Is organisational culture the next frontier in investment? Embracing a coaching culture could be the answer!

Organisational culture has long been acknowledged as a critical factor in business success, but according to the recent report from the Institute of Business Ethics (IBE), titled ‘Is organisational culture the next frontier in investment?’, it has yet to be fully appreciated in investment analysis.

The report highlights that organisations with strong cultures enjoy improved productivity, reduced staff turnover and increased innovation. This is a compelling argument for business leaders to prioritise their workplace culture. But how can companies create the kind of culture that delivers these outcomes? The answer could lie in embracing a coaching culture - an approach that fosters trust, psychological safety and continuous learning. Such cultures not only attract and retain top talent but also build resilience and innovation, making them more appealing to investors, employees and customers alike.

The business case for a coaching culture

As organisations navigate complex global challenges, building a strong culture has become more than a ‘nice to have’ - it’s essential for long-term success. The IBE report shows that a strong corporate culture can drive performance, reduce risk and improve employee wellbeing. Leaders who adopt a coaching mindset can create environments of psychological safety, openness and trust, which are critical for high performance. A coaching culture encourages employees to challenge the status quo, take ownership of their work and collaborate more effectively, all of which can have direct financial benefits.

In fact, research from the International Coaching Federation (ICF) reveals that 60% of companies with strong coaching cultures report higher revenue growth compared to their industry peers. This demonstrates that an investment in a coaching culture is not only a way to enhance employee experience but also a tangible driver of financial success.

Reducing risk through better communication and leadership

The IBE report points to corporate scandals and collapses where culture failures played a significant role. From toxic work environments to ignoring warning signals from staff, poor cultures have cost companies billions in fines, reputational damage, loss of market share and even collapse. Leaders who embrace a coaching approach can help prevent these issues by fostering an open dialogue within their teams and ensuring that concerns and ideas from all levels of the organisation are heard and acted upon.

By creating a culture of trust and psychological safety, coaching leaders encourage their teams to speak up without fear of reprisal, allowing organisations to address problems before they escalate. This kind of leadership reduces the risk of regulatory breaches and supports better governance, two factors that investors closely monitor when making decisions.

Innovation thrives in psychologically safe environments

Innovation is essential for growth, and the IBE report highlights how a strong organisational culture is one of the key drivers of innovation. But innovation cannot thrive in an environment where employees are afraid to take risks. Psychological safety - a core component of a coaching culture - is critical in fostering creativity and problem-solving.

In a coaching culture, employees are encouraged to voice new ideas, challenge outdated processes and experiment without fear of failure. The report notes that companies with strong cultures are more likely to adapt to market changes and outpace their competitors in terms of growth and innovation. For investors looking at the long-term sustainability of a business, this ability to innovate and pivot is a key consideration.

Attracting and retaining top talent

Talent management is another crucial area where culture plays a significant role. The IBE report highlights that organisations with motivating and inclusive cultures see higher levels of employee satisfaction, better productivity and lower turnover. Companies with strong cultures, particularly those that offer autonomy and align with their employees’ values, are much more successful in retaining top talent.

A coaching culture enhances this by providing employees with development opportunities, regular feedback and a sense of ownership over their career progression. According to the ICF, 65% of employees are highly engaged in organisations with strong coaching cultures. This leads to lower recruitment costs, fewer unfilled vacancies and a more engaged, productive workforce.

Aligning culture with purpose for long-term success

The IBE report underscores the importance of aligning organisational culture with the company’s purpose. Companies with a strong sense of purpose and a culture that motivates and connects employees to that purpose consistently outperform their peers. However, a coaching culture ensures that this alignment isn’t just a superficial PR exercise. By embedding coaching into the fabric of the organisation, leaders ensure that employees at every level understand, live and breathe the organisation’s purpose.

This authentic alignment strengthens trust with stakeholders, enhances the company’s social licence to operate and positions the organisation as a leader in environmental, social and governance (ESG) initiatives. For investors, a company with a purpose or ethically driven culture represents a lower-risk, higher-reward opportunity.

The investment case for evaluating culture

The IBE report makes it clear that evaluating culture is not just a theoretical exercise - it’s a concrete investment strategy. Companies with strong cultures have shown significant and persistent stock market outperformance. Moreover, culture is a crucial element of human capital, which is gaining increasing attention from investors interested in sustainable growth.

Investors are uniquely positioned to influence company culture by encouraging boards and management teams to prioritise it. A coaching culture, with its focus on continuous development, innovation and employee wellbeing, offers a structured way for organisations to strengthen their human capital and, by extension, their market performance.

Culture as a driver of financial and social success

The IBE report provides compelling evidence that organisational culture is not only a driver of financial performance but also a critical element of long-term success. Embracing a coaching culture - where psychological safety, trust, and open communication are the norm - can help organisations attract investment, retain top talent and promote innovation. For C-suites, boards of directors, and entrepreneurs looking to future-proof their businesses, investing in culture is no longer optional. It is the next frontier in securing competitive advantage and ensuring sustainable growth.