Adaptive Corporate Culture: Key to Financial Performance

A new study of Fortune 500 companies co-sponsored by Crawford International and HR.com shows that those with adaptive corporate cultures and strong leadership practices financially outperform those that do not.

The report, Leadership and Culture, states that only three out of ten strategic change programs produce the business value or financial return that company leaders expect. In a study of the financial performance of 94 large companies from 1995 to 2004, the researchers found that companies that create adaptive corporate cultures outperform companies with non-adaptive cultures by a factor of 900 to 1 as measured by long term net income and stock price growth.

Ric Roi, lead researcher and vice president, Crawford International, said:

"As we worked with corporations over the past 24 years, we came to recognize the importance of corporate culture and strong leadership in supporting business change and transformation. Clients that have an adaptive or agile corporate culture have historically thrived in the face of organizational change while those with non-adaptive cultures suffer through change."

Companies participating in this study reporting high levels of adaptability include 3M, Apple, Bank of America, Cisco Systems, Barclays, BMC, Hewlett Packard, Genentech, GlaxoSmithKline and Intuit.

Larry Schnicker, director, HR development operations, Cisco Systems said:

"Cisco's unique and agile culture originates at the top with John Chambers as President and CEO. Cisco's core values have allowed our company to remain very agile in adapting cultural expectations to include the importance of Cisco as a career company, management as a profession, and talent development and movement."

Adaptive companies also tend to be more pioneering as evidenced by Cisco recently being named by Business Week as one of the top 30 most innovative companies in the world.

Debbie McGrath, CEO, HR.com said:

"If more corporations truly measured the value and impact of leadership and culture on their bottom lines, they would invest more in developing leaders and creating high performing cultures, instead of just paying lip service to it. At HR.com, we are committed to helping our 135 000 members share in the research we sponsored with Crawford so they can understand and realize the impact of great leadership and culture."