NEW YORK, NY – With almost one-fifth of employees self-reporting to be actively disengaged at work,
companies are scrambling to find ways to improve company culture. While the current incentive for improving company culture for most businesses is to increase workers' productivity and build a strong public image, a new study co-authored by Columbia Business School Professor Wei Cai shows that a robust company culture could help build trust with customers. The study finds that when a customer observes close teamwork among employees, they are more likely to visit a store and use a company’s services. This uncovers a new incentive for why companies should work to improve their organizational culture.
The research, Culture as a Signal: Evidence from a Natural Field Experiment, shows that the way a team behaves affects a customer’s perceptions of the company's services. Professor Wei Cai and her co-authors, Harvard Business School Professor Dennis Campbell and Columbia Business School’s MS in Accounting and Fundamental Analysis student Jiehang Yu ‘24, find when employees are more responsive to one another when directly assisting a customer, the customer is more likely to trust the company and use their services. Importantly, by running simulations looking at the relationship between the percentage of teams with close teamwork and customer visit rate, the researchers find that the rate at which customers visit a company’s store increases by over 50% if there is close teamwork.
“Until now, we have only tried to understand the internal benefits of company culture. However, our findings show that companies that focus on building strong teamwork can foster better relationships with their clients,” said Professor Wei Cai, Assistant Professor. “This further incentivizes companies to improve their company culture, because it could have an impact on their bottom line.”
For this study, Professor Cai and her co-researchers conducted a field experiment on an apartment decoration company operating across the six biggest cities in China. The company uses the Chinese messaging app WeChat for employees to provide customers with information on the company, details of the service, and answer questions, and the customers need to visit the company’s physical storefront to place an order for the decoration service. Their research sample spans from February to December 2020, including 16,476 customer observations of conversations with 446 employees (275 designers and 171 service agents), with a typical group having 3 employees (2 service agents and 1 designer). The researchers measure teamwork as employees’ responsiveness to team members, and customer trust as whether the customer visits the store. They first test to see whether employees replying to customers in a shorter amount of time makes customers more likely to visit a store, finding that if the average reply time between employees is halved, the customer’s visit probability will increase by more than 10%. They then test if the same is true for when employees repeatedly reply quickly, and lastly when all employees on a team are quickly responsive – finding that each factor plays a role in gaining the customer’s trust. They conducted additional tests to account for factors like gender, sentiment of messages in the WeChat group, employees’ prior connections, eager customers, and non-worktime messages.
Additional Findings Include:
- All Team Members Should Actively Participate In Teamwork: To attain a good team culture, managers should encourage employees on a team to actively participate in the work rather than having some members dominate the teamwork process.
- Employees Being Responsive to Each Other Builds Trust More than Being Responsive to the Customer: By comparing data between employees’ responsiveness to other employees and employees’ responsiveness to the customers themselves, they find that the former has a much stronger impact on the customer’s likelihood of visiting the store.
“This research opens up the possibility that this phenomenon might be the same for company investors and suppliers as well,” said Professor Wei Cai. “While more research is needed to conclude this, our study provides a baseline for future examination on this topic.”
To learn more about the cutting-edge research being conducted, please visit the Columbia Business School.
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