February 1, 2023, Seattle, WA – The latest global study by HR research powerhouse i4cp provides evidence to support a new business imperative: the health of your culture has a direct impact on how well a company performs.
The study, Culture Fitness: Healthy Habits of High-Performance Organizations, showcases the financial impact a healthy culture—or a toxic culture—can have over time. Organizations that reported top cultural health also reported high market performance 6x more often than those that described their cultures as unfit…or toxic.
Moreover, cultural fitness helped predict employee productivity and market performance.
“The health of a culture can often be summed up by the employee experience,” said Kevin Oakes, CEO of i4cp and author of the bestselling book Culture Renovation®. “And there’s no question that employee experience is much more visible today than in the past. With multiple channels that enable workers to anonymously express opinions, it doesn’t take long to gauge how former or current employees feel about a culture. And those in the fittest cultures are much more likely to vocally recommend their company to family and friends.”
The pandemic seemed to create greater separation on the topic of culture fitness:
- 43% of companies said their culture became healthier since the beginning of the pandemic
- 34% said their culture became less fit.
Fit cultures defined by six notable traits
The fittest cultures in the study were found to have significantly higher employee net promoter scores (eNPS) than unfit cultures over the last two years.
- Companies with healthy cultures reported excellent (71-100) eNPS scores 9x more often than their unfit counterparts.
- Those firms were also 4.5x more likely to report an increase in employee engagement scores since the onset of the pandemic.
Aside from perception, healthy cultures enjoy concrete positive benefits, such as improvements in talent attraction and employee well-being. Very fit cultures are 4x more likely to have experienced improved retention and 3x more likely to have strengthened their ability to attract top talent since 2020. Unsurprisingly, this has resulted in improved productivity: fit cultures are 2x as likely to have experienced increased employee productivity during this same period.
When asked to select their organizations’ top culture traits, surveyed leaders from companies with the healthiest cultures commonly cited the above:
The Toxic 9
The study found that the healthier the culture, the less likely it is to be plagued with any of the following challenges, which i4cp terms The Toxic 9 traits of unfit cultures:
“When examining what behaviors happen inside organizations with any of these toxic traits, the study found that leadership actions—particularly inaction on unwanted behavior—emerged as a main catalyst,” said Katheryn Brekken, Sr. Research Analyst at i4cp and co-author of the study. “Leaders almost always set the cultural tone. Like it or not, they are the stewards of corporate culture. Trust in leaders is critical to a healthy culture and ultimately to the bottom-line; yet in unfit cultures, a lack of faith in senior leaders is reported 16x more.”
Leaders in unfit cultures are 4x to 5x more likely to disregard poor behavior when making decisions about advancement, compensation, succession planning, performance ratings, awards and recognition, and high-potential employee designations.
Conversely, organizations that report fit cultures are 6x more likely to address behavioral issues as soon as they are identified.
The full report is available now exclusively to i4cp members. Non-members can download an executive brief here.
i4cp is the leading authority on next practices in human capital. Our purpose is to discover and advance next practices in human capital. We produce more research than any other human capital research firm in the world, and many of the world’s most prominent organizations and HR leaders turn to i4cp to better capitalize on HR best practices and emerging workforce trends. Supported by a powerful community of human capital practitioners, we provide HR research and insights that help organizations better anticipate, adapt, and act in a constantly changing business environment.