Page 6 - MS Perspectives 2014 YIR

A recent culture study (assessment) conducted for a client resulted in a very
interesting and significant finding concerning the relationship between culture and
turnover.4 The culture assessment involved several organizational units of a rapidly
growing company. In this company, growth is occurring organically and via
acquisitions.

What we found was that a perfect relationship exists between "culture" and
"voluntary turnover".5 Specifically:

 When culture become more favorable (scores increase), voluntary turnover
decreases.

 When culture become less favorable (scores decrease), voluntary turnover
increases.

 When culture remains unchanged (scores remain unchanged), voluntary
turnover remains unchanged.

The results are statistically significant.

Implications

What are the implications of this study for management? The key finding is that
culture influences voluntary turnover. When people leave organizations the
investment made to recruit, hire, orient and train them is lost. This is a hidden cost
of a dysfunctional culture. When people remain in an organization, valuable human
capital is preserved.

Culture management can impact voluntary turnover. This means that culture
management can impact the bottom line of profitability. This also implies that
companies ought to learn how to manage their corporate cultures in order to
minimize the hidden costs of turnover and preserve valuable human capital.

Action

For more information about culture management see, Eric Flamholtz and Yvonne
Randle and their book Corporate Culture: The Ultimate Strategic Asset, a must-read
on the subject of culture for any organization, published by Stanford University
Press in 2011. For further reading on what differentiates Management Systems and
its culture research and programs, check out What Makes Us Different - Culture
Management.

4 This was the third assessment of culture (the second reassessment) by this rapidly growing
company.
5 Voluntary turnover occurs when people leave a company of their own volition, and are not
terminated by the organization.

4