture investment relates to a perceived affordability issue. Note the deliberate use of the word “investment” when referring to culture, as opposed to cost. If you are managing your culture, it should be viewed as an investment in the future success of the organisation. And yes – culture change programs can be expensive and take time to realise results, not to mention the significant amount of effort and resources, taken away from business-as-usual. They don’t have to be that way, however, and cost-effective solutions do exist. You just need to know what you are looking for, and where to find it.

Additionally, most organisations will embark on a culture program, for a specific period of time, due to cost pressures. This may be a 3-year program or an intervention that may provide some early changes and benefits. But it’s critical to understand that Culture is a thing that lives, breathes, and changes daily, and therefore if someone isn’t attending to it or managing it, it can morph very quickly into something different. Similar to behavioural change, culture change can be like an elastic band, in that whilst we focus on it and stretch it, we start to see change. Lose that focus or attention, and things will likely just snap back to the way they were.

Competing Priorities: Organisations always have competing priorities, a full schedule of projects to deliver or other initiatives considered more important than improving their culture. Once could content, however, that there are very few things within an organisation more important than culture. In fact, an organisation’s culture often has the largest impact on the the success or otherwise of its competing priorities.

Businesses with a poor culture will struggle to attract and retain resources. If you don’t have resources, you can’t deliver, and if you can’t deliver, you lose the lifeblood of your business. If you believe you can’t focus on your business’ culture because of competing priorities, consider reviewing how priorities are being set, and by whom.

“Our Culture is Good Already”: If you have a lack of understanding of what culture is, including the individual factors that influence it, how do you know how you built a good business culture? And if you haven’t been managing it, it’s difficult to take any credit if it materialised organically, as opposed to something built and managed consciously over time.

Furthermore, you may have a good culture today, but remember it is a living thing. As such, you are only ever one bad hire, a bad decision, a complaint, or a poor customer experience away from this being challenged. Organisations with a good culture will generally understand it, know what it is, measure it, know the myriad of moving parts that contribute, and continue to invest in it. This is because they know the benefits it provides, and the potential for problems if they take their eye off the ball.

Perceived Lack of Value: In many organisations, if there is a lack of understanding about what culture is, and it can’t be seen or touched, the question tends to be – “Why should I spend money on it?”. Many business leaders instinctively demand specifics on what the ROI will be, or where it appears in the P&L, as other competing priorities that require investment can demonstrate more immediate and tangible financial value. If an initiative can demonstrate value and a return on my ROI, it is likely that a business will fund that in favour of something that can’t be seen or touched.

But what is the cost? In almost all cases, an organisation with a poor culture will be failing to realise their full potential. The challenge in many cases is that the management and executive teams are unaware of where that potential is being lost.

Wrapping Up and Moving Forward

We often talk about the hidden costs of a poor culture being increased staff turnover, lack of engagement, loss of productivity, wastage, ineffective communication, poor decision making, or loss of customers, amongst other things. Additionally, we would challenge any CFO or member of an accounting or finance team to find a line item where these costs are specified. Hint – there isn’t one. These hidden costs are sprinkled in various places throughout the P&L.

You just need to know what you are looking for, and where to look.

In summary, organisations may feel that they can’t afford to invest in their culture for a number of reasons – all of which make imminent sense to them. But as we often say, people don’t know what they don’t know, and they can’t be expected to be experts in every field.

Leadership Change Solutions (LCS) are the experts in the field, and would contend that organisations cannot afford not to invest in their organisations’ culture. Just because you can’t see or touch it, that does not mean that it isn’t real, and it might be costing you in more ways than you think. LCS partners with individuals, teams and organisations to Lead, Collaborate and Transform for competitive advantage. LCS is an organisation change and leadership development agency that believes engaged, inspired PEOPLE are at the heart of great organisations. Successful teams collaborate and innovate, guided by leaders that inspire and empower.

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