What Real Leaders Need to Know About Company Culture

What Real Leaders Need to Know About Company Culture

Srikumar Rao

US$7 trillion are lost in productivity due to mismanaged company culture and employee disengagement. Here’s what you need to know to improve your own.

In the decades since “corporate culture” first appeared in the 1980s, it has become one of the most fashionable organizational features to study and one of the most popular themes in business books.

On Amazon alone, there are more than 10,000 results for books about workplace culture. That’s a lot of books!

With so much information out there have most companies become culture experts and applied their knowledge intelligently to fix their own culture?

No, they have not. 85% of employees are either “not engaged” or “actively disengaged” at work according to the State of the Global Workplace Report. In their report, they describe the 67% that are “not engaged:

This latter group makes up the majority of the workforce — they are not your worst performers, but they are indifferent to your organization. They give you their time, but not their best effort nor their best ideas.

And the reason is that they likely come to work wanting to make a difference — but nobody has ever asked them to use their strengths to make the organization better.

That means that your employees or team likely want to be engaged but aren’t. Usually, this comes down to company cultures that aren’t cultivating and harnessing the full potential of their employees.

Here’s something I’ve learned after helping thousands of executives, professionals, and entrepreneurs harness their own potential and show others at their organization how to do the same:

Human beings are the same all over the world. They’re all looking to be happy; they’re all looking to find meaning in their life. Your team is no different.

Below are some facts, stats, and case studies about workplace culture below that have tremendous implications for your business.

Mindvalley Team on a mission to elevate humanity
Mindvalley Team on a mission to elevate humanity

What Is Company Culture — and 3 Things You Should Know About It

According to Inc Magazine, “company culture,” also referred to as “corporate culture” and “workplace culture,” means

The shared values, attitudes, standards, and beliefs that characterize members of an organization and define its nature.

Inc Magazine’s Encyclopedia also goes on to call it “an essential component in any business’s ultimate success or failure.”

That’s been true in my experience.

While most people believe you have to climb the ladder of success one rung at a time, you and your team can leapfrog to higher levels of achievement in short order.

But here’s the catch:

  • You can’t do this by “working harder.”
  • You can’t do this by “working smarter.”
  • You can’t do this by “managing time better” — or teaching your team to do the same, for that matter.
  • And you can’t do this by copycatting today’s “best companies.”

The truth is, tomorrow’s best companies will be different from the leading companies that exist today.

The only way you can pull off such a jump is by radically challenging the way you and your team view the world. You achieve this quantum leap by dramatically changing the way you and your team approach life and the way you react to circumstances.

1. Use your mission statement as a touchstone, not a ploy

Almost everyone agrees that companies should stand for something greater than themselves. But as I wrote in London Business School’s Business Strategy Review journal:

It is essential that the mission statement not be a cynical attempt to portray the organization in a good light, but a statement that its leaders truly believe in.

Most organizations and companies have a carefully-crafted mission statement. Yet this statement acts less as a true indicator of how they act towards their current stakeholders (employees, customers, shareholders, etc) and more as a public relations ploy.

Don’t make your mission statement a press releases to paste on your “about” page. Instead, make it the touchstone of every major decision your company makes.

If that sounds radical, it is in today’s world. Most CEOs, Board Members, and Managers believe their main duty is to increase shareholder value, due to business school dogma. Most of my students, who are in some of the top business programs in the world, reject that idea. So do well-respected companies, like Patagonia, and business experts, like Simon Sinek.

Your potential employees believe it’s important that your workplace culture serve the “triple bottom line”: profits, social good, and the environment.

When it becomes clear that your organization is putting the desires of the shareholders above everyone and everything else, including the foundational pillars of your company, employees become disillusioned.

As I mentioned earlier, people want to do good. People want to meaningfully contribute to something larger. And the exceptional, committed employees that you want will leave if they’ve been duped. The rest will stay but they won’t be engaged in making your company better.

what leaders need to know about company culture

2. Workplace culture affects your profits

Every company has a culture. It either happens by accident or design.

But if you’re still wondering whether you should actively shape your company culture, you should know that it deeply affects your company’s productivity and profits.

According to the same State of the Global Workplace Report mentioned earlier, 85% of employees who are disengaged from work cost the global economy $7 trillion in lost productivity.

Our laser focus on profit over everything else distracts us from seeing that profit is a byproduct of the value we create for everyone we come into contact with. Our responsibility lies in helping our employees, our customers, our shareholders, and society at large reach their full potential.

By acting with this in mind, we are able to generate long-term profit through our company’s culture, instead of allowing a dysfunctional workplace to drive down company profits.

Starbucks became an early success in large part because Howard Schultz, the CEO at the time, decided to offer health insurance even to part-time workers.

He made the decision because of his own experience with poverty and empathy for others in the same situation. This single, simple gesture generated incredible loyalty. Employee turnover and training costs dropped precipitously. Part-time baristas showed up cheerfully at short notice if there was a sudden influx of customers.

That cheeriness rubbed off on customers who liked their experience. The rest is history.

what leaders need to know about company culture

3. Don’t manipulate workplace morale; encourage healthy mental models instead

Yes, you can and should actively shape your workplace culture. I’m not suggesting that you should give up. But I often see people who are so intent on creating an “awesome workplace culture” that they miss the point.

Motivating dispirited and disengaged workers can become an attempt to manipulate people into doing what they do not want to do. Why? Because the company wants it.

Too often, companies rely on bean bag chairs and stocked kitchens to drive up motivation and morale.

However, motivational fire isn’t something you can implant in someone. It is already inside us all. We just need to figure out what’s putting out the flames.

Instead of trying to mastermind an “awesome culture,” try to encourage healthy actions and mental models.

Let me provide you with an example:

A senior executive from a Fortune 20 multinational company took my program. He was responsible for sales outside of North America. One day, he said to me, “it’s all very well to say that ‘the outcome doesn’t matter,’ but I have numbers to meet, and I’m not going to make it this quarter, and if I were to wave my hands and say the outcome doesn’t matter, my boss would not be very impressed.”

I said to him, “Look, you had to meet numbers, and you tried your level best to meet those numbers, and despite your best efforts, this year you’re not going to make it, correct?”

He said yes.

I responded, “Okay. I’m not telling you to share with your boss, ‘Hey guys, we’re not going to meet the numbers, but guess what? It doesn’t matter because the outcome doesn’t matter.’ Instead, we’re shifting your mindset so you don’t do what you might instinctively want to do: beat yourself up, reprimand your sales team, lower the morale at the office, or any other dysfunctional action.

“By accepting that you’re not going to meet the numbers and that there might be other unintended consequences that come with it, you can use where you are as a new starting point for your next success.”

He decided to go to his boss and say, “Hey boss, we’re not going to meet the numbers. Don’t know what the shortfall is going to be, but likely to be this order of magnitude, and here’s what I propose to do about it.”

And his boss said, “Fine, go do it.”

This outcome could’ve turned into a major derailment, not because it was disastrous but because of all the other ways, it could have affected the company morale, engagement, and, ultimately, productivity.

Instead, it became a minor bump on the long road of success.

HEALING workplace

Making Work Meaningful

I once believed that the world was divided into two groups of people: those who passionately hated their jobs and those who merely disliked their job.

In fact, I varied between heartily hating to mildly disliking the majority of jobs I’ve had. I designed my program, Creativity and Personal Mastery, as a way to work on my own mindset. I wanted to come fully alive.

After putting my energy into the course, I now can say that when I get up in the morning, I honestly couldn’t tell you if I’m working or playing. The distinction has completely disappeared.

Your team is no different. Work can be a meaningful part of your team’s lives.

It is YOUR job to figure out how you can communicate this to your team members in a way that makes sense to them.

And when that becomes your company culture, you can bet that they’ll commit to going above and beyond their role to help your company succeed.

Written by
Dr. Srikumar Rao