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ATD Blog

How Culture and Engagement Drive Organizational Performance

Friday, November 22, 2013
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For many leaders there’s a commonly held belief that employee engagement drives organizational performance. And there’s data out there to support it—Gallup’s 2013 State of the American Workplace recently re-confirmed a well-established connection between employee engagement and the following nine performance indicators:

  • Customer ratings
  • Profitability
  • Productivity
  • Turnover
  • Safety incidents
  • Shrinkage (theft)
  • Absenteeism
  • Patient safety incidents
  • Quality (defects)

But I believe that if we look a little deeper, we’ll see that organizational culture actually has the single biggest impact on organizational performance. I know—it’s a bold statement. So stick with me for a moment, and I’ll explain my thinking.
Last week we defined culture as an evolutionary pattern of employee assumptions, beliefs, thoughts, and feelings about how to be successful in the organization. For simplicity, let’s call it a mindset. This mindset is reinforced via more tangible or visible organizational elements such as processes, communication, interaction, decisions, and what I like to call the strategic foundation—the mission, vision, and core values. Together, these elements create the employee experience.

The employee experience

When employees show up for work, they spend eight hours or more immersed in a world that may or may not feel good to them. If it’s a culture that aligns with their values, is supportive of their efforts, respects their ideas and opinions, and trusts them to make role-appropriate decisions, they will feel good. When employees feel good, they smile (and then others smile, too—I love how that works!), they try harder, they help others, they are appreciative, and they genuinely want to do what is best for the organization because they come to value the associated experiences and feelings. In other words, employees who feel good about their day-to-day experiences are more engaged. And more engaged employees deliver a better customer experience.

The customer experience

I think intellectually it’s easy to accept the concept that a positive employee experience has a positive impact on the customer experience. And conversely, a negative employee experience has a negative impact on the customer experience. But to what extent do leaders think this experience is important enough to take action inside their organizations?

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Maybe this will prompt action: The employee who is having a negative experience is carrying that negative energy with him. He carries it home to the spouse whom you want to be supportive when he has to stay late to meet an important deadline. He carries it to his friends and professional colleagues who may be your future employees, he posts it online for the whole wired world to see, and he carries it with him when he interacts with the customer. Are you starting to see the link? Good. Now, let’s talk performance.

Performance outcomes

It’s possible at this point that some leaders are saying, “Yeah, that’s all well and good, but our customers only care about low cost.” Or: “Internally we’re doing fine—it’s the economy that’s killing us.” Blame it on the economy. Or on your customers who don’t get it. Or on your employees who don’t focus on the right things. It can be all of those things, but it’s really none of them. Because nothing—and I mean nothing—matters more than the employee experience, and ultimately the customer experience, when it comes to the bottom line.

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Consider these examples: People love CarMax because of its no frills, straightforward, take-it-or-leave-it experience. People buy Apple products because of the experience of turning on a technology product that is designed to be up and running on the spot, and the opportunity to work with a “genius” when they need help. And people over-pay every day for a decaf, four pump, skinny, extra-hot vanilla latte because of the social experience Starbucks provides. In every single case, it’s not difficult to imagine what it’s like to be an employee and how that translates into your experience as a customer. And because you like how it feels, you keep going back for more. And that is the impact to the bottom line.

Gallup is right! Employee engagement is critical to organizational performance. And you can drive engagement by defining and cultivating a culture that fosters a positive employee experience. Now it’s your turn. Below, share your observations and the instances when you’ve seen a link between culture, engagement, and performance. Be brilliant!

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About the Author

Paula Pierce is a recognized consultant, coach, and speaker with more than 20 years of experience helping organizations solve their operational problems, change their performance trajectory, and realize success on their terms. Experienced in organizational culture, leadership development, human capital strategy, and change management, she currently serves as the CEO and principal transformation strategist at Peridona Strategies LLC. Paula is passionate about helping organizations and individuals discover their true value and operate from a mindset of service and authenticity. She believes that true satisfaction and success come from using one’s talents to enhance the lives of others and that organizations have that same duty on a larger scale. She coined her company’s tagline—Be Brilliant—as a reminder that the solutions and answers to the problems of individuals, organizations and the world reside inside us, and that when we tap into our inner-brilliance we are best able to influence positive change. Contact her at [email protected].

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