Organizational culture and leadership are interconnected for the success of any company. It is important to have a conducive and friendly environment so that ideas flow freely, employees don’t have pressure and feel more accountable. It is true that a lot of companies don’t understand that there is a strong relationship between leadership and organizational culture, and that’s the reason they haven’t been as successful. A whopping 87% of organizations say that in the current scenario work culture and employee engagement are two of their main priorities.

Given below are 6 reasons why organizational culture matters.

1. Customer satisfaction

Employees are a company’s representatives. If they’re engaged and believe in the values of your company, it will only make your brand stronger. There is a distinct link between customer satisfaction and company culture. When employees are dedicated they can influence customers and increase customer satisfaction levels.

• Motivation

After many types of research and studies a theory was formulated – why we work determines how well we work. When employees enjoy their work, identify with their roles and responsibilities, and are aligned with the goals, they are highly productive and engaged.

Play, purpose, and potential are three indispensable elements that can only be achieved if the company has a good organizational culture. By combining all these elements, here’s a Tomo (total motivation formula) –

(10 x the score for play) + (5 x purpose) + (1 2/3 x potential) – (1 2/3 x emotional pressure) – (5 x economic pressure) – (10 x inertia)

• Growth

Having a strong organizational culture & corporate culture gives your company scale to grow. A study was conducted by Deloitte and it was found that 83% of respondents who work for companies with a strong sense of purpose ingrained into culture are more confident in their company’s ability to deliver best-in-class services and products.

• Attracting top talent

Another benefit is that a comprehensive organizational culture helps to hire best people. Today potential employees look for more than just a good salary. They look at the overall working conditions, organizational culture, leadership etc. They’re looking for employers who are concerned about their overall growth and give them chances to learn and grow on the job.

• Employee retention

The employee of today doesn’t just want to look for a job, he/she seeks an environment and community that encourages collaboration and which fosters knowledge sharing. A survey conducted by Google found that 88% of respondents said that their organizational culture and leadership support collaboration and knowledge-sharing.

Recent research found that companies with rich cultures have a 13.9% probability of turnover as compared to 4.8% of those in a weak organizational culture. A study done by Officevibe suggested that 58% of men and 74% of women would refuse a job even with a higher pay if it means doesn’t getting along with their colleagues.

• Company image

In the current times corporate culture is all about transparency and scrutiny. Most leading organizations base their rankings on employee critique of company culture. A study was recently done by Deloitte and Glassdoor and it was found that an employee’s rating for culture and values is 4.9 times more predictive of a positive recommendation than salary or other perks.

If you think that only the company’s workforce is impacted by the organizational culture & corporate culture, then you should think again. Even the clients and customers are directly affected organizational culture. In a survey, Deloitte found that 81% of respondents working for companies with a strong sense of purpose also said stakeholders trusted their leadership team.

A combined study by Columbia and Duke University conducted with over 1400 CEOs and CFOs suggested –

• More than 90% of them suggested that organizational culture and leadership was important to them
• 92% of them said they believed in improving their company’s corporate culture would improve the overall value as well
• 78% of them said that culture was one of the top 5 things that makes their company more valuable
• More than 50% of the participants said that corporate culture has a direct influence on productivity, profitability, creativity, growth, and values
• Only 15% of them said that their company’s culture was where it should be
• When considering acquiring a new company 46% of participants would not make an offer to a company that doesn’t align with their own company’s culture

Relationship between leadership and organizational culture can be clearly seen. If you have good organization culture, it encourages productivity and builds relationships.