Effects and Signs of Toxic Corporate Culture


One of the most pervasively damaging thing to a company of any size is a toxic or incredibly negative corporate culture. On the other hand, one of the best things a company can have in terms of being successful and competitive is a positive work environment.

Unfortunately, all-too-often company leaders don’t recognize that a toxic culture is eroding and chipping away at their business until it’s too late to do something to right the wrongs.

Having an understanding of the effects of toxic corporate culture, and also the red flags that it exists are important for business leaders. The following are some things to know about toxic corporate culture and its effects.

What Are the Effects of a Toxic Corporate Culture?

The effects of a negative corporate culture can be far-reaching, but can include:

  • Attitudes of employees may be diminished. This could mean they aren’t working to achieve their maximum potential, which is most often seen as careless or sloppy work quality or low productivity.
  • Interactions between employees can be negative, and this can show to interactions employees have with customers.
  • When there’s a negative corporate culture, there’s also likely to be a low retention rate for employees and high turnover.
  • Employees may not pay attention to training, and the overall result of a negative culture can lead to general underachievement.
  • One of the big problems that can relate to problems with culture is ethical issues. For example, when there is a bad corporate culture, employees may be more likely to lie or steal.
  • There tends to be a lack of innovation in organizations where culture is a problem. There may be no incentive for innovation, and employees may lack the motivation to think innovatively.

These serious issues related to negative corporate culture don’t even cover all of the potential problems. So how can you know, as a company leader, proactively that problems exist? The following are some of the red flags, including early on, of a culture problem.

Leadership Problems

If you’re a business leader, you may not want to recognize the fact that the problems with culture might start with you. Toxic culture almost always begins at the top, and it can include bosses who are defensive, secretive,or believe one set of rules applies to them and another to everyone else. Company leaders who want to pass blame or are unwilling to listen or accept responsibility or accountability are also red flags of problems with company culture.

High Levels of Absenteeism

If there are high levels of absenteeism in a company, this might be an early sign of problems to come and pervasive cultural issues. For example, if employees are frequently absent, it could be because they feel that they’re the victim of bullying or gossip in the workplace. High absenteeism can be linked to high turnover as well.

Rumors Float Around Frequently

If there are a lot of rumors in the workplace on the part of employees or company leaders, it’s not just pettiness. It often represents a bigger problem. Namely, employees may feel like there isn’t transparency or communication from the top-down in their workplace, so they may make things up to fill the void they feel like exists.

Gossiping can also fuel interpersonal problems which can grow and become more problematic over time.

Good Employees Leave Quickly

Once a toxic culture has taken hold and become fully pervasive, you’ll see high turnover rates all around. In the early days, however, one red flag there’s a problem can be high-performing employees and top talent who leave frequently or who are always on the lookout for a better opportunity.

If top performers are leaving it signifies they don’t feel valued, and making employees feel valued and recognizing their achievements is part of a positive culture.

Employees Aren’t Growing or Developing

The top talent may be leaving, but everyone else might seem stagnant in a company where culture is an issue. Employees who aren’t growing, developing and evolving may feel underappreciated, feel as if they lack opportunities to do so and may feel generally stagnant.

As an employer, while you can’t do everything, it is up to you to create an environment where everyone feels like you’re investing in them and you want them to succeed. This can come in the form of mentorships and coaching, training programs, and promoting from within wherever possible. Your employees are your top resource, and they should be treated as such in a strong corporate culture.


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