Company Culture is Linked to Employee Productivity

February 28, 2018・6 mins read
Company Culture is Linked to Employee Productivity

Perhaps unsurprisingly, research shows that company culture is linked to employee productivity. In that particular survey of business owners, carried out by The Alternative Board (TAB), 86% of respondents say they believe company culture directly impacts productivity.

However, acknowledging that company culture and productivity are linked isn’t enough to improve either one. As a leader, you must understand their relationship. This will help you quickly identify company culture and productivity issues within your own organization and correct them where needed.

1. Company culture influences individual mindsets

Your organizational culture impacts the way each employee views performance. High-performance cultures foster high performing team members - think of it as positive peer pressure, a tactic long-used by professional athletes, says Aaron Schmookler, leadership coach and co-founder of TheYesWorks, a training and team-building organization.

“Why do aspiring Olympians train with other aspiring Olympians?” he asks. “In part, they want the high-performance drive to rub off on them if they don't have as much of it as they wish.”

According to Schmookler, if an individual already has a high-performance mindset, they want to keep it, be inspired to deepen in it, and for it to continue to remain reliable. “It's easy to get up, put in the work, and push for greatness when you're surrounded by others doing likewise.”

Schmookler points out that the alternative also holds true. “We've all heard of workplaces where a new person comes into a low-performance culture and people tell them, ‘slow down.’ ‘You're making us look bad.’ High-performance cultures have people who instead say, ‘Pick it up. You can do it.’”

2. Culture impacts engagement, which drives productivity

If productivity is an issue, consider your employee engagement metrics. Then, review your company culture. Does it encourage employees to feel connected and enthusiastic about the work they’re doing? If not, it’s time to review the culture in your organization.

“Without question, the culture of a company is a significant factor in an employee’s level of engagement,” says Todd Davis, who serves as the chief people officer for FranklinCovey and is the author of the new book, Get Better: 15 Proven Practices to Build Effective Relationships at Work.

Davis says that engagement drives productivity, plus everything the employee does with and for an organization. “Employees with low (or no) engagement come to work for a paycheck. Nothing more,” he says. “They do just enough to ensure they aren’t put on a performance plan or fired. It’s a ‘check the box’ mentality regarding anything they do throughout the day.”

As Davis points out, when employees are highly engaged, they treat the organization as if they are an actual owner of the business, whether they are or aren’t. “They care deeply about results and therefore, they work tirelessly to ensure those results are remarkable. Their productivity is extremely high,” he says.

3. Competitive culture hinders productivity

The word “competitive” is typically positively associated with business (and to life in the Western world, for that matter). As Schmookler says, it’s long been understood that competition drives performance. But here’s a shocker: if you have a competitive culture, it may hinder your productivity.

In a Harvard Business Review article, authors Emma Seppala and Kim Cameron point out that “a large and growing body of research on positive organizational psychology demonstrates that not only is a cut-throat environment harmful to productivity over time, but that a positive environment will lead to dramatic benefits for employers, employees, and the bottom line.”

Schmookler says competitive cultures hinder overall productivity because competition between individuals drives individual performance at the expense of team performance.

“Teams with good teaming skills accomplish far more together than the sum of their individual efforts would allow,” he explains.

4. Collaborative culture enhances productivity

The other side of the competitive culture coin is the collaborative culture, one in which cooperation and collaboration get encouraged over competition between individuals. “The top performers may not produce quite as much, but the bottom performers don't produce as little,” says Schmookler. “And in aggregate, the team produces more.”

Though your organization may have some managers actively trying to promote a collaborative department, your entire organization must embrace the collaborative ideal to impact overall productivity.

“While the culture of an organization and the individual and/or departmental productivity certainly feed each other, in my experience, it’s the culture that drives productivity,” says Davis.

Schmookler says that collaborative cultures also yield other positive effects on organizations, including improved engagement and retention. “And lower performers learn from high performers and begin to outpace their past,” he says.

5. Company policies empower or stifle individual productivity

Can you detail how your company’s own policies impact your company culture, which in turn affects individual productivity? Organizations that support what Schmookler calls “prescriptive policies” depend on policies that flat out tell employees what’s allowed and what isn’t. On the other hand, a “principle-driven policy” guide employees to make sensible decisions. For example, Schmookler says, a prescriptive policy is “wear closed-toed shoes,” while a principle-driven policy would be “dress appropriately for the work you’re doing.”

Schmookler says principle-driven policies worry many HR professionals and attorneys because they “leave a lot open to interpretation,” and introduce the possibility of interpreting the policy differently between different people.

It also means that that managers must talk with employees and sometimes debating things like the appropriateness of their clothing (or footwear) for the job.

“On the surface, that seems like a waste of time,” he says. “It's a tremendous boost, however, to productivity. The subtle message is, ‘you are a professional. We expect you to think through your decisions.’”

Schmookler says principle-driven policies let employees know their organization expects that they’ll make mistakes and interpret situations differently from the way management does, but also that the company will support the employee to work through it. This fosters independent thinking among employees, empowers them, engages them, and lets them learn and take action quickly - boosting productivity.

The bottom line on company culture and productivity

Though its impact can be seen in various ways, when it comes right down to it, there’s no doubt they’re connected. Company culture has a strong link to productivity in an organization, in a large part because of how it influences an individual’s mindset and resulting engagement at work.

“Strong productivity is the result of many things, but at its foundation is a winning culture,” says Davis. “The greater the culture, the more productive people will be, because they are engaged. Human beings excel when they are happy and doing what they enjoy. And when they excel, they produce.”

This post was originally published August 28, 2017 and has been modified.

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