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How Strategy and Culture Affect Employee Retention

By Anthony Taylor - January 17, 2017

You probably understand the benefits of strategic planning for the purposes of getting more effective execution on your action plans moving forward, but have you considered the impact of your strategy and culture on the retention of your staff?

As culture becomes a more central part of organizations like Southwest, Zappos and other successes big and small, there is also a negative aspect to a culture that can have a direct impact on your bottom line.

Understanding what might be going inside your organization means looking  under the surface of your P&L (profit and loss), employee reviews and HR department. Let's take a look at strategy and culture together, and while we do, think about your organization and examples of how this might be represented within your team.


What is a company culture?

A culture within a company are the set of norms and values (ways of acting  that are common accepted/desired behaviours), rules (ways of being that are actively enforced) and overall behaviours that dictate how employees act while at work (or more precisely while employed) at a specific company.

Watch: Why Culture Eats Strategy for Breakfast.

Culture can take many forms:

  • Expectations as to how long someone can expect to wait for an email reply
  • Rapport and conversation styles among teams, between departments, or with leaders
  • How teams in different areas of the business work collaboratively (or competitively)
  • Management's approach to solving disagreements and disputes
  • Length of work days
  • and much more

The difference between values and culture:

As we alluded to earlier, values are an ingredient to creating a culture within your organization.

  • In your organization, what are your values?
  • What about your personal values as a manager and a leader?
  • Are they different? The same? 

What people and the organization value (whether aligned or not) can have a variety of impacts on the company culture. 

The impacts of a negative culture:

If you have a bad/toxic culture you probably already know that something is going on, but might not know exactly what that is. Maybe: 

  • People are unhappy, disinterested or unmotivated
  • They aren't working well together or work is slipping through the cracks
  • People are leaving (this is a big warning sign!)

Examples in real life:


Understanding what's going on in your culture:

The first step to changing culture (if that's what you want to do) is to assess it!


On a white board or sheet of paper ask yourself:

  • What are some ways that people act (positive or not) that would describes our current work culture? (This exercise is best done with multiple people)
  • How is this different than our desired or optimized culture?
  • What is your version of a "perfect" culture?
  • What do your people envision as their "perfect" culture?
  • What would be a 100% successful culture transition?

A great culture can be really attractive for talent: Facebook had an entire team leave to go to create a culture that was more in line with what they wanted.

What you can do to start changing culture:

You've already done the first step if you've started identifying some problem areas and creating a version of success. The next step is to create urgency around a business initiative.

Tying strategy and culture change together is key to making culture development stick. What kind of business success would require people to change the way they act and work together?

Here are some examples from HBR.org of tying culture change to strategic change.

Knowing what success looks like:

  • What are some behaviours that you would want to see that would create the organization that you really want to work in?
  • How would you know/demonstrate those values in action?

(If someone lived these values we would know because of: _____________)

Talking the Talk vs. Walking the Walk:

It's one thing to say that you want a certain set of behaviours, but it's important to support these values and behaviours moving forward. You need to lead, before people follow, and even if you are leading, you still might be sabotaging your change efforts by rewarding the wrong actions.

Let's take a look at 3 different ways of acting:

  • Talking the talk: You say one thing, and do another. People see you paying lip service, but not doing the things that you expect of others. No good.
  • Walking the walk: Great, you're doing what you said you were going to, and people should follow right? Well, in theory yes, but you're missing one more component to make culture change stick.
  • Rewarding the walk: If you told people you value work life balance, but reward the people (with praise or money or other) for extended hours, which behaviours do you expect people to get behind?

Getting alignment with your values and your incentives/ benefits is the last step to creating behaviours that will stick. 

The bottom line on culture and employee satisfaction

Culture and values act as decision making rules for employees.

If clear and understood, employee's know how they can be successful, how they can contribute, and how they can win and move forward in their jobs.

If employees know how they can be successful and are empowered to do so then they are more likely to be engaged and happy in their work.

You want your staff to be engaged

According to an analysis of 1.4 million employees done by Gallop

Work units in the top quartile in employee engagement outperformed bottom-quartile units by 10% on customer ratings, 22% in profitability, and 21% in productivity.

Work units in the top quartile also saw significantly lower turnover (25% in high-turnover organizations, 65% in low-turnover organizations), shrinkage (28%), and absenteeism (37%) and fewer safety incidents (48%), patient safety incidents (41%), and quality defects (41%).

In other words : If your employees are engaged by having a creat culture that is tied to strategy then you are going to perform better and your employees are going to stick around.


If you're happy at your job, why would you leave?

There is no one best culture; there's the culture that your company has, and it's going to attract a certain type of person (Like a pub or cafe with a different types of music and atmosphere).

A negative culture, however, will push away the great people in your organization.

How much does it cost your organization for hiring/training/on boarding new employees? (What if someone senior leaves?)

We've gone over a few benefits of creating a great culture, so it should be a no brainer to be aware of the affects culture has on your people and on your performance.

Whether you are at the stage of creating a world class culture, or simply turning around your current culture, use the tips above to make changes for the sake of your employees and for your organization.

In a 2016 Strategic planning session we facilitated, one of the management team members came to us and said they had planned on leaving, but were inspired by the commitment and direction from the rest of the leadership that they were going to stay. 

If you have any parts of a negative culture going on, the sooner you can address it the better. 

Who knows? One of your best people might just be waiting for the next chance to make a change, 

Want to get the ball rolling on culture change? Start at your next strategic planning meeting



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