Corporate Culture

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Corporate Culture

This five-part report provides an analysis of what constitutes a strong corporate culture. Part I provides insights related to what consumers and employees look for in a strong corporate culture. Parts II-V provide case studies of eight public companies that have developed notably strong cultures.

I. What Consumers and Employees Look For in a Strong Corporate Culture

Consumers and employees often look for qualities like trust, transparency, vision, and purpose in a strong corporate culture. They also prefer environments that foster diversity and inclusion. Other important qualities include providing healthy feedback and support, encouraging positive communication, and presenting opportunities for learning, creativity, and empowerment.

Trust and Transparency

  • Employees are looking for a corporate culture that is warm, welcoming, and loyal. Creating an environment where employees can depend on corporate leadership effectively motivates staff to remain dedicated to the company.
  • Consumers and employees alike believe that corporate transparency is invaluable. This means that executive leadership is open and honest about the company's triumphs and failures, financial statements, and agenda. As one executive explains in a recent Forbes article, "Trust is the cornerstone of any culture that thrives."
  • Companies can achieve a culture of trust and transparency by making integrity a priority and genuinely caring for employees and consumers. They can also inspire trust by admitting to their mistakes and actively listening to criticism.
  • Lack of trust in corporate leadership can lead to higher employee turnover rates. Forbes reports that as many as 35% of workers say they would leave their job if they felt management was untrustworthy.
  • A trending issue related to this topic is the value of salary transparency. Many people are "advocat[ing] for salary transparency as a means to close race- and gender-based salary gaps." A 2019 LinkedIn survey found that roughly 22% of corporate respondents have plans to openly share salary information moving forward.
  • A 2018 Inc. article reports that 73% of consumers consider trust more important than price when it comes to purchasing decisions. In addition, 40% would "switch from their preferred brand to one that offered more transparency."
  • Sixty-six percent of consumers feel more connected to a brand that they trust.

Vision and Purpose

  • Creating a strong sense of vision and purpose means developing a corporate identity that extends beyond what a company does or produces. It involves uniting brand, culture, and mission to give the company a sense of meaning that encourages greater levels of engagement, loyalty, and investment from executives, employees, and consumers.
  • According to Forbes, a strong corporate vision can be inspirational because "employees want to feel a sense of purpose at work and know how their contribution makes a difference."
  • Forbes reports that 54% of employees are likely to stay with a company for five years or longer if they feel driven by a sense of mission or purpose. They are also 30% more likely to invest the time and effort into becoming high-performing team members.
  • A 2019 Glassdoor survey found that 79% of workers would consider a company's mission, vision, and purpose before applying for a job there.
  • Employees and consumers are looking for a culture of social responsibility in particular. Three-quarters of employees say they would work for reduced pay at a company that prioritized social responsibility. Such companies also experience greater employee engagement and lower turnover rates.
  • Seventy-two percent of consumers are looking for brands that contribute to society in a positive way, and 64% of consumers want companies to "use their power to help people."
  • Companies with a strong vision and sense of purpose also report more revenue. Corporations like Dove and Unilever that have introduced "sustainable living brands" report that those lines are growing 50% faster than their other products and account for nearly two-thirds of the companies' total growth.

An Environment that Fosters Diversity and Inclusion

  • One aspect of fostering diversity and inclusion in the workplace is through hiring processes both at the executive and subordinate levels. However, in order to be truly inclusive, a company's culture must also encourage an environment where marginalized groups feel comfortable, welcome, and valued.
  • Millennials in particular are looking for a corporate culture that promotes diversity and inclusion in regard to "gender, race, and sexual orientation." However, this is by no means the only criteria for what constitutes diversity. Other traits to consider include age, thinking style, marital status, political affiliation, and disabilities.
  • A global survey of 1,700 corporations conducted by the Boston Consulting Group found that 75% of companies believe "diversity is gaining momentum in their organizations." In addition, the survey found that above-average diversity at the managerial level can lead to greater innovation revenue.
  • A strong corporate diversity program can also increase net revenue. According to DiversityInc, an organization that compiles an annual list of the top 50 most diverse companies, its winners on average make up 7% of the Fortune 500 yet account for 22% of its total revenue.
  • Forty-six percent of consumers want corporate brands to use their influence to "unite people from different backgrounds."
  • Additionally, consumer buying power is steadily increasing among minority groups. For example, black consumers have a buying power of $1.2 trillion, Hispanics have a buying power of $1.3 trillion, and the LGBTQ community's buying power is $917 billion.
  • It is also worth noting that Millennials and Gen Z, the two generations that value corporate diversity and inclusion most passionately, have a combined buying power of $3.53 trillion.

Open Communication and Support

  • Employees are looking for a corporate culture that offers them support, open channels of communication, and positive feedback. Companies can achieve this by starting family funds, regularly expressing gratitude for team members, and getting involved in community projects.
  • According to the Harvard Business Review, when major changes occur within a company, management can evoke better responses from employees by explaining why such changes are necessary and how it can positively (or negatively) effect their daily work experience.
  • A 2018 Public Relations Review found that a supportive corporate culture leads to greater job satisfaction, increased trust, and higher engagement rates for employees.
  • Consumers also want brands that actively communicate with them. For example, 70% of consumers feel better about companies whose CEO is active on social media, and 72% feel more connected to brands "whose employees share information on social media."
  • Opening lines of communication between brands and consumers can lead to increased brand loyalty. Fifty-seven percent of consumers say they would spend more money on a brand that invests in relationships with their customers, and 76% say they would choose such a brand over a competitor.
  • More than half of consumers feel more connected to a brand that "understands them and their wants."

Opportunities for Learning, Creativity, and Empowerment

  • Empowerment allows employees to feel more involved in the workplace by giving them appropriate decision-making authority and permission to think for themselves. Corporations can empower employees by reducing micromanagement and encouraging more autonomy.
  • Entrepreneur Safi Bahcall says that corporate executives should "lead like a gardener, not like a Moses." This means that they should put their effort into making sure employees have the resources and tools they need to succeed and allow them to make independent creative decisions.
  • Millennial employees in particular are looking for a work environment that supports continued education and professional development, as well as one that provides regular positive feedback.
  • The average onboarding process costs roughly $4,000 per new hire, which companies should look at as an investment rather than an expense. High turnover rates can cost businesses more money in the long run, and a strong professional development program can lead to higher workplace morale and better-performing employees.
  • For consumers, opportunities for learning and product education can increase brand loyalty. The majority of today's consumers do not trust advertising and are much more responsive to educational content or materials than paid actors.

II. Case Studies — Google and Starbucks

Google and Starbucks are two examples of companies with strong corporate cultures. Google's culture prioritizes autonomy, innovation, and creativity. The culture at Starbucks emphasizes social responsibility, diversity, and inclusion.

Google

  • Google is a sub-organization of Alphabet, an information technology (IT) company headquartered in Mountain View, CA that reports $161.9 billion in annual revenue.
  • Forbes ranked Google #4 on its 2019 list of the top 50 companies with the best corporate cultures. One employee describes the work environment as "cool" with a "high quality of life" and many opportunities.
  • Google's corporate culture encourages values like flexibility, creativity, and fun. Its offices are dog-friendly. The company allows scheduling flexibility and encourages creative freedom, which has led to happier employees and increased productivity levels.
  • Employee benefits include such perks as organic meals prepared by an on-site chef, nap pods, a break room with ping pong tables and video games, free health and dental insurance, on-site doctors, and subsidies for driving hybrid cars.
  • Its corporate culture is also driven by purpose and innovation, two qualities that are highly valued by consumers and employees alike. The company is passionate concerning its mission "to organize the world's information and make it universally accessible and useful." It also champions an ongoing commitment to sustainability.
  • In its 2019 annual report, Google states that it "embrace[s] collaboration and creativity" and considers its employees to be the company's greatest asset. It strives to hire team members with "diverse backgrounds" who can provide innovative perspectives to approaching the company's mission to "address some of the biggest challenges in technology and society."
  • One benefit of its strong corporate culture is that Google's team members feel more like a family. The company has over 70 offices across more than 50 countries, and 28% of its staff telecommutes. Of this vast employee network, 86% of Google's team members are satisfied with their jobs.
  • Google's investment into new hire training has resulted in its employees becoming competent at their jobs 25% faster than at other companies. Part of its corporate culture assimilation process includes the promotion of "transparency, open communication, networking, and quality time with managers."
  • Another benefit of its strong corporate culture is that consumers consider Google one of the "most valuable brands." Google is also the #1 most-trusted company for Millennials and members of Gen Z.

Starbucks

  • Starbucks is an international coffee shop franchise headquartered in Seattle, WA that reports $26.5 billion in annual revenue.
  • Forbes ranked Starbucks #49 on its 2019 list of the top 50 companies with the best corporate cultures. It describes the company as "an inclusive, progressive, forward-thinking beacon of a brand" that "embraces issues like accessible health care and education, competitive wages, inner-city development, and civic discourse as part of its ethos and overall purpose."
  • Employee benefits include health care options for both full- and part-time team members, stock options, 401(k) matching, and tuition reimbursement through its College Achievement Plan. Health care coverage for dependents of Starbucks employees extends to all domestic partnerships.
  • The corporate culture at Starbucks emphasizes community service, diversity, and inclusion. In 2019, the company created a new executive position, chief inclusion and diversity officer, to bolster its already aggressive efforts in this arena.
  • Starbucks has been praised for holding itself accountable following accusations of racism in 2018. CEO Kevin Johnson publicly acknowledged the issue and closed 8,000 stores for a day of mandatory staff sensitivity training.
  • The company recently launched its #whatsyourname campaign in the UK, which aims to welcome members of the transgender community by celebrating their adoption of new names. The campaign is a reference to Starbucks' practice of writing customers' names on their beverage cups.
  • Starbucks is also committed to making a "global social impact" through responsible sourcing and "reducing [its] environmental impact."
  • One benefit of the strong corporate culture at Starbucks is that employees have cited it as one of the top 50 companies with the best outlook for its team members. Starbucks was ranked #45.
  • Another benefit of its strong corporate culture is that Starbucks has a notably loyal consumer base. The company saw a 13% spike in its loyalty program membership numbers during the second quarter of 2019, and members of the program account for roughly 41% of the corporation's total sales.

III. Case Studies — Chipotle and T-Mobile

Chipotle and T-Mobile are two additional examples of companies with strong corporate cultures. Chipotle fosters a corporate culture focused on integrity and is currently undergoing a branding evolution to solidify a reputation for fun, loyalty, and accountability. T-Mobile's corporate culture emphasizes diversity, empowerment, and community.

Chipotle

  • Chipotle is a chain of Mexican quick-service restaurants that is headquartered in Denver, CO and reports $5.6 billion in annual revenue.
  • Forbes ranked Chipotle #44 on its 2019 list of the top 50 companies with the best corporate cultures. The company is an example of a business that has managed to survive and thrive following a major scandal when an E. coli outbreak in 2016 seriously damaged the brand's reputation.
  • In its 2019 annual report, Chipotle cites its strong corporate culture as a major factor in the company's continuing success. Its website features the slogan "Food with Integrity" and provides insights related to the company's efforts in responsible sourcing, product quality, and social responsibility.
  • The chain tends to fill its upper- and middle-management positions with current team members, which gives employees an incentive to stick with the company for longer. Hourly staff can promote from a position paying $30,000 per year to one that pays over $100,000 by remaining loyal to the company. It also rolled out a recent bonus incentive for its hourly staff to lower turnover rates.
  • Chipotle recently announced an expansion of its educational assistance program, which now "covers 100% of tuition costs up front for eligible employees to earn associate’s and bachelor’s degrees in fields ranging from cybersecurity to supply chain logistics" at select universities.
  • The company is in the process of evolving its corporate culture to place greater emphasis on values like fun, loyalty, and accountability. Its new CEO Brian Niccol is investing between $115 million and $135 million into transforming Chipotle into a lifestyle brand. The strategy has been successful thus far, and Chipotle has seen in-store sales grow as much as 9.9%.
  • Communicating openly and creatively with its customers is another important value to Chipotle. The corporation is the only major brand to have an official channel on TikTok, a social media platform that is particularly popular with Gen Z. Millennials and Gen Z make up nearly half of Chipotle's consumer base.
  • Chipotle's consumer satisfaction rating plummeted in 2016 following its food safety crisis. However, one result of its focus on establishing a corporate culture based on integrity is that it has managed to rebuild its reputation. Consumer satisfaction has steadily increased, and Chipotle ranked seventh in customer satisfaction among limited-service restaurants in 2019 with a rating of 80, which is 1% higher than its rating of 79 the year before.
  • The company has also seen significant benefits from its educational assistance incentive for employees. Team members who participate in the program are 90% more likely to stay with the company long-term. These employees also contribute to Chipotle's continued success by applying newly-acquired skills in their work for the company.

T-Mobile

  • T-Mobile is a mobile telecommunications company headquartered in Bellevue, WA that reports $45 billion in annual revenue.
  • Forbes ranked T-Mobile #10 on its 2019 list of the top 50 companies with the best corporate cultures. Its values include empowerment, diversity, community, and caring. T-Mobile describes its culture as "where passion meets purpose."
  • Comparably presented T-Mobile with its Greatest Company Culture award in both 2018 and 2019. It also won the Best Company for Women and Best Company for Diversity awards in 2019. The site gives T-Mobile a 4.8/5.0 culture score.
  • One significant aspect of T-Mobile's strong corporate culture is its dedication to customer service. J.D. Power voted T-Mobile the Best Wireless Purchasing Experience among cellphone service providers in 2019. YouGov ranked the company #1 in customer satisfaction and quality among wireless carriers during the same year.
  • T-Mobile fosters a "people-centric" culture and values team members just as much as consumers. It won Glassdoor's 2020 Best Places to Work Employees' Choice award and Forbes' 2020 Best Employer for Diversity award. The Human Rights Campaign gave T-Mobile a score of 100% in its Corporate Equality Index.
  • One benefit of the strong corporate culture at T-Mobile is that employees have cited it as one of the top 50 companies with the best outlook for its team members. T-Mobile was ranked #9. Roughly 91% of its employees express a positive view of the company.
  • Another benefit of its people-first corporate culture is that T-Mobile has experienced explosive and unprecedented growth. Over the last several years, the company has reported at least 1 million additional subscribers every quarter while its competitors like AT&T, Sprint, and Verizon have struggled.
  • T-Mobile began seeing a notable spike in its subscriber numbers around 2013, which is when CEO John Legere launched a rebranding campaign to make its executive leadership more open, relatable, and approachable for both consumers and employees.

IV. Case Studies — Costco and GEICO

Costco and GEICO are two additional examples of companies with strong corporate cultures. Costco promotes a corporate culture built on respect, caring, and support. The corporate culture at GEICO prioritizes diversity, teamwork, and community.

Costco

  • Costco is a wholesale retailer chain headquartered in Issaquah, WA that reports $152.7 billion in annual sales and membership fees.
  • Forbes ranked Costco #8 on its 2019 list of the top 50 companies with the best corporate cultures. The company has built its culture on a code of ethics that encompasses obeying the law, caring for its staff and customers, and respecting its vendors.
  • Costco takes exceptional care of its employees and prioritizes corporate investment into their well-being. Its 2018 median pay was $38,810, which is significantly higher than that of its main competitors Walmart ($19,177) and Amazon ($28,446). It strives to promote from within the company whenever possible.
  • The company takes great pride in its culture of caring, integrity, and support, and "seventy cents of every dollar spent by Costco goes to employee wages."
  • Employee benefits include health and dental insurance, paid parental leave, guaranteed hours, paid holidays, free memberships, and free Thanksgiving turkeys. Its employee turnover rate is only 6% while other retailers commonly report turnover rates between 60% and 70%.
  • According to a 2019 Inc. article, Costco owes its success to a corporate culture that supports its team members and prioritizes customer satisfaction. The 2018-2019 American Customer Satisfaction Index (ACSI) ranked it #1.
  • Examples of its efforts to cultivate member loyalty and customer satisfaction include a return policy that allows consumers to return products for a full refund several years later and a new same-day grocery delivery service.
  • In an effort to appeal to Millennial consumers specifically and their love of all things avocado, Costco recently began carrying a new product, Apeel Avocados. These avocados are coated with a special skin that slows the ripening process and extends the products' life.
  • One benefit of the strong corporate culture at Costco is that employees have cited it as one of the top 50 companies with the best outlook for its team members. Costco was ranked #7. Its management philosophy is built on cross-training, empowerment, and autonomy.
  • An additional benefit of its strong corporate culture is that Costco has been able to not only survive, but also thrive when many other retailers are struggling to compete with companies like Amazon. Costco reports an annual growth rate of 12.9%.

GEICO

  • GEICO is an auto insurance company headquartered in Chevy Chase, MD that reports $32 billion in total assets. It is a subsidiary of Berkshire Hathaway.
  • Forbes ranked GEICO #50 on its 2019 list of the top 50 companies with the best corporate cultures. Its website showcases a culture of diversity, community, and teamwork.
  • Comparably presented GEICO with its Best Company Culture award in 2019. It also won the Best Company Perks & Benefits, Best Company Compensation, and Best CEOs for Diversity awards for the same year. The site gives GEICO a 4.1/5.0 culture score.
  • To honor diversity, the company hosts several special events that celebrate veterans, black history, Hispanic heritage, women's history, and disabilities awareness. It prioritizes values like respect, integrity, and inclusion so that people from all walks of life feel welcome.
  • GEICO also supports organizations like the United Way, March of Dimes, American Red Cross, and Make-a-Wish Foundation. It frequently sponsors charity walks and runs, donates food, clothing, and toys to the less fortunate, and partners with community service organizations like Big Brother Big Sister and Habitat for Humanity. Each year, GEICO recognizes employees who have made a significant contribution to the community.
  • The company also participates in local highway safety programs and promotes a "Matching Gifts Program" in which it matches any monetary donation made to a charity, college, or university by any of its employees.
  • One benefit of GEICO's strong corporate culture is that consumers consider it the best auto insurance company for customer satisfaction. It has fewer complaints reported to state regulators than its competitors like Allstate, Progressive, and State Farm. GEICO is also top-rated among its competitors for the company's use of apps and technology.
  • Another benefit of its strong corporate culture is that its team members generally speak well of working for GEICO. According to Comparably, 82% of its employees express a favorable opinion of the company.

V. Case Studies — Tesla and the Walt Disney Company

Tesla and the Walt Disney Company are two additional examples of companies with strong corporate cultures. Tesla's corporate culture emphasizes excellence and innovation. Disney builds its corporate culture on such foundational values as leadership, service, and engagement.

Tesla

  • Tesla is an automotive innovation company headquartered in Palo Alto, CA that reports $2.46 billion in annual revenue.
  • According to the Harvard Business Review, Tesla takes a learning approach to its corporate culture. The organization is chiefly driven by a dedication to its mission, which is "aggressive innovation," creativity, and excellence.
  • The company exposes new hires to its culture of excellence from the get-go. An "anti-handbook handbook" recently leaked, which does not merely describe the minimum engagement and productivity levels required to remain employed with the company, but rather illustrates CEO Elon Musk's "incredibly high standards." It uses a conversational — and sometimes humorous — tone.
  • Tesla encourages its team members to "think like owners" and quickly respond to "current issues and challenges in the global automotive industry." It expects them to "constantly innovate" and "do the impossible." The company emphasizes teamwork, and everyone from the top down exemplifies Tesla's corporate culture.
  • Employee benefits include health, dental, and vision insurance, paid parental leave, relocation assistance, access to a company car, child and elder care services, paid vacation and time off, and student loan refinancing options. Team members also have access to exclusive discounts, a complimentary shuttle service for commuters, and stock purchase options.
  • Musk's mission-driven corporate culture often has a love-it or hate-it effect on employees and consumers. However, one benefit of his approach to corporate culture is that 83% of employees report that they are motivated by the company's "mission, vision, and values." Eighty-eight percent say the company's values are clearly defined and that team members "are invested in them."
  • Another benefit of its strong corporate culture of excellence and innovation is that consumers rate Tesla's cars as a "more satisfying" purchase than luxury brands like Porsche and Corvette. According to CNBC, "92% of Tesla Model 3 owners" would "definitely" buy the car again if given the opportunity to change their decision.

Walt Disney Company

  • The Walt Disney Company is an entertainment company and animation studio headquartered in Lake Buena Vista, FL that reports $69.6 billion in annual revenue.
  • The company has a corporate division dedicated to its professional development program called the Disney Institute. Its goal is to cultivate a healthy corporate culture built on excellence, leadership, teamwork, service, and engagement.
  • Employees are empowered through their professional development training at the Disney Institute, where they are transformed into "cast members" and learn that Disney culture champions a positive attitude, authenticity, responsiveness, and childlike joy.
  • Comparably presented Disney with its Best Company Outlook award in 2019. It also won the Best Company Professional Development award in 2018. The site gives Disney a 4.1/5.0 culture score.
  • Other aspects of Disney's strong culture is its dedication to innovative storytelling, commitment to environmental protection, and corporate philanthropy efforts. For example, its Team of Heroes program is an outreach initiative that grants wishes to children battling serious medical conditions. The company's sustainability efforts include a goal to cut its fossil fuel emissions in half by 2020.
  • The culture at Disney also prioritizes delivering a superior customer experience. The company accomplishes this through relationship building, anticipating guests' expectations and entertaining them in unique ways, actively listening to better understand guests' needs, and resolving issues quickly.
  • One benefit of the strong corporate culture at Disney is that the company is extremely successful in retaining the loyalty of its consumer base. It does this through its commitment to customer service, the cornerstone of which it describes as "exceeding expectations rather than simply satisfying them."
  • Another benefit of its strong corporate culture is that its team members generally speak well of working for the Walt Disney Company. According to Comparably, 72% of employees express a favorable opinion of the company.
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