Culture and Performance - a one-way relationship

There have been many studies suggesting a link between an organisation’s culture and its performance.  Now a recent study published in the Journal of Organisational Behaviour, has shed more light on the nature of this relationship.

There have been many studies suggesting a link between an organisation’s culture and its performance.  Now a recent study published in the Journal of Organisational Behaviour, has shed more light on the nature of this relationship.

The study found that, whilst a  corporate culture in which employees are motivated and highly engaged helps a company’s bottom line, the reverse  is not true.  In other words, a positive corporate culture can boost profitability but financial success alone does not guarantee a positive culture.

In order to understand the impact of organisational culture, a team of academic and corporate researchers examined the link between culture and sales volumes at almost 100 car dealerships over a 6 year period.

To assess and evaluate the culture in each dealership, researchers asked employees to answer questions about their motivation, sense of mission and the extent to which they feel involved in their workplace.

According to one of the researchers, Dr. Michael Gillespie, an Assistant Professor of Psychology at the University of South Florida, the study shows that “culture causes performance, not vice versa”.

Those dealerships which had the most engaged and motivated employees at the start of the study period were found to be making bigger profits by the end of it.  In contrast, those dealerships which recorded high sales but low employee engagement and motivation at the start of the study period generally saw their profits fall by the time the research finished.

The study also found that there was a lag time between the creation of a positive culture and the impact on customer satisfaction and sales.  “The culture of a sales department right now is going to influence the customer satisfaction from that department two years from now, and that customer satisfaction is going to drive vehicle sales two years from that point,” says Dr. Gillespie.

A 2015 analysis of data from 7 million employees worldwide reveals the benefits of having an engaged workforce.  It showed that:

• Highly engaged and enabled employees are 50% more likely than average to outperform their individual performance targets
  
  
• High levels of employee engagement can improve staff retention by 54%
  
  
• 27% of staff at companies in the bottom quartile for work / life balance plan to leave within the next 2 years, compared to 17% of staff in the top quartile

​MSB understands that changing the culture of a whole organisation is not easy, but we also recognise the enormous financial and competitive benefits that the right culture can bring.  With a long (30 years and counting…) and highly successful record in this field, our team of consultants has the right mixture of business experience and fresh thinking  to deliver lasting and meaningful culture change.