Building a company culture that drives profitability

Simon Sinek once wrote, “Customers will never love a company until the employees love it first.” The author, a speaker on business leadership, published “Leaders Eat Last: Why Some Teams Pull Together, and Others Don’t” in 2014, exploring how employee well-being is the foundation for long-term success. Over ten years later, the idea still resonates, with research showing that now more than ever, employees need to feel like they belong at work. And among the top reasons people walk out is because they don’t feel appreciated by their employers. 

While a healthy internal culture has long been seen as a founding block of organisational performance, recent budget cuts and an economic slowdown have meant that companies continue to deprioritise workplace culture. Despite the ample evidence pointing toward the relationship between workplace culture and the bottom line, leaders still need convincing. 

Where to begin cultivating a people-first culture that fuels business results? We turn to serial entrepreneur Wouter Glaser, who faced this question many years ago when starting his own PR agency. Glaser was one of the keynote speakers at Forge Connect, an event hosted by Rydoo and iBanFirst in Amsterdam, where he shared his candid insights on what he did to take his company from scratch to 30% EBITDA with 40 full-time employees in eight years.

In the era of hybrid and remote work, employees crave purpose. They want to know how and where they fit into the company’s long-term vision. When they don’t find this at an organisation, they’ll either leave or quietly quit — a phenomenon that has emerged as a response to poor workplace culture. Subsequently, retention takes a hit, and performance and productivity suffer, leading to hundreds and thousands in lost capital.

Wouter Glaser, a serial entrepreneur, faced this issue personally when he started his own PR agency, Glasnost. Looking back on his early days as founder, Glaser admits that employee retention wasn’t high. 

“While we had an amazing and skilled team, we had a high rotation of people. Finding the right people was difficult”, Glaser shared during his keynote session. “This was the first time I encountered a culture challenge, because the individuals were skilled, but they weren’t forming a team. This made me realise that I should build a culture to succeed.”

Glaser started by mapping out core values like openness, trust, and passion, taking it a step further and embedding those values into the company’s daily operations. He introduced the ABCD player quadrant method, a tactic to evaluate employees by their output and how well they aligned with core values. This helped him make hiring, retention, and layoff decisions consistent with the company’s culture.

“The A player is high in output and high in core values. The D player is low in output and also low on core values”, Wouter explains. “If you’re lucky and have a good recruitment process, you probably won’t hire any D players. But it can also become very interesting, because B players are high in core values, but lower on output.“

Instead of sidelining B players, whom Glaser identified as culture champions who weren’t top performers, he doubled down on training them, making employee development a core part of his business strategy. 

At one point, he recalls, 50% of his staff had begun their careers through an traineeship program where the most promising master’s students were given a three-year crash course to become consultants. These employees were entrusted with managing small P&Ls and client relationships from early on. 

“This helped create a lot of long-lasting relationships with clients,” Glaser explains. “Vodafone, for instance, has been a client for ten years, Unilever for nine years, which is quite unique in a market where you can always change to another agency.”

This focus on culture not only feeds into long-term client retention but also increases employee tenure. “What we saw is that on average, someone stayed with us for around five to six years, when the industry averages between two and three”, Glaser states.

Research supports the connection between employee development and financial outcomes. According to a Great Place to Work study, companies that encourage employee growth experience five times higher year-over-year revenue growth than companies where employees feel stagnant.

When companies hire employees who live their core values, they boost engagement, retention, and productivity — key drivers of financial success.

Glaser’s leadership style is inspired by “Good to Great”, a book by the American researcher Jim C. Collins, which describes how good organisations can become great and why most fail to achieve it. According to Collins, it all lies in hiring the right people from the start. 

Take David Maxwell’s story. When he became CEO of Fannie Mae in 1981, the business was losing $1 million every working day, with $56 billion worth of mortgage loans that still needed paying off. Maxwell famously told his management team that there would only be a place for A-level people willing to put in an A-plus effort. He interviewed every team member and gave them the chance to leave. 

Out of the 26 executives, 14 walked out. They were replaced by some of the brightest, most dedicated employees. With the right people at the helm, Maxwell took Fannie Mae from losing $1 million a day at the start of his position to clocking in $4 million a day. The message is clear: people are the lifeblood of your company, and Glaser understood this when scaling his PR agency. 

As the company grew, he realised that focusing exclusively on skills wasn’t enough. To get the right people in, he needed to prioritise cultural alignment. To ensure every new hire fit the company’s values of openness, trust, and passion, he trusted the A-players, the top-performers and culture superstars, to interview new hires.

“It wasn’t about the curriculum [or] professional experience. It was about who they were as a person, so we started the process with a cultural due diligence by the people we trusted the most.”

This focus on culture paid off, as Glaser saw a major jump in profitability. “With the help of core values and other systemic optimizations, we managed to double the EBITDA from 2019 to 2020 to an optimised level of 30%.”

Ultimately, companies that focus on culture outperform their peers. Researcher Alex Edmans analysed the history of the 100 best companies to work for lists from 1984 to 2009. The conclusion? Companies on the list outperformed the stock market by 2% to 3% per year.

When you invest in company culture, your business is more profitable. A study into US businesses revealed that actively disengaged workers cost about $300 billion dollars a year in lost profit. Unhappy workers will miss almost four more work days per year than satisfied employees. 

On the other hand, companies with engaged employees consistently outperform their competition by almost 20%. Successful companies are the ones who align their purpose with business strategy and operations. For example, Netflix’s core values, like freedom and responsibility, are embedded operationally, with the HR team measuring employees on each of these values. 

At one point, Glaser had a difficult decision to make. He had to choose between sticking with old management and way of doing things or restructuring the core leadership team to reflect the company culture more accurately. 

“I had some difficult conversations. I changed the management team, and this company started to thrive again. Obviously, we had some turnover in this period… but we managed”, Wouter recalls, remembering how introducing the Rockefeller habits, a set of habits fast-growth companies often embrace, had a great impact in the organisation. “[with the help of these habits] we managed to get the company running again. To get that energy back.”

Ultimately, to truly align culture with business strategy, leaders must select people who embody organisational values, recruit and educate them, and periodically reselect those who belong to the culture.

A strong culture doesn’t happen on its own. It’s often designed and nurtured by leaders who want to learn how to improve company culture and consistently drive change. Leaders are not just responsible for fostering culture — they are the biggest factor in determining whether a company makes or loses money.

Consider the following scenarios that frequently loom over leadership teams: the promise of a recent acquisition that evaporates. An exhaustive effort to create a new values-driven mission that fails to stem attrition rates. A poor customer experience that goes viral on social media. All of these situations lead to lost revenue, increased employee turnover, and operational inefficiencies. In fact, half of the difference in operating income between organisations in the same industry can be attributed to culture. Leaders who neglect culture risk huge financial losses.

Glaser knew he had built a values-driven people culture when one of his own team members course-corrected him after he helped land a major account.

“I got a call from a team member saying we had won this major pitch. I was not in the office and decided to keep the information to myself, because I wanted to look everyone in the eye when I told them. But someone found out before I arrived, and everyone thought I wasn’t being straightforward with the team”, Wouter recalls. “After this, one of our junior members approached me and said: ‘Wouter, if one of our core values is to dare to be open, this was not it.’ It was quite a revelation for me.”

What happened in Glaser’s case illustrates how leadership sits at the helm of culture. Leaders set an example for people to follow, and when leaders make mistakes, it is vital for them to take accountability to preserve organisational values. After this episode, Glaser introduced a monthly recurring revenue and turnover meeting, deciding to be fully open about won and closed deals. 

This type of leadership behaviour isn’t just about being transparent. When employees trust leadership and see their values being upheld, they work harder, innovate more, and contribute to greater business success.

When Satya Nadella became CEO of Microsoft in 2014, the company was losing more than $2 billion to its competitors like Apple, Google, and Amazon. A big part of the problem was Microsoft’s corporate culture, which was seen as hierarchical and stifling. Nadella’s leadership brought cultural transformation to the organisation, whereby she prioritised psychological safety and a growth mindset. She essentially rehauled the company culture, driving the market cap from $300 billion to over $2.7 trillion. Nadella didn’t treat culture as a side project, but as a core business strategy, showcasing how leadership’s focus on culture is integral to financial growth.

A successful company culture happens when people live and breathe the organisational values in everything they do. It’s built on a delicate set of values, behaviour, and mindset that must constantly be adapted and iterated to keep up with a changing work landscape.

The relationship between company culture and profitability is clear: the right culture, driven by core values, leads to higher engagement, innovation, and financial returns. Organisations must invest in their people, prioritise culture in every decision, and ensure their leadership leads by example.

As Glaser’s journey shows, when core values are aligned with business strategy, the results go beyond a happier workforce — they also lead to higher profits.