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Cutting costs? Why companies must spare—and splurge on—the office retreat

Every year, before our annual employee gathering, I inevitably and repeatedly hear the same question. “Everybody attends? Not just management?”

“Yes,” I answer. “Everybody.”

I mean it. As the CEO of QlikTech, a software and data-analysis company, I take pride in our annual employee gathering and invite our entire staff of more than 1,300, from entry-level administrative assistants to the executive team from 23 countries and throughout the United States.

I know this is increasingly rare. Amid fiscal cliffs, deficits, and debt ceilings, corporations are focused on a single-minded goal: cutting costs.  However, without more focus on investment, companies may be undercutting their own futures.

Yet if cost is the only thing that comes to mind to those ever conscious of the bottom line, they’ve missed the entire point of growing a company. Employee summits are really an investment in a company’s most valuable asset—its culture. Companies that cut costs by short-changing culture may just be sacrificing their futures to scale the next quarter’s results.

It’s an era of cost-cutting, especially for publicly held companies.  The pressure to slash every expense can be overwhelming.  Wall Street may well ask or, rather, has already asked: Why can’t webinars, Skype and motivational posters on cubicle walls promote the culture and replace employee summits? Why can’t artificial, distant interactions substitute? The answer is simple. Culture is entrusted—and best built—person-to-person, face-to-face.

Employee summits may be viewed as an old-age activity, particularly for tech companies, but I believe they are essential part of building culture.  There is storytelling of company histories, a reinforcement of company culture through team activities and even awards that recognize employees and instill a sense of pride that is carried through all year long.

At QlikTech, our gatherings focus on team building, culture immersion and simply knowing who you work for, as much as possible. The key is to make sure every employee understands the direction of the company.

If anything, cost pressures make investment in culture more important, not less.  Morgan Stanley recently conducted an analysis of the most successful publicly traded technology companies.  The answer wasn’t who could crunch the toughest numbers.  There were three parts to the secret sauce: a simple, focused mission; an effective management team; and great culture.

Culture is a human asset to be transmitted from person to person.  It is the essence of a company’s identity and brand.  Employee summits bring every employee together on a level playing field.  It is serious business and serious play.  They innovate.  They review company’s goals from the year prior and create new challenges for the year ahead.  They learn a united narrative. Cultures are built from people, brands arise from cultures, and customers buy brands.  That makes people—and culture—a bottom-line issue.

The results—and they are that—are tangible.  Loyalty is one.  Disruptive thinking is another.  So is a workplace and, crucially, brand culture in which every employee, every day, believes he or she can make a difference in the company’s course.  It’s tempting to say you can’t put a price tag on those outputs, but you can.  Let’s put it this way, employees who are loyal tend to stay. Companies save money by retaining employees over a longer period of time.  These are investments that pay tangible, measurable dividends for shareholders far exceeding their cost.

Where many companies go wrong is confusing a company’s culture with its outputs.  The result is tunnel-vision: a narrow-cast focus on short-term results that causes them to slash costs above all other priorities. That is not to say costs are unimportant.  They are crucial.  But outputs are merely a measure of a company’s culture, not the culture itself.  It is far better to invest in the culture that serves a company’s mission and companies that invest in culture can see the results—not just in the pride in their employees’ eyes, but the satisfaction in their shareholders’.   Bringing people together is only the way to do it.

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