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Eradicating toxicity in the workplace

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toxicity in workplace

These days, we hear about toxic workplaces, strained relationships, and negativity.

While the word ‘toxic’ may have become one of the most overused adjectives in the modern era, toxic workplaces are a real and pervasive problem.

Concerns about unhealthy work environment have existed for a long time, but the concept of a toxic work environment is a recent development. It initially referred to literal work environments that posed health risks, and it wasn’t until the 1980s that the term started being used to refer to workplaces with problematic regulations and practices.

Not all bad workplace cultures are toxic!

Sometimes, we get ‘bad’ cultures and ‘toxic’ cultures mixed up. While bad workplace cultures certainly affect a person’s physical and mental well-being, they don’t necessarily reach the level of toxic. Issues in bad workplaces can be irritating and affect productivity, but they often have room for improvement. These issues can mostly be addressed by effective communication, recognition, proper goal setting, and so on.

Toxic workplaces, on the other hand, go a step further. They have problems that go beyond general issues, and actively harm employee well-being. Workplaces like these need a complete overhaul and a fundamental shift in leadership behavior and company values.

Think of it like this:

Bad culture is a mildly unpleasant meal. They might lack flavor or have some imperfections, but it’s still edible. A toxic culture, on the other hand, is like spoiled food. It’s harmful and can make you sick.

Fun fact: According to Psychology, labeling everything as toxic is bad for your brain, as it causes you to miss chances of personal growth, repairing relationships, and figuring things out.

But toxic workplaces seem so extreme; do they even exist?

Yes. In fact, 1 in 5 workers combat a toxic workplace, according to a new survey from the American Psychological Association (APA).

For instance, there’s Uber. It has been known for its toxic culture of harassment, bullying and discrimination. There have also been reports of sexual harassment towards women, which led to the resignation of Travis Kalanick, the CEO. Previously, Uber’s toxic culture only existed within the organization, but an engineer Susan Fowler, Uber’s ex-employee, published a blog post detailing the history of discrimination and sexual harassment in the organization. She said that the toxic culture was even fostered by those at the top of the company.

Wells Fargo 

This big American bank was involved in a major scandal where employees created fake bank accounts just to meet their sales targets and earn bonuses. Employees had only two options: to meet unreasonable sales targets or otherwise be faced with termination. While the employees could have reported the illegal acts to legal authorities, the culture was so toxic that they did not feel comfortable doing so.

As we have seen, the effects of a toxic workplace culture are far-reaching.

The costs of a toxic culture 

Considering Uber’s culture again, the company’s toxic culture also led to legal settlements. For instance, in October 2017, Uber settled a bias case involving women and minorities for $10 million. But the cost of a toxic culture goes beyond just legal settlements. Uber had to:

  • Hire a law firm
  • Fire employees for sexual harassment and unprofessional behavior
  • Hire and train new employees
  • Overcome lost income caused by rider protests, as seen during the #DeleteUber movement

The cost of a toxic culture is rippling – it affects all areas of a company, from employee well-being and productivity to customer satisfaction and the bottom line. Here are some areas it affects:

Retention 

We’ve all heard of the Great Resignation. In 2021, over 47 million Americans voluntarily quit their jobs, according to the U.S. Bureau of Labor Statistics. To better understand the sources of the Great Resignation, MIT Sloan analyzed over 34 million employee profiles and 170 cultural topics on employee attrition in Culture 500 companies.

Also, with SHRM conducting research on the costs of toxic workplace cultures…

These are the 3 findings, overall:

  • Toxic corporate culture is the leading predictor of attrition
  • A toxic culture is 10.4 times more likely to contribute to attrition than compensation
  • The cost of turnover exceeded $223 billion due to workplace culture (2014 – 2019)

Performance 

Several studies have shown that a toxic work environment negatively impacts performance, as it results in increased work stress and decreased employee engagement. Anyone working in an environment that constantly leaves them stressed will certainly struggle concentrating on their tasks or meeting deadlines.

  • Employees working in a negative environment are 10% less productive (University of Manchester)
  • Toxic workplaces reduce an employee’s productivity by 40% (Harvard Business Review)

Customer service 

Customers will never love a company until the employees love it first.

Simon Sinek

One question that drives all business leaders is, “How do you develop the edge that will make your customers choose your business over others?”

Sure, it could be great products, services, or values, deals, and so on. But what is it that your competitors can’t copy?

It’s corporate culture.

Culture is mostly known as an internal thing that benefits employees; however, it also has a lot to do with attracting and retaining customers. A company’s culture is defined by the employees’ behavior, attitudes, and values displayed in everything they do. It extends to each customer interaction and is often more important than the product or service sold. If a company has a reputation for its culture, it’s probably the ‘edge’ that draws customers to the company in the first place – or worse, it could probably be what drives customers away from the business.

  • 73% of customers will switch to a competitor after multiple bad experiences, which can be caused by toxic workplaces (Zendesk)
  • 65% of customers will have already changed to a different brand because of a poor experience (Khoros)
  • 78% of customers may back out of a purchase (Glance)
  • 4 out of 10 customers will recommend others not to buy from your business (Dimensional Research)
  • 91% of unhappy customers will leave a brand without complaining (Kolsky)

These are some shocking data points, but they stay true.

For example, Wells Fargo’s toxic internal culture left customers feeling frustrated too. About 30% of customers were at risk of ditching the bank. The same report projected that the bank was at risk of losing 7% of its total deposits. Customers were fed up with Wells Fargo for a lot of things, like dishonest practices, selling products customers don’t want, and bad customer representative behavior. Around 12% of customers are expected to move their money to different banks. This means the bank’s net deposits could decrease by $75 billion and a loss of $2.1 billion in sales.

Look closely at these customer service failures and you’ll see a common thread. Most of these companies have a toxic corporate culture.

Well-being

In a toxic culture, employees are likely to be socially excluded by their colleagues. This affects psychological well-being and increases job dissatisfaction, stress, and anxiety. Also, when employees feel psychologically unsafe, they might suppress themselves from expressing their views and needs, losing their voices with their colleagues.

Poor employee well-being results in the factors listed above – turnover, low performance, and low levels of customer service.

Financial costs 

The highest cost incurred by a company is this – losing employees.

The biggest concern employee turnover presents are the financial costs of recruiting and training the employees to replace the ones lost. These are the financial costs incurred, as per an article.

  • It takes one to two times an employee’s annual salary to replace an employee
  • It takes up to 213% of an employee’s salary for C-suite positions
  • It takes a minimum of 1 to 2 years to reach the productivity level of the previous employee
  • About 10% to 20% of an employee’s salary is incurred in training the new person
  • Impacts the culture as others take time assessing why an employee left.

The costs of a toxic workplace are massive, far-reaching, and impactful, but…

Let’s face the real question –

Who is responsible for such toxicity in the workplace?  

As per a 2023 poll, 44% of respondents directly blamed the leadership team for their toxic work environment. Also, toxic leaders are one of the most detrimental factors affecting the company’s culture. They cause up to 73% of employee turnover, as per a survey.

Culture is everyone’s responsibility, and everyone has a role in preventing toxicity from arising in the workplace. However, it’s the senior leadership who bears the full responsibility for a toxic culture, as they are also primarily responsible for addressing it.

The leadership link: How power players might be accountable for a toxic culture 

Let’s talk about Uber’s culture again. What was its leadership like?

Travis Kalanick, the ex-CEO, had a massive impact on the company’s culture. His traits, like being combative, aggressive, and impatient served Uber well in its rapid growth and competition against companies like Lyft.

But what was the impact of the same qualities on the culture?

His combativeness got him into arguments with his workers, and he set expectations that prioritized performance over employee well-being. Kalanick also had knowledge of sexual harassment allegations within the company and failed to act, as per The Guardian. After this, a series of scandals about sexual harassment unfolded followed by the departure of many senior executives. With persistent stories about disputes with drivers and organizational sexism, Travis Kalanick consequently resigned on 21 June 2017.

“Travis’ biggest strength is that he will run through a wall to accomplish his goals,” said investor and mentor Mark Cuban to the NY Times

“Travis’ biggest weakness is that he will run through a wall to accomplish his goals.”

As discussed above, everyone in an organization is responsible for the culture, whether good or bad. Ultimately, the responsibility falls on senior leadership, as they are primarily responsible for addressing toxicity in the workplace.

Hence, the way a leader acts has a domino effect, impacting everyone below them.

For example, there’s Tim Cook. He has elevated Apple, the world’s most iconic company, to new heights since taking over as the CEO. His personality has helped Apple to become a more well-rounded, inclusive company. Tim steps back, putting aside his own bias, to listen and let others share. He also shows great care for the values of the company, expanding on what Apple was already good at.

The result?

Under Tim’s leadership, the company shifted from being the biggest tech innovator to showing care for the environment. There is also a shift in Apple’s management style. Tim Cook and the executive management give the product leads the visionary direction and tools to make their project successful. They also have full autonomy. Unsurprisingly, under Cook’s leadership, employees are happier than ever.

Leaders leave their mark. Greatness or poison, it trickles down.

What you should stop doing to eliminate toxicity:

  1. Ignoring or avoiding addressing employees who act against the company’s culture, mission, vision, and values.
  2. Placing too much importance on hierarchy and promoting former colleagues or friends. This promotes a culture of exclusivity, resulting in bullying or mistreatment of employees by another employee.
  3. Micromanagement. Controlling every aspect of the company may create unmanageable workloads for employees.

Here comes the real part – how can a leader tackle toxicity?

Surprisingly, it’s not so complex. The key?

  • Just noticing. Look around. Are your employees looking disengaged? What’s bugging them? Do they seem happy and productive? These are some effortless ways to get started. All it takes is walking the halls of business.
  • Next, they can take a more data-driven approach. Look for patterns in the statistics, such as high turnover and absenteeism. Collect feedback, use anonymous employee surveys or pulse surveys to gather information about the current work environment.

All of this is a strong example of effective leadership.

Leaders can and should take these steps, but there’s another key player, who can play a bigger role:

HR

HR’s bigger role in preventing a toxic workplace 

Speaking of Uber’s toxic culture and its discrimination scandals, you must have wondered, what happened to the formal complaints filed by employees?

Apparently, Uber’s management team and HR department ignored complaints of harassment, protected offenders (who were high performers) and threatened to fire a woman for speaking up. These complaints ranged from sexual harassment to bullying, discrimination, and a hostile working environment. Owing to the fact that employees could not receive help from the management, Susan Fowler released a blog post that triggered #DeleteUber movement that became a viral trend on social media, and multiple firings of senior executives or people involved.

This is also the case for Wells Fargo, where employees created 2 million fake accounts and credit cards that customers were unaware of, to meet unrealistic sales targets. Employees were pressured to achieve results at any cost, and so they did. There are major human resources aspects the company missed, like:

  • Creating a work environment where employees can report any misconduct without fear
  • Continuous feedback and assessment systems to ensure compliance with ethics and law
  • Training on ethical professional conduct and social responsibility

When it comes to tackling toxicity in the workplace, there are 2 roles HR plays: \

avoiding toxic culture by hr

  1. Proactive
  2. Reactive

1. Proactive 

HR takes a proactive role in avoiding a toxic workplace. They prevent toxicity from taking root, by building a healthy workplace culture from the ground up. Proactive strategies discourage toxicity and have a longer-lasting impact on preventing a toxic environment.

For instance, there’s Boston Consulting Group (BCG) that focuses on providing training to the employees. In fact, it is ranked by the Fortune as one of the best companies to work for, particularly because of their extensive training programs.

Now, why does BCG have to invest so much in employee training?

They are expensive, time-consuming, and most companies fear employee attrition once new skills are acquired. Almost 40% of employees who have been with a company for less than 6 months plan to leave within the next 12 months, as per a recent report. This is because new employees are not getting the support they need in their new jobs and bad onboarding experiences.

BCG recognized this threat and took a more proactive approach in preventing new hire attrition. In BCG, newcomers graduate to leadership positions within a short duration because of the training they receive early on.

For instance, LinkedIn too has turnover less than 8% because it encourages employees to create systems that break the status quo. The HR team hosts all-company parties, complete with live music and a nightclub atmosphere to reward employees for their hard work. LinkedIn has consistently maintained a high retention rate because of its innovative ways to reward and recognize employees.

Microsoft also creates a safe space for employees to report harassment or discrimination. The company established multiple reporting mechanisms, including ERGs and an anonymous hotline for underrepresented groups. By providing safe reporting channels, Microsoft has empowered employees to speak up, allowing for swift intervention and preventing a potentially toxic environment.

Unfortunately, these HR practices failed to handle complaints, which required Microsoft to take a more reactive approach. Before we discuss how Microsoft handled the situation, let’s explore what reactive HR means.

2. Reactive 

When HR takes a more reactive approach, they respond to existing toxicity within the established culture. They take appropriate action against employees who violate policies and mediate disputes between employees or teams.

Think of proactive and reactive like this: While proactive HR is like building a house on a sturdy foundation to prevent problems, reactive HR is like fixing problems in an already existing house.

Coming back to how Microsoft took a reactive approach, it hired a law firm to evaluate the company’s practices over concerns about misconduct and discrimination in the workplace. Then, a 50-page report was released, containing recommendations that Microsoft will implement by June 30th, 2023. It aims to revise its anti-harassment and discrimination policy and revamp the way it conducts investigations.

Even with HR efforts, a toxic work environment can still arise, and leadership behavior is often a significant factor. To fix such behaviors, follow the culture recovery framework below:

Fixing toxic leadership: The culture recovery framework 

 

cultural framework for toxicity recovery

This framework can be utilized by organizations that are seeking to recover from toxic leadership.

Let’s understand this by looking into Peter’s case. His leader, Dan, micromanages him and undermines his confidence by not allowing Peter to fail. Dan often leaves no room for Peter’s own judgment or creativity in his tasks. He second-guesses Peter’s decisions, even for minor matters. This was demoralizing for Peter, as nothing he did was right, or good enough. Moreover, Peter would get feedback that he’s always defensive towards Dan.

Some toxic traits visible from the above case are micromanagement and creating a culture of fear. If the culture recovery framework were to be put into use, this is how it would go:

There are four quadrants, each representing reflection points for both the leadership and an individual. In Peter’s case, the toxic leadership could have been tackled by encouraging the leader to model the behaviors he was expecting from Peter while encouraging diversity of thought from Peter. HR could also take a more reactive approach by providing leadership training to Dan.

The accountability quadrant makes sure that an individual or a leader stays accountable to their own policies while following through on commitments. If the accountability is weak at the organizational level, the leadership can consider speaking freely regarding the company’s challenges and mission. As the organization continues to build trust and accountability, the same is transferred to an individual level. The framework circle can be complete with individual accountability, because what the leadership does, the individual follows.

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    Meet the author

    Nikitha Joyce

    Content Writer

    Nikitha Joyce is a content writer at Keka Technologies. She loves exploring HR topics and turning them into thrilling tales. Nikitha is a dark fiction enthusiast who is a fan of anime, books, and horror tales.

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