Can You Really Measure the Effect of Culture on Your Business?
How do you measure culture inside an organisation? Can you even perform such an assessment? The truth is that many business owners aren’t even aware of the importance of tracking the right metrics as far as culture is involved.
When you think about it, culture isn’t that easy to measure. How do you quantify something that’s relatively intangible? On top of that, attitudes towards culture development stand in the way of progress tracking. While awareness about its importance is increasing, some still view it as a nice bonus rather than a powerful tool to attract profitable opportunities and talented staff.
As far as key performance indicators (KPIs) are involved, many managers focus on financial and revenue-related metrics.
Even if there’s enough money in the bank, there could still be something intrinsically wrong within the organisation. A focus on the financial side of things alone deprives owners from opportunities to identify room for improvement and problematic areas that need to be addressed immediately.
You cannot improve what you don’t measure. Choosing the right KPIs to pay attention to, however, is the first and most determining part of the process.
When it comes to culture, here are five of the most important KPI’s to track. Pick one that will indicate whether or not you are making improvements in your culture and start tracking it like a hawk.
Employee attraction is what brings people to apply for jobs that you advertise. Why are they attracted to your business? What appeals to them the most?
Attraction depends on many factors – financial incentives, growth opportunities, perceived reputation and yes – your culture.
We know that prior to applicants applying for positions, they will spend quite a few hours researching the company. The process is two-directional – not only do candidates have to appeal to you, it’s also vital for you to appeal to the top talent within your industry. So how easy is it for you to attract the top talent in your industry? If it is not easy, then perhaps it’s time to look deeper at your culture as this will affect your ability to grow, to scale and to make an impact. Click to tweet
Retention refers to the percentage of people who remain within the business for a specified period of time. It’s vitally important number to track because a high turnover rate can cost you anywhere between 16 and 213 per cent of the lost employee’s salary. Retention also suggests just how engaged people are with the culture you have in place because when this number starts to fall it’s a definite sign that you have not made your patch of grass green enough and therefore your people are looking for a greener patch of grass with your competitors.
A habitual absence from work can turn into a serious problem that can cost the business a lot. It’s also indicative of poor engagement, poor morale and even burnout. People will not come to work if it is not a positive experience and the emerging workforce places a far higher importance on the workplace environment. Click to tweet
4. Worker Compensation Claims
Workers compensation claims about mental health are on the rise in this country and around the world. Ninety one per cent of them are due to work overload and stress. If your people are putting in claims due to these issues, alarm bells should start ringing and an immediate plan should be put in place to improve your culture. One insurance company I spoke with believed that one mental health workers compensation claim could triple your premiums for the next three to five years. Ouch!
5. Engagement and Productivity
Engaged employees are productive employees.
Because engagement is somewhat tough to define, it can also be tough to measure. Usually, it’s seen as a grouping of several measures like happiness, relationships between colleagues, relationships between employees and managers, wellness and feedback.
There’s a lot of research about the importance of engagement for the overall performance of the organisation. A commitment to measure engagement on its own shows employees you’re concerned about their happiness and workplace satisfaction.
There are a number of companies who do measure engagement, so please contact me if you would like some help choosing the right one.
In a highly competitive world, financial metrics are the ones that receive the most attention. Culture, however, can be examined as a conglomerate of various KPIs that show the health of the organisation from within. After all, leaders who care about the wellbeing of their employees are the ones that reap the biggest rewards. Click to tweet