Does corporate culture really impact results?
The following article comes from Fast Company, which describes itself as the world’s leading business media brand, with an editorial focus on technological innovation, leadership, transformative ideas, creativity, and design. Written for and about the most progressive business leaders, Fast Company inspires readers to think big, lead with purpose, embrace change, and shape the future of business.
At least one analysis claims it doesn’t.
The article is by Bud Caddell, founder and CEO of NOBL, a boutique consulting firm that helps its clients create real change. His work has appeared in The New York Times, The Wall Street Journal, Forbes, and AdAge.
Corporate culture does not affect performance. This is not a controversial opinion; it’s the conclusion of a 2022 meta-analysis by the Chartered Institute of Personnel and Development, which compared more than 500 research articles on the topic. From the report:
The findings are very clear: there is little evidence that consistently links organizational culture to performance, but if such a link existed, it is very weak and too small to be meaningful in practice.
Therefore, organizations and professionals should be cautious about investing time and money in company-wide cultural change programs, as they are unlikely to improve performance.
And yet, when asked, 92% of executives believe that improving their company’s culture would increase its value.
So, are 92% of executives wrong?
Are millions, if not billions, of dollars wasted each year on cultural initiatives?
The short answer? Yes and yes. The full answer is a bit more complex.
Why does the myth persist?
Leaders cling to the idea that culture drives results because it feels controllable. New values can be written, an off-site meeting can be held, or a chief culture officer can be hired. It is far easier to reprint the employee handbook than to reconfigure incentives, decision-making, or priorities. The discourse on culture offers the illusion of progress—something visible, moral, and manageable—while the true drivers of performance remain untouched.
Corporate culture remains deeply misunderstood.
Many leaders talk about culture as something you have—a vibe, a set of values, a state of mind—rather than something you do. But culture is not a static asset; it is the emergent result of how decisions are made, what is rewarded or punished, and what behaviors the system facilitates or hinders. When executives say, “We need a culture of innovation,” but still require six levels of approval for new ideas, they are confusing aspiration with infrastructure.
Leaders are not honest about their culture or themselves.
A 2020 MIT Sloan Management Review study
found no correlation between a company’s stated values and the lived experience of its employees. In other words, what leaders say their culture is and what people actually feel on a daily basis are worlds apart. Companies with large cultural gaps experience lower productivity and poor alignment.
This misalignment fuels cynicism and distrust, undermining managerial credibility and eroding morale. Employees in these organizations report lower engagement and higher turnover. Instead of addressing this gap, many double down on image: slogans, motivational speeches for everyone, or off-site meetings to «rebuild trust.»
But culture isn’t changed with words or rituals, but through systems.
The right to make decisions, the flow of information, the cadence of meetings, and incentives form the true architecture of behavior. Until leaders are honest enough to align these structures with their rhetoric, cultural initiatives will continue to deliver the same result: symbolic satisfaction without measurable performance improvements.
Leaders aren’t being strategic with their culture.
Every era has its cultural model: the company everyone is told to emulate. In the 1990s it was Jack Welch’s GE. Then it was Apple, then Amazon. Now it’s Jensen Huang’s Nvidia. Each time, executives rush to borrow its rituals and slogans, hoping to import a little of its magic. But let’s be honest: your company isn’t that company, and it shouldn’t be.
Culture is simply how strategy is lived.
This means there is no such thing as an «ideal culture,» only a suitable culture—one that reinforces your strategy and addresses your specific constraints. Copying someone else’s culture while pursuing a different strategy is not only naive but counter-strategic.
Obsessing over culture is a distraction.
The corporate world is hooked on culture because it’s comforting and makes leadership feel human and moral. But talking about culture often becomes a way to avoid harder truths: poor strategy, misaligned incentives, failing systems, and unclear ownership. In our experience as a consulting partner to some of the world’s largest and most complex companies, a «cultural problem» is often a smokescreen for issues leaders have long known about and are shirking responsibility for—a «friendly» way to avoid assigning blame or deflecting responsibility. And when we analyzed 1,700 publicly traded companies and their Glassdoor ratings, we found that the main theme among negative reviews was complaints about leaders and management. So, poor leadership breeds poor cultures.
What to do instead?
Before rushing to rewrite values, produce giveaways, or drag people into public meetings, leaders must first take responsibility for themselves. Do they actually behave the way they expect others to? Do they collaborate with their colleagues as «one company,» or is that just a slogan? Does the way they allocate resources align with what they say they prioritize? Are the people who rise through the ranks truly the best «culture bearers,» or are they simply complainers or political players?
Therefore, leaders must consider culture as the shadow cast by the operating model they design and manage.
If they want to change that shadow, they must change the object casting it. This means redesigning how decisions are made, how information is communicated, and what is measured and rewarded. Culture isn’t a lever you pull; it’s a reflection of the decisions leaders make every day about how things actually get done.
So yes, culture matters, but not in the way most executives think. You don’t fix performance by fixing culture; you fix culture by fixing performance. Because, ultimately, culture resides in the rules you enforce, not in the words you pass.
Does Your Company’s Culture Improve Your Results?
The following contribution comes from the CultureWise portal, which defines itself as follows: CultureWise helps your team consistently deliver exceptional experiences by developing daily habits, a shared language, and true accountability.
More than 1,000 companies worldwide trust us.
Author: Candace Coleman
Does Your Company’s Culture Improve Your Results?
It may be surprising that the head of one of the world’s most successful companies considers culture his number one priority. But that’s exactly what Satya Nadella, CEO of Microsoft, stated when he increased his organization’s market capitalization from $300 billion to more than $2.7 trillion.
Nadella isn’t the only one who thinks this way. A Korn Ferry survey reveals that two-thirds of the leaders of the world’s largest companies attribute at least 30% of their companies’ value to culture, and a third say it accounts for 50% or more.
Furthermore, 72% of those surveyed by PwC stated that a strong culture is critical to the success of change initiatives.
Prioritizing culture seems like an obvious decision for business leaders, as change is inevitable and even necessary to maintain a market advantage and remain profitable. However, organizational culture is not as effective as a standalone attribute. CEOs like Nadella understand that it is fundamental to every aspect of their business and cite it as the primary reason for Microsoft’s rise. Nadella and other top leaders understand that they unleash the power of culture when they align it with their business strategy.
When Boosting Culture Fails to Increase Profits
It’s impossible to run a company without hearing about the importance of workplace culture. The topic dominates news across all sectors and is the focus of countless books, articles, podcasts, seminars, and workshops.
Most of these sources focus on improving the quality of corporate culture. However, many fail to address the relationship between culture and profit.
Researchers at Hendrick & Struggle (H&S), a global leadership consultancy, report that this disconnect could be the reason why many CEOs fail to maximize their culture’s potential to revitalize their bottom line.
In their survey of 500 leaders from the world’s largest companies,
82% of respondents stated that culture was important to them. However, 74% stated that other aspects of their business (such as strategy and leadership) drive profitability. In a recent article, the H&S team notes:
“Our findings suggest that most CEOs prioritize culture, as we believe they should. However, surprisingly, we also observed that most are not particularly intentional in their pursuit of culture as a driver of financial performance, even when they try.”
Without understanding culture’s potential to impact revenue, leaders’ initiatives to improve it can only achieve basic goals.
Correlation of Culture with the Bottom Line
Upon further analysis of their survey data, the H&S team discovered an interesting subset of companies: those that approached their cultural initiatives with strategic intent. By labeling them “culture accelerators,” they found that these organizations followed a people-centric approach across the board and outperformed the rest of the surveyed group financially. H&S reports that the compound annual growth rate (CAGR) for culture accelerator companies was 9.1%, up from 4.4% the previous year.
They also found that this phenomenon was observed in companies of all sizes and sectors globally. They concluded: “In our experience, companies often know they need to align strategy, operating models, and culture, but they don’t know where to start. This is not the case for CEOs of culture accelerators; only 19% stated that focusing on operating models was among the top three positive influences on financial performance, compared to 40% of other CEOs.”
Furthermore, 48% of cultural accelerators stated that they focus on culture
to drive a change in strategy or direction, compared to only 22% of other organizations.
Cultural accelerators are particularly focused on maximizing personal contact to improve the customer experience and strengthen relationships with stakeholders. They also work to generate a high level of collaboration and trust among their team members. Similarly, the Health & Safety survey revealed that 48% of cultural accelerator companies prioritized diversity, equity, and inclusion initiatives, compared to 30% of other organizations.
Not surprisingly, two-thirds of these companies reported having met or exceeded their cultural objectives. Their strong financial performance and strategic focus suggest that companies would be more successful if they integrated culture into their strategy from the outset, rather than treating it as a separate entity.
According to H&S, a select and smaller group within cultural accelerators embraces their culture at an even deeper level. These companies, referred to as «cultural connectors,» demonstrate intense engagement with their culture.
«Their employees are involved, to a large extent or completely, in applying the company culture in their daily work.» These organizations focus even more on clear and effective communication, both internally and externally, and strive to engage all their staff.» H&S reports that organizations that connect cultures had a higher three-year compound annual growth rate (CAGR) in revenue than all other companies surveyed.
Using Culture as a Catalyst
H&S researchers found that CEOs of companies that connect cultures believe a strong culture strengthens financial performance because it inspires people to exceed expectations. They identified two best practices that enabled companies to generate high levels of performance and enthusiasm:
Engaging people at all levels of the organization
Large-scale communication
ENGAGEMENT
Nearly two-thirds of the CEOs of companies that connect cultures in the H&S study said that appreciation and recognition were key aspects of their culture and that these elements directly impacted financial performance. This percentage is 26% higher than that of culture accelerators and significantly higher than that of the other companies surveyed.
It can be difficult for some leaders to connect the dots between showing appreciation for their team members and increasing profitability. However, many expert sources point to meaningful staff recognition as one of the most impactful ways companies can foster employee engagement.
According to Gallup
And according to Gallup, employee engagement is closely linked to the business results essential to an organization’s financial success.
Another way culture-connecting companies generate engagement is by encouraging employees to take ownership of living the organization’s culture. Initiating this positive accountability reinforces the entire team’s effort to encourage and support each other to achieve results.
COMMUNICATION
CEOs who connect cultures systematically implement multiple methods to strengthen their culture.
They stay in tune with their team through communication at both micro and macro levels, from one-on-one dialogues and coaching to large-scale discussions. They look for ways to build ongoing alignment with the culture and prevent toxic situations that could erode it.
This focused, continuous, and multifaceted communication approach helps a company manifest its culture and allows everyone to participate in its success.
The H&S survey also revealed that CEOs of culture-connecting companies practice a more subtle but powerful way of communicating culture: they lead by example. Their researchers report:
“When asked how they communicate at scale, 80% of these CEOs selected ‘personal commitment to focusing on culture,’ compared to 66% of culture accelerators and 45% of other companies.”
The Role of Culture in Strategy
Korn Ferry recently surveyed nearly 500 leaders from the World’s Most Admired Companies (WMAC) and other leading organizations. The consensus among respondents was that culture was the most underrated source of a company’s future success.
These executives are planning a continued emphasis on culture within their organizations and listed related priorities when planning for the future, including learning, customer focus, collaboration, accountability, and a long-term perspective. As Laura Manson-Smith, global leader of Korn Ferry’s Organizational Strategy Consulting practice, observed:
“Ultimately, we’re seeing a shift from the what to the how. Most executives at the World’s Most Admired Companies are preparing for a future where they won’t focus exclusively on the bottom line. Instead, they’re spending more time questioning how they will achieve results.”
These leaders are giving culture a central role in their business strategy, which will be crucial for their continued success.
The Economist Intelligence Unit Survey
This interrelationship is vital, as a survey by The Economist Intelligence Unit revealed that a lack of cultural alignment was the reason why 90% of large companies failed to achieve their strategic objectives. However, companies that align their strategy with their culture empower and inspire their teams to achieve and exceed goals.
Korn Ferry
For example, Korn Ferry reports that companies that adhere to this alignment achieve a 117% higher return on investment than those that do not. They also achieve a 145% higher return on assets and a 56% higher return on equity.
Legendary management consultant Peter Drucker warned business leaders that “culture eats strategy.” But it doesn’t have to be that way. Culture can and should be the most important component of strategy. As former IBM CEO Louis Gerstner noted:
«I came to understand that culture isn’t just an aspect of the game, it is the game i
