Employee-oriented corporate culture boosts companies’ economic success

A recently published study commissioned by the Federal Ministry of Labour and Social Affairs shows that the commitment of employees to their company is positively influenced by an employee-oriented corporate culture. Most companies have already recognised the importance of the link between employee commitment, corporate culture and economic success. However, a great deal of employee potential remains to be exploited by employers.

Corporate culture can be defined as the whole system of fundamental beliefs, norms and values that influence the effective behaviour of employees. Companies’ main challenge is how to make best use of their employees’ skills and abilities. In this context, many enterprises have already realised that an employee-oriented corporate culture is essential for encouraging employee commitment and thus also boosting economic success.

Nonetheless, a study commissioned by the Federal Ministry of Labour and Social Affairs (Bundesministerium für Arbeit und Soziales, BMAS) shows that companies’ current efforts to establish an employee-oriented corporate culture still allow for ongoing improvement.

About the study

In February 2008, BMAS published the report of a research project it had commissioned, Organisational culture, quality of work and employee commitment in companies in Germany (in German, 13Mb PDF). The main aims of this project were to:

  • analyse the current situation in Germany concerning corporate culture, quality of work and employees’ commitment to their employers;
  • examine the link between corporate culture, quality of work, employee commitment and business success;
  • develop recommendations concerning the establishment of a corporate culture that enhances companies’ economic competitiveness, increases their employees’ commitment and promotes the health and well-being of their workforce.

Employee and management surveys

To this end, a sample survey was conducted from April to October 2006. Altogether, 68,151 employees in 314 companies were asked to complete a standardised questionnaire as part of an employee survey, and a total of 37,151 persons complied. This corresponds to a response rate of 58%. Overall, 12 economic sectors – characterised by the highest numbers of companies or employees – were chosen to be part of the survey. In these 12 sectors of economic activity, about 18.5 million employees were working in approximately 195,000 companies in 2001. From this sample, potential participants were chosen at random; the candidates received a written invitation to participate in the survey or were contacted by telephone.

In addition, a senior executive or a department manager in each of the sample companies was interviewed to provide a management survey. Managers received their questionnaire after the employee survey was finished. They were granted four weeks to complete the online questionnaire.

The questionnaire for the employee survey focused on fundamental issues concerning the corporate culture, the company’s commitment to its employees and the employees’ commitment to the company. Employees were asked to review their workplaces, the development of their working situation and their company’s management. The management survey meanwhile focused on issues such as the human resource management (HRM) tools currently implemented and business success.

A total of 122 small companies with 20 to 99 employees participated in the survey, as did 132 medium-sized enterprises with 100 to 499 employees and 60 large companies with 500 or more employees. The 12 fields of economic activity included in the sample comprised: the food processing industry, the chemicals industry, the metalworking industry, mechanical engineering, the automobile industry, construction, wholesale and retail trade, transport, financial services, business services, public administration, and health and social welfare. The number of employees surveyed from each industry corresponded approximately to the actual distribution of employees across these fields of economic activity nationwide.

Employee-oriented corporate culture

Employee-oriented values and measures can be regarded as a precondition for employees’ commitment to their companies. The study analysed the following factors, all of which are deemed crucial for the establishment of a strong corporate culture:

  • clear communications;
  • leadership competence;
  • integrity of the management;
  • promotion of professional development;
  • involvement of employees in decision making;
  • interest in employee welfare;
  • fairness;
  • a team spirit;
  • identification with the company.

The results of the study show that the majority of respondents felt that their physical safety (85%) was safeguarded at their workplace and that they were treated fairly with respect to their nationality (86%), disabilities (81%) and their sex (80%).

About half of the workers surveyed gave a positive assessment of the leadership abilities of their company’s management, promotion of professional development, team spirit, fairness and the involvement of employees in decision making.

On the other hand, certain other issues were assessed critically, such as: companies’ commitment to the promotion and implementation of measures to improve work–life balance or healthcare matters, praise for good work and the consultation of employees concerning topics that affect their work. For example, only 24% of the survey respondents felt that they received a fair share of their company’s profits. Another 38% of the survey participants believed that benefits such as wages and promotion were commensurate with their efforts.

Moreover, the study highlights that only about 60% of the respondents recognised a homogenous corporate culture in their company. This is viewed as a critical factor, since the authors of the study hold that a corporate culture with a high degree of employee-oriented values encourages greater employee commitment and is therefore a significant determinant for the enterprise’s success.

Employee commitment

The employee responses indicated a high stability with respect to their job satisfaction and commitment to their companies (60%). Employees’ commitment was measured by the degree of pride in their companies (‘say’), their willingness to exert themselves on the company’s behalf (‘serve’) and finally their wish to remain with their companies in the future (‘stay’).

In this context, the study reveals that almost two thirds of the employees were proud to work for their current company (63%). Another two thirds of the respondents were prepared to put in extra effort for their employer (63%). However, the proportion of employees who can be regarded as highly committed with respect to all of these three dimensions (say, serve, stay) totalled only 40%.

As Table 1 indicates, considering all dimensions together, the employees surveyed can be divided into four categories with regard to their commitment to their company: content but passive (37%), actively committed (31%), dissatisfied and demotivated (18%), and uninterested with little commitment to work or career (14%).

Table 1: Employees, by commitment to the company (%)
Employee characteristics Content but passive Actively committed Dissatisfied and demotivated Uninterested – little commitment to work and career
Proportion of surveyed employees 37 31 18 14

Source: BMAS, ‘Organisational culture, quality of work and employee commitment in companies in Germany’, 2008

It should be noted that no significant gender differences existed. Younger and older workers were more often content with their company than middle-aged workers. Medium-skilled and low-skilled workers tended to be less content than high-skilled personnel. Nevertheless, 62% of the respondents reported that the stress they suffered at work had increased in recent years.

Employee-oriented corporate culture and economic success

The BMAS study reveals that the proportion of content and committed employees – who are most beneficial for employers – is highest in companies with an employee-oriented corporate culture (45%). In these companies, only 10% of the staff can be classified as ‘dissatisfied and demotivated’. Only 8% of the staff in such companies were ‘uninterested’, showing a generally low commitment to their work and career.

To measure the economic success of the individual enterprises participating in the survey, the study constructed an integrated ‘Success Index’ that comprises a self-assessment of the company’s development and success, as well as factual indicators. Factual data include the compilation of company earnings before interest and tax (EBIT) for 2003, 2004 and 2005, data on employee turnover and the number of staff on sick leave. The analysis highlights that, when comparing the most successful companies to the least successful ones in the survey, no significant differences arose with regard to the number of employees falling into the categories of ‘uninterested’ or ‘content but passive’ employees.

Nonetheless, as Table 2 shows, the most successful companies in the survey had a greater share of ‘actively committed’ employees (34%) compared with the proportion of such employees in the least successful companies (24%). Furthermore, only 14% of the staff working for the most successful enterprises fell into the category of ‘dissatisfied and demotivated’ employees. This compares with 21% in the least successful companies.

Table 2: Distribution of employee types across the most and least successful companies (%)
Employee types Most successful companies (Top 30) Least successful companies (Bottom 30)
Content but passive 36 37
Actively committed 34 24
Dissatisfied and demotivated 14 21
Uninterested – low commitment to career and work 17 17

Source: BMAS, 2008

In this context, it should be noted that very successful companies assessed the commitment of their employees as the most important competitive factor, whereas less successful companies identified cost as being most important.

Support measures

Generally speaking, the authors of the study believe that most companies are aware of the importance of creating an employee-oriented corporate culture. Nevertheless, the above research results indicate that a great deal of employee potential remains to be exploited by employers, for example concerning issues of employee participation.

The study therefore asked managers for their views on measures which would be helpful in supporting their efforts to establish an employee-oriented corporate culture. The response included the following suggestions:

  • identification and publication of examples of best practice in corporate culture;
  • support for the establishment of networks to enable organisations and companies to learn from each other;
  • preparation and publication of studies on unresolved issues in the field of corporate culture;
  • provision of workshops and training courses to improve corporate culture.

Larger companies furthermore stated that corporate culture audits and certification would clearly be useful.

The study concludes that the development and implementation of such supportive measures would be a suitable field of action for ministries, employer associations or other public organisations concerned with improving the quality of work and corporate efficiency. However, an employee-oriented corporate culture needs to be implemented at individual establishment level.

Sandra Vogel, Cologne Institute for Economic Research (IW Köln)

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