If you’re one of those company executives that think corporate culture is a touchy-feely Millennial thing, think again. Culture is so elemental to how your business runs that it directly impacts revenue and the bottom-line.
Another common misconception: That superficial things like casual Fridays or free snacks drive culture. In fact, studies show that corporate culture ultimately shapes every organizational decision, and even business infrastructure.
How much does your corporate culture impact the business? The National Center for the Middle Market recently conducted a survey to answer that question.
First, the survey asked middle market executives what type of culture fit their company. Virtually all middle-market businesses identify with one of seven distinct types of corporate culture, according to the NCMM. These seven types are:
Executives would be wise to foster the right type of culture because it’s a strong predictor of revenue growth, as well as employee and customer retention, says the NCMM. In fact, a weak or dysfunctional culture creates a tangible negative trajectory for a company’s ability to grow and remain profitable.
The study found:
Despite the rich rewards that flow from a positive culture, busy company leaders often focus exclusively on operations and finances and leave HR to handle culture. The fact is, your company culture requires more than your attendance at the annual company picnic. Managing culture well takes nearly 25 percent of middle market leaders’ time when they prioritize it, found NCMM.
The upside to investing such large quantities of time on culture? Company performance. NCMM found that “Companies with deeply ingrained cultures grow much faster than the average middle market company: They report 10.8% past-year revenue growth compared to 7.2% for the middle market as a whole.”
Solid growth attracts potential buyers, which means culture should play a vital part in your exit planning. Learn more about what makes your company more interesting to potential buyers:
The relationship between a company’s culture and its ability to attract potential buyers cannot be overemphasized. Buyers not only look at your bottom-line, but they will also examine how you got there.
Often, a company’s culture is a key part of the value found in its intangible assets. If your employees are motivated to overachieve, if you have created a culture that rewards successes and innovation, buyers will view your business far more favorably when you’re planning to sell your business.
Conversely, even if you are making money, if your culture is weak and your employees feel unappreciated and unmotivated, buyers will learn this via the due diligence process and discount your business valuation.
We have learned over the years that a middle market company’s culture is often dependent and driven by the personality of the founder/owner. This can be both a positive and a negative. Buyers will want to know what will happen to the company’s culture (and ultimately its sales and profits) when the founder/owner leaves.
If your company’s culture is completely dependent on your personality, it will benefit your exit planning to create a culture that is based on a written mission statement and philosophy that is independent of you and will sustain the ongoing business after you leave.
So, look at the 7 culture types identified above and determine which one fits your company. Build a culture that is sustainable and is defined based on the core values of the company, not on your personality.
By Jessica Johns Pool
The information we learn from customers helps us personalize and continually improve your experience at gencm.com. Here are the types of information we gather.
Information You Give Us: We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice. Our computer system protects personal information using advanced firewall technology.
Information from Other Sources: For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Capital Markets LLC may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Capital Markets, L.L.C. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Capital Markets LLC at is office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
INFORMATION ON THIS WEB SITE IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Capital Markets may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Capital Markets does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Capital Markets will be deemed NOT to be confidential. By sending Generational Capital Markets any information or material, you grant Generational Capital Markets an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Capital Markets is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Information Generational Capital Markets publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Capital Markets intends to announce such products, programs or services in your country. Consult a Generational Capital Markets representative for information regarding the products, programs and services which may be available to you.
Generational Capital Markets makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Capital Markets web site, please understand that it is independent from Generational Capital Markets, and that Generational Capital Markets has no control over the content on that web site. In addition, a link to a non-Generational Capital Markets web site does not mean that Generational Capital Markets endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Capital Markets BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Capital Markets.
Honored to win Investment Banking Firm of the Year 3 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.