Culture can be the bedrock of a company’s success. Though it’s not tangible, it is the glue that holds the company together, influences its decisions, and shapes its workforce. A strong company culture has the potential to increase employee engagement, boost productivity, and differentiate the business from its competitors. In fact, it can even impact profitability. This is where the 80/20 rule comes into play.
The 80/20 rule was first introduced by Italian economist Vilfredo Pareto in 1895, who noticed that 80% of the land in Italy was owned by 20% of the population. Since then, the rule has been applied to several domains, including business. In the context of culture, the 80/20 rule suggests that 80% of a company’s culture comes from 20% of its activities.
To understand this further, let’s take the example of Zappos, an online shoe and clothing retailer famous for its outstanding company culture. The CEO, Tony Hsieh, identified three core values- delivering wow through service, embracing and driving change, and creating fun and a little weirdness, that defined their culture. These values were then integrated into every aspect of the company’s operations- from hiring to training to performance evaluations- ensuring that the company’s culture was aligned with its values. This is the 20% of activities that created 80% of the company’s culture.
So, how can a company determine its 20% of activities that shape its culture? Firstly, it’s essential to identify the core values that define their culture, and then align the company’s activities with these values. This can include hiring practices, communication protocols, recognition programs, and development opportunities. Secondly, it’s crucial to assess the impact of these activities on employees and the company’s overall performance. This can be achieved through surveys, employee feedback, and performance evaluations.
Companies that have leveraged the 80/20 rule to shape their culture have seen positive results. For instance, Southwest Airlines, known for its fun-loving and customer-centric culture, was able to outperform other airlines in the industry, leading to increased profitability. Similarly, Patagonia, an outdoor clothing manufacturer famous for its commitment to sustainability, was able to attract and retain like-minded employees who shared their values.
In conclusion, the 80/20 rule can be a powerful tool for companies looking to shape their culture. By identifying the core values that define their culture and aligning their activities with these values, companies can create a strong culture that has the potential to increase employee engagement and boost productivity, leading to increased profitability. The key takeaway is that culture is not just about having ping pong tables and free snacks, but about aligning the company’s values with its activities, creating a unique identity that sets it apart from its competitors.
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