The Importance of Company Culture
Do you know the effect your company culture is having on your insurance brokerage firm’s organic growth? It is deeper and more impactful than you probably think. Strategy can be meticulously planned out in a boardroom and antagonized over in detail, but its effect will only be as impactful as your culture allows. As Peter Drucker asserted, “Culture eats strategy for breakfast.” That is precisely why company culture is so important.
When leaders are busy focusing on growth and profitability it may seem like a luxury to spend time intentionally building company culture, but culture is not an “if time permits” end-of-meeting side note.
Company Culture is Objective, not Subjective.
Culture is at the core of your business, affecting every decision and action. You may not realize the importance of company culture and what can be impacted. Consider these insights:
- Companies with strong cultures have seen a 4x increase in revenue growth.1
- Companies that have appeared on Fortune’s annual 100 Best Companies to Work For list see higher average annual returns, with cumulative returns as high as 495% instead of 170% (Russell 3000) and 156% (S&P 500).1
- Having highly engaged employees can lead to a 202% increase in performance.2
- 47% of active job seekers cite company culture as their driving reason for looking for work.3
Measuring Company Culture.
Unfortunately, there is not a traffic light-like signal to identify the health for the culture, but there are company culture metrics you can look at to see the impact it is having on business and related attributes. For example, look at:
- Employee turnover: According to MarshBerry’s proprietary financial management system, Perspectives for High Performance (PHP), the average brokerage experienced 16.6% employee turnover in 2022. Employees leaving can be an indication of their experience with your company and their level of satisfaction. If your brokerage is above that average it may be time to delve into your hiring, retention and employee engagement strategies to improve the overall happiness and success of your workforce.
- Organic growth: The average brokerage is growing organically at 9%. If you are not exceeding this, your culture may be lacking in sales aptitude, support or encouragement. Pushing your employees to be their best while also supporting their growth is an important balance. A growth-focused company has a culture that supports and enhances growth opportunities.
- Revenue per employee vs. organic growth: Happy employees are productive employees. Brokerages with average organic growth (around 9%) have an average revenue per employee of $206k, which is the highest it’s ever been according to MarshBerry’s historical database.
Changing Company Culture Could Be The Solution to Your Problems, But It’s Not Easy.
Not getting the right applicants? Employees turning over at a higher-than-average rate? Producers not meeting sales goals? You may need to start changing company culture, and cultural change management isn’t easy. If change was easy, every firm would have booming growth and employee satisfaction would be sky high. Company culture isn’t about providing foosball tables, espresso machines and free lunches. Instead, culture is the equivalent to a fish living in water – it’s everywhere and inconspicuous. Therefore, a weak, ambiguous or toxic culture quickly results in detrimental problems.
Changing a company culture requires intentional design, long-term consistency, and it starts with leadership. The ‘trickledown theory’ of culture suggests successful companies produce and promote valuable social norms that spread downward, influencing broader values and behavior. Therefore, you can either design your company’s culture or have a culture by default. Consider these questions for your company:
- What are your cultural aspirations?
- Does your team know this?
- How do you want your employees to describe your company’s culture?
If your picture of an ideal company is fuzzy for you, it’s even more blurry for the people following you.
To build more loyal employees, make sure your culture reflects things of personal importance to your current and future talent like collaboration, professional development, community involvement, or philanthropy to name a few.
Overwhelmed? We get it. It’s hard to go at this alone. MarshBerry conducts benchmark reviews and strategic planning sessions for hundreds of companies every year – even companies that are outpacing average performances. Looking for more anecdotes from some of the best brokerages in the industry? Join us at the MarshBerry 360 Forum to dive deeper into the data and learn more about the best practices for growth.
