How Toxic Company Culture Is Driving Employee Turnover

Research into toxic workplace culture reveals how a lack of inclusion, fairness, and purpose at work is causing employees to leave their jobs in droves.

Toxic company culture is a lot like catching a nasty bug. It can spread quickly, and before you know it, everyone's feeling under the weather.

Toxic vibes can race through an organization, with people picking up on bad habits and negative attitudes. When employees see others gossiping or treating their colleagues unfairly, it's easy for them to fall into the same pattern, and soon enough, the whole atmosphere takes a hit.

Toxic company culture has increasingly become a significant concern for organizations, as more employers are waking up to how company culture can have a heavy sway on employee turnover, employee morale, and productivity. Addressing and transforming an unhealthy culture is crucial for the long-term success and sustainability of a business.

In 2022, MIT Sloan Management Review published a survey that delved into the role toxic culture played in the Great Resignation.

After analyzing 34 million online employee profiles, researchers found that "a toxic corporate culture is by far the strongest predictor of industry-adjusted attrition and is ten times more important than compensation in predicting turnover."

According to the MIT analysis, toxic company culture is characterized by a lack of diversity, equity, and inclusion, workers feeling disrespected, and unethical behavior within an organization. Such an environment can lead to high employee turnover, low morale, and decreased productivity.

What are signs of a toxic work culture?

Key signs of a toxic workplace culture include:

1. Unfair treatment or discrimination

2. Exclusionary behavior or cliques

3. Lack of workplace trust and support among team members

4. Excessive workload and unrealistic expectations

5. Poor communication and lack of transparency

7. High levels of stress and burnout

8. High employee turnover

Great Place To Work? research reveals the same about employee retention and flight risk drivers.

In our 2021 survey of more than 330,000 U.S. employees, those who said they didn��t intend to stay at their company a long time pointed to the absence of the following as key culprits:

Purpose in their work

Looking forward to coming to work

Feeling proud to work at their company

Diversity, equity, inclusion and belonging

Let��s narrow in on that last one: diversity, equity, inclusion and belonging (DEIB). Employees with low intent to stay raised these concerns about issues relating to equity and inclusion:

Gender equity

Fair promotions

Fair pay

Equal and limited opportunities

The same study also revealed that underrepresented minority groups were at the highest risk of leaving.

Changing a toxic company culture

If toxic company culture is the problem, can it be fixed?

In short, yes. But it will take time and consistency.

"Rebuilding trust is possible," says Julian Lute, senior strategic advisor at Great Place To Work. "Steady, consistent focus in the right places will help you gain traction in support of your efforts to be better."

Julian recommends three ways leaders can start to change toxic company culture:

1. Accepting accountability for past mistakes and current issues

2. Following your words with your actions, demonstrating a commitment to change

3. Committing to ongoing, transparent, and two-way communication with employees

Many organizations that achieve Great Place To Work Certified? status score high on fairness, equity, inclusion, and belonging (DEIB) efforts and experience high retention figures.

Take the company Bitwise Industries, which tripled in size over the last two years while others struggled to hire and retain staff.

CEO and founder Jake Soberal credits the rapid workforce growth to their commitment to diversity and individualism and meeting employees' needs (rather than only expecting employees to meet company needs).

"It's not: we will tolerate you, we will charitably serve you," he says. "It's: you are essential to our collective success. We have continually gotten better if for no other reason than we've added wonderful people who have expanded the edges of that culture and enriched it."

Focusing on employee needs pays unending dividends, as evidenced by decades' worth of research. Organizations that prioritize connecting purpose to employee work and fostering diversity and inclusion, among other things, experience a positive workplace culture and higher retention.

Using employee surveys to fix toxic company culture

Employee surveys can be an incredibly powerful tool for diagnosing a toxic company culture. Just like a doctor uses tests to identify what's causing a patient's symptoms, we can use surveys to get to the heart of any issues within our workplace.

Surveys can help you pinpoint problems preventing you from creating a more positive environment:

Gathering honest feedback: Surveys give employees a safe space to share their thoughts and experiences, confidentially if needed. By encouraging honest feedback, you can gain valuable insights into how your team members truly feel about the work environment and identify areas that need improvement.

Spotting patterns and trends: By analyzing survey results, you can identify patterns and trends in engagement, collaboration, and willingness to recommend their workplace. This information helps employers recognize potential issues, like favoritism, lack of recognition, or poor communication, that may be contributing to a toxic culture.

Inclusivity and representation: Surveys ensure that everyone's voice is heard, no matter their role or position within the organization. By including all employees in the process, we can better understand the unique experiences and challenges faced by different individuals and groups.

Measuring progress: Regular surveys allow us to track our progress over time. As we make changes to address the issues uncovered in the surveys, we can gauge the effectiveness of our efforts and make any necessary adjustments to keep moving in the right direction.

Encouraging open communication: Surveys can help foster a culture of openness and transparency, demonstrating that leadership values employee input and is committed to creating a positive work environment. This can encourage team members to share their concerns and ideas more openly, both during the survey process and in their day-to-day interactions.

Identifying strengths and opportunities: While surveys are excellent for spotting problems in a toxic company culture, they can also help us recognize what's working well. By celebrating our strengths and building on them, we can create a more resilient and positive culture that benefits everyone.

Building trust and collaboration: When employees see that their feedback is taken seriously and leads to meaningful change, it can strengthen trust and collaboration among team members. This shared commitment to creating a healthier work environment can bring everyone together and make the organization stronger.

Is your workplace showing signs of a toxic culture?

The Great Place To Work Trust Index? Survey can be your secret hidden ace in diagnosing a toxic company culture. Gather honest feedback, spot patterns, and measure progress, all while fostering trust and collaboration. Ask us today about how we can work together to help you create a happier, healthier workplace for everyone.