30 November 2015
6 reasons why culture and values matter to the bottom line
In a business, culture and values are – at their simplest – what that company stands for and how it conducts itself. These are issues that continue to loom large in the public eye: from horsemeat to Libor, high profile industry scandals have led many to question what really underpins the behaviour of companies.
Some of the best businesses place a huge emphasis on the importance of culture and values because doing it right can mean:
1. Enhanced reputation and trust
“The financial crisis of 2007-2008 showed what can happen when behaviours become disconnected from values” says the Great Place to Work Institute. Since then, around half of companies (54%) report having changed their values, the same number citing the changing external context as the main reason for this change. In order to build public trust it’s essential that companies live by those values and embed them in day to day behaviour, or as Martin Hawley, Boardcircle puts it “Companies shouldn’t find themselves helping a homeless charity one minute and then devising tax avoidance schemes the next”. Find out more – see what Cardinal Vincent Nichols has to say about the principles that underpin business.
2. Closing the gap between shareholder and society
Many are concerned about the potential disconnect between the short-term interests of shareholders and those of wider society for the long-term. For example, while 70% agree that profit is a good thing, just as many believe employees or customers lose when profits are made. Establishing the right set of principles from out the outset can help companies to strike the right balance between short and long term returns and to take into account the needs and demands of a wider group of stakeholders. Find out more – read what Antony Jenkins, Group Chief Executive of Barclays thinks about the evolving role of large business in society post the financial crisis.
3. Building loyalty with employees
“Happy people at work really work” says entrepreneur and blogger Raymond Klompsma. Shared companywide values are one of the top drivers of employee engagement, cited by 29% of employers. Indeed, in workplaces that are top rated by their employees, the majority agree that management’s actions match its words (75%) and that management delivers on its promises (76%), suggesting a strong adherence to core values. If a business’ employees have a shared sense of purpose and get what it’s all about, they are more likely to stay and support the company and work hard. This is even more important for businesses competing to recruit and retain the talent of younger generations: 59% of millennials say they would deliberately seek employers whose corporate responsibility values matched their own. Find out more – read why Nita Clarke, Director, IPA says that a company’s employees are its best early warning system.
4. Winning over consumers
No doubt about it, consumer expectations are growing – 55% of people agree that expectations on business to do the right thing have risen in the last ten years. People are increasingly prepared to make purchasing decisions based on the wider value of a product, for example whether it was ethically sourced or if the packaging can be recycled. When customers see that a firm and its employees behave in a way that lives up to expectations and delivers against its values, there’s a great opportunity for firms to win market share from companies that fall short. As supermarket Sainsbury’s put it, “our values make us different” – a strong value statement is a chance for firms to set themselves apart from other brands and create a USP. Find out more – read what Euan Venters, Commercial Director, Fairtrade Foundation has to say about a culture of ethical sourcing.
5. Helping to bolster company longevity
Companies that have remained at the top of their game for the last century all share one thing – a strong value base. M&S for example, still aims to remain true to its 1884 founding values of “Quality, Value, Service, Innovation and Trust”. A set of guiding principles for behaviour and a purpose beyond profit can prove a strong and long lasting bond for a company and its employees, investors and customers. Find out more – read an opinion piece from Sara Weller, Non-Executive Lloyds Banking Group exploring why a return to ‘long-term thinking’, on which many UK banks originally built successful businesses, may be the answer to building trust in the industry.
6. Driving positive change
From youth unemployment to climate change, obesity to our ageing population, together we face major challenges not just in our communities but also a country, and as a planet. Business has the resource, scale and expertise to be able to make a real difference, but the majority (67%) of CEOs themselves do not believe that business is doing enough to address global challenges. Embedding wider social goals into value statements is a way to convincingly put them at the heart of what a business does and achieve real change – securing the future for all of us, business included. Find out more – read what Estelle Brachlianoff, Senior Executive Vice-President UK and Ireland, Veolia has to say about whether business is leaving generations compromised or better equipped to meet future challenges.
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