Purpose-Driven Cultures Drive Financial Success

Monique Reece shared valuable research findings on the impact of a purpose-driven culture on financial performance in an article called “The ROI of Company Culture”. It’s worth repeating here.

Over 2 decades ago, John Kotter and James Heskett compared the performance of organizations that made company culture a key aspect of their strategy versus those that did not. They discovered that companies that focused on culture as a key ingredient of strategy:

• Revenue increased – 4 times faster
• Job creation rates grew – 7 time higher
• Stock prices increased – 12 times faster
• Net Income and Profits climbed – 700+% higher

In Firms of Endearment: How World Class Companies Profit from Passion and Profit, Sisodia, Wolfe Sheth illustrate the connection between purpose-driven companies and financial outcome, with these companies returning 1025% growth over a 10 year period, companies to only 122% for S&P companies.

The power of focusing on culture can best be seen in service industries, such as lodging or hospitality. For instance, Ritz-Carlton has less than 1/4 the employee turnover than other hotels do.

So, as you’re gearing up for 2014 and putting the new strategy in place  — are you also making commensurate culture improvements to link employees’ sense of purpose to the strategic goals? If not do so. If yes, share with us how you are doing so now, so we can inspire other organizations to have a breakthrough year in 2014.

Research by Success Profiles revealed that businesses that excel in the areas of communicating their vision, mission and values, saw profit per employee increase from $7,802 to $27,401.

As I’ve noted in a prior blog entry, IBM does biennial studies of CEOs and 2 years ago found that innovation was no longer the top concern: managing complexity was. Moreover, the majority felt they hadn’t been trained to handle some of the complex issues they faced.

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