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Resources >   Growth and Operations  >  Management  >  

Organizational Culture: Can It Really Impact Business Expansion?

Management

Organizational Culture: Can It Really Impact Business Expansion?

company culture - feature image

Updated: Oct 11, 2019

When you think about having a successful business, many metrics no doubt come to mind, such as sales, profits, and cash flow. But have you ever given much thought to your organization’s workplace culture? In a nutshell, company culture reflects whether or not you have happy employees

If you think your company culture doesn’t impact the level of success your business is experiencing, think again. A positive or negative office culture could be the difference between successfully pursuing ambitions such as a business expansion or getting stuck in a rut. 

Before we explore ways that company culture can impact a business expansion, let’s identify what it is. Culture can extend beyond employees to include backers of the business, vendors that you use, and even customers. For the purpose of this article, we will focus on how workplace culture impacts employees.

What is company culture?

Workplace culture sets the tone for the office environment. It is basically a set of values and behaviors that are understood to be acceptable by the team. And while office culture isn’t a tangible thing, it is a very real force in the decision-making process throughout the workday.  

When a positive company culture is in place, employees are more likely to feel appreciated and valued. As a result, you can expect them to become more engaged throughout the workday. 

One example of this is a “work hard, play hard” style. This doesn’t necessarily mean having a pool table in the lobby, but it could mean that you organize team-building exercises or outings in which team members can connect outside of the office. Or you could create a system in which employees are incentivized with a reward for reaching certain milestones. 

On the other extreme, a toxic office environment is one in which employees dread coming to work. Instead of feeling valued and appreciated, they feel afraid and intimidated that they are going to make a mistake. This could involve what’s described as a “tornado boss.” This is someone who flies off the handle when there is a drop in sales revenue or is not open to hearing the ideas of employees, which makes it hard for team members to trust management. 

Considering that company culture and a business’s value go hand in hand, a toxic workplace environment could interfere with a company’s expansion ambitions. When you establish a positive office culture, however, this not only boosts existing employee engagement but is also an incentive when growing your team in attracting high-quality talent.

Who decides the workplace culture? 

As the business owner, be deliberate about creating a company culture. Otherwise, your business will still have a culture – it just may not be the one that you want. Employees might begin showing up late or calling out sick frequently, all of which could impact your bottom line. Having policies in place from the top, coupled with encouraging positive behavior among team members and with customers all contribute to company culture. 

One example of establishing a positive office culture is a company that is extremely online-driven and makes emojis a standard part of the communication process. When a manager sends out a communication to the team, they preface it with an emoji to convey emotion and set the tone. Whether or not your business operates online, this approach can be adopted with anything from text messages to email communication. 

Why is workplace culture important? 

It’s one thing to attract the right people to your business, but it’s something else altogether to keep them. The right office culture fosters employee engagement and can help you to do just that. 

It’s difficult to quantify the benefits of positive office culture. But, we can connect the dots and provide sufficient evidence as to why workplace culture is important. A positive company culture in which employees are engaged will likely result in higher productivity of those employees. This should then be reflected in your company’s bottom line.  

According to 2016 data by Business 2 Community, a business with “engaged employees [will] outperform those with low employee engagement by 202%.” Employees are less likely to miss a day from work. Or, worse, quit altogether

A more recent poll by Gallup suggests that a business can achieve more than 20% greater profitability with a staff that is engaged with the success of the company. This leads to a healthier balance sheet. You will appreciate that when it comes time to access financing for your business expansion. Your financial statements will determine things like the cost of the loan. 

Trying to pursue a business expansion when you don’t know if your employees will be there tomorrow is more likely to cost you money instead of helping you grow.  A study cited by Forbes reveals that disengaged employees leave a hefty price tag, costing employers up to $550 billion annually. 

Positive work culture helps when growing your team  

Statistics show that employees just entering the workforce are looking to strike a balance between inspiration and growth potential. This is good considering that you have business expansion on your mind. 

One way that this expansion can come naturally is if you focus on company culture. Also, ensure that you make your business a place that people want to work for. This is likely to drive employee engagement and ultimately profits. Think of it like this: happy employees usually lead to happy customers, all of which is a plus for your bottom line.  

When it comes time to gather your financial statements to pursue a business expansion loan and grow your team, lenders are going to examine your company’s performance for the past couple of years. By taking on debt, you want to be confident that you can manage cash flow to service that debt. As a result, you won’t have to worry about spending time replacing talent or covering for a frequently absent employee. Both of these are often a result of a negative company culture. With a loan, you have a better shot of handling these obstacles successfully.

As you grow, company culture grows with you 

So you’ve created a positive work culture and you have decided to pursue those business expansion plans. Congratulations! 

One thing to keep in mind when growing your team and expanding the business is that your workplace culture will have to evolve with that. With the expansion and hiring more employees, you’ll likely need to make some adjustments to the way things are done on a daily basis. Be flexible and open to adapting the office routines and procedures. Staying nimble with how you approach office culture will mean fewer growing pains into the future.  

Tags: Management

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