Think about the fact that unhappy employees drag the productivity of the whole organization down because they are already inherently 20% – 30% less effective and productive. Then think about all the overt and hidden costs of employee turnover such as interviewing costs (time) and on-boarding the new person (time). Now, think about how Company culture has become a driving factor in hiring and retaining the best talent especially in highly competitive sectors like IT, marketing and sales.
We’re all aware of what bad company culture might look or feel like but what about world-class company culture? Entrepreneur partnered with CultureIQ to cultivate a list of the companies with top-ranked cultures where for the second year in a row, Tuft and Needle, an online mattress retailer from Arizona took the top spot.
An article posted on Harvard Business Review takes an in-depth look at six components of great company culture we’re taking a look at how Tuft and Needle views and practices these traits in order to give you an ideas of what it takes and where to start developing a company culture that drives growth.
- Vision – This is the mission statement that articulates the purpose of your culture. At Tuft and Needle, they strive to be the opposite of most mattress retailers and that includes providing top-notch customer service. So, when it comes to culture, their vision is to prioritize strong culture over growth.
- Values – The guidelines on behavior and mindset needed to achieve the vision. Tuft and Needle values kindness, humility and intellectual honesty.
- Practices –This is the action that maps to the values. Tuft and Needle view the organizational culture as “flat” meaning everyone has a voice at the table and everyone is valued. The CEO spent two months interviewing 50 employees, one-to-one. It took a long time but it was one of the best culture exercises he ever did. The outcome was an arsenal of information on what’s working or not and the boost in employee morale when an executive’s actions map to the values.
- People – Hiring, assessing new candidates with the purpose of aligning values and practices and ensuring they stay aligned. Tuft and Needle takes their time interviewing and believes alignment with culture (which is innate) is more important than skills (which can be learned).
- Narrative – This is the organization’s unique story as it pertains to culture. Tuft and Needle moved from Silicon Valley to Arizona and that was a smart move. According to their CEO, the reduction in hard costs like office space can be used on perks. Their employees receive free healthcare, 25-days (minimum) mandatory vacation and a company sponsored tea time at 3:00 PM where employees and the community meet for a cup of Earl Grey.
- Place – The office environment, look, smell, perks, and type of workspaces – all of which impacts employee happiness. Open office space where there are no assigned desks, offices or cubicles is the way Tuft and Needle rolls. On any given day, you’ll be sitting next to someone different. It’s a great way to keep ideas flowing, create bonds between departments, and get to know all your co-workers.
The impact of good company culture can been seen in the bottom line. Surveys suggest the cost of on-boarding equates to anywhere from six to nine months worth of salary. Turnover and hiring a replacement adds another 10 – 20% of the person who leaves’ salary. To put that in dollars, the average $40,000 employee would cost $8000 to replace and $20,000 (on the low side) to onboard which totals $28,000.
Tuft and Needle have experienced a less than 5% turnover rate in the four years they’ve been in business. The cost savings tied to their culture is not easy to calculate when you consider on-boarding, and hiring plus the increase in productivity associated with happy employees.
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