Several studies confirm the correlation between a company’s culture and financial performance, employee engagement and ultimately customer satisfaction. In saying this, business performance can largely be seen as the product of the cultural environment that surrounds it.
Healthy company cultures are certainly not homogenous. Numerous studies demonstrate that higher company performance and innovation comes from companies that allow for the freedom to take risks, that communicate effectively and are able to be flexible.
These companies also tend to perform substantially better than those that don’t display these cultural traits.
1. Risk Taking:
This single cultural trait has proven to have the largest impact on employee performance. Risk taking can be described as a culture in which the employer provides employees with incentives and encouragement to work on new ideas despite uncertain outcomes or initial failures. Studies have shown that risk-tolerant cultures have a direct effect by encouraging employees to push themselves beyond boundaries, leading to employee performance improving by up to a whopping 39%.
Further studies show that employees working in a risk-tolerant culture are 46% more committed to their company, and feel 33% more closely matched with their jobs than employees in non-risk tolerant companies. Employees are also prepared to put in at least 18% more discretionary effort than employees in non risk-tolerant companies.
2. Internal Communications:
Internal communications have shown to have a very powerful impact on employee performance. A culture of internal communication that is characterised by frequent and effective communication, not only top-down, but between peers and across the company, is a key driver of individual and company performance.
Increases in discretionary effort of up to 17% have been recorded, leading to potential company performance improvements of up to 34%.
Flexibility in this context, speaks to a culture of continually adapting to change and a strong commitment to process improvement. At the core of the flexible business is the ability of its owners/leaders to recognise what changes are needed, figure out how to implement them, and then execute them quickly. The critical task for owners/leaders is to acknowledge the skill sets of your employees and listen to what they and customers say – and then improve those skill sets if need be.