How much does culture really mean when it comes to company results?

Well, for Alphabet, the parent company of Google and one of the largest public companies in the world, the short answer is a lot. In fact, it’s enough that the company recently issued a warning to investors that pandemic-related challenges to company culture could raise costs and hinder productivity for the remainder of this year.

“As we prepare to return our workforce in more locations back to the office in 2021, we may experience increased costs as we prepare our facilities for a safe return to work environment and experiment with hybrid work models, in addition to potential effects on our ability to compete effectively and maintain our corporate culture,” the company stated in a recent 10-K filing.

There’s no question that Google company has made a huge investment in its company culture. While the company is known for its famously lavish perks – free gourmet meals, free health care, nap pods, and dog-friendly workspaces – just to name a few – Google has also invested in creating an environment that cultivates and rewards innovation and achievement.

For example, Google employees also enjoy:

  • Time to think. Google encourages employees to spend 20% of their time on their own ideas.
  • Reduction in daily stressors. Google makes it easy for employees to get to work by running wi-fi-enabled shuttles. Flexible schedules are an established practice, enabling employees to manage their days to best suit their lives. These and other thoughtful policies and perks effectively reduce the effect of common time-wasters and stress-inducers.
  • Intense focus on employee wellness. Free healthcare and on-site medical services ensure employees’ health needs are covered. Healthy meals, gyms, yoga classes, massages, nap pods, and other innovations together show the company is serious about the wellness of its employees.

Google’s benefits, and the amenities its employees enjoy, help the company to attract and retain its talented workforce. However, like so many of the rest of us, Google employees have been forced to work from home for the last year, and this is posing risk to the company’s core culture great enough for the company to disclose it to investors.

Google has already signaled to employees that the company is planning to support hybrid schedules, allowing employees to work from home part of the time, but also requiring them to be on-site several days a week, starting this fall. However, as they noted in the 10-K, even for a company like Google – one that has invested in culture to a level few others have – this is a time of real challenge for company culture.

New pressures on culture

Company culture is under silent assault from a variety of quarters. Four of the key forces that are at work, eroding culture and eating away at employee morale, are highlighted in our new white paper, New Threats to Company Culture Post-Covid:

  • Employee fatigue and burnout,
  • Misalignment between employers and employees,
  • Resistance to returning to the workplace,
  • Misunderstanding of how employees’ expectations of employers have changed.

The move to remote work has been a significant driver of these changes, due also in part to the dynamics of remote work, and the reduction in visibility for HR officers amongst employees working from home.

“Employees tend to predominantly interact (virtually) within their teams. Team leads and managers have created a microcosm of the company within their teams and shaped a company culture on this micro-level. Rather than HR, the responsibility now falls on the team leads and managers to onboard new employees and introduce them to the company culture.”Challenges to Corporate Culture in 2021

Another new element affecting culture is the empowerment employees feel and expect.

“One thing is for sure, the voice of employees has never been stronger, and organisational cultures are being driven by the expectations and demands of the workforce on a scale that we’ve not seen before,” writes Ian Barrow for CompanyCulture.com. “Whether it’s the way employees are communicated with, issues around wellbeing and mental health, or how teams are managed and run, crowdsourcing employee opinion has become the norm. Employees understand the situation, they see the effects of the pandemic all around them in their lives, so involving them in decisions around their work life is natural and something everyone values and expects.”

Taken together, these elements are combining to create an entirely new territory for leaders and their HR partners, and, as Google’s disclosure illustrates, the risk to business performance is real. We’re fielding a lot of questions on these topics from our clients, and next week, on Thursday, 25 February, our CEO and founder, Stefan Wissenbach, will be hosting an open Q&A and will be inviting your most problematic questions. You can register for the session here.