Learning & Development

4 Ways Employee Culture Can Affect Your Bottom Line

An employee culture can seem like an immeasurable concept. Sure, all managers want their employees to be happy at work, but is it really worth pouring time and resources into if you aren’t sure of your return on investment?

But employee culture does, in fact, affect your bottom line. It actually impacts it quite a bit in a variety of ways. Seventy percent of your operating costs likely involve your employees (source). Employee culture isn’t some modern buzzword or fuzzy concept; it’s a real aspect of your business that needs care and attention.

What IS Company Culture?

Company culture is simply the values that surround your organization and employee structure. It’s not a tagline or a phrase; it’s not your logo or brand colors. It’s the way employees feel coming into work, the amount of respect they’re given by teammates and management, and their level of satisfaction as members of your company. Although visible attributes like a dress code do play into company culture, company culture is really more about the invisible attributes, things like attitudes, routines, and habits. A positive company culture leaves employees feeling valued and welcomed. A negative company culture causes a lot of employees to hit the door.

If your employee culture stands to improve a bit, don’t feel guilty about prioritizing it this quarter. It’s never too late to make a positive impact on your culture and turn things around. Here are four ways employee culture can impact your bottom line.

Positive Employee Culture Cuts Down on Turnover Costs

Think of all the time, energy, and dollars that go into employee turnover. When employees leave their job, they spend valuable working hours wrapping up projects and handing them off. You spend time conducting exit interviews. Your HR and recruitment teams are wrapped up in posting new job openings, finding candidates, and holding interviews, and that’s all before you even hire someone. Once you do find new hires, you then need to pour time into training them, and they aren’t as effective as they could be those first few weeks because they’re still getting the lay of the land. Employee turnover is a huge expense—one you want to cut down on as much as possible. By creating a positive employee culture, you’re encouraging employees to stick around for much longer, resulting in fewer resources that need to be thrown at recruitment and onboarding. When people are happy and engaged at work, they’re much less likely to take other job offers and uproot their lives. Happy employees mean fewer employees walking out the door, which means less time your HR team has to spend on finding new job candidates, hiring them, and training them.

Positive Employee Culture Encourages Innovation

When employees are getting enough rest, feel valued at work, and enjoy their role at your company, they’re much more likely to work their creativity and innovation muscles. They’ll be able to bring new ideas to the table that you’d never even thought of. A positive company culture leads to a lot of creative collaboration, as well; when people feel like their ideas and hard work are respected and prioritized, they’ll have much more freedom in their working relationships.

Positive Employee Culture Lowers Insurance Costs

Employees aren’t just robots who show up to work; that seems obvious, but it’s actually hard for some managers to realize. They’re full-fledged people with lives outside of the office. These lives include needs involving their families, their health, and their lifestyles. According to a recent survey, many employees are struggling with their health and energy levels in particular. In fact, a whopping 87% of adult employees feel anxious or stressed, and 70% feel depressed.

On a human level, you should care about your employees as people and invest in them for the good of society. But also, when your employees are healthy, you can get better deals with your insurance plans, lowering your bottom line in terms of insurance spend. Furthermore, healthier employees will likely be more productive. Things like stress or depression can negatively affect work performance. By encouraging things like socialization in the office, you can improve your employees’ mental health, and by implementing wellness programs the right way, you can affect their health and lifestyle in meaningful ways. All of these things will lead to their being healthier overall and needing major insurance less, saving you as an organization major money.

Positive Employee Culture Increases Your Brand’s Reputation

It seems fairly obvious that happy employees will lead to happy customers. When employees are satisfied at work and not weighed down by office conflict, frustration at a supervisor, or unhappiness with their job conditions, they’ll be much better at their job. When your employees are performing well, they’re representing your brand well. On the other hand, if employees are exhausted and frazzled, they may be short with a customer or slapdash on the job, creating a product that’s well under your standards. They may not feel the need to go above and beyond for a company that doesn’t seem to care about them, or they may just be feeling exhausted and impatient. These things will damage your brand, sometimes beyond repair.

These days, thanks to technology and social media, word also travels fast both if you aren’t treating your employees well and if you are. It gives your brand image a boost if you can point to instances when you helped pay for employees’ continuing education or awarded them large bonuses. It can damage your brand if it gets out that you’ve been asking for tons of overtime or not solving office conflicts appropriately. That reputation can be incredibly difficult to shake and can also lead to a cascade of turnover, an employer’s worst nightmare. Potential job candidates will Google your company, and you want what they read about your culture to be positive. So by focusing on a positive employee culture, you’re improving your company’s brand in a significant way.

Claire Swinarski is a Contributing Editor at HR Daily Advisor.

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