In the ever-evolving landscape of small and medium-sized businesses (SMBs), success hinges on an effective strategy and a well-defined corporate culture. However, the impact of a poorly communicated strategy and an ill-defined culture can be devastating. These two factors can have profound effects on the operations of SMBs. A lack of clarity in strategy and culture can spell doom for businesses aiming to thrive in today’s competitive market.

A well-communicated and clear business strategy is the roadmap for an organization’s growth and success. Unfortunately, many SMBs suffer from a lack of clarity when it comes to their strategic goals. According to a study by the Harvard Business Review, 95% of employees do not fully understand their company’s strategy. This alarming statistic suggests that most businesses aren’t effectively communicating their strategic vision to their workforce, and a poorly communicated strategy triggers multiple problems.

When employees are uncertain about the company’s direction, they are less engaged in their work. Gallup’s State of the Global Workplace report found that only 15% of employees worldwide are engaged in their jobs. Low engagement leads to decreased productivity, lower morale, and higher turnover rates.

Without a clear strategy, a business may miss out on valuable opportunities for growth and innovation due to a diminished ability to match products and services to fuel the desired future state. PwC found that 52% of companies with clear and well-communicated strategies reported higher rates of innovation.

A vague strategy can result in the misallocation of resources. Businesses may invest in projects or initiatives that do not align with their long-term goals. Research by McKinsey shows that 17% of large IT projects go so badly that they can threaten the company’s very existence.

Ultimately, the lack of a coherent strategy can lead to financial woes. A study by the Project Management Institute found that only 40% of projects at companies with poor communication of strategy were completed on time and budget, compared to 74% at companies with excellent communication. The cost associated with failed projects can easily sink an SMB into the red.

A strong corporate culture is the glue that binds an organization together, shaping behavior, decision-making, and employee satisfaction. It can buoy some of the burden of a poorly communicated strategy as leaders and team members leverage informal channels. However, when the culture is also ill-defined or neglected, it can accelerate dysfunction.

A study by Deloitte found that 94% of executives and 88% of employees believe a distinct corporate culture is critical to business success. In SMBs with a poorly defined culture, employees are more likely to leave, resulting in higher turnover costs and a loss of institutional knowledge.

Poorly defined cultures often lead to confusion about company values and priorities. This confusion can result in a decline in employee performance. Souring performance affects customer service and perception; thus, a company’s culture directly impacts its reputation. A study by Glassdoor found that 77% of job seekers consider a company’s culture before applying. SMBs with negative cultural perceptions will struggle to attract top talent and customers.

An unclear or toxic culture can also lead to legal and ethical problems. A survey conducted by the Ethics & Compliance Initiative states that 41% of employees at organizations with weak cultures reported witnessing misconduct, compared to 10% at organizations with strong cultures.

Strategy and culture are not isolated elements within a business; they are interconnected and mutually reinforcing. A well-communicated strategy can help shape a positive culture, and a healthy culture can facilitate the execution of the strategy. A study by Kotter and Heskett found that companies with strong cultures aligned with their strategic objectives outperformed their counterparts by a factor of six in terms of revenue growth. When strategy and culture are aligned, employees are more likely to embrace and execute the strategic plan effectively.

To thrive and grow, SMBs must prioritize developing and communicating a clear strategy and a strong, well-defined culture, and Helmwise can help.

Find out how Helmwise can strengthen your strategy and activate your culture by visiting helmwise.com and scheduling a complimentary consultation.