The evidence is in – the right workplace culture isn’t just beneficial, it’s essential. Today we talk about how culture drives profitability, how much it drives profitability, and how to get it right.  

An important note: we’ve long heard that a happy team is a productive team. In my experience, it’s different: a challenged, trusted, and supported team is a productive team (and ultimately, a happy team). Highly engaged cultures are less about pizza parties and more about investing in the real growth of your humans. But, what's the ROI? 

Why Culture Matters 

Employees who enjoy a positive workplace culture tend to stay longer, show up with more enthusiasm and effort, and drive faster innovation. And, no surprise, the financial implications are substantial. According to research, companies noted as "Best Places to Work" outperform the market significantly, with lower turnover and higher returns.  

The Financial Impact of Culture 

1. Reduced Turnover Costs: High turnover isn’t just a headache; it's expensive. Studies show that replacing an employee can cost about 20% of their salary and that companies with strong workplace culture experience about half the turnover of their peers. The right culture not only reduces costly turnover but makes recruiting top talent easier. In fact, studies show that businesses with highly engaged employees received 100% more job applications. 
2. Increased Productivity and Innovation: Companies with engaged employees report higher productivity and innovation levels. When everyone feels empowered to participate, creativity flourishes, leading to products and solutions that keep a company competitive and profitable. Data shows that companies with engaged employees see their revenue grow up to 5x faster than those without. 
3. Increased Employee Engagement: One of the most dangerous assumptions I see leaders make is that time and energy spent on company culture directly conflicts with business productivity. This fails to consider the exponential reward of an employee who is inspired and connected rather than burnt out. Burn out is real, and it’s really expensive. According to studies, disengaged workers have 37% higher absenteeism and 60% more errors. Further, companies with lower-than-average employee engagement “experience 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time.”  
4. Higher Profitability and Market Performance: A direct correlation exists between positive workplace culture and profitability. Businesses that prioritize their environment see a significant increase in revenue—up to 33%. Some studies show that companies with high-trust cultures have seen a 4x increase in revenue growth.  

Creating a Culture That Drives Profitability 

1. Encourage Open Communication: Transparency is crucial. This doesn’t have to mean sharing all of your company’s financial details, but it does mean encouraging employees to actively solve the business’s toughest issues. Trying to unlock customer churn? Ask the employees on the front lines. Wanting to build an onboarding program that gets employees more productive, faster? Ask your newest hires what they need and encourage them to build it with you. This kind of environment not only builds trust but also fosters a sense of ownership and commitment to the company’s goals.  
2. Foster Professional Growth: There is no faster way to improve company culture in a way that pays dividends for the business. Invest in your employees' growth through training, conferences, or access to courses. Employees who feel they’re growing in their roles are more likely to feel satisfied and stay longer. Expanding your employees’ skillsets means your business can do more with less over time. Something as simple as regular, in-house training for midlevel managers or sales teams can produce revenue results within 30 days.  
3. Recognize and Reward: Regularly acknowledging your team’s hard work goes a long way in building an engaged culture. Whether it’s through shout-outs in meetings, performance bonuses, or career development opportunities, showing appreciation boosts morale and motivation. 
4. Lean into Employee Rituals: One of the trademarks of a hyper-engaged culture is a set of employee rituals. It may be a running office joke, a competition, an annual tradition, or daily walks around the block. Whatever makes your company culture distinct deserves to be honored and protected. Studies show that these micro-behaviors are connective and drive employee satisfaction and productivity, and it’s an easy way to keep work fun. 

The Results Speak for Themselves 

Done right, workplace culture is a force multiplier. In practice, these strategies not only enhance the working environment but also significantly impact the bottom line.  

Investing in a positive workplace culture isn't just about creating a nice place to work; it’s about building a sustainable, profitable business with empowered and engaged employees.  

References:  

5 Ways Workplace Culture Drives Business Profitability | Great Place To Work® 

100 Best Companies to Work For in 2024 Deliver ‘Staggering’ Business Performance | Great Place To Work® 

Building A Company Culture To Drive Success (forbes.com) 

11 Ways (And Reasons) To Measure The ROI Of Your Company Culture (forbes.com) 

10 Proven Methods For Measuring The ROI Of Company Culture (forbes.com) 

Proof That Positive Work Cultures Are More Productive (hbr.org) 

Culture Is A Company’s Single Most Powerful Advantage. Here’s Why (forbes.com) 

About APPROVE:  

APPROVE is an award-winning fintech startup and one of Wilmington's fastest-growing SaaS companies. You can learn more about us at https://www.approvepayments.com.