Corporate Culture and Employee Retention

When thinking of my non-profit, Ridgeview Medical Center, and trying to identify what makes it unique and interesting, the answer was simple: the employee retention rate is astounding because of the culture, I believe.

 I’ve spent a significant amount of time at Ridgeview since I was a child, and for being terribly afraid of medical procedures and all they entail, I find myself willingly returning to Ridgeview time after time. I volunteered in numerous departments during junior high, created a project to raise money to purchase a piano for the lobby during high school, and worked as  an intern in the Ridgeview Foundation my first summer after freshman year at Marquette. When I decided to move on from Ridgeview sophomore year, I had an overwhelming sadness and it made me wonder, what about this place makes it so hard for people to leave? I’ve happily moved on from jobs in the past, so this inner turmoil was a new experience for me. Therefore, I’d like to explore how a firm’s culture can impact employee retention, and identify what it is about Ridgeview that supports this. Then, I’ll evaluate if Harley shares any of these traits and explore their culture, also.

First, it is important to understand what employee retention means and its role in a firm. According to Human Resources IQ, employee retention is the “organizational policies and practices designed to meet the diverse needs of employees and create an environment that encourages employees to remain employed” (HumanResourcesIQ).

Why would a firm value employee retention?

Glenn Wille explores these reasons in an article titled, “Employee retention: A positive force.” Wille points out how in the past, one’s employer was a “second family,” a source of pride and loyalty for a person (Wille). However, these times have changed. Now, employees come and go so frequently that it causes many businesses problems and great expense. For example, results of a study the Bureau of Labor Statistics showed that as of January 2010, the average person had been with their current employer for 4.4 years (Bureau of Labor Statistics). This means that an average person will have 7-10 jobs in their lifetime.

Therefore, if a person switches jobs about every four years, that means a business is training a new employee in the same position every four years. Hiring a new employee can cut across many areas of a business, such as training, benefits, culture, supervisions, etc. As a result of these inconveniences, employers lose money. Saratoga Institute did a study that placed the average cost of hiring an exempt employee at $7,839 (Wille). This cost doesn’t include training costs. Not only does employee turnover cost a firm money, but it also costs them morale; remaining employees can get frustrated by a constant inflow and outflow of co-workers. Therefore, from simply a technical aspect, companies should avoid losing employees they would like to keep.

However, even though there are high costs involved, I think that companies try to keep good employees around for more qualitative reasons—this is where Ridgeview has got it right. An article by Nandita Chatterjee explores how a firm’s culture affects employee retention. Chatterjee defines culture as, “a characteristic of the day-to-day environment as seen and felt by those who work there” (Chatterjee). Keeping employees happy is extremely important not only as an offensive aspect, but for defense as well. Chatterjee points out how “corporate spying” is become more and more relevant and unhappy employees can contribute to this, resulting in potentially disastrous problems for the company (Chatterjee). Culture is also important because with the addition of new employees, it is current employee’s job to spread the culture onto them, and an unhappy employee will only pass on the negative aspects. This will contribute to an overall low morale, which in full circle can result in low employee retention.

Now that we know why a firm values employee retention and understands the importance of organizational culture, it is important to look at why a potential employee values these same things.

In a study discussed in “A study of organization culture and its effect on employee retention” showed that 45% of people who had left their job left because “unsuitable organizational culture” was the most important factor.  53% of respondents thought that ethical practices were a major factor in evaluating professional culture (Chatterjee). 

Organization processes were another element of a firm noted of importance by this study. An overwhelming 100% of respondents believed that organizations should have policies in order to “retain talented employees” (Chatterjee).  The study concluded with five things managers need to do in order to lead a successful organization culture, as follows: 

1.      “Identify and understand the present organizational culture in order to understand the implications on employee retention

2.      Prioritize the key areas in order to anticipate the strengths and weaknesses of organizational culture

3.      Ensure proper communication. Proper two-way communication ensures employee and management awareness on key issues and hence lessens the chances of rumors and gossip which can be detrimental to the growth of the organization” (Chatterjee). 

Thus far, one can infer that it is crucial for a firm to identify the right employee for their company. However, the question remains, how do you find them? In addition, how does one decide who is a right fit for their culture? 

Before diving further into the cultures of Ridgeview and Harley, here’s an excellent summary of the impact of corporate culture: 

Harley’s decrease in hierarchical control makes their culture even more important. Chatterjee discusses how since, “command-and-control governance” is no longer as relevant as it used to be in organizations, companies need to develop strong shared norms to give the organization an identity. Angie Ziegler, Director of Leadership Development for Harley-Davidson discussed Harley’s new view of culture in recent years. She discussed how in the 1990s, Harley’s culture didn’t embody enough values; in fact, Ziegler stated that when plant employees were asked their opinions about Harley upholding strong values, they laughed.

These major cultural issues are huge problems that need to be discussed themselves, but what I want to focus on in regard to this topic is how Ms. Ziegler provided me with the revelations that one can’t define what an individual organization’s culture is. Culture itself can be defined, but when trying to communicate a full embodiment of a culture, it’s impossible. I’ve been running into this problem while writing this entire blog—trying to identify what it is about Ridgeview that makes me sad to leave. However, Ms. Ziegler said one can’t identify culture, it is a result of how an organization acts. Therefore, in order to understand a company’s culture, I believe one needs to have active actions. One needs to investigate what a company does, and how they do it. From my experiences, the best way of doing this would be by spending time there. This must be true for others, and I believe is a main reason why employees stick around.  Grasping a company’s culture is when you walk into a company and there is “something different” (Ziegler).  Ms. Ziegler is confident Harley has “it,” and I know Ridgeview does as well. 

Bureau of Labor Statistics. United States Department of Labor. 3/31/2012.             http://www.bls.gov/news.release/tenure.nr0.htm

Chatterjee, Nandita . "A study of organisational culture and its effect on employee retention." ASBM     Journal of Management . 2.2 (2009): n. page. Web. 31 Mar. 2012.

HumanResourcesIQ. 2012. IQPC. www.humanresourcesiq.com

Ziegler , Angie . "One Company. One Team. One Direction." Organization and Behavior Lecture . Marquette University, Milwaukee . 4 April 2012. Address.