Bad culture: It’s costing you more than you think

Some might say that life’s too short for reading bad books, sitting in long meetings, and drinking bad wine (there are a million more examples that I could mention, but I’ll leave it at three so you won't say that life’s too short to read this blog post). If you asked us to fill in the blank for Life’s too short to… We would put “foster a bad culture.”

Life’s too short for a bad culture

Imagine investing all your time creating the proper mission and vision for your organization, and spending countless hours creating a master strategy so that you can steer the organization toward success. The great majority of your efforts will go to waste or won’t generate the result you expect if there’s a bad culture in the equation. Life’s too short to invest your time in actions that will not generate results. (By the way, we’ll use the Life’s too short... idea three or four more times in this post—I can’t remember, so you’ll just have to keep reading.)

Can you afford it?

A bad culture can cost your organization a lot more than your precious time and effort. With candidates being more cautious about choosing a place to work and customers being interested in more than just your product and service, this is not the age to have a bad culture.

Here’s a list of some potential costs of having a bad culture:

  • Missing out on the best talent

  • Higher absenteeism

  • Decrease in customers

  • Decrease in productivity

The best candidates obviously want to work for the best organizations, and the best organizations nowadays go beyond offering a good service or  product: they focus on contributing to the well-being of Planet Earth and its inhabitants and, most importantly, focus on treating their employees well and fostering a healthy culture so they can attract top-of-the-line recruits.

It’s natural for human beings to want to feel comfortable, and as soon as a situation makes us uncomfortable, we start to avoid it. Bad organizational culture can invoke discomfort in its employees, and soon they start calling in sick or requesting days off so that they won't be in the uncomfortable situation.

We are not just normal consumers anymore; we are becoming conscious consumers. People tend to be more conscious about the products and services they buy, researching a company to see if buying its product or service will contribute to something positive. If it’s known that an organization has a bad culture and doesn’t treat their employees well, many consumers would rather go to the competition.

You knew this was coming: Life’s too short for not recruiting the best of the best, not feeling comfortable at work, and losing customers to competitors.

Oops, I almost forgot to elaborate on the decrease in productivity, but I will make it up to you by elaborating on it below.

Cultural entropy?

The health of an organization’s culture can be measured by its cultural entropy. Cultural entropy? Yes, that was our reaction at first. Barrett Values Centre, an organizational-culture metrics firm, explains it as follows: Cultural entropy is the degree of dysfunction or disorder in an organization or human group.

Richard Barrett, the mastermind behind Barrett Values Centre, uses physics to vividly explain cultural entropy: in physics, the amount of energy you get out of a mechanical system is equal to the amount of energy you put into it minus the amount of energy that is needed to keep the system functioning. It’s the same in human systems. The amount of energy you get out of an organization (value-added work) is equal to the amount of energy you put in minus the amount of energy needed to keep the organization functioning.

Further, Barrett explains that a high degree of dysfunction and disorder in an organization is likely caused by factors like excessive control, caution, confusion, bureaucracy, hierarchy, internal competition, blame, silo mentality, etc. It takes the employees additional energy to overcome the cultural entropy. The higher the cultural entropy, the more energy employees have to put in to overcome it. And as a result, employees will have less energy to contribute to value-added work (i.e., they’ll be less productive).

In other words, life’s too short for a high cultural entropy level.

Let’s put it in numbers

When asked, Can you afford a bad culture the majority will say yes, because they don’t see it in numbers. Well, Barrett Values Centre figured out a way to not only make culture tangible but also measure what bad culture costs an organization in terms of money.

Enough with the physics and questions! We’re talking about costs here, so let’s see numbers.

Here’s a case study based on the situation of one of our clients.

We’ve embarked on a journey of culture change for this client, and as part of this process we conducted a cultural values assessment, or CVA, to get insight on the current culture and find out what type of culture everyone desires.

After conducting the CVA and identifying the potentially limiting values, we ran a test to identify how much these potentially limiting values are limiting our client’s ability to either save or make additional revenue. A little background: Our client’s revenue is over 450 million guilders (250 million dollars), and their top three potentially limiting values are: blame, bureaucracy, and confusion. The test results indicated that this client could either save or make 2.4 million guilders (1.34 million dollars) by reducing the cultural entropy. These results were an eye-opener for our client, and they are now completely dedicated to eliminating their top three potentially limiting values. And how are they doing this? Stay tuned for the next blog post.

Ask yourself, Is life too short for losing money?

After offering this client’s story, I have two questions for you:

How many times did we use “Life’s too short”? And—the real question—Can you REALLY afford a bad culture?