Work culture is the environment that you create at your workplace. It includes the values, beliefs, and behaviours that you and your employees share. The culture of the company can define the success of the organisation or it can also become the reason for its failure.
The work culture of a company is the pillar on which the company is built. It is important for the employer to nurture a healthy work culture so that the employees feel comfortable and motivated to work.
A toxic work culture can impact a company in many ways which may affect the business directly or indirectly.
In this article, we will talk about 10 major setbacks that a company can face because of its toxic culture.
But firstly, how is a toxic culture defined?
A toxic culture is not very difficult to identify. If you feel that something is not right at your workplace, it is probably because of the toxic culture.
Here are some of the signs of a toxic culture:
- Stressful environment
- Lack of trust
A toxic work environment is characterized by negative attitudes and behaviours, such as bullying, discrimination, and harassment. You feel unappreciated, insecure and not respected. This type of environment leads to physical and mental health problems for employees. Not just this, it starts immediately impacting the productivity of individual employees and gradually the other teams as well.
There are clear signs of a toxic work culture which are many times ignored by the management and could have been easily fixed.
So, what happens when a company fails to address a toxic culture and fix it?
Well, here are ten things that a toxic culture can cost your company.
A toxic workplace can be incredibly distracting and stressful, which can lead to a decrease in productivity and motivation.
Productivity is the first thing that gets directly impacted by a toxic culture. When your employees feel unsafe, unsupported, or unvalued, they are less likely to be engaged in their work.
This can lead to higher levels of absenteeism, turnover, and symbolic presenteeism (when employees are physically present but not mentally or emotionally engaged). All of these factors lead to a decrease in productivity and an increase in costs for your company.
Let’s take a scenario here: Say you have an employee who is constantly putting down other employees and making them feel bad about themselves. This employee is toxic and is negatively impacting the culture of your company.
This employee is also likely to be less productive than other employees because they are not engaged in their work. They may also be more likely to leave the company, which would lead to even further productivity losses.
Your employees also start focusing on negative office politics instead of their jobs.
So, how does this affect your company? Poor quality of work and output, a direct impact on revenue!
Employee retention becomes an issue
There is a clear scarcity of talent in the job market and it can become increasingly difficult to retain employees in a toxic culture. In a toxic culture, employees may feel undervalued, and unappreciated, and may not feel like they are able to perform to the best of their abilities.
This can lead to high levels of stress and anxiety, lowered motivation and can eventually lead to employees leaving the company in search of a better work environment.
Gone are the days when an employee would stick with a company through thick and thin. In today’s job market, employees are far more likely to leave a company if they are unhappy with their work environment.
A toxic culture can cost a company dearly in terms of both money and talent.
This impacts the motivation of other employees as well. There are multiple ways in which a company culture shapes employee motivation. It is important to take a note on how the culture affects overall motivation and causes issues with employee retention.
Recruitment: difficulty in attracting top talent
A toxic culture will make it difficult to attract top talent.
Firstly, the employees who leave your company due to poor culture will never want to return. Not only that, but they will likely dissuade others from joining your company as well. This can make it difficult to recruit top talent.
Given how important a company’s work culture is for employees today, the top talent you want to recruit will likely not want to work for a company with a toxic culture.
People now have many options when it comes to where they want to work. There are a plethora of companies out there and most of them are competing for the same top talent.
In a survey conducted by Glassdoor, 77% respondents said a good company culture precedes salary when considering a new job.
A company with a toxic culture will likely not be able to attract the best and brightest employees. This can put your company at a disadvantage and make it difficult to keep up with the competition.
You may not realise but a toxic culture at your company can cost you your customers. If your employees are unhappy, it will show in their interactions with customers. Your employees will be less likely to go above and beyond for your customers if they don’t feel appreciated in their own workplace.
In turn, this will have an impact on your customers and the overall performance of the company is bound to suffer.
A toxic workplace culture can lead to high staff turnover, which can be disruptive for customers who have come to rely on certain employees. A constant churn of new employees can be frustrating for customers and make it difficult to build relationships with your company.
Unhappy employees are less productive, which can lead to a decline in the quality of your products and services. This can lead to customers taking their business elsewhere.
“A happy customer tells a friend; an unhappy customer tells the world.”
You just don’t lose one customer but your company’s reputation takes a beating as well which directly affects future business opportunities.
Damaged company reputation
The toxic culture of a company doesn’t just stay within the walls of the office—it can have a profound impact on the company’s reputation. When employees are unhappy, they’re more likely to speak out about their experiences, and that can damage the company’s image.
All those employees who leave the company due to toxic culture also take their networks with them. And when they leave, they’re likely to tell their story—which can further damage the company’s reputation.
The customers who suffer due to the company’s toxic culture can also damage the company’s reputation. If they’re unhappy with the way they’re treated, they’ll take their business elsewhere—and they’ll tell their network about their experiences.
We have all heard about many such companies that have had to face the brunt of their toxic culture.
A company with a bad reputation will find it harder to do business and may even face legal consequences if employees decide to speak out about the toxicity of the workplace.
As a result, it hampers their growth and the company’s reputation takes a severe beating.
Diminished investor confidence
Investors will be less likely to invest in a company that has a toxic culture, as it is seen as a higher risk.
Traditionally investors may look at a company’s financial statements and business model to determine its viability, but in recent years there has been an increased focus on a company’s culture. This is because a toxic culture can lead to a number of problems that can have a negative impact on the bottom line.
Investors are becoming increasingly aware of the importance of corporate culture. As such, they may avoid investing in companies with a toxic culture as they perceive them to be high risk.
Investors need to trust that management is acting in the best interests of shareholders and that the company culture is one that promotes ethical behaviour. A toxic culture can erode this trust and make investors wary of putting their money into a company.
Innovation thrives in cultures that are open to new ideas, encourage creativity and risk-taking, and provide employees with a sense of purpose. A toxic culture, on the other hand, can stifle innovation and cost your company dearly in the long run.
An organisation where employees are afraid to speak up or share new ideas is not likely to be a hotbed of innovation. A culture of blame, where people are quick to point fingers rather than take responsibility, is also not conducive to creativity and innovation. And a company that values conformity over creativity is unlikely to be at the forefront of the next big thing.
If you want your company to be innovative, it’s important to create a culture that supports and encourages new ideas. A culture where people feel valued and empowered to take risks is more likely to produce breakthrough innovations than a culture of fear and intimidation.
Increased regulatory scrutiny and risk of legal liabilities
When there is toxicity in a workplace, there are often issues with bullying, harassment, and discrimination. This can lead to a hostile work environment, which can create legal liabilities for the company.
If employees feel that they are being harassed or discriminated against, they may file a complaint with the Equal Employment Opportunity Commission (EEOC).
Legal cases are not only a possibility but a highly probable scenario when there is a toxic culture in the workplace. In one example, a former Google employee filed a lawsuit against the company, alleging that she was subjected to gender-based discrimination and harassment. The lawsuit claimed that the woman was paid less than her male counterparts, was given fewer opportunities for advancement, and was ultimately fired because she complained about the treatment she was receiving.
Another legal case that can come from a toxic workplace is a wrongful termination lawsuit. If an employee is fired because they have complained about the toxicity or because they refuse to participate in it, they may have a legal claim against the company.
There are many such legal cases that have come from toxic workplaces, and companies should be aware of the potential liabilities they may face if they do not address the issue.
More than the financial damages that a company faces, it is the loss of reputation and the effect on employee morale that is the most damaging when a company has a toxic culture.
High employee turnover
A toxic culture can certainly lead to high employee turnover. If employees feel like they are constantly being mistreated or that their work environment is negative, they are likely to look for other opportunities. This can cost a company a lot of money in terms of both the direct costs of turnover as well as the indirect costs associated with lower productivity and morale.
This issue is especially problematic in today’s tight labor market, where it can be difficult to find replacement workers. Once a company has developed a reputation for having a toxic culture, it can be very difficult to attract and retain top talent.
What the high turnover issue does is, it causes a domino effect. One person leaves, which lowers morale and makes it harder for the team to function. This can lead to more people leaving, creating an even bigger problem.
Not only does this cost the company money in terms of lost productivity and the need to find and train replacement workers, but it can also damage the company’s reputation and make it harder to attract new talent.
High employee turnover can be costly in terms of both the financial cost of recruiting and training new employees and the loss of institutional knowledge and experience.
Increased Absenteeism at the workplace means that more employees are taking time off from work, either for personal reasons or because they are sick. In a toxic culture, Employees begin to feel the need to take time off in order to stay away from the negative environment at work.
They may also take time off because they are not being treated well by their supervisors or co-workers. Employees don’t work to their full potential because of the fear of being reprimanded and look for ways to avoid coming to work. Also, absenteeism often doesn’t get reported, so the company may not even be aware of the problem. not being aware of the problem can perpetuate the cycle.
This can cost the company money in the long run, as they will have to pay for replacements or overtime.
The culture of a company has become one of the most important factors in recent years in the job market. A toxic work culture can cost your company more than just a few good employees. Above are ten things that a toxic culture can cost your company and it is high time that every company takes this seriously. An unhealthy work culture directly impacts the bottom line of the company.
A toxic workplace culture is simply not sustainable in the long term. If you want your business to thrive, you need to create a positive working environment where employees feel valued and respected.
It is important for companies to realise the importance of good work culture and invest in it. The first step to this is to identify the problem by observing the signs and fixing them by creating a positive company culture in 11 easy steps.
About the Author
Reema Bharti is an e-commerce advertising enthusiast and currently works with an e-commerce giant. Having spent 7+ years in the corporate space working with multiple firms, she likes writing about work culture, work ethics, digital marketing and sales. She also has a personal blog – Writer Alpha, which is about precious gemstones and a complete guide about their benefits and uses.