The Ethos Effect on Your Bottom Line

Truly savvy executives pay attention to the pulse in their organization. They understand how beliefs, attitudes and habits impact their bottom line: unless people embrace their jobs and their work wholeheartedly, they won’t sustain efforts in the face of difficulties.

I consider this as I watch some companies prosper and draw the business world’s attention. They continuously grow, innovate and impress. In contrast, others struggle, never breaking through to reach their desired success. The latter must deal with downsizing, financial shortfalls, market-share losses and tarnished reputations. The disparities are glaring.

While leaders of prosperous companies garner industry admiration, those who head besieged organizations wonder where they went wrong. They search for explanations as to why their operations haven’t fulfilled their potential. Research in social science and organizational behavior points to a critical quality, one that most directs every company’s future: culture.

Too often, leaders discount the importance of ethos and organizational culture, with predictable consequences. They must define, assess and strengthen their culture to thrive.

Ethos Effect

Ethos is a Greek word that describes the guiding beliefs or ideals that characterize an individual, corporation or culture. Ethos is to an organization as personality is to a person. Personality describes how we think, act and respond to the circumstances we face.

Similarly, an organization’s ethos determines how people act or work, what they stand for and how they respond to pressures and challenges. An organization’s ethos defines the culture. Every company, without exception, has a culture.

Unfortunately, leaders unfamiliar with the concept of culture or organizational behavior are out of touch with the daily workings within their walls. They fail to realize that ethos drives:

  • How well (or how poorly) teams function
  • Whether customers’ needs are being met
  • Whether employees’ needs are fulfilled
  • Company health and well-being
  • Future outlook

A trained observer, like an executive coach, can quickly assess an organization’s ethos. For example, they may look for the characteristics John Coleman described in an HBR article, Six Components of a Great Corporate Culture:

  • A unifying vision or mission that fashions one’s purpose and plans
  • A code of values that influences behavior and mindsets
  • Practices that support and enhance people
  • A recruiting process that matches people to the desired culture
  • A celebrated heritage that tells the company’s story and what it stands for
  • A beneficial working environment to optimize synergy

Here’s why this is important: a strong culture can increase net income by more than 700% in an 11-year span, according to a 2012 study published in the Interdisciplinary Journal of Contemporary Research in Business. Other research confirms culture as a significant factor in determining success or failure.

What do you think? What is the ethos-effect in your organization? Is it time to make adjustments to your culture? I’d love to hear from you. You can call me at 704-827-4474; let’s talk. And as always, I can be reached here, or on LinkedIn.

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