The short answer to the question raised in the title of this article is YES. But you’re looking for a longer answer, perhaps because you’re skeptical about how much workplace culture really matters. If that’s the case, then this might just be the most important article you’ve read in a long time.

What we know for sure is that there is nearly universal agreement that organizational culture exists, and also that it plays a vital role in shaping employee behaviors in any company. One year-long study of corporate CEOs and CFOs revealed they overwhelming believe healthy workplace culture is necessary for companies to thrive.

Workplace CultureThe study was not easy to conduct. After all, how do you even define organizational culture? The researchers had to construct their questions very carefully to make sure that people had something definite in mind when asked about workplace culture. Here’s a summary of what they found (source):

  • 90%+ feel culture is important at their firms.
  • 92% believe improving workplace culture would boost the company’s value.
  • 50%+ think organizational culture influences firm value, profitability, growth rates, productivity, and creativity.
  • A mere 15% believe their company culture is where it should be.
  • 70% place the most responsibility for shaping culture on company leadership.

If the Greek philosopher Aristotle were alive today, he’d probably chip in with one of his wise sayings: “We are what we repeatedly do.” This is an important perspective that says culture is about what you see as consistent observable behaviors in organizations. If you can figure out what it is that drives those behaviors, then you’ve possibly put your finger on one or more important aspects of your company’s culture.

There can also be no doubt that incentives have an outsized influence on culture. What is it that your company incentivizes? Framing the question that way broadens the notion of incentives beyond compensation, benefits, and so on.

Many companies, whether intentionally or unintentionally, end up incentivizing bad behavior. Take the case of Japanese company Toshiba. When one of its divisions informed the company president it would have to post a large operating loss for the first half of 2012, the president refused to accept it, instead giving the division an ultimatum to improve profitability by billions in just three days. The only way to do that was to fudge the numbers, and there was a big corporate scandal that subsequently forced the resignation of Toshiba’s top brass. It’s an extreme example, but you see the point, right? You have to be very aware of what behaviors are being incentivized in your company. Bad incentives bring about bad behavior with impressive consistency.

Also pay attention to any potential values gap. Compare your company’s stated mission and values with the behaviors you can observe throughout the company. Are they in alignment or is there a gap between what your company says it values and how its people behave. If you find a significant gap, then it may be time to get proactive about re-shaping your company’s culture, which will be the topic of a follow-up article.

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