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Linking Culture to the Bottom Line
By Gail Finger, Fall 2003
Each organization has its own distinct culture, i.e., the underlying beliefs, values and assumptions that drive how work gets done. In the past, attempts to describe company culture have produced results that were more academic than practical. But now there is a way to describe and measure your company culture, and the impact it is having on your bottom line.
To make the concept of "business culture" relevant to business leaders, there had to be a way to measure it and link it with bottom line performance measures such as return on investment (ROI), sales growth, quality, innovation and employee satisfaction. Fifteen years of research by Dr. Daniel Denison, PhD., professor of Organizational Development at IMD (International Institute of Management Development in Lausanne, Switzerland), culminated in the Denison Organizational Culture Survey and the Denison Leadership Development Survey. Denison asserts that elements of culture are manifested in a set of behaviors. Since these behaviors are observable, Denison was able to develop a tool to measure company culture.
Nine hundred and fifty businesses (of divergent sizes and sectors) participated in the development of the Denison culture model, which measures the following four basic business culture traits:
- Mission – Is the company clear about why they exist and where they are going?
- Involvement – Do employees embrace the defined mission, can they see the link between their jobs and the mission, and are they willing to give their all to achieve it?
- Adaptability – Do employees fully understand the needs of their customers and are they able to respond to changing marketplace demands?
- Consistency – Are efficient and effective systems, structures, and processes in place to maintain focus on the mission?
Strong revenue and sales growth correlate with high scores on mission and adaptability. In an article by Caroline Fisher, PhD, entitled "Like It or Not, Culture Matters – Linking Culture to Bottom Line Business Performance" (Employee Relations Today, John Wiley & Sons, 27:2, Summer 2000) she states "Mission alone, as a single cultural factor, impacts the greatest number of bottom-line performance measures in a company." Therefore, every company leader would do well to ensure that each person in his/her employ understands why the company exists and where it is headed.
High performing companies – those having an ROI of 30% – score high in all four areas. Low performing companies – those with an ROI of 9%, scored poorly in all four areas. Comparisons like these are available on Denison’s website (http://www.denisonculture.com/).
I have had the opportunity to use both the Denison Organizational Culture Survey and the Denison Leadership Development Survey. The Leadership survey lets you know how your executives and managers are performing in the four key areas of mission, involvement, adaptability and consistency. This information is invaluable in helping you to identify where to invest your training and development dollars.
Both surveys can be taken easily, cost-effectively, and anonymously on-line. The report offers easy-to-read graphics and a breakdown of company performance in all four key areas. The report also provides suggestions for improving performance where it is needed. This tool not only helps businesses to assess why they are not reaching their financial goals, but can also be used to measure progress along the way so leaders can be confident about staying on track with fixes.
Company culture is no longer a purely academic concept with no real link to your bottom line. Now, tools exist to measure the behaviors associated with company culture, assess how your company compares to the most successful ones, and focus your resources in ways that will give you the greatest return.
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