Culture: The #1 Human Capital Challenge

A recent study conducted jointly by the Fuqua School of Business at Duke University and the Columbia Business School found that 85% of executives feel their culture isn’t where it needs to be. This fact, combined with numerous studies finding a strong correlation between a positive culture and profits, shows the importance of creating a strong corporate culture within an organization. In fact, research by Harvard Professor James Hesket found about half the difference in operating profit between organizations can be attributed to effective culture. Developing organizational culture has gone from unfeasible, to popular, to serious in a short period of time. 

Many leaders realize the importance of a strong corporate culture, however, while this number is growing, many leaders still do not. Some do not realize the impact their company’s culture (prevailing ideas, values, attitudes and beliefs that guide the way their employees think, feel and act) has on outcomes and financial performance. They also fail to realize the importance of aligning culture and strategy, and therefore do not put the time and effort into building a positive culture that will drive organizational success. Culture has become so important that in their recent book on Human Capital Trends, Schatzky and Schwartz pointed out that employee engagement and culture are the number one human capital challenge companies face globally.