A Critical analysis of the impact of organisational culture on employee retention and Turnover

impact of organisational culture on employee retention
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Suppose you have ever undergone a week-long training at a big company. You might have encountered jargon related to “organisational culture” without clearly defining it. Regrettably, the culture within an organisation is critical in deciding whether the company will thrive or collapse.

A positive organisational culture not only facilitates the employees to lead a successful professional and personal life but also establishes the corporation as a positive entity in the community. Conversely, a negative corporate culture can decrease employee retention rates and negatively affect their mental health. In this article, we will examine how this correlation functions.

What is Organizational Culture?

According to the book Organizational Culture and Leadership, Organisational culture is a collection of fundamental suppositions or psychological predispositions held by members of an organisation that affect their conduct and actions.

In simpler terms, organisational culture refers to how things are done within a company. Every organisation has a distinct culture comprising its values, attitudes, rules, and often unspoken routines. This culture determines how employees handle challenges, communicate with each other, and conduct themselves in their daily work. Therefore, management must establish the tone of the company’s culture early on.

It’s essential to recognise that organisational cultures are complex and diverse, like regional and ethnic cultures. They can sometimes be contradictory and changeable.

While there may be identifiable patterns, success in one area does not necessarily guarantee success in another. Establishing a positive workplace culture requires ongoing effort and active management, which will take time to develop.

What’s clear is that organisational culture has a significant impact on employee retention. Studies suggest that around one-third of job seekers would reject their dream job if the company culture didn’t align with their values. Moreover, a survey showed that 72% of employees consider corporate culture as a significant factor when deciding to work for a particular company; in the same survey conducted by Jobvite, 32% of employees who resigned within the initial 90 days mentioned that the company culture was the reason for their departure.

What is Bad Organizational Culture? 

If you have not read our articles on what keeps good employees in or makes them leave, you may not be aware of our emphasis on employee engagement. Lack of engagement is the primary cause of employee retention problems in the corporate world, equally affecting high and low performers. Disengaged employees are three times more likely to quit, even if they receive adequate compensation. Negative cultural practices, such as delay, negativity, and procrastination, tend to spread in the workplace. As an employer, you set the standard for your employees, so it’s essential to lead by example and take a top-down approach. Rules and regulations are important to some extent, but excessive policies and regulations can create a suffocating atmosphere that prevents employees from relaxing and being comfortable in the organisation. This leads to declining casual conversations, jokes, and basic interactions. The result is a heavier and almost tangible atmosphere in the office. Expending 40 hours a week in such an environment is enough to depress anyone, and this is what we refer to as a toxic organisational culture.

What’s a Good Organizational Culture? 

A clearly defined set of values is crucial in shaping your company’s culture. It represents your company’s mission and the imprint it will leave on the world. As we concerned in our previous article on retaining good employees, positive company values can lead to greater employee engagement and improve retention rates by up to three times the national average in some cases. Your values should be something your employees can personally connect with as they make a difference in the world while working for your organisation. Therefore, your corporate values should ideally bring people together.

A positive organisational culture also promotes initiative and commitment. Conversely, a negative organisational culture focuses excessively on punishment, while a good workplace culture emphasises rewards. Employees who try to innovate or go beyond their responsibilities to assist a colleague should receive recognition through promotions or special acknowledgements. When employees are undervalued, a company’s culture can quickly become stagnant.

Author Bio:

Mark Edmonds is an experienced academic writer at Academic Assignments, a top-notch assignment writing services provider. With a specialization in MBA dissertation help, Mark has helped numerous students achieve academic success. He is passionate about providing high-quality and timely assignments to his clients, and his expertise and professionalism have earned him a loyal following.