Culture Affects the Bottom Line
When a company demonstrates that it’s thriving with happy and motivated talent, it is more likely to garner a higher business valuation when going to market for a merger or acquisition.
There is a proven link between culture, employees, productivity, and profit. Research shows that:
- Businesses with satisfied employeeshave been noted to outperform competitors by 20 percent.
- Happiness leads to a 12 percent boost in productivity and companies with strong cultures see a 43 percent increasein revenue growth.
- When employees are engaged, absenteeism falls 41 percent, productivity rises by 17 percent, and turnover is cut by 24 percent.
Prospective buyers do look at the culture within a business when evaluating whether to purchase it and when assessing how much it’s worth. When touring the company, interested investors will pay attention to the staff and whether they appear content and motivated. This can affect the opinion of potential acquirers regarding the quality of your company.
When everyone from top management downward contributes positively to the company culture, it becomes fixed in people’s minds and attitudes. Changing the culture can be a long-term investment, but it is worth it.
How To Improve Company Culture
There are several factors that can be involved in enhancing the culture of a business.
- Communication and transparency are critical. According to the Harvard Business Review, employees that report that their company’s values are known and understood are 51 times more likely to be fully engaged than those who do not. Additionally, data shows that 50 percent of employees report that management’s sharing of information has a significantly positive impact on productivity and And 68 percent of employees who get consistent feedback feel fulfilled in their positions. This means asking questions and learning what your people want and need.
- Culture starts at the top. As a business owner, you must lead by example and show that you are “all in” on the cultural philosophy that you are promoting. Data shows that the largest barrier to strengthening culture—according to more than half of human resources professionals surveyed—is a lack of management buy-in.
- Be rewarding. Businesses that score in the top 20 percent for building a culture rich with recognition see 31 percent less turnover.
- Listen to your staff. Research shows that 75 percent of employees would remain at a company longer if they are listened to and have their concerns addressed. 65 percent of employees report being actively disengagedwhen they feel that they cannot approach management with questions.
- When it comes to global mergers and acquisitions between businesses, culture is vital to a successful outcome. International cultures can vary in complexity, nuances, and there are potential language barriers. When integrating companies, awareness of the cultures and how they will blend is critical. Consider how the transition will take place to avoid a culture shock.
- Invest in employee development. Giving your staff opportunities to learn, improve, and advance their career will show that you care about them, fostering a greater sense of loyalty in your company.
- Think about the physical work environment. Employees tend to be happier when their office space is clean, comfortable and less distracting.
Culture During COVID
The culture of a company may be even more important during the COVID-19 pandemic, as normal life is disrupted and people are subjected to the effects of a lack of social contact with others. There are also the financial hardships that some workers are facing due to altered work conditions and schedules, as well as changes to their household incomes and routines. So, even if you are doing financially well as a business owner, it can help to be sensitive to what your team members are experiencing in their lives. They may feel resentment if it appears that you are out of touch or rewarding yourself with flashy purchases while they work hard and still face challenges in life.
Are you considering selling your business? Get in touch with our M&A experts at Benchmark International to discuss how we can help you take your future to the next level.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com
Europe: Michael Lawrie at +44 (0) 161 359 4400 / Enquiries@BenchmarkIntl.com
Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com
ABOUT BENCHMARK INTERNATIONAL
Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $6B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.