Running your own business comes with numerous challenges and triumphs. One area that often gets overlooked is the importance organisational culture plays in the success of small and medium businesses.

Building a strong and healthy company culture doesn’t necessarily come naturally. Thankfully, there are steps you can take to achieve it – and they start with understanding why it’s important. Here are seven reasons why maintaining a positive company culture is key to business success.

1. Enhances Employee Engagement:

Research shows employees who are happy at work are 12% more productive than those who are unhappy. To help improve the happiness of your staff, create an environment where they feel connected to their work and the company's mission.

Individuals are more likely to be engaged and committed when they understand the importance of their roles and how those goals fit into the bigger picture. Employee engagement in turn leads to higher levels of productivity, job satisfaction and a sense of fulfillment.

2. Improves Retention Rates:

A positive business culture can increase employee engagement, happiness and productivity. This invariably results in increased retention rates, as employees who feel appreciated at work and connected to a community who shares their values are more likely to remain for an extended duration.

A Deloitte study showed organisations with a strong learning culture have a 30% to 50% higher retention rate. Decreasing turnover saves on recruitment costs and, importantly, contributes to the workforce's stability and continuity.

3. Increases Productivity

Lack of productivity can be a costly problem. Research by analytics and consulting firm Gallup found that unengaged employees cost their companies 18% of their annual salary. Improving workplace productivity is critical to success.

Gallup reports that highly engaged teams are 21% more productive. Giving feedback, encouraging teamwork and communicating clearly were found to be great methods to boost workplace productivity.

4. Attracts Top Talent

In a competitive job market, companies with a strong and positive culture stand out to potential candidates. A recent survey by Glassdoor, one of the world's largest job and recruiting sites, found that millennials and young adults are more likely to prioritize culture above salary. It also found most adults would only apply for a job at a company whose values aligned with their own personal values. This goes to show that job seekers look for workplaces where they feel a sense of belonging.

5. Fosters Innovation and Creativity

A culture that promotes open communication and values diverse perspectives fosters creativity. When employees feel comfortable sharing their ideas without fear of judgment, innovative solutions can emerge. Adopting a creative mindset can propel your business forward.

6. Aligns Staff on Goals

When the entire organisation is clear on the company's overarching values and goals, everyone can work towards them. Businesses that fail to track and follow through with their aspirations risk  having a disunified workforce. When everyone is clear on the business goals, they can work together and make cohesive, consistent decisions.

7. Boosts Reputation

A strong culture extends beyond the walls of your business. It shapes the perception of your business in the eyes of clients, partners and the broader community. Market research firm Gitnux has found that a company's reputation accounts for 63% of its market value, showcasing how vital a business’s reputation is for ongoing success. A good work environment improves the company's image, making it appealing to partners for whom trust and morality is key. A positive reputation can also influence customer loyalty.

The benefits of maintaining a positive organisational culture are clear; the next challenge is achieving one. As a first step, seek out ways to empower and acknowledge your staff.

At Bizcap, we’re dedicated to empowering small and medium businesses, not only with loans that help to address cash flow issues and seize growth opportunities, but also by offering advice for achieving your goals.  

To find out whether a Bizcap loan could help your business, call us on 1300 922 223 or apply for a loan here. It takes 5 minutes to apply and we can make obligation-free offers without running a credit check.