There are a number of studies that exist on how company culture affects performance and even stock returns. For example, The Harvard Business School completed a landmark study in 1992 highlighting the benefits of a performance-driven culture. Notably, stock growth skyrocketed 901% for companies with a strong culture, compared with 74% for those without the same.
(see the following table)
And the impact of culture is still relevant in today’s markets. Just this year Glassdoor.com produced study results on culture, showing that a portfolio of companies with strong cultures outperformed the S&P 500 by a wide margin. In fact, $1,000 invested in the companies ranking highly in 2009 would be worth $3,470 in 2014, compared with $2,210 for the S&P 500 group.
So I found it interesting when a prospective customer expressed shock when I answered their question about how much it would cost for her company to have a small handpicked group attend and complete my Mastering Company Culture Planning Program. This executive, like many others still struggle to understand the cost return ratio of achieving a High Performance Culture.
Even with the global research and numerous examples of companies with poor performance due to failing internal culture, investing in Culture and realising the positive impact on the bottom line is still a hesitation. The interesting thing is, for the executive I spoke about above, the investment is less than the amount it had recently cost their business to replace two talented employees, who had left because of their dissatisfaction with the culture and its performance.
Cultural Observation For Consideration
You may not be investing in your organisation’s culture in order to save money or to avoid over stretching budgets, but in the longer term, investing in mastering your culture will pay off. In the worst case scenario, ignoring culture can cost a fortune, just ask Toshiba.