Savvy leaders have long known that fostering a better culture can help increase productivity and reduce the vast costs of employee turnover. But mid-pandemic, it’s become more important than ever as employers navigate myriad workplace setups including remote, hybrid and on-site with COVID-19 protocols.
"Managers need to realize the impact of work culture on morale, productivity and turnover," says Heidi Lynne Kurter, a workplace culture consultant and leadership coach. She teaches leaders to prioritize people over results.
This may seem counterintuitive, but as Kurter explains, poor employee morale often seeps into work output and client relationships, leading to lower-quality products, services and customer experiences.
Employee satisfaction strengthens job performance and retention. The great resignation we’re all reading about? It largely stems from burnout and psychological exhaustion, prompting employees to look for new, more nurturing employers. The Hartford’s Future of Benefits Pulse Survey found that the more burnout employees are experiencing, the more likely they are to look for a new job. Of the U.S. workers who say they are “extremely likely” to look for a new job in the next six months, 55% say they “always feel burned out” and 16% say they “often feel burned out.”
Source: The Hartford 2021 Future of Benefits Pulse Survey
High Employee Turnover, High Employer Cost
Elevated employee turnover is incredibly expensive for companies. In the five years leading up to the pandemic, toxic culture cost employers $223 billion in turnover according to a report by the Society for Human Resources Management.1
Research shows that companies with a range of voices and perspectives are better innovators, risk takers and problem solvers, says Susan Johnson, chief diversity, equity and inclusion officer at The Hartford. “We believe that welcoming unique perspectives and backgrounds helps to achieve better business outcomes,” she adds. “Toxic workplace cultures lead to low productivity, scant innovation and lack of employee retention.”
Toxic culture can involve ineffective or hurtful communication and/or being deliberately ignored by colleagues. A recent survey from the Workplace Bullying Institute shows that 30% of Americans have been bullied at work, while another 19% have witnessed it.2 The organization says a total of approximately 79 million U.S. workers have been affected by workplace bullying.
Source: Workplace Bullying Institute
“Employees in those situations are harmed by slower career growth, physical and mental ailments, and low quality of work-life balance,” Johnson says.
Another type of toxic culture can appear when employees from underrepresented groups don't believe they can be themselves in the workplace. These individuals may feel the need to hide or diminish an aspect of their identity that would not get embraced in the work environment, Johnson says "It can feed upon itself," she adds. “And it's not just about race. Similar issues could apply to people across faith, gender identity, physical or mental ability differences.”
Toxic culture isn’t always obvious or linked to a single incident. Culture can erode over time based on cumulative interactions. "Eventually, if you feel disrespected or unappreciated, trust can erode and you become disengaged with decreased self-esteem," Kurter says.
The Secret to Good Culture: Trust
The more profound question is: What makes one company’s corporate culture supportive and another’s not? “The same action that seems toxic in one place doesn't seem so in another," says Batia Wiesenfeld, professor of management at New York University's Leonard N. Stern School of Business. For example, in some careers, yelling between employees is normal – such as a trading floor or in TV production – and in others, it is not. But normal does not necessarily mean OK. It comes down to a team level and the shared values of that team.
Wiesenfeld says trust is a key part of what differentiates a positive culture from a negative one. "When you feel like you can trust management and coworkers, you feel like you can get on with your job. Part of trust is benevolence, whereby people act with good will, integrity and look out for each other,” she says. That involves mangers and employees doing what they promise. It’s an alignment of values paired with action. "If you have no integrity, then you have no trust," Wiesenfeld says.
Consider this anecdote: An employee gets promised a promotion for achieving specific goals. The employee meets the goals but is denied the promotion or told it will happen at a later date without any further explanation. Unfortunately, promises do get broken in business, but how such matters are explained can be the difference between a good trust culture and a toxic one. “People only want to be treated fairly," Wisenfeld says. “Fairness means getting treated in a decent, dignified, and respectful manner.” At its core, that means being given explanations for why decisions fell the way they did, she explains, adding: “It's about consistency and giving people an opportunity to give input.”
“The more you have people trusting each other, the more you have people firing on all cylinders.”
– Lori Rodden, Chief Human Resources Officer, The Hartford
As leaders prioritize consistency, keep an eye on competitiveness, too. A company that values internal camaraderie and trust over competition will achieve better outcomes, says Lori Rodden, chief human resources officer at The Hartford. "The more you have people trusting each other, the more you have people firing on all cylinders.” A company where individuals are forced to compete against each other can quickly turn toxic. “If work is considered a zero-sum game where I can win only if you lose and vice-versa, then you have a recipe for a lack of cooperation between individuals and departments,” she says.
Good Culture Focuses on Feedback – And Listens to It
Few people are born knowing exactly how to lead and inspire a team, and even the most talented managers still need coaching. The experts we spoke with all circled one thing as the make-or-break foundation of good leadership: willingness. Willingness to ask for feedback, willingness to listen to it and willingness to improve.
"First and foremost, leadership needs to have the self-awareness to improve," Kurter says. "That means seeking feedback and talking with their people."
“Leadership needs to have the self-awareness to improve.”
– Heidi Lynne Kurter, Workplace Culture Consultant
Many companies, including The Hartford, use the STAR approach for feedback, an acronym for Situation, Task, Action, Result. "It teaches leaders how to give feedback that is specific and actionable," Rodden says. The STAR system encourages reviewing the situation and task, analyzing the individual’s actions and determining how the result could have been improved.
Rodden provides an example of how a STAR review led to a new senior executive projecting stronger ownership of presentations after a boss counseled the executive against using unnecessary caveats that could diminish her clout with her team.
Continuous improvement should happen at the individual level as well as the corporate level. Rodden gives a nod to The Hartford’s “Courageous Conversations” series, which gathers groups of employees together to discuss complex, timely topics. Last year, topics included civil unrest, mental health, work-life balance, race relations and the COVID-19 pandemic. "These aren't debates," Rodden says. “It is an exercise where the goals and the activity are one and the same: to listen and develop stronger working relationships. That can really open up the dialogue in an organization."
As an employee, knowing your company wants its employees to be respected and appreciated feels good. And for employers, it is vital for business survival and prosperity, NYU’s Wiesenfeld says, recalling the words of Adam Smith, the godfather of economics. "Capitalism works because not only is there healthy competition, but there is an appreciation for what others bring to the table.”
1 Society for Human Resource Management (SHRM), Toxic Workplace Cultures Are Costing Employers Billions, September 2019
2 2021 WBI U.S. Workplace Bullying Survey: The Complete Report, Workplace Bullying Institute, Gary Namie, PhD, April 2021
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