Do you know how many people are leaving each year and what an unconscious culture is costing your organization?
There is a saying, “Culture eats strategy for breakfast”. Using the metaphor of an iceberg, Culture is the under belly. It’s the thing we cannot see, but know the terrifying power it has. We only have to be reminded of the of the Titanic, the unsinkable ship, and the terrible loss of life that was suffered.
Workplace Culture is similar in so many ways. If you aren’t assessing your corporate culture, then it’s probably fair to admit you have an unconscious culture. “So what?” You ask.
I hope all CFOs are reading this. Pay close attention to the following calculation:
Cost of Employee Turnover = # of Employees Leaving X Annual Salary X Cost to Replace (between 90 – 200% of annual salary)
Manufacturing Real Business Case:
- Organization with 150 people and 30% annual employee turnover = 45 employees
Note: Singapore’s average is 20 – 30% annual employee turnover
- 45 employees leaving X $60,000 annual salary X 120% annual salary = $3,240,000 million dollars
The business cost to SME organizations with 30% turnover is $3,240,000.
With 20% turnover, the cost is $2,160, 000 million dollars.
That’s a huge cost which can be directly linked to an unconscious corporate culture.
The thing to ask yourself is “What are the employees experiencing that would make them want to leave? When they do leave, what does it actually cost to replace them? The cost of training someone new, the cost of lost relationships they take with them. Calculate all the lost opportunities and business potential the person was providing, that is now gone.
There is an even worse scenario.
Consider an unhealthy, disengaged, disempowering culture that creates a toxic work environment. Where poor behaviour becomes the norm. And People to not leave.
Those who are dissatisfied, and disengaged stay and cause more toxicity.
What impact do you think this has on the whole organization? Instead of attracting the best talent, you attract the “bottom of the barrel”. Unsavoury characters who bring with them even more problems. Unfortunately, like attracts like.
Think of the reach and impact unproductive behaviours have. Every person who encounters them will suffer, somehow. Fellow employees, clients, customers, suppliers, community stakeholders.
Why do people leave organizations? Leaders believe the main reason is for more pay. However, the truth is people leave managers, not organizations. Leadership style has a lot to do with employee experience. The values and behaviours employees experience either inspire and motivate engagement and high performance. Or they disengage and cause low productivity, negatively reducing the business’s effectiveness in achieving its targeted outcomes and goals.
Think of an organization you have left. What were the values and behaviours you were experiencing that caused you to look elsewhere for more meaningful work. Where you would feel valued for all you had to offer.
There is a term used to describe all the limiting values and behaviours that cause conflict, friction, and frustration. It is Cultural Entropy. When you think about entropy, what comes to mind? Something that is shrinking and dying from within. Examples are blame, disrespect, manipulation, control, distrust. You can see and feel the energy drain sucking the life force out. All these limiting behaviours have a negative impact on people’s ability to be creative, innovative, collaborate, connect, and trust.
The worst hidden cost of an unconscious culture is the loss of human potential. This is because loosing human potential directly impacts the human potential in the whole organization.
If you’re not growing, you’re dying. The entropy eats away all the positive intentions we have as human beings. I once stayed in a job for one year because I had given a commitment to the organization. However, the negative impact this had on my personality and spirit was tangible. People could see my energy drain and the passion I have for my work, dwindle down. Until, at the end, I was so glad when the contract ended and I didn’t have to face the Monday morning blues.
So what are you doing to build a conscious culture? This is why I wrote my book: Conscious Culture – How to Build a High Performing Workplace through Values, Ethics, and Leadership.
Bottom line profit, and top line growth are directly impacted by your workplace culture, and people’s ability to perform up to their full potential. Your company brand is also directly impacted by your culture. Who you are in the inside, the employee experience, has a direct impact of the client and customer’s external experience. This is your brand. Yes, workplace culture and company brand are directly connected.
In the assessments we conduct, we measure your organization’s entropy. It is a measurement of all the limiting values and behaviours people select to describe your current culture. To find out the actual cost of your entropy, we take the % of entropy and multiply it by your HR Budget.
Cost of Entropy = % of limiting values x HR Budget $$$
Many organization today have 20 – 40% entropy. With an HR budget of $3,000,000 that cost is $600,000 to $1,200,000. That’s a lot of valuable resources spent on disengagement. Imagine what could be done if a portion was spent on building a high performing workplace culture by empowering people to reach their full potential.
As we experience more and more disruptive change, doesn’t it make good business sense to invest in your culture, and consciously build high performance? If you don’t, you can bet your competition is, because an organization’s culture is their #1 competitive advantage. It is the only thing that cannot be copied or stolen because it’s made by you.
Here are 3 tips for helping you start to build a conscious culture:
- Assess your workplace culture – get a baseline measurement so you can map, and manage cultural change in times of disruption.
- Revisit your mission, vision, and strategies – create a shared vision that will give direction and purpose to the whole organization.
- Select operational values and behaviours that will support your mission and vision, and build alignment.
Having a shared vision with shared values creates the internal cohesion necessary for high performing. Take care of your people, and they will take care of your profits. Use your profits to take care of the planet, this is what I call conscious, sustainable leadership.
Much love, from Singapore.
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With 30 years in business transformation working with organizations, Joanna’s passion lies in working with leaders, facilitating active participation in organizational change, developing resourceful teams and aligning strategic objectives. Her goal is to help organizations become high performing and values-driven, where people take ownership, build commitment and bridge communication gaps. As CEO of the Culture Leadership Group, she ensures successful transformation from concept through to implementation.