Dan Denison conducted a very sophisticated research program in the 1980’s, which is ongoing and continuous to measuring the culture-performance link. Until this point, culture had been defined in “non-specific” terms like values, beliefs, and attitudes … Denison believed that in order to be useful to business leaders, culture must be defined in terms of specific behaviors that you can observe and measure.

This was the difference between “culture” being the domain of trained psychologists, versus being part of the business strategy leaders can shape to help the business succeed. The result is a database of over 3000 companies and a specific culture model that shows a powerful link between the strength of culture and seven key performance indicators:

Return on Equity. Consider this example that compares the culture results for companies with low return on equity and high return on equity.

• Study of 161 publicly traded companies from a broad range of industries
• Contrasts the performance of the 10% of the organizations with the best culture scores with the 10% of the organizations with the worst culture scores.
• Average ROE for the organizations with the lowest culture scores is 6%. Average ROE for the organizations with highest culture scores is 21%.
• Highly similar results for return on total investment.

What do you DO to build a stronger culture that drives performance?

See “Culture Process” for an overview of Jackson & Schmidt’s approach.