I've worked at companies for 10+ years, and I know how important corporate culture is to the success of a business. Changing a culture for the better is no easy task, even when the execs understand that it needs to change. More recently, I've learned to appreciate the importance of the stories that associates tell about their company to explain and maintain a particular culture.
I agree that stories can be influential, but I'm afraid that this article attaches too much importance to the power of stories. The author has confused cause and effect. The company described in the article has some fundamental problems with its values. The company is experiencing turnover because of the way management treats people. If you want to keep people, treat 'em right in a consistent, visible way. If you do that the old stories will be replaced by new ones. Performing a few one-off good deeds in the hope that people will make up stories about them will just breed cynicism and contempt.