Company Culture: Does It Matter?
September 2011 Issue
Can a company's culture affect its bottom line? Though considered by many as intangible and "touchy-feely," experience and recent scientific research indicate that company culture can have a measurable impact on a company's performance and profits.
"The impact of a poor culture has far-reaching implications on the entire organization," says Kevin Lombardo, founder and CEO of Summit Group Partners, a management consulting firm in Littleton, Colorado. He points out that sales can stagnate, profits may never meet their potential, costs may inexplicably rise, employee morale may suffer, and production might fall. "In the short term, these symptoms may cause management to make decisions that are not based on the root causes of the problems," he writes in his article, "Creating and Keeping a Winning Corporate Culture," (ColoradoBiz, July 13, 2011).
"In the long run, these same symptoms can have a critical impact on overall enterprise value," he adds. Other business experts express similar views.
However, a strong, positive corporate culture can bring significant value to a business, Lombardo says. "The results of a strong corporate culture can be seen in many aspects-turnover rate, productivity, sales, brand value-all of which ultimately impact overall profitability. For a true corporate culture to take hold, senior management must be highly involved and keenly aware of their actions and words and how the employees are reacting."
What Is Company Culture?
Company culture, also referred to as "corporate culture" or "organizational culture," is frequently defined as "the way we do things around here;" sometimes it is defined as the company's personality. Edgar Schein, PhD, a noted expert on organizational development and former professor in the Massachusetts Institute of Technology (MIT) Sloan School of Management, Cambridge, provides a more detailed definition: "A pattern of shared basic assumptions that the group learned as it solved its problems that has worked well enough to be considered valid and is passed on to new members as the correct way to perceive, think, and feel in relation to those problems."
M. Jason Martin, EdD, associate university librarian, University of Central Florida, Orlando, notes that various scholars define culture as "how an organization solves problems, or as a deeply rooted value that shapes the behavior of the individuals within the group." He adds, "In reality, organizational culture is all of these things. In its entirety, organizational culture consists of an organization's shared values, symbols, behaviors, and assumptions."
What Is Our Company Culture Really Like?
To find out how issues surrounding company culture impact O&P businesses, The O&P EDGE consulted five business experts who focus specifically on the O&P industry and who have had practical professional and business experience themselves: Elizabeth Carlstrom, O&P Business Solutions, Austin, Texas; Jared Howell, CPO, assistant director of Prosthetics, Physical Medicine and Rehabilitation, Northwestern University, Feinberg School of Medicine, Chicago, Illinois; Elizabeth Mansfield, Outsource Marketing Solutions, Hartford, Connecticut; and Joyce Perrone and Rob Benedetti of Promise Consulting and De La Torre Orthotics and Prosthetics, Pittsburgh, Pennsylvania.
Even if all is going well, business owners still may want to take a close look at their company's culture. Identifying all of the positive aspects that work in favor of their company's reputation, performance, and competitive edge can help business owners establish benchmarks so that their organizations can be proactive regarding future company and industry developments.
To identify aspects of a company's culture, our experts recommend using anonymous employee surveys, if the organization's size allows for true anonymity. Having a consultant conduct a survey and compile results provides a safer environment for employees, Perrone points out. "They feel that they can be open and honest in their answers without fear of retribution." She adds, "Owners may think they know their company culture- 'we have integrity,' etc., but when we tap into the individuals in a company, they may paint a totally different picture."
Benedetti says that surveys could include such questions as, "Do you feel your boss or direct report does a good job of keeping you informed and keeping communication lines open? Do you feel like you know what's going on with the company? Are you happy with your salary? With your benefits? With your work environment?" Questions are not all about salary and benefits, Benedetti notes. The survey also includes such questions as, "Do you understand the vision or purpose of the company? Do you have a feeling of security? Do you feel you're being recognized for good work? Do you know if the company is profitable or not?"
"Those are the type of questions that we ask as consultants," he continues. "Then, when we get the results, we have a good starting point."
If the company is too small for a survey, and management may be able to figure out who said what from compiled responses, Howell suggests working alongside employees in the lab or elsewhere. While working with an employee on a task in a more casual environment, managers can ask non-threatening questions about the work environment and other concerns. In larger organizations, managers and senior leadership can circulate more through the workplace, getting to know their employees and their concerns in an informal setting.
Changing Your Culture
"You might think it's an easy task from reading some of the articles on organizational culture, but it's not that easy," Perrone says. "Many small-business-owner practitioners are so busy with patient care and regulatory compliance that it's sometimes hard to find time for...considering their company's environment and culture and its effect on employees," Mansfield notes. "It's natural for what are considered more urgent, immediate matters to come first."
Carlstrom adds that some business owners are reluctant to change. "Some even become angry and defensive," she says. "They should have open minds and let down their defenses. They also need to realize that 'we're not in Kansas anymore.' Times have changed, and we must change with them."
"Most humans will not change their beliefs, habits, or behaviors unless they are motivated to do so," says Peter Grazier, founder of Teambuilding Inc., Marlton, New Jersey. "Most will not change, even if change is for the better, unless there is some compelling reason," he explains in the article, "Overcoming Resistance to Employee Involvement" (www.teambuilding inc.com/article_overcoming_resistance.htm). Grazier cites an instance where he shared an article with a client that showed a competitor's performance data. The data revealed that the competitor's revenues per employee were twice that of the client's. "The management team was shocked by the numbers...and could now see the potential threat posed by a competitor with such strong financial performance."
If the company's leadership does see a need for change, it must start at the top. Leaders set the example. For instance, if a practitioner who owns or manages a company speaks negatively about some patients to the staff, that attitude can be reflected toward those patients by employees all the way from the front desk to the lab, Perrone points out. The potential for lower-quality patient care, loss of genuine compassion toward patients, and, ultimately, loss of patients, are logical results. Perrone quotes a frequent comment from a noted practitioner: "Rude at the bench, rude at the bedside." Conversely, through their own example, leaders can foster a culture of positive, compassionate care.
Walk the Talk
If senior management has promised to take action on employees' concerns, they must follow through in order to build trust and credibility. In a research study of hospitals over an 18-month period, Harvard Business School (Cambridge, Massachusetts) Professor Anita L. Tucker, DBA, and Harvard School of Public Health Professor Sara J. Singer, MBA, PhD, highlighted the need for words to be translated into action.
Findings from the study, "Going through the Motions: An Empirical Test of Management Involvement in Process Improvement," published in January 2010, as described in the Harvard Business School newsletter (http://hbswk.hbs.edu/ item/6345.html) indicate the following:
- Taking action on known problems in specific work areas on at least a quarterly basis may improve the organizational climate for process improvement.
- Managers would be well advised to take action-preferably substantive and intense action-in response to frontline workers' communications about problems.
- Resolving a small number of problems is better than collecting data about many problems.
- Giving feedback to employees about actions taken can worsen their perceptions of the climate for improvement if the actions were superficial or punitive. In other words, managers do not fool frontline workers by going through the motions of process improvement.
- The risk of surfacing a large number of problems is twofold: (1) identifying many problems simultaneously may overwhelm people with a new awareness of the full extent of problems within the organization, complicating and slowing decision processes and spreading already-stretched resources, and (2) it may reinforce cynicism among frontline workers that managers are uncommitted to improving the organizations' work systems.
All of our experts agree that communication is a major aspect of building trust and unity within a company's culture. Perrone notes that some owners adopt the attitude of "I know what's going on; you don't need to; you just need to do your job." That mentality alienates the workforce, she says. This is an old mentality that just does not work, especially in today's climate of social networking and information sharing. "Some people keep things close to their chest, and as a result they are not trusted. If you are open, clear, and willing to share information, the trust level increases."
Employees also play a vital role in company culture. Angelo Kinicki, DBA, management professor in the W.P. Carey School of Business, Arizona State University, Phoenix, mentions the effect of company culture on the organization's climate. In the study, "Corporate Culture as a Road Map to Success," (, August 3, 2005), Kinicki defines "climate" as "welling up from the grassroots," comprising perceptions employees hold in common about what is expected and what behavior is rewarded at their workplace. "This includes shared understandings of formal and informal policies, practices, events, and procedures," he explains.
"If you do what you say, and you're clear about what you want to be, and then create systems to support that-hiring systems, reward systems-you can have a very powerful influence on your success," he adds.
Perrone's team demonstrates how employees themselves reinforce company values. "We have a strong, mature team that orients new employees to the ground rules of the team. A strong team itself holds members accountable for behaviors in a kind, respectful, and controlled manner."
However, to balance the scales, changing a company culture is not always necessary or desirable. For instance, Carlstrom points out, "I have several clients that are 'softies,' and their employees run their office and make their own schedules. These are smaller offices that are not motivated by money. Sometimes businesses lose sight of what they got into this business for, and that is to help patients improve their lifestyles. As long as they are comfortable and maintain compliance, I see no reason for these companies to make a change."
If changes in your organization's culture do need to be made, and your organization, from senior management to frontline employees, succeeds in accomplishing them, the rewards can be great.
There are also intangible results: Employees feel genuine satisfaction with their contributions to the company's success and pride in the organization, and everyone enjoys the mental and physical health benefits of a pleasant work environment. After all, work is where most of us spend the majority of our waking hours.
Miki Fairley is a freelance writer based in southwest Colorado. She can be reached at