Don't underestimate the importance of company culture

One of the toughest issues facing growing firms in a fiercely competitive market is the importance of company culture. This is particularly true for small and medium-sized companies on a growth trajectory, where culture can spell the difference between success or failure.

"Company culture is the foundation of every business," says James Kerr, global chair of N2Growth, an executive search firm. "If you optimize the culture and ensure its alignment with the achievement of your strategic objectives, your business performance will improve."

To create a strong company culture, the first thing a business leader needs to do is map out the company's core values and beliefs, says Employers Resource. These don't have to be a firm set of rules, but should include the guiding principles and philosophy of the organization, concretely defining what makes it unique.

Once the core values are established, it's imperative to apply them consistently. When employees see others receiving preferential treatment, it might cause a rift that could undermine company morale.

Keeping doors open

Business experts generally agree that maintaining open communications plays the biggest role in fostering a positive company culture, not just among employees but also between managers and their direct reports.

Vick Vaishnaviin, an executive with Aveksa, achieves this by instituting an "open door" culture, in which a business leader makes it clear that any employee can come see them to share feedback or concerns. Obviously, the policy works best in small or medium-sized firms; as companies grow, it may be necessary to delegate the open door to "de facto" leaders who can act as representatives during these meetings.

In a similar vein, a positive company culture stems from fostering close work relationships.

"Caring for, being interested in and maintaining responsibility for colleagues as friends," can help boost productivity and even have a positive impact on profitability, according to a report in the Harvard Business Review.

"Relationships are key to a company's culture because they support and mirror back the company's key values," says Debra Thompson, CEO of The Alternative Board Boston. "They add depth to the value statement and they underline the ability of the company to deliver value."

Fostering good work relationships can have a significant impact on employee engagement in the business. This is a major predictor of a worker's productivity, which ultimately affects the company's profitability and turnover costs.

According to a study by ADP that surveyed 500 U.S. companies in 2016, "Connecting employees with others during onboarding could go a long way in solidifying their relationship with the company."

A helping hand

One way to build these relationships is to set up a mentoring program, with a new employee entrusted to a seasoned colleague. Experienced employees can brief the newcomer on organizational knowledge, while the newcomer often has technical expertise and a fresh way of looking at things.

Many successful programs involve partnering new hires and more entry-level employees with individuals two or more levels above them in the organizational chart. This gives employees new to the organization a much higher view of the company, while ensuring that those new to the team have someone "higher up" to communicate with regularly. Mentorship programs also give employees an outlet to discuss their own relationship with their boss to someone else. Per ADP's report, aside from compensation, direct manager relationship is the number one reason why people leave jobs.

Another thing to bear in mind is that while periods of strong growth may be good for the company's bottom line, they can also adversely affect its culture. Things like shifting job roles and responsibilities, new hires and office relocations are not always welcomed by workers, who may not have the temperament for change. Despite efforts to improve onboarding experiences or clarify what your culture means, original team members could head out the door.

It's vital to decide if your culture will be changing along with the growth spurt. If so, make sure that everyone on the team has a say in shaping it. If it's going to stay more or less the same, you have to ensure that new employees are made aware of what it is — those core values mentioned earlier — and that you help them adapt to the importance of company culture in your organization.

The views expressed in the article are those of the author and/or person interviewed and do not necessarily reflect the views of Silicon Valley Bank, a division of First-Citizens Bank and First Citizens BancShares, Inc. The materials on this website are for informational purposes only, are subject to change and do not take into account your particular investment objective, financial situation or need. Since each client’s situation is unique, you should consult your financial advisor and/or tax planning professional before acting on any information provided herein.