Why a good work culture is essential for client-focused businesses

On the long list of reasons for business success, company culture too often gets short shrift. Company culture is more ephemeral than accounting processes and sales figures; there isn’t a spreadsheet that can tell you how to build a winning workplace culture or what to change when esprit de corps is lacking.

Professional services businesses like law firms, architecture firms, and marketing agencies focus a lot on making their clients happy, which makes sense. But what if they put that same energy into making their employees happy?

The growth of social focus

According to Deloitte’s 2018 Global Human Capital Trends survey, the watchword for businesses these days is “social.” A shift toward enterprises that value the common good as highly as they do shareholder value and the bottom line is driving a new focus on relationships and ethical behavior, and promotion of values like collaboration, trust, credibility, and consistency.

“Organizations today are increasingly judged on the basis of their relationships with their workers, their customers, and their communities, as well as their impact on society at large — transforming them from business enterprises into social enterprises,” the report states.

Increased social capital in business has implications for not only how companies act toward society at large but also for internal management. When companies embrace a social orientation, they must match their internal company culture with the values they espouse in their outward-facing operations. Company culture, it turns out, is more important than ever in this changing business landscape.

Beware the “cultural chasm”

With workplace culture so essential, growing businesses need to work from the very beginning to ensure that they develop internal values, policies, and communication methods that contribute to employee satisfaction.

Data shows a quality work culture is one of the most important indicators of whether a business is likely to maintain strong employee enthusiasm and faster-than-average growth. A study of 60 professional services companies by Great Places to Work found that companies that have fairer, better managed, and more democratic workplaces end up with more cooperative, loyal, and eager employees and also grow faster than their competitors.

New companies are particularly in danger of neglecting to build the type of culture that will result in this kind of success. Some 70 percent of startups overall hit rough water with their work culture in years three and four, irrespective of how fervently their employees were singing kumbaya before that time. This dip in morale has been termed the “cultural chasm,” and experts warn that companies need to start thinking about how to mitigate and navigate it before they get tripped up by it. Companies that figure out how to navigate this chasm see a distinct improvement in their company culture in the subsequent years.

The good news for client-focused firms is that Niu and Roberge’s data is mostly focused on companies like software startups. Part of the reason the cultural chasm can be so difficult for such companies is because they are growing so fast that leadership doesn’t have time to thoughtfully focus on employee morale. The nature of the service provision businesses, which requires person-to-person engagement instead of high-volume or high-priced software sales, gives executives room to put thought into employee engagement as the business evolves.

The importance of engagement and retention

How can client-focused companies gauge the quality of their workplace culture? Two important indicators they should consider are employee engagement and employee retention. These two metrics can hint at how happy employees are at the company. Are they dedicated, hard-working, and enthusiastic? Are they planning to stick around and grow with the firm? If the answer to either is “no,” it’s time to take a hard look at your company culture.

Many companies could use this kind of soul-searching. Gallup found in a recent survey that about a third of employees are engaged in their workplaces, meaning that a vast majority of workers aren’t very enthusiastic, drag down productivity, and dampen the overall mood. It’s an expensive problem: Lost productivity costs the U.S. economy at least $480 billion each year.

Employees who aren’t engaged will be less likely to stay at a workplace over the long haul. This is why employee retention is such a powerful indicator of whether your culture is working for you and your workers or not.

The most successful companies are those that make it worth their employees’ while to stick around. At the 100 companies with the best workplace culture as identified by Great Place to Work, an average of 87 percent of all employees report a desire “to work here for a long time.”

Retention is of particular concern to client service companies because long-term trusting client relationships are key to their success. Clients like to work with the same professionals again and again, and the higher the turnover in your firm, the less likely you are to be able to satisfy that desire. Clients may wonder why those who serve them seem to rotate so frequently, which can sew doubts about the quality of the company and make it increasingly difficult for new employees to gain clients’ trust.

How to develop company culture

There are as many ways to grow a quality company culture as there are companies. The positive culture you want to create for your current employees will depend on the nature of your work, your clients, the values you hold, and the desires of your employees.

The Deloitte study suggests a few things to focus on in the highly socially focused and data-enriched business world of today:

• Empower employees to manage and advance their own careers, encouraging them to take initiative for how they want their careers to grow instead of waiting for a climb up a corporate ladder.
• Develop human resources strategies to provide personalized, flexible benefits and pay solutions, including fair and transparent pay and a variety of wellness programming that employees today value. For example, Reed Smith international law firm created a wellness program focusing on stress reduction, mindfulness, work-life balance, and health and wellness. The firm brings in speakers on these topics, has created an internal network to provide resources and support, and is planning fitness events such as 5-K races among employees.
• Train employees on new technology to make them partners in using these tools creatively, ensuring that the influx of new AI tech and social messaging apps for the workplace don’t overwhelm or alienate workers. An example of doing this well is Fourlane, a virtual accounting firm that has employees vote on adopting new technologies, with a 70 percent buy-in threshold required for bringing any new tools onboard.
• Protect your company and your employees with well-defined policies and guidelines for use of data in order to maintain a reputation as a trustworthy steward of information and help employees feel comfortable using these resources.

In addition, one of the most important features of good company culture is the workers’ perception of leadership transparency. This factor was so strongly correlated with good company culture, in fact, that it overshadowed concerns like benefits and work-life balance. Company leaders can encourage this by talking openly with employees about what changes to expect as the company evolves.

Final Thoughts

Creating a positive work culture is a complex and constantly changing undertaking. In a business landscape in which trust, social awareness, relationships, and transparency are increasingly valued, company culture has more currency than ever.

Focusing on employee engagement and retention can provide a window into whether your company is providing the kind of workplace employees today are looking for. And your firm can also gain insight from how satisfied their clients are with the professionals who serve them.

“Culture eats strategy for breakfast,” management consultant Peter Drucker famously said. When you look at the importance of company culture in business success, it’s clear why he was so emphatic about its effectiveness.