I know that most leaders don't set out to build a fear-based culture on purpose, but after working with 10,000 senior business leaders, across 300 companies, located in 100 countries--my team at Legacy Transformational Consulting and I are clear on one thing: If you don't intentionally work to create a culture that empowers your people, a default one takes reign and it's usually fear-based.
If you've been following the news lately, you may have seen that 181 CEOs from top organizations like Apple, Amazon, and Abbott signed an agreement to redefine the purpose of their corporations. The new statement recognizes multiple stakeholders are crucial to an organization's success--not just shareholders--which is something my team and I have been adamant about for the past three decades. Workers were among the groups they highlighted.
There's a saying in business that you should only measure what matters, which has led to a fixation on revenue, profits, and stock prices. However, as you can see from the four points below, ignoring the intangibles of a toxic culture isn't a smart long-term move for the bottom-line or anyone in a leadership position who wants to keep their job.
Employees will not go the extra mile.
There's a big difference in output among employees going the extra mile versus those just doing the minimum to get by, or in other words, "covering their asses." This gap is felt at every level, from customer service to partnerships with key suppliers, and all the way up to senior organizational leaders.
What it boils down to is employee engagement. Organizations that recognize this are investing millions into this area each year, with projections forecasting it to grow into the billions in annual spend.
After four-time best-selling author Jacob Morgan interviewed over 150 psychologists, economists, and business leaders worldwide, which included heads of HR, innovation, IT, and diversity, representing a wide array of sectors, the data showed that companies that invest in culture (as in fostering a culture in which people want to come to work), technology (as in the company provides the necessary tools to do the job efficiently and effectively) and physical areas (as in a nice place to work) had "more than four times the average profit and more than two times the average revenue. They were also almost 25 percent smaller, which suggests higher levels of productivity and innovation."
I am a firm believer that the devil is in the details, and a toxic culture erodes people's desire to go beyond what is expected of them.
Leaders get pushed out.
As of 2017, the average tenure of a CEO leading a large market cap company is five years, and their failure rate within the first 18 months can be as high as 75 percent but not lower than 30 percent.
No one said the chief job was easy, but turnover in top leadership can cost your company major time and money. Not only will the team loose direction, but executives will also need to carve out time to find and replace the role, which is no simple task.
As a leader, not transforming a toxic culture doesn't only affect job security but it has a severe impact on shareholder value.
Employees get sicker in toxic environments.
Millennials may be getting labeled as the "burnout generation," but a toxic workplace affects everyone in negative ways. Research shows that overly-stressful work environments increases absenteeism and leads to employees getting sick more often.
The monetary consequences of worker absences are clear. The CDC reports that productivity losses from missed work costs employers $225.8 billion, or $1,685 per employee, each year.
Your workplace culture has a direct effect on employee health. It shouldn't take an expert to tell you healthy employees will be more productive.
Forget about snagging the best talent for your team.
The last point worth highlighting is related to your organization's reputation. When employees leave positions, they tend to talk to other people in their areas of expertise. Negative word of mouth alone will kill your ability to recruit the best talent, but sites like Glassdoor that share anonymous feedback can be brutal for companies as they are held to a higher standard.
What's worse is that employment numbers are showing signs we're near full employment in the US. If it's already getting difficult to find people qualified for the positions your business has open, a bad reputation will make your searches even more frustrating.
The consequences of bad behavior catches up with everyone. With so much research and data pointing to the need for a supportive workplace culture, this topic can no longer be ignored by organizational leadership.