4 Reasons Why Culture Matters to Business: Part 1

The Oxford Dictionary defines culture as, "the customs, arts, social institutions, and achievements of a particular nation, people, or social group."

Take a close look at that definition again. Does anything interesting jump out to you as a professional? Would you be surprised to learn that all businesses are also "social groups"?

It's true!

In fact, a business is also a social group that has a distinct culture that is uniquely its own. Should this information excite a startup's leadership team?

You bet it should! Why?

Because if one extends the logic out just a tiny bit, one can easily start to recognize an organization's culture for what it truly is - a powerful tool to differentiate a business within the market. And when a business is able to differentiate itself, it is better equipped to be able to stand out from the competition pack... and become memorable.

The truth is this: culture matters to business in very powerful ways!

Here are the first two reasons why culture matters to your business:

1. Culture Helps to Conquer the Attrition Challenge

Once upon a time, in a bygone era where pension plans were much more common than they are today, it was not unusual for employees to lock in with a company and stick around until retirement. Throughout those long years, an employee's understanding of their employer's business would grow significantly.

This insight came to be known as "institutional knowledge."  It was - and is - very valuable to an employer. When an employee leaves a company, he takes all of his knowledge with him out the door. This creates a vacuum where previously understood processes, practices, insights, policies, and strategies that belong to someone else are suddenly not there.

This is a knowledge continuity gap.  And it's costly to a business.

It can cost up to 50% of an entry-level salary to replace a worker at that stage, while the replacement cost for a mid-career employee can run roughly 150%. (1) Remember: when you replace a long-time employee - one with large amounts of institutional knowledge - it takes time to train someone new and to bring that replacement up to the speed of the person she is replacing. It's an implicit cost.

Cultivating an enticing culture can reap rewards, especially with Millennials who became the largest working cohort group in the United States in 2015 for the first time. TalentCulture.com argues that Millennials find it easy to quit jobs that they don't connect with easily or at all. In fact, Millennials "long for meaningful work," (2) and will stay with a company that provides such an environment.

Forbes writes, "Over 75% of Millennials wish their manager was more of a coach." While the word we see here is "coach," what they are wishing for is a manager who delivers a culture from which they can be inspired. (3)

Help connect the dots between a meaningful culture and your organization's goals. Do this and someday you'll likely discover that your Millennial workers are sharing their hard-earned institutional knowledge with future cohort hires in the years to come.

2. Culture Drives and Motivates Employees

Sometimes when "culture" is brought up in business, it can admittedly come across as a "soft skill" with seemingly little real-world value beyond a few good feels, and perhaps a pat on the back for a job well done.

In truth, however, it's not a soft skill at all. Culture can and does impact employees' drive and motivation.

Harvard Business Review recognized 3 "good motives" of culture that can impact employees' drive and motivation for the better.

First: "Play" - This motive drives an employee because she simply enjoys the work, which in itself drives and motivates her to achieve.

Second: "Purpose" - This motive encourages and drives an employee because he connects with the outcome of the work and derives value from it.

For instance, in the BPO industry, a content moderation worker can often times find purpose in being the Internet's policeman and in protecting others from harmful content.

Third: "Potential" - This motive relates to an employee's end goals and whether or not the task's outcome benefits a goal identity.

For example, an entry-level programmer might be motivated by work, because he or she believes that in doing the work, he or she will have the experience required to someday become a chief technology officer.

Leaders who can deliver a culture that maximizes an employee's connection to these three motives will be leading workers who are driven and motivated. Being able to do so is a powerful differentiator from competitors who may be struggling to achieve this... and losing their best employees to attrition and to you.

(Be sure to read Part 2 of "4 Reasons Why Culture Matters to Business"!)


  1. http://www.eremedia.com/tlnt/what-was-leadership-thinking-the-shockingly-high-cost-of-employee-turnover/
  2. http://www.talentculture.com/creating-company-culture-irresistible-to-millennials/
  3. http://www.forbes.com/sites/ericadhawan/2015/04/13/how-to-engage-millennials-in-your-corporate-culture/#6b76c51e4680
  4. https://hbr.org/2015/11/how-company-culture-shapes-employee-motivation


June 29, 2016