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It’s Time to Take Company Culture Off the Chopping Block
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When financial times get tough for organizations, invariably company culture initiatives are the first to be cut. The view is that these are the easiest items to take away, sending money back into the budget.
It’s time to take company culture off the chopping block. Cuts to company culture don’t heal easily. When leaders cut too deeply into culture, it sends a devastating message to employees: people are only important until profits are on the line.
It’s easy to look at this from the leader’s perspective. The organization needs to survive, and compromises must be made for it to endure. As a result, the idealized long-term vision for the organization contracts while leaders focus on short-term survival.
If leaders want employees to persevere in tough financial times, maintaining organizational culture should be a priority. Cuts to company culture may bring short-term savings, but the long-term ramifications can be severe.
According to a Columbia University study, when companies have a poor culture, 48.4% employees start considering voluntary turnover. Compound increased turnover rates with the effect a mediocre or declining brand has on recruiting top talent, then add to that a discouraged workforce and the impact – to revenue, on customers, on productivity — is profound.
More than 50% of executives agree that culture drives outcomes like productivity and profitability, and never has that relationship been more apparent than in the story of Barry-Wehmiller.
As with many organizations, the manufacturing technology supplier firm was hit hard by the Great Recession. CEO Bob Chapman faced a situation where 40% of the organization’s orders disappeared overnight. On paper, it appeared Chapman would have to lay off a significant number of employees. Instead, Chapman instituted a mandatory furlough program requiring every employee – from the top down — to take four weeks of unpaid vacation time. Completely unprompted by any organizational directive, the employees volunteered to help each other out. Those who could afford to take more furlough time did, taking it from those who couldn’t. The culture provided meaning and purpose for employees who, in turn, were willing to make sacrifices for the good of the organization.
Barry-Wehmiller made it through the recession without a single layoff. Last year the organization made 10 acquisitions, more than ever in its 132 years of operation. Chapman directly attributes this prosperity to the human-driven culture at the organization’s center.
Similarly, Southwest Airlines has built a reputation for placing people and culture above profits and payouts. Its leadership, including founder and former CEO Herb Kelleher, go to great lengths to maintain that environment in times of duress.
Immediately following 9/11, Southwest was the only airline to turn a profit. Why? Kelleher notoriously refused to lay off staff or reduce flight schedules. Instead, key members of the leadership team worked without pay through the end of the year. Southwest employees returned the favor. They volunteered over $1 million in payroll deductions to mitigate revenue loss.
The stories of Barry-Wehmiller and Southwest Airlines prove that the actions leaders take against impossible odds send ripples throughout the organization. When times are tough, the choice between culture and (better) quarterly metrics isn’t a stark binary. Consider the following when searching for your solution:
If any of that sounded like common sense to you, you’re not wrong. Remembering to perform simple, humanistic actions is enough to keep the spirit of organizational culture alive. Showing you care–and making that empathy central to culture–matters just as much in times of scarcity as it does in times of prosperity.