How poor company culture is affecting SMEs

How do we change the misconception that company culture is optional, rather than a necessity? Here, Jonathan Richards explores the issue.

The Queen’s corgis are often described as ‘fluffy’. And rightly so. However, something that is costing the UK economy over £23.6 billion per year, shouldn’t be. Yet, 60 per cent of business leaders still view company culture as a nice to have – rather than a need to have, according to our Culture Economy report.

This belief is arguably due to the confusion around what workplace culture actually is, as its subjective nature means different things to different people. In essence, culture isn’t just the values written on the wall, office bean bags or table tennis tables, it isn’t even just down to the leadership style. It is all of these and more, including day-to-day attitudes, behaviours, and conversations.

The effects of not making company culture a priority are felt hardest when it goes wrong. If business owners don’t take the time to consider what they want their culture to be and how they can establish and develop it at the beginning, it manifests itself. And once a culture has been established it’s hard to change it. We’ve seen various examples of toxic cultures causing a huge backlash for organisations. Take Uber and Facebook. The internal failures around culture in these businesses have been making the headlines for all the wrong reasons.

The challenge here is trying to change this misconception that company culture is optional, rather than a necessity. And, as these supergiants are showing, it’s not just a bad name in the press that these businesses may have to deal with, the knock-on effects can run a lot deeper.

Impacting business growth and profit

In fact, company culture can directly impact business growth and profit. Too often, organisations with poor company culture are limiting themselves because staff members are demotivated and less likely to perform at high levels. Employees who don’t feel they have a purpose and a positive environment to thrive in will result in them failing to develop new skills and being frequently bereft of new ideas. One of the most demotivating things for an employee to feel is that they are stagnating in a position with little satisfaction or room to grow.

CEOs and senior management are the figureheads of a business, much like the Royal family is for the UK, and a key part of their job is to lead by example. Managers can have the most direct influence on the employees they line manage, and, therefore, play a big part in instilling the companies’ culture. They carry the responsibility for aligning the performance of their department and its staff with overarching organisational goals.

“Company culture can be a hard thing to get right. However, no matter the size or an organisation, it’s crucial”

According to the Chartered Management Institute’s research, effective leadership could improve Britain’s productivity by 23 per cent. Productivity, in part, is a result of motivation, and motivation thrives on strong management and a good climate.

But this requires a complex toolkit. Leaders must be effective communicators, counsellors and consultants, whilst also knowing when to step-back and when to step-in. They need to open up to best practice and collaboration. The fastest path to productivity gains lies in your workforce, not only in terms of improving engagement levels, but also providing autonomy and support to enable workers to solve their own problems. This is one of the core elements of a coaching and nurturing culture.

Company culture can be a hard thing to get right. However, no matter the size or an organisation, it’s crucial. Entrepreneurs need to manage correctly from the get go, so when the company grows, its managers can manage in a strong, motivational way. This effective leadership will boost productivity and create an environment where employees want to stay and want to work.

As Queen Elizabeth put it, ‘I know of no single formula for success. But over the years I have observed that some attributes of leadership are universal and are often about finding ways of encouraging people to combine their efforts, their talents, their insights, their enthusiasm and their inspiration to work together.’

I couldn’t agree more.

Jonathan Richards is founder and CEO of breatheHR.

Further reading on company culture

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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