Is there proof that organizational culture matters? Does it determine performance? Let’s look at the ground-breaking study of Professors John Kotter and James Heskett. They studied the corporate cultures of over 200 companies (including Hewlett-Packard, Xerox, ICI, Nissan, and First Chicago) and tracked their economic performances over an 11-year period. What they found is fascinating: your culture can enhance economic success or make you fail to adapt to changing markets.
Effective organizational culture
Organizations with strong, shared company values increased their revenue on average to 682% over 11 years. Companies without a clear culture grew to just 166% Heskett says that effective culture can account for 20-30 percent of the differential in corporate performance when compared with “culturally unremarkable” competitors.
Many researchers looked at organizational performance, using a balance of financial and non-financial indicators. Think of profits and revenue, combined with job satisfaction, the error rate, quality and customer satisfaction. Organizational culture was found to directly impact the non-financial factors that contribute to organizational performance.
According to Bersin by Deloitte, 95% of employees say that culture is more important than compensation. Gallup research claims that only 13 percent of the global workforce is “highly engaged.” More than half the workforce would not recommend their employer to peers. Gallup also calculated that engaged people are 30% more productive.
This is why employee engagement and culture are currently the number-1 challenge around the world (study by Deloitte). An overwhelming 87 percent of respondents believe the issue is “important”. Culture has been shown to impact the success of recruitment and retention, mergers and acquisitions, organizational change, and innovation.
Culture matters a lot! And it’s not just a strong culture that’s favorable. A positive culture can work wonders.
What’s positive about a positive culture?
Positive is productive. It affects the business bottom line, as research shows. Professor Kim Cameron at the University of Michigan has been researching positive organizations for years. He found that a positive climate, positive relationships, communication, and positive meaning lead to “positive deviance” or high performance.
The usual response to a problem is to go back to normal. But in a positive culture the focus is on what is working well and what people could do even better. A positive culture creates an “upward spiral” so it’s easier to achieve what is called Positive Deviance. People go the extra mile and might even surprise themselves.
Let’s also bust a myth about “positive”: it is not soft and fake-happy. Positive cultures set challenging boundaries and targets to achieve Positive Deviance! People do not get away with slacking. A fake smile is not part of a positive culture, either. People are invited to be themselves but to focus on positive possibilities whenever possible. Negative feedback is part of the game but delivered in a constructive way.
Positive leaders change what is “normal”. Instead of problem-solving and returning to the zero-line, they aim for “positive deviance”. This is what companies such as Wells Fargo, Ford, Kelly Services, Burt’s Bees, Griffin Hospital, and Zingerman’s have been doing. They show that you can create positive change in your organization through simple actions and attitude shifts – thus developing the culture, organizational performance, and employee engagement.
Ready to take action today?
That’s great, but how do you go about it? “What if this doesn’t work with my team? You haven’t met my colleagues! You should see my boss!” The good news is that all people respond to positivity, even if they seem a bit suspicious or uncomfortable when you, for instance, give them a compliment. Of course, developing a positive culture with positive leadership takes more than handing out compliments. I started the online Positive Culture Academy to help leaders and organizations focus on what and who is working well, and to develop their culture with many more tools.
However, both research and my practice with clients confirm: your first step is to notice what goes well and to mention that! Catch your people doing something right, or appreciate them for being authentic, or helpful.
Giving well-meant compliments is a sure contribution to a (more) positive and productive culture. In the research by Losada and Heaphy, the single most important factor in predicting organizational performance turned out to be the ratio of positive to negative statements! Positive refers to appreciation, support, approval, or compliments. Who do you appreciate? Tell them! A recent Accenture study states that 43% people who leave their jobs, mentioned a lack of recognition as the reason…
Kotter and Heskett showed that an effective culture adds 20-30% to corporate performance. Today, the latest research on positive organizations shows that a positive culture makes both people and performance thrive. A Positive Culture can boost performance even further than 20%. If you take culture as seriously as you’d like your results to be, you might increase by 30-40%
If you want to learn how to develop a positive culture, join the online Positive Culture Academy today. Return on investment is easy, even if you boost performance by just 10% .
- What are your examples of boosting performance thanks to a positive approach?
© Marcella Bremer, 2019. All rights reserved.