According to the Bureau of Labor Statistics, the current average length of service for employees is four years, with those between 25-32 years of age even lower at two years. With service periods shortening, it’s natural to experience higher levels of turnover. Data from a Society of Human Resource Management survey estimated annual turnover at 18 percent with costs between 50 and 75 percent of average total compensation, indicating turnover can have a significant impact on the cost of doing business. For example, a 100-person company with an 18 percent turnover rate and average total compensation of $60,000 could experience direct and indirect turnover costs of $530,000 to $800,000 on an annual basis. From a financial standpoint, employee retention is key to a successful business, and company culture is one factor that can help retain employees.
Mike Krizman, Human Resource Advisor at TMAC and The University of Texas at Arlington, spoke on organization culture at NATM’s Workforce Development Summit in November of 2020. He covered organizational culture and its importance during his presentation. He touched on what organizational culture is comprised of as well as barriers and tips to forming the type of culture that benefits both employees and employers.
TMAC is a NIST (National Institute of Standards and Technology) MEP (Manufacturing Extension Partnership) and is the official representative of the MEP National Network in Texas. TMAC’s mission is to accelerate profitable growth and competitiveness of Texas manufacturers by developing and improving profit, products, processes, technologies, and people.
What is Organization Culture?
Krizman defined culture as the conscience and subconscious of an organization. It is universally understood and influences the success of a company. Culture is comprised of the values and behaviors of employees and is unique to that individual group. It is dynamic which means it is affected by many different factors, both internal and external. Most importantly, culture impacts an organization’s ability to succeed.
Culture is made up of a variety of factors including the company’s vision or mission as well as what employees bring to work every day. Experiences, beliefs, attitudes, opinions, etc. all make up the organization’s culture. Leadership can help set the cultural example for employees to follow by enacting it themselves.
Barriers to Successful Organization Culture
Although building a successful culture is a key part to a business’ success, it is not without its challenges. Culture relies on all parts (employees, leaders, systems and processes, etc.) working seamlessly together; if one part breaks, the entire culture takes a hit, and regaining the loss can be tedious. Be on the lookout for these barriers to success:
These three things can negatively impact the growth of organizational culture. If leaders do not support the culture, there is no reason for other employees to be supportive. If HR does not have the practices in place to act in line with the culture, it will be unable to take root. If what employees see does not line up with the culture, it is something fake and out of reach, something they are not meant to be a part of.
Tips for Building a Successful Culture
A successful culture is one established from the top-down and bottom-up. It is systemic and written into company policies and plans. A successful company culture is one that employees see themselves in.
Examples of actionable steps to take to ensure consistency and success across the company include:
Leaders should be at the forefront of the organizations culture. Here’s some examples of actions they should take to ensure knowledge is passed on to the appropriate parties:
Organizations have a greater likelihood of success when leaders create vision, mission, and value statements to drive their desired cultural and performance expectations. Leaders should work to establish an environment where employees can reach their full potential while also meeting their basic physical and psychological needs. This requires the introduction of a competitive HR management program, extensive communication systems, and an engaged workforce which will help create the link between employee and organization needs.
For more information about how TMAC can assist your company in Texas, contact TMAC by phone at (800) 625-4876; on their website at www.TMAC.org; or, contact speaker Mike Krizman at Mike.Krizman@tmac.org.