Question

A concern is sometimes raised that, by focusing on issues such as culture, companies may lose sight of “the bottom line.” How might failure to pay attention to organizational culture and related issues harm a firm’s financial performance?

Answer 1

Organizational culture may be defined as a set of common values, beliefs, behaviours and ideologies of working and interacting that result in working environment - social & psychological for all stakeholders particularly the employees. Organizational culture is found to be critical factor in talent attraction, retention, performance as well as attrition. Since organizational culture encompasses softer aspects of management, it requires long term investment from the leadership to create, percolate and sustain. Organizational culture is essential as it has direct effect on the bottom line in long run. Some of the ways in which this happens is as follows

1) Performance: Positive work culture sees employees with high morale and motivation in their day to day work, resulting in better output and results for the organization. This directly reflects in as better customer satisfaction, higher profits and better bottom line

2) Organizations where the culture is positive has lower absenteeism, less attrition, more self-directed teams and lesser need to be monitored. Employees working in such organizations normally have higher levels of commitment and ownership. This lowers down the wastage and leads to manpower cost optimization, again contributing directly to bottom-line.

3) Employees working in such organizations are likely to be happier and less stressful. A good work culture has an aspect of work-life balance, wherein the employee as well as his/her family has a more enriching experience. The physical as well as mental health of employee is also likely to be positive.

4) Culture also defines how employee interact amongst themselves and with the customer, and hence a good culture help build a positive brand image for the organization. This in turn creates more sales and goodwill again helping the bottom-line.

5) Most importantly a positive work culture creates a common ground amongst people of various backgrounds to create an alignment of various functions and departments so that they synchronize to yield organizational objectives.