Prepared by: Joel Levey, Michelle Levey, John D. Adams, Albert C. Hyde, Janet C. Laing, William Maynard, Keith McCandless, Ron Sacchi, and Sean Sullivan

Overview: Drawing insights from over 350 sources and studies, this report examines the substantial and rapidly expanding body of research that confirms the vital links between corporate culture and people management, employee health, productivity, and retention/loyalty; customer loyalty; and bottom-line business results.

The twofold purpose of this report is:

1. To provide a thorough and robust analysis of the leading research, and emerging and established knowledge, regarding the interplay of corporate culture, healthy and toxic workplaces, bottom-line business performance, and employee health, loyalty, and productivity.
2. To offer insights and recommendations to leaders for increasing their business effectiveness by promoting the health and vitality of their organizational cultures, and to suggests guidelines for future research.

Report Structure:
For the reader's ease, this report is organized into four parts and two appendices:

PART I: The business case for developing healthy, high performing corporate cultures

Part I provides a thorough survey of the theory and research necessary for framing the business case for developing healthier organizational cultures. For readers with limited time/interest seeking to understand the best thinking with regards to this field of inquiry, this section offers a robust overview of our findings. The discussion of the importance of corporate culture offers a comparison of the adaptive capacity and resiliency of different organizational cultures and the impacts of culture on the health and performance of employees, and on bottom-line business results. Seminal data is presented here from five domains of inquiry related to this investigation:

• Corporate culture and organizational health
• Stress optimization and performance enhancement
• Work-life balance
• EAPs
• Violence in the workplace

PART II: Corporate Culture, Performance, and Wellness

Part II examines the impact on organizational culture of the shift from an industrial based economy to a knowledge-based economy, and provides an in-depth discussion and analysis of the forces that shape and determine corporate culture. Benchmarking five organizational cultures — Southwest Airlines, Harman Management/Kentucky Fried Chicken, TD Industries, HP Labs, and Bell Labs — insights are offered regarding the effects of corporate culture on employee health and performance, and business results.

PART III: Analysis of core domains related to corporate culture, productivity and performance: stress optimization, work-life balance, violence in the workplace, and EAPs

Part III presents a more detailed analysis and evaluation of current research, data, and organizational practices related to each of the five domains of inquiry introduced in Part I.

PART IV: Conclusions & Recommendations

The main body of the report concludes with a discussion of lessons from the research in the five inquiry domains, and suggests directions for future research. Part IV also highlights challenges and opportunities to be reckoned with in developing the health and capacity of an organization's culture, and provides readers with valuable application guidelines for implementing the principles and practices highlighted in this report within their own organizations.

Appendix I: Annotated Bibliography

Supplements the Reference section with an annotated bibliography of seminal source material.

Appendix II: Research team and council of advisors

Introduces the reader to the members of the IHPM Center for Corporate Culture and Organizational Health's research team, and the members of the Center's council of advisors.

Jeffrey Pfeffer, the Thomas D. Dee Professor of Organizational Behavior at the Stanford Graduate School of Business, corroborates the essence of our findings in his recent book, "The Human Equation: Building Profits by Putting People First" (Pfeffer, 1998). As Pfeffer states in a recent interview, "Companies that manage people right will outperform companies that don't by 30 to 40 percent. This principle even applies in the current IPO arena. IPO firms that value their people have a much higher five-year survival rate than those that don't. Similar studies of the steel industry, the oil-refining industry, the apparel industry, and the semiconductor industry all demonstrate the enormous productivity benefits that come with implementing high-performance, high involvement management practices. There is conclusive evidence that holds for all industries, regardless of their type, size, or age. The results are the same." (Reich, 1998)

Even though there is considerable evidence to confirm that the “people friendly” management practices of adaptive and “healthy organizations” deliver many measurable business advantages, many business leaders still act as Drucker describes here:

All organizations now say routinely, 'People are our greatest asset.' Yet few practice what they preach, let alone truly believe it. Most still believe, perhaps not consciously, what nineteenth-century employers believed: people need us more than we need them. (Drucker, 1992)

As health care costs skyrocket to over $1 trillion per year, and as competition continues to increase in the global economy, concerns about the impact of corporate culture on organizational health and productivity are moving to the forefront of awareness. Business leaders must be wisely informed to balance their scorecard in order to develop, continually adapt, and maintain the organizational agility necessary for sustained business success.

The findings presented in this report will provide the insights needed to draw the following conclusions:

• There is a clear and compelling relationship between the culture and people practices of organizations and the productivity and health of their people.
• Investing in people is a wise strategy for achieving and maintaining high levels of bottom-line business success.
• Continued research is needed to deepen our understanding of the intricate interdependencies between organizational culture and employee health and productivity.

Methodology

In preparing this report, our research team employed the following methodologies: rigorous and extensive literature reviews; database assessments; comparisons to other studies; and interviews with dozens of business leaders, human resource professionals, and expert consultants in the field. Examination of current knowledge in this arena includes: evidence regarding productivity and cost considerations, seminal articles, leading practices, case histories, and hypothesized potential impact on cost and performance. Priority has been given to research well grounded in social science principles and published in respected professional sources.

The findings, recommendations, and insights offered here also reflect over 150 years of combined applied experience in over 200 organizational cultures by the members of the IHPM Center for Corporate Culture and Organizational Health's research team. Over the past twenty-five years, each of these contributors has played a leading role in developing the health and performance of workplace cultures within leading organizations in business, industry, healthcare, and governmental arenas.