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The Key Drivers Of Company Culture

Red Rocket previously wrote about how to create a good company culture. But, a research report on the topic from The Alternative Board (“TAB”), included a lot of quantifiable and actionable items around building a good company culture. There were a lot of gems in the data collected in their small business survey, which are shared below.

Summary of Sample Studied

TAB interviewed 100 small businesses in gathering the below results. Approximately two-thirds were B2B companies and one-third were B2C companies. They came from a wide base of industries, where professional services (31%) and manufacturing (29%) made up the majority. Their mean business age was 14 years old and their mean company size was around 25 employees and over $2MM in revenues. Which probably describes a lot of you reading this article—either today or where you see yourself in the near future.

What is Culture and Who Drives It?

When you think about culture, most people are thinking about: management style (39%), employee experience (30%) and company reputation (18%). Which are most impacted by: business owners (45%), business executives (23%) and the employees (21%). Where 63% say business owners are the MOST important driver here, not executives or employees (which is a little surprising, as many owners are not often visible within the company).

What is the Outcome of a Good Culture?

Driving a good culture empowers people (43%), delivers business results (25%) and promotes good teamwork (22%). And, the benefits therefrom include: shared goals between management and employees (47%), connecting employees to its customers (24%) and fosters a collaborative environment (18%). Which in turn, drives productivity (39%) and improves morale (39%).

It All Starts With Recruiting . . .

It all starts with hiring the right people who fit your culture, right from the start (91%), as it is difficult to get people outside of your desired culture to change. When recruiting employee candidates, you can best assess their fit for your company culture through: personal interviews (91%), employee feedback (64%), observing their interaction with staff (56%), calling their references (49%), hiring on a trial basis first (43%), reading their social media conversations (42%) and having them take a personality test (37%).

. . . And Knowing What is Most Important to Employees . . .

Employees are motivated by having trust in strong leaders (44%), more transparency around key issues impacting the business (21%) and more control in their day-to-day decision making (21%). Employees are most interested in enjoying their work environment (91%), being mentored (90%), having advancement opportunities (83%), getting training and continuing education opportunities (80%) and flexible work hours (66%). At the time of the survey, only 30% thought telecommuting, working from outside of the home office, was important here. But, that was before COVID, and that number may have increased since then, with people getting more comfortable working from home.

. . . And Not Letting Key Hurdles Get in the Way

The key obstacles and challenges to driving culture are: making sure you practice what you preach (43%), maximizing culture and profits at the same time (34%) and trying to make everyone happy, which is nearly impossible (18%).

Measuring Culture is Critical to Success

Like with any business decision, you can’t manage what you don’t measure. So, you need to be measuring your company culture, to make sure your company culture is improving towards desired outcomes. The companies in this study that had a strong culture, had a net promoter score (NPS) of 8.4 (out of 10), based on employee feedback about their company. The companies that had a weak culture, had an NPS of 6.2. With the average company having an NPS of 7.4. So, if you are below 7.4 when you test your own employees, you most likely have a culture problem on your hands.

Hopefully, you will agree there was a LOT of great data coming out of this TAB survey. Be sure to incorporate these learnings into actionable strategies within your business. 

George Deeb is a Partner at Red Rocket Ventures and author of 101 Startup Lessons-An Entrepreneur’s Handbook. For future posts from George, please follow him here or on Twitter at @georgedeeb or @redrocketvc.

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