Confessions of a Culture Accountant – Accounting for Culture

Just for today.

I’ve taken off my usual Culture Mechanic coveralls, put my tools neatly aside and washed my hands.

I’m taking a break from my workshop and popping into the office to play with some spreadsheets.

Just for today though. I promise.

You’re probably wondering why.

You see boardrooms around the world can be funny places.

You can sometimes find funny people who very much like numbers. People who go a bit glassy eyed when they hear words like marketing, morale or culture.

But get very excited about balance sheets, profit and loss and profit margins.

These are the folks that I’m talking to today.

Answering the question, “Can you measure the impact of culture?”

Short answer is yes.

Both negative and positive.

To truly understand the tangible impact of culture, let me show you some real-world examples where culture made — or broke — a company.

Some stories from the dark side

Respect, Integrity, Communication, Excellence.

These were the values proudly displayed in the lobby of Enron.

But this was most definitely not the culture that was valued.

Instead, a culture that encouraged greed, arrogance and self-serving deceit prevailed.

Let’s do the accounting for that.

1. The largest bankruptcy in American corporate history. $63.4 billion
2. Their auditor, Arthur Andersen went bankrupt. $9.3 billion

Ouch!

Then there’s Volkswagen. Who remembers Dieselgate?

How could such a trusted and respected brand go so horribly and publicly astray.

A corporate culture that prioritised personal gain, aggressive goals and secrecy over ethical behaviour and responsibility.

The accounting:

1. Criminal fines and settlements. $34.69 billion
2. Profits down. 20%
3. Stock decline. 37% ($56 billion)

Oh, and several executives, including the CEO were forced to resign. One went to jail for 7 years.

Let’s not forget the ugliness that recently came to light at Nine Entertainment.

A culture of keeping “open secrets”, inappropriate behaviour and forced signings of NDA’s.

Here’s some toxic-workplace accounting:

1. Share price down: 30% ($ 1 billion)
2. Net Income down: 46%
3. Net Profits down: 25%
4. Darren Wick Settlement: $1 million + legal fees from $100,000+

Their Chairman Peter Costello was forced to resign.

A powerful cautionary tale of how even well-established companies can suffer severe consequences when culture goes unchecked.

Maybe it’s time for some good news.

Stories from the bright side of culture 

Zappos is rightly famous for its genuine customer-centric culture. The company’s CEO famously said, “We’re a customer service company that just happens to sell shoes.”  They place an extraordinary emphasis on customer satisfaction and employee happiness.

This positive culture has led to extremely high levels of customer loyalty and repeat business. Employees are encouraged and empowered to go above and beyond for customers.

The accounting:

1. Annual sales growth: $2 billion p.a
2. Zero to $1 billion in 10 years: $1 billion
3. Acquired by Amazon: $2.1 billion

Today, their customer-first culture continues to drive success.

It’s hard to go past Google.

Their culture is centered around innovation, openness and a flat organisational structure that encourages creativity and collaboration. The company’s famous perks, like free meals and on-site services, are just part of a broader strategy to make employees feel valued and engaged.

This culture fosters an environment where everyone feels comfortable experimenting and pushing boundaries, leading to groundbreaking products like Gmail, Google Maps and Android.

The accounting looks great:

1. Market Capitalisation: $1 trillion
2. Annual Revenue: $300 billion
3. Profitability up: 41% ($82.4 billion)

Closer to home we have the amazing successes of Atlassian.

Atlassian is a prime example of how a strong corporate culture can significantly contribute to a company’s success. The Australian software giant, known for products like Jira, Confluence and Trello, has built its reputation not just on its innovative products but also on its unique and robust culture.

Their culture is centered around its (genuine) core values, which include “Open Company, No Bullshit,” “Play, as a Team,” “Build with Heart and Balance,” and “Don’t #@!% the Customer.”

Don’t you just love it!

All of this is reflected in some pretty impressive numbers:

1. Employee Retention: 91%
2. Role offers acceptance up: 20%
3. Revenue up: 20% ($3.5 billion)
4. Market Cap: $100 billion

Isn’t it Obvious

There is a clear and powerful connection between a strong, positive corporate culture and financial success.

An equally clear correlation between negative corporate culture and financial ruin.

Here’s the bottom line.

Organisations that place high value on a positive, healthy culture reap benefits across every imaginable KPI and metric, over time.

So, if you like numbers. Especially those that are heading in the right direction. Then investing in culture will make you very happy indeed.

Psst

Normal service will be resumed next week where you’ll find me back in my overalls and on the tools fixing culture wherever I’m needed.

If you’d like to invest a bit more in your corporate culture and you’d like a Culture Mechanic to lend a hand. You know how to reach us.