What makes a company valuable? Positive annual financial statements. Promising financial projections for the future. Yes, of course. But non-monetary aspects—so-called “soft facts” (such as a company’s work environment, length of service, or customer base)—also increase a company’s value. What’s more: A recent study by the Federal Ministry of Labor and Social Affairs* shows that corporate culture strongly influences employee engagement. And there, in turn, is a strong correlation between employee engagement within a company and its success.
What is corporate culture?
Corporate culture describes a comprehensive system of shared values, social norms, and common attitudes put into practice. Through their collective thinking and actions, a company’s employees and managers define the company’s self-image. A strong corporate culture is evident, among other things, through open communication, respectful and tolerant behavior toward one another, a constructive approach to conflicts and mistakes, and employees’ identification with the company.
What drives high employee engagement?
Qualified and motivated employees are essential for achieving a company’s goals and securing its future. Employees are therefore valuable resources for every company: Without employees, there is no success. The study by the Federal Ministry of Labor and Social Affairs demonstrates that there is a significant and comparatively strong correlation between the level of employee engagement within a company and its success. Successful companies have a high proportion of actively engaged (rather than acutely dissatisfied) employees. Employees are particularly engaged when they feel treated as full-fledged members of the team, enjoy their work, feel a sense of camaraderie, and are able to continually develop their skills.
How can the “soft factor” of corporate culture be improved?
Motivated employees are therefore more innovative, energetic, and productive when the following aspects are present in their company (listed in order of importance):
1. Identification
2. Team orientation (“sense of unity”)
3. Fairness (full-fledged member)
4. Support (appreciation)
5. Care (interest in the individual)
6. Leadership: Competence (Competent Leadership)
7. Leadership: Integrity (Trust)
8. Adaptability & Innovation (Developing Skills)
9. Leadership: Communication (Open Responses)
10. Participation (Employee Suggestions & Ideas)
In other words: If the corporate culture is perceived positively, employees feel comfortable at work and identify with the company’s values and norms—they are more engaged, take fewer sick days, and thus lead the company toward the future. According to the BMAS study, the corporate culture aspects mentioned above account for approximately 65% of employee engagement in Germany.
If business owners want to make their companies more profitable, they should therefore focus their attention on employee engagement. A corporate culture that is perceived positively lays the foundation.
Two key factors shape corporate culture:
• First, the response to change: how flexibly does a company handle a change in leadership, and how does it address various trends such as demographic change, digitalization, globalization, and shifting values?
• Second, human interaction: what does the company value, for example; to what extent are employees involved in decision-making; and how transparent is internal communication?
Current State Analysis: Identifying Potential for Value Creation
Even though corporate culture is a “soft factor,” its effects are evident throughout the entire company. The change process can be quite complex; therefore, planning and preparation must clarify the necessary and available resources and define the goals. Managers and executives serve as role models and should be aware that their behavior has a decisive influence on corporate culture.
A continuous examination of corporate culture fosters innovation and agility within the organization. An analysis of the current situation is recommended as the foundation for targeted, active corporate culture development. M&A consulting firms, such as miso consulting, specialize in realistic valuation and potential analysis. For example, miso consulting has developed the unique aumento value® check, which provides a detailed assessment of non-monetary aspects within companies—while simultaneously identifying opportunities for value enhancement.
