Why Culture Makes or Breaks a Company

The last 18 months have shone a spotlight on one of the most important drivers of business success: company culture.

Perhaps no phrase gets tossed around more when it comes to the workplace. Companies with a strong culture know it’s an advantage. Companies with a toxic culture try to hide it. And, when considering an opportunity, talent wants to know what your company culture is all about.

During the pandemic, companies in every industry have learned the importance of a strong company culture, especially as we went from working together to working from home in a period of historic stress. This has made maintaining a strong company culture much more challenging.

Now, as employers and employees navigate a return to in-person work amid the friction of changed expectations, company culture matters more than ever. Let’s look at culture after COVID.

The power of a positive company culture

Company culture has significant power—in many ways, it’s the fabric of the social contract between employer and employee. Culture determines how employees are treated, ideas and products are developed, partnerships and alliances are forged and even how work gets done in the day-to-day environment. It’s everything you can’t see, the secret sauce that influences how everyone works together.

Simply put, a healthy, positive company culture is a competitive advantage. Think of culture as the motor driving a three-part wheel:

  • Healthy culture attracts top talent
  • The best talent fuels innovation agility and high performance
  • Company growth follows, which improves topline revenue and ultimately the bottom line (profitability)

Culture’s connection to talent and success cannot be understated. In fact, a recent McKinsey report found top performers are up to eight times more productive than average ones. This productivity advantage can help companies accelerate innovation, speed time to market and gain other advantages that lift performance and improve profitability. In the post-pandemic world, this advantage can mean the difference between resilience and failure to fully recover.

The COVID company culture crisis

We are just now beginning to see how the last 18 months have affected company culture. At first, as the pandemic and economic crises swept over the world, a paradox seemed to emerge: average culture ratings across a broad swath of companies jumped significantly, as MIT researchers found using data from Glassdoor. This seemed counterintuitive for March and April 2020, as lockdowns, the shift to remote work, and spikes in layoffs contributed to uncertainty and stress for millions of workers. Yet average culture ratings were among the highest in a five-year period. When the researchers dug into the data, they concluded the quality of communication and transparency by top company leadership helped to elevate perception of culture. Perhaps this makes intuitive sense, too, when set against the context that work was a familiar constant in crisis, even if that work was taking place in an unfamiliar environment (the kitchen table).

As time has gone on, though, new frictions have emerged affecting company culture. These include chronic stress levels and pandemic-related burnout as people struggled to change how and where they worked while also juggling significant additional responsibilities. New divides have opened between employers and employees over vaccines, workplace health and safety, schedules, and reopening plans.

The greatest friction may be over where work takes place as employers define hybrid or fully in-person schedules, just four percent of employees want to return to 100% in-person work. As plans continue for a transition to in-person work, it’s causing a spike in stress: a May 2021 Mental Health Index survey found nearly two-thirds of employees are experiencing return-to-work anxiety after more than a year of remote work.

The last year has stress-tested company culture in unprecedented ways. Now these frictions pose threats as a reset of the social contract between employer and employee looms. What can HR leaders do to protect or strengthen culture?

Building a healthy company culture

This can be a complex question to answer, but there are some simple commonalities across strong company cultures. A healthy culture is a positive one where everyone is valued and shares a common sense of purpose. Ideas and innovation are welcomed. People have opportunities to contribute, be recognized and advance. Diversity, equity, and inclusion are central to the culture, not an afterthought or a gesture for compliance or reputation.

There are some new realities to add to this list, including health and safety, transparency and openness in communication, employer empathy, and a willingness to renegotiate the company culture contract together. 

Company culture—and what we’ve learned over the last year—will be an ongoing topic for our education events and at The HRSouthwest Conference 2021 (virtual and in-person offerings). Join us to learn more. DallasHR is the third largest SHRM affiliate chapter in the nation. With more than 2,000 engaged HR professionals, the Chapter has been Advancing the Value of HR since 1939 through cutting-edge education, fun networking events and opportunities to share best practices with others in the field of HR. The Chapter powers The HRSouthwest Conference, one of the largest regional HR events in the U.S. Visit us at dallashr.org to join or hrsouthwest.com to register and follow us at #DALLASHR, #HRSWC.