Does Workplace Culture Impact Revenue, Profit, and the Bottom Line?

November 5, 2021
November 5, 2021 Jamie Notter

Intuitively, most people recognize that workplace culture has a big impact on the success of their organization. Of course, intuition can be wrong, so ideally we would have some research that proves the impact of culture on success. There are, in fact, a number of studies out there that draw that conclusion.

In the end, however, I think the research is not as conclusive as people make it out to be. I first started coming to this conclusion when Maddie and I were researching our book, the Non-Obvious Guide to Employee Engagement. The engagement field is famous for bragging about how increased engagement drives bottom-line results. Gallup has been claiming this for years. Another consulting firm has a post citing a Business 2 Community report claiming “companies with engaged employees outperform those without by 202%.”

Lovely, except all these studies show is correlation. Yes, those with greater profits have more engaged employees, but maybe that’s because they figured out how to have more profit than those other loser companies! Maybe profit drives engagement, rather than the other way around—the data don’t tell us one way or the other. There are similar studies with culture, where researchers measure some kind of alignment with an ideal culture or consistency with core values and show a correlation with success, revenue, profit, etc., but honestly these are not really showing causation either.

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The truth is, organizations are a complex jumble of human interactions, and while I absolutely support academia’s efforts to use the scientific method to improve our understanding of how organizations succeed, I think the practice is ahead of the research on this one. Don’t wait for the professor to prove that culture improves the bottom line—just do it.

Think of it like this. If you want to grow some crops, there are multiple factors that go into the quality and quantity of your harvest. Some things are out of your control, like the weather, but others absolutely are, like the quality of your soil. If you want, you can ignore the quality of your soil and hope for the best. To be honest, that might be just fine, depending on where you started your farm, at least for the short- and medium-term. Or, you could apply what we know about soil science and add some fertilizer to the soil. That won’t guarantee you a huge harvest, because there are too many other factors at play, but it’s definitely going to increase your chances.

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Culture is the same way. I can’t prove that creating a particular culture will guarantee better bottom line results, and anyone who makes that claim is definitely trying to sell you something. But I do know culture science, and I know organizations that intentionally shaped their culture to be consistent with what makes them successful and saw incredible results. So don’t wait for proof, and don’t hope for good luck. Use what we know and design the most powerful culture you can.

Jamie Notter

Jamie is an author and growth strategist at PROPEL, where he helps leaders integrate culture, strategy, and execution to achieve breakthrough performance and impact. He brings twenty-five years of experience to his work designing culture-driven businesses, and has specialized along the way in areas like conflict resolution and generations. Jamie is also the co-author of three books—Humanize, When Millennials Take Over, and The Non-Obvious Guide to Employee Engagement—and holds a Master’s in conflict resolution from George Mason and a certificate in Organization Development from Georgetown, where he serves as adjunct faculty.
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