Why Company Culture Matters

Various organizations, from time to time publish reports that focus on the “best” and “worst” workplaces, organizations and industries relative to employee turnover. Their reports are eye-opening but not necessarily prescriptive.

My article is intended neither to bad mouth nor to glorify, the members of these “best and worst” lists, hence, I am not using names. However, there are about 19 well-respected and esteemed organizations with median employee tenure of 2 years or less. In other words, their staff churns, on average, in 18 months or less. The first thought on seeing this data is – "How do they manage to stay in business and have a competitive advantage?" Even more surprising is the fact that there are perhaps 20, not so popular organizations, with median employee tenure of 8 to 20 years! Talk about competitive advantage!

The Problem
The trend of voluntary turnover in India has improved between 2008 and 2013 from an All Industries Average of 13% to 10%. Some of this can be attributed to a tight hiring market and the fact that many people were just thankful to have a job and hence they stuck to their jobs. However, since achieving the lowest voluntary turnover of 9.1% in 2011, it has been increasing rapidly to 11% in 2013 (according to the last available data on payscale.com) which is a real cause for concern.
Turnover Trends
Each organization has its own inside story and while it is not correct to form generalizations, we can always construct a working hypothesis and then prove or disapprove the hypothesis.

My Take on this
Hypothesis: Employee Turnover will continue to rise because employees are NOT our most valued resource.
Something to ponder upon!

  • No factory manager can expect machines to perform on their own without human intervention to maintain and periodically check their condition.
  • No employer can sell a product solely on the basis of e-commerce, one needs human resources to further take the products to the market.
  • No supply chain can solely rely on machines and also make profit out of it.

There CANNOT be any industry or organization or a segment that can do without people.

But when it comes to people, organizations usually seem to drop the ball. They say, “there is no smoke without fire” and in this case the fire is today’s “Corporate Culture”. While they could be anecdotal, stories exist in abundance on why people quit their jobs. In my opinion, neither do we have nor do we live in a culture that treats people the way we ourselves would like to be treated.

The Evidence
Read up any blog or any article by the top influencers or listen to any Management Guru or any business leader. You will find that majority of them share the opinion that people leave because they are not treated as a treasured company asset. Glassdoor.com also offers a perspective that supports this hypothesis. My research in this area is neither exhaustive nor totally scientific in nature. I searched for about 15 random companies from the Fortune 500 List, which had also received at least a thousand employee reviews. My spotlight was on the employees who had left the organization and had mentioned the “Pros and Cons” of the organization in their reviews. I overlooked certain reviews, which I thought were due to personal grudges, or had very specific job related issues. I could also see many great reviews of these organizations from both current and former employees.

Following is the list of most common reasons for employee turnover (based on this research):

  1. Poor Work-Life Balance
  2. Unfair Treatment
  3. Lack of Training Opportunities
  4. Relationship Issues/Lack of Open Communication with Manager/Boss

These are some rather compelling reasons, most of which can be addressed by leaders. In my view, all these reasons boil down to ‘Culture’. It was quite astonishing to learn that monetary compensation was not one of the top reasons for employee turnover.

The Solutions:
The internet is flooded with a million articles and blogs that offer tips on how to reduce employee turnover. But rarely does it seem that organizations actually apply those recommendations.

In my opinion, treating people in a professional manner is critical. I have personally experienced that when organizations start treating their people with respect and dignity, they are more likely to stick with the organization for much longer and also be much more productive at their jobs. The following are some of the ways to lower employee turnover at the workplace:

  • Hire the right people: Carefully interview and vet candidates. Use psychometric assessments for recruitment, not just to ensure that they have the right skills but also to ensure that they fit well with the company culture, top management, supervisors and colleagues.
  • Offer fair compensation and benefits: Managers must work with Human Resource Department to get current data on industry pay packages, get unconventional (when need be) with benefits, bonus, flexible work schedules and appraisals.
  • Review compensation and benefits packages in a timely manner: Managers must make sure that they review compensation and benefits package at least once a year. They must pay attention to the trends in the marketplace related to the same.
  • Address employees’ personal needs: Pay attention to employees’ personal needs and propose more flexibility where possible. (E.g.: Facilities like work from home, compressed work schedules, on site or back up day care for employees’ children).
  • Create a friendly and rewarding work environment: Reinforce positivity by continually treating employees with dignity and respect. Recognize employees’ efforts and reward them from time to time. (Rewards can range from monetary gifts to verbal appreciation or public recognition.)
  • Plan challenging career paths: Help employees know how they can grow in the organization and how they can achieve the next career move. Encourage employees to approach their respective managers with career advancement queries and desires throughout the year.

In the end, it is all about Culture. Ask yourself what is your ‘Corporate Culture’? Is it only a few placards of your organization’s mission, vision and values pinned on the wall or do leaders live by them every day? Ponder upon how LIVING the right culture might influence your organization.


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