How Workplace Culture Leads to Business Success

An average person will spend 90,000 hours across their lifetime working. So, it’s no surprise that people want to spend this time in an environment that makes them happy. According to Deloitte, there’s a correlation between employees who are happy and feel valued, and those who say their organisation has a clearly defined and ingrained culture. And with 94% of executives and 88% of employees believing that a distinct workplace culture is essential to business, it’s not a stretch to say that the success of your business hinges on it’s culture.

We spoke to Michael Stone, founder and CEO of Holistic Services Group, one of Australia’s largest providers of wellness services to the corporate and SME markets, and Tom Walley, General Manager of Corporate Traveller, for their insights into how to create a thriving workplace culture and why you should.

Why is workplace culture important?

A workplace’s culture is made up of the values, attitudes and belief systems that the people within a workplace share. According to the Harvard Business Review, workplace culture is crucial as it acts as the guide for discretionary behaviour, like how to respond to unusual service requests and whether to raise issues or keep them concealed.

But your workplace culture can impact more than your staff, with your financial position also being affected, says Michael: "Having a good workplace culture in place can have significant financial benefits for a business, while conversely a toxic culture will increase costs and reduce profit.”

Toxic workplace culture will increase costs in several ways:

  • Higher recruitment costs. Staff are more likely to leave a toxic workplace, resulting in more time and money spent on recruiting and training staff. “It’s your best staff that are most likely to leave because they're the ones that will find it easiest to get another job. You’ll be left with the least employable staff and the staff that are causing and benefiting from the toxic environment,” says Michael.
  • Lower productivity. “High turnover also means a loss of corporate memory, which translates into lower productivity,” says Michael, while the time lapse between an employee leaving and a new one starting and being trained can be a period of reduced productivity for the company. The employees that remain may stop caring about whether the business does well or not, and you may even get spiteful or malicious behaviour designed to sabotage the work of other employees.  
  • Higher rate of sick-leave. Employees who hate being in their toxic work environment are more likely to take fake sick leave and take sick leave for minor illnesses. “Toxic work cultures often produce higher stress and thus more stress-related sick leave,” says Michael.

Good workplace culture breeds success

Rather than focussing on success first, prioritising culture in your business will help to set you up for success. Companies with a positive workplace culture will be more innovative and able to change to meet new challenges, says Michael: “Employees want the business to succeed and to improve. They adopt the corporate mission as part of their own personal mission and enjoy the challenge of fulfilling that mission.”

This view is echoed by Tom, who says that empowerment is at the core of culture: “An ownership culture gives people the respect to make their own decisions. Our people feel a sense of ownership; they refer to this as ‘my business’ not ‘my job’,” says Tom.

Ironically, part of Corporate Traveller’s culture – and an element that contributes to its success – is failure.

“We encourage our people to have a crack, even if it fails. This is our way of saying 'despite a failure, support is there, and we'll keep helping'. If people feel that their ability to try something out is recognised, they’ll stay,” says Tom.

And Corporate Traveller’s staff retention rate of 94% is a reflection of a culture that’s working, for our people and customers: “Longevity generally breeds success; that's how we retain customers because the relationship is with a person – the Travel Manager – not a brand," says Tom.

Even though staff departing an organisation can mean a loss of corporate memory and a period of unproductivity,  culture doesn't have to die, says Tom: "The elders of our organisation have passed down our workplace culture, and it becomes our responsibility to continue it. Promoting culture from within helps to keep it alive.”

Top five ways to improve workplace culture

Whether you have a strong legacy culture to continue or your culture needs some fostering, consider these five areas to improve your workplace culture:

1. Reduce conflict

“Conflict is the most toxic ingredient in a workplace, and your top priority should be to identify its sources so that you can minimise it,” says Michael.

Solutions may include defining job roles clearly, one-on-one coaching, team bonding, teaching communication skills and opening lines of communication throughout the organisation’s hierarchy.

2. Improve communication

There are two types of communication that you need to consider: procedural and personal.

Procedural communication encompasses the way information flows through your organisation. Consider whether the appropriate information is getting to where it needs to be promptly. If it's not, look at what procedures or guidelines might be blocking the flow. A new process might need to be put in place, says Michael: “Having an open-door policy and 360-degree feedback are two good ways to improve procedural communication.”

Personal communication is about how people speak with each other. It’s especially important that team leaders have the right tools, such as how to communicate with their team and to convey feedback in a way that doesn’t alienate team members, says Michael: “All staff should be trained in effective communication techniques, and some team leaders may benefit from one-on-one coaching.”

3. Develop the capabilities of the management team

Things can go downhill very quickly if team members perceive that their team leader is incompetent. For example, the most competent team members may become resentful that they’re not the team leader and may lose motivation or actively work to sabotage them.

“It’s important that you train your managers in the skills that they need to succeed; this includes people skills, not just technical skills. Sometimes a manager is technically proficient but is hyper-driven and over-stressed and will benefit from some wellness coaching to help them relax a little so that they don’t unnecessarily pass their stress onto their team,” says Michael.

4. Increase staff morale and co-operation

“A team that works well together can accomplish more than a bunch of isolated individuals. People like to belong and to be part of a team. They will sacrifice more for the team than for a room full of strangers that they merely sit next to, day after day,” says Michael.

Team bonding workshops are the most obvious way to give your team a memorable experience of interacting positively with each other. They break down the usual barriers to communication and open doors to closer relationships and friendlier communication.

5. Grant some autonomy

“Employees are more positively engaged and experience less burnout when they have a choice in what tasks to do and when to do them,” says Michael.

Unless things must be done at certain times and in a specific order, try relaxing the grip and allowing more job autonomy. You may need to experiment with how much freedom you can enable and what works best in your particular workplace and for each individual employee.

Make ‘doing’ part of your culture

Businesses with a good workplace culture will not only enjoy the benefits of reduced recruitment costs and higher productivity, but as Michael says, they’ll put themselves in a good position to succeed: “They will be more innovative and able to change to meet new challenges.”

But when it comes to improving the culture of your workplace, the first challenge may very well be walking the walk, says Tom: “The biggest failing is talking about it but not doing it.”