I find it baffling that even in hardcore capitalistic circles, company culture and what it means for the company and profits is incredibly misunderstood. And I wonder if one of the reasons is that there is no project or programme you can run to “fix culture” and bring 10 FTE savings or salary decreases across the company.
I believe most people in the Western world would agree that they would take a 5% pay cut to work in a company that they feel good about. Where they feel like they make a difference and where they look forward to working with their colleagues. Or at least they don’t dread it.
And you know what, I think there is a part of us that would even take a 10% pay cut for that.
Let’s say it’s 7.5% across the board. That’s a 140-person company with £10m annual people costs, with £750k a year to work with!
Just look at your inefficiencies and where software could help you? I bet that software is nowhere close to £750k a year!
That is a decent-sized development team that is developing new products, propositions, or building tools to bring efficiencies.
And you know what the real magic in it is? IT IS AN INVESTMENT! It compounds! Like investments in markets (fingers crossed), every year you invest that £750k into improving your operations and product!
And this pot of money to invest grows with your company as well! I know, it’s like chickens! You get new chickens out of chickens! #DavidMitchell
So we have established that company culture is like free money that you can invest into growth that compounds. This is the hard benefit. The one you can possibly see on an EBITDA spreadsheet.
Now, let’s have a think about the soft benefits. And that is keeping people in your organisation and keeping the deep knowledge that takes years to learn.
I strongly believe that in a company with a good culture, with people who are happy to make changes and are knowledgeable about the work they do, the cost of change is an order of magnitude cheaper. Change to a business that would cost £100k becomes £500k or even millions of pounds in an organisation with a poor company culture.
How does that happen, you ask? No one really knows how things work or how they should work. People are afraid of making changes or the changes happening around them. They do not engage or are happy for changes to happen due to anxiety and fear. Confidence is low, everything becomes a long project with large groups of people, because you need to get a bit of information from every person. Even after weeks of workshops and brainstormings you are still likely to miss some critical pieces of information.
What is the impact of that? You might get to a point where YOU ARE NOT ABLE TO MAKE A CHANGE! You look at a project plan and think “How the f*ck does this cost £1m?! Surely it’s 3 people and 2 months of work at worst?!”
But you don’t say that out loud. You just think it to yourself, because you are just confused about how you got to this point.
All of a sudden, changing a toilet paper roll becomes a whole company programme, because we can’t spend that amount of money without proper scrutiny. And it goes on and on and on.
Confidence falls, frustration rises, and no one knows how to get out of that situation.
And no matter how many 3rd party companies will offer the silver bullet, they don’t have it.
Whilst you are going through this, there is a direct competitor that is reinvesting 7.5% of people costs and moves fast. And possibly they have been doing it for 10 years by now. What is the math on that?
Just above average 