Culture Isn’t Just Important—it's the THING

In today's dynamic corporate world, two significant elements have emerged to form the backbone of successful business models—corporate culture and employee engagement. The once command-and-control style of traditional leadership, emphasizing profits over people, has paved the way for a more evolved approach to leading a workforce. At its core, the understanding that investing in people ensures not only their happiness, but also contributes to the business's bottom line.

The Pandemic and the Future of Work

The global pandemic, initiated by the outbreak of COVID-19, created an unparalleled shift in both corporate culture and employee engagement. Almost overnight, companies were thrust into the uncharted territory of remote work, necessitating a rapid reevaluation of established cultural norms and practices. This instantaneous transformation, while disruptive, also provided a unique opportunity for organizations to rethink, reshape, and reestablish their corporate cultures in ways that were previously deemed unconventional or even impractical.

One of the most profound impacts was the blurring of professional and personal boundaries. As homes morphed into offices, employees began sharing glimpses of their personal lives—be it through the backdrop of virtual meetings or the spontaneous appearances of family members during conference calls. These unscripted moments, while trivial on the surface, cultivated a more human-centric culture, fostering empathy and understanding among coworkers. The hierarchical barriers that once defined traditional office settings began to diminish, promoting open communication and the democratization of ideas.

However, the transition was not without its challenges. According to a Gallup poll conducted in April 2020, 62% of employed Americans said they had worked from home during the crisis, a number that had doubled since mid-March, and that created a feeling of disconnect. A survey from the Martec Group revealed that 44% of workers felt less connected to their company while working from home, and 37% felt less connected to their coworkers.

Plus, with physical office spaces becoming redundant, the onus was on companies to maintain, if not amplify, engagement levels. The absence of face-to-face interactions, water cooler conversations, and team-building activities exacerbated feelings of isolation for many. To counteract this, organizations introduced a slew of virtual engagement activities, from online team lunches to wellness sessions, emphasizing the need for connectivity and camaraderie. The pandemic underscored the quintessential truth of the modern corporate world: culture and engagement are not rooted in physical spaces but in shared values, purposeful communication, and the collective resilience of the workforce. If anything, it kicked the door wide open for a movement that had started many years early.

From Fixtures to Foundations

Historically, employees in early corporations (i.e. 1950s) were seen as mere fixtures, characterized and defined solely by their roles.

The genesis of modern employee engagement can be traced back to the 1960s and 1970s, a pivotal period marked by sweeping cultural and societal changes. During this era, many forward-thinking companies began to challenge the rigid, top-down hierarchical structures that had long been the norm in the corporate world. Instead of seeing employees as mere cogs in the machine, a paradigm shift emerged that began to value the individual and their unique contributions.

One such exemplary company from this period was Hewlett-Packard (HP). Founded well before the 1960s, by the time this era came around, HP had become a beacon for its 'HP Way', a corporate culture predicated on trust, respect for individual contributions, and a commitment to fostering innovation from the ground up. Similarly, 3M, another pioneering company, instituted its famed '15% Time' policy, allowing employees to spend 15% of their paid time on projects of their choosing. This progressive move not only boosted morale but also led to groundbreaking innovations, including the invention of the Post-it Note.

The 1970s further propelled this burgeoning interest in employee engagement with the rise of the human potential movement, which emphasized personal growth and self-actualization. Companies began to recognize that for employees to be fully engaged, they needed to feel a sense of purpose and connection to their work. This realization led to the introduction of more comprehensive training programs, employee feedback mechanisms, and a broader move toward participative management. Firms like Xerox, for instance, became renowned for their robust employee training programs, which not only honed skills but also sought to imbue a sense of purpose and direction.

While these efforts in the 1960s and 1970s laid a crucial foundation, CEO’s being committed to employee engagement like HP and 3M were the exception rather than the norm.

The advent of the term "company culture" in the 1980s was initially a novelty. However, over the decades, corporate leaders recognized the immense value in establishing a positive and nurturing culture. By the 1990s, it was evident that a company’s success didn’t solely rest on its strategy, products, or services. The true driving force was its people.

Corporate culture, "refers to the values, beliefs, and practices associated with a particular corporation." Slowly but surely, this culture became the heartbeat of organizations, and CEOs began to see its direct influence on employee productivity and retention. Yet, a striking statistic from the 2023 Gallup report revealed that only 20% of employees felt connected to organizations lacking a distinct corporate culture.

Data-Driven Realization

Let’s check out some of the data:

Pre-Pandemic (2019): According to a report from Owl Labs, before the pandemic, only around 24% of employees worked remotely at least once a week. Most employees were accustomed to traditional work settings, with face-to-face interactions.

During the Pandemic (2020-2021): A Gallup poll found that, at its peak, up to 62% of employed Americans worked remotely during the pandemic. The rapid shift to remote work emphasized the need for proactive employee engagement strategies, as many employees faced feelings of isolation, burnout, and detachment from their organizations.

Correlation Between Employee Engagement and Performance Outcomes:

Earlier Period (2000s): Gallup's research in the early 2000s already showed a connection between employee engagement and performance outcomes. For instance, business units in the top quartile of Gallup's engagement database experienced 12% higher customer advocacy.

Recent Period (2017-2021): This correlation has only grown stronger. In more recent Gallup research, businesses in the top quartile of engagement have shown up to 23% higher profitability and 10% higher customer ratings compared to those in the bottom quartile. The widening gap underscores the heightened importance of engagement in recent years.

Talent Retention and Employee Turnover:

Earlier Period (2010): A survey by the Corporate Leadership Council found that engaged organizations could reduce staff turnover by up to 87%.

Recent Period (2021): According to a report by Achievers Workforce Institute, disengaged employees are 2.6x times more likely to be actively searching for a new position than engaged employees. With the advent of the "Great Resignation" in mid-2021, where large numbers of employees voluntarily left their jobs, engagement became a crucial lever for talent retention.

Heidrick and Struggles' 2023 survey showcased that over half the CEOs acknowledged that a robust cultural focus significantly enhanced employee retention across all work models. With 53% of respondents stating that culture had a marked positive effect on retention. Clearly, culture isn't just a concept; it's a business imperative.

However, culture alone doesn't complete the puzzle. Enter employee engagement. As per Gallup’s State of the Global Workplace: 2023 Report, a staggering number of global employees are "quiet quitting." Terms like “bare minimum Monday” have permeated social media, signaling a kind of silent protest against the perception of outdated business practices. However, proponents of bare minimum Monday also got an equally harsh backlash. There may never have been a time where there is such a difficult middle ground to breach. Such trends underscore the pressing need for companies and leaders to adapt and evolve.

Low engagement has been found to cost the global economy a whopping $8.8 trillion. When employee well-being takes a backseat, it’s not just the morale that drops. Productivity, innovation, and profits get severely impacted. The solution? High-performing cultures that prioritize people.

The Profitable Intersection of Culture and Engagement

From the perspectives of both employee happiness and business profitability, there's no overlooking the advantages of high employee engagement levels. Statistics from Gallup emphasize this: Engaged teams report 81% lower absenteeism, 41% fewer quality defects, and 43% lower turnover than their less-engaged counterparts.

Gallup’s research further demonstrates that employee engagement isn't strictly about physical presence. There are initial indications that some hybrid workers—those navigating both remote and onsite work environments—feel the most connected to their organization’s culture. The insight here? It's not only about where you work, but how you feel when you're working.

The Role of Technology in Augmenting Culture and Engagement

With the rise of technology, the methods of cultivating corporate culture and fostering employee engagement have also evolved. Platforms like Happy Companies offer technology solutions aimed at enhancing employee engagement, but there are a whole suite of digital tools that can make a difference for innovative, forward-thinking organizations.

Communication and collaboration are streamlined with tools like Slack and Microsoft Teams, making team interactions seamless, even across continents. Engagement is enhanced with platforms like Kudos, promoting peer recognition, and 15Five, which facilitates continuous feedback, aligning managers with their teams.

Platforms such as Udemy for Business and LinkedIn Learning offer myriad courses, underlining the importance of continuous learning in modern workplaces. Feedback mechanisms, essential for understanding employee sentiment, are optimized by tools like SurveyMonkey and Culture Amp, the latter specifically focusing on cultural metrics.

Employee well-being, a pillar of contemporary work culture, is supported by apps like Headspace for Work, focusing on mindfulness, and Lyra Health, providing tailored mental health resources. BambooHR ensures that the onboarding process for new hires is smooth, while virtual office environments, like Sococo and Gather, recreate the physical office experience in the digital realm.

Lastly, fostering an inclusive workplace is aided by platforms such as Atipica and Blendoor, which prioritize diversity in hiring processes. While technology plays a pivotal role, the ultimate success in fostering engagement and culture rests on an organization's genuine commitment to its people.

Concluding Thoughts

Investing in people, bolstering corporate culture, and ensuring robust employee engagement isn't just a "nice-to-have"—it's essential. Both from a human-centric standpoint and a profit-driven perspective, the emphasis on culture and engagement isn’t a mere trend. It’s the way forward.

For CEOs and leaders aspiring for success in today's business landscape, the writing is on the wall: prioritize your people, nurture your culture, and foster engagement. It’s not just the right thing to do; it’s the smartest business move you can make.