3 Reasons a Toxic Work Culture is Bad for Business

At the heart of any successful business is a supportive and encouraging work culture. But when company culture is toxic, businesses can anticipate consequences like decreased productivity, lower potential for revenue growth, and increased turnover.  

By understanding the dangers of a toxic work culture, leaders can find ways to prevent or correct it. And with the steps outlined below, they can start creating a safe and productive workplace for their team members.  

What’s a Toxic Workplace?  

When a workplace is considered toxic, it typically means that it has created an environment where employees feel devalued, discouraged, unsupported, and in some cases, disrespected. Rather than feeling like they are part of a team or a network, they feel like their worth is only tied to their workload and output. 

But toxic work culture isn’t formed overnight or by one single issue. Rather, it is often the result of multiple factors and problem areas such as: 

• Lack of diversity, equity, and inclusion 
• Major wealth gaps and salaries far below market value 
• Pressure to work long hours with little to no breaks 
• Frequent use of insensitive or harsh language by leaders 
• Few or no benefits  
• Normalization of unethical behavior in the workplace 
• Limited or no opportunity for growth  

3 Ways a Toxic Work Culture Impacts Business  

A toxic work culture can trigger a domino effect within your company and have a negative impact on the success of your teams.  

Let’s go over three key consequences of a toxic work culture, and how they can harm your business. 

Higher Attrition Rates

Companies with toxic workplace culture experience much higher rates of attrition. Analysis from MIT indicates that toxic work culture is 10.4 times more likely to contribute to company attrition than compensation, which is typically the leading reason for changing companies. 

And with movements like the great resignation and quiet quitting, attrition is something companies should be focusing on. Employees are less likely to tolerate or endure a work environment that is toxic, discouraging, or simply negative.  

Between the cost of recruiting, onboarding, and training, backfilling a role can cost anywhere from six to nine months’ salary for that position. So, if your team experiences significant turnover because of a negative work culture, it can really add up. 

Higher Risk of Burnout

Toxic work culture often places low priority on mental wellbeing, work-life balance, and overall employee health. And inversely, toxic work culture will place high priority on production, long hours, and inflated workloads.  

These conditions create a much higher risk for employee burnout than in positive workplaces. Employees who feel burnt out are more inclined to become cynical toward their work, colleagues, and clients. They are also far more likely to feel detached from their company, with 50% of workers citing burnout as the reason they left a previous role.  

Low Morale, Low Productivity 

The financial success of your business is deeply connected to your company culture, and when it’s weakened, you can expect to see a similar change mirrored in company revenue. 

This is because a toxic workplace causes a major decline in morale, and when morale and energy is low, productivity is sure to follow. In a toxic workplace, employees feel less motivated, disengaged from their work, and discouraged. And when teams are disengaged, they are 20% less productive. 

Essentially, when your company morale takes a hit, it’s going to inhibit productivity and ultimately reduce potential for revenue growth. 

4 Tips for Creating a Positive Workplace  

Overhauling an existing, toxic work culture can be overwhelming or intimidating—it’s no small task! But the reward far outweighs the effort. By improving company culture and creating a positive environment, you are ensuring your teams are healthy and feel valued.  

Here are some suggestions for getting started: 

Schedule Opportunities for Feedback  

Creating opportunities for open feedback will boost workplace culture by accomplishing two things: One, scheduling feedback will ensure that company leaders are continually and consistently checking in with their teams. Two, this feedback will establish channels for your employees to share concerns without fear of consequences. 

Here are a few options to use: 

• 1×1 meetings 
• Anonymous surveys 
• Open forums 

You can also set up a secure email address that is monitored by Human Resources or Employee Relations, where employees can submit feedback throughout the year. 

Utilize the Onboarding Process  

For new hires, the onboarding and training phases can really set the tone. Whether you are attempting to correct a toxic culture or protect a positive one, you need to utilize the onboarding process. 

In this period, you can train new hires on culture initiatives, shared values, and your company’s mission. So if your culture needs work, you can mobilize this new class of hires to bring positive, encouraging habits to existing teams. This will also make the rollout of cultural initiatives more successful, as you will already have them on board. And if your culture is thriving, training new hires on your culture and its importance will ensure it remains strong.  

Show Appreciation  

To avoid—or correct—a toxic workplace culture, be sure to make appreciation a standard practice at your company. Show your own appreciation, but also be sure to encourage leaders and members of your organization to show their own appreciation for their teams. Fostering a culture of appreciation will bring you one step closer to having an uplifting, positive workplace. 

Here are a few different ways to show appreciation: 

• Hand-written notes 
• Gift cards 
• Additional paid time off 
• Early leave 
• Catered lunches and happy hours 

Encourage Work-Life Balance  

We addressed how higher risk of burnout is a major indicator and symptom of a toxic work culture. A great way to combat burnout is by encouraging your staff to find and protect a healthy work-life balance. 

This is especially important for leaders to understand, as they play a part in setting the tone. They can set a good example by maintaining their own work-life balance as well as clearly expressing their support for others to do the same.  

For more tips on how to properly encourage a work-life balance, and how to benefit from it, check out this resource. 

Prioritize a Positive Culture

When leaders are passive about culture initiatives, it’s easier for negative qualities or habits to emerge. But being intentional with your workplace culture will protect your teams from a toxic environment, and all of its negative side effects. 

Our culture experts at Compass offer workshops, team experiences, and customized solutions that will help to strengthen your culture and your business. Get started today.