Recently, BambooHR has been getting quite a bit of attention for our paid paid vacation policy that gives every employee $2000 to spend on a vacation each year. Most of the feedback has been fun: "Where can I apply?", "Wish my company would do this!", etc. But the most surprising and somewhat humorous feedback was from a company who insisted we'd go out of business for spending money like this on employees. We think they missed the point and the proof of years of research.

It's common in today's business world to think that remaining at the cutting edge of your industry is the only way to remain successful long-term. However, evidence proves that policies designed to support company culture and keep talented employees happy, productive, engaged, and renewed are exactly what keep organizations thriving long term. What we've discovered through experience and talking to thousands of HR leaders is that it takes more than just innovation to achieve long-term success.

Innovation's short shelf-life

In the past, innovation created significant gaps among products and services, allowing an organization to lastingly differentiate themselves. Today, every worthwhile innovation has imitators within days and weeks, leaving the original creators in a struggle to improve their creation, advance beyond it, or sacrifice their advantage; that, or find another way to differentiate.

Luckily, for some companies like ours, the highest priority is and has always been something virtually impossible to replicate: creating the best mix of people and culture that allows us to create value at speed, consistently. Prioritizing people and culture rather than innovation itself has made all the difference in our growth and success despite ever-increasing competition.

Focus on people

Building a talented team has never been easy, but we feel it's more challenging today than ever before. Getting the right people on the bus and keeping them is like playing a game with constantly changing rules and endlessly increasing competition. Baby boomers are leaving in droves--up to 11,000 are retiring each day--and millennials, who generally have very different expectations from your organization, are stepping in to take their place. This shift, along with so many other complexities in today's workforce, is making people the most difficult, strategic business problem.

The complexity of the talent market reinforces the fact that people are the most critical piece of business strategy. Knowing that people strategy is actually business strategy, we agree with author Paul Kearns' belief that "business strategy that does not explicitly and consciously integrate with HR strategy will no longer qualify as the best strategic option." That's because, as we (and others) like to put it, businesses don't create value; people do.

Relentlessly attracting, empowering, and engaging the best people is the single most important thing we can do for our business. Talented people are the input we need if the output we want is success; they deserve--and are worth--thoughtful, strategic attention.

Focus on culture

People are the input, but we have to put them into an ecosystem that enables success. That ecosystem is our company culture, and since we can't force them into that system (especially not in today's talent warzone), it has to be a system they find attractive and rewarding.

Culture isn't a simple or universal equation. You can't find an organization you admire, copy everything they do, and expect an equal outcome. Culture has to be unique to your people, your needs, your industry, and even your value proposition. Culture is also fluid, requiring frequent evaluation and guidance to remain healthy. There are financial and practical costs to building and maintaining a culture that cultivates both satisfaction and performance, but the return on investment can be incredible.

When you have a great company culture, employees are more engaged and productive, and they're easier to recruit and retain. In fact, since BambooHR started more deliberately communicating about our culture, our applicant volume went up 300 percent. But by far, the biggest return on investment of a healthy company culture is that our people can create more value more quickly because they're more invested in our success. We really believe that when we create a great place to work, great work takes place.

Create value at speed

Now back to the reason to focus on people and culture: Innovation doesn't make us unique anymore, or at least not for very long. What does make us unique are the people we hire and the culture they work in. We have high-quality employees in a high-performing culture; that's a formula for long-term market success, even in today's hyper-competitive economy.

It's funny; initially, we invested in our people and our culture because it was the right thing to do. Now, with the safe haven of differentiation decaying more rapidly than anyone ever imagined, we see more than moral value in cultural investment; we also see its business value. Simply put, those organizations that focus on people and culture to create value at speed are the organizations that win.