Changing company culture, Diversity & Inclusion, Elements of Company Culture, Employee Experience, Retention Strategies
Research into toxic workplace culture reveals how a lack of inclusion, fairness, and purpose at work is causing employees to leave their jobs in droves.
Toxic company culture is a lot like catching a nasty bug. It can spread quickly, and before you know it, everyone's feeling under the weather.
Toxic vibes can race through an organization, with people picking up on bad habits and negative attitudes. When employees see others gossiping or treating their colleagues unfairly, it’s easy for them to fall into the same pattern. Soon enough, the whole atmosphere takes a hit.
Toxic company culture has increasingly become a significant concern for organizations, as more employers are waking up to how company culture can sway employee turnover, employee morale, and productivity. Addressing and transforming an unhealthy culture is crucial for the long-term success and sustainability of a business.
In 2022, MIT Sloan Management Review published a survey that delved into the role toxic culture played in the Great Resignation.
After analyzing 34 million online employee profiles, researchers found that "a toxic corporate culture is by far the strongest predictor of industry-adjusted attrition and is ten times more important than compensation in predicting turnover."
What are signs of a toxic work culture?
Key signs of a toxic workplace culture include:
1. Unfair treatment or discrimination
Discrimination in toxic workplaces often manifests through unequal opportunities for advancement, pay inequities for the same work, biased performance evaluations, and exclusion from important meetings or decision-making processes.
This creates a demoralizing environment where affected employees feel undervalued and unsupported.
In a 2021 Great Place To Work® survey of more than 330,000 U.S. employees, those who said they didn’t intend to stay at their company a long time pointed to the absence of diversity, equity, inclusion and belonging (DEIB) as one of the primary culprits.
Employees with low intent to stay raised these concerns about issues relating to DEIB:
- Gender equity
- Fair promotions
- Fair pay
- Equal and limited opportunities
The same study also revealed that underrepresented minority groups were at the highest risk of leaving.
2. Lack of growth opportunities
When employers don’t invest in employee growth, it sends a clear message: you’re replaceable, not valuable. This can leave employees feeling unmotivated, disengaged, and burnt out, fuelling a toxic environment.
By comparison, organizations that invest in employee development see higher retention rates, better recruitment efforts, and even greater profitability.
3. Lack of workplace trust and support among team members
Trust is at the heart of every great workplace. It’s why we’ve put it at the center of the Great Place To Work Model with our Trust Index™. High-trust companies see lower turnover, increased productivity, and stronger financial performance — nearly four times the market average.
But when trust is lacking, toxicity becomes a risk. This could look like employees not collaborating because they see each other as competition rather than teammates. Or meetings that become performative instead of productive, with people afraid to speak up or more focused on looking good than solving problems.
The result? Less productivity, decreased innovation, and reduced business results.
4. Excessive workload and unrealistic expectations
Great Place To Work research has found that 27% of employees at low-trust companies report experiencing burnout. That’s nearly twice as high as companies on the Fortune 100 Best Companies to Work For® and other Best Workplaces™ lists.
Employee burnout can be caused by many things, but common reasons are a lack of control over their schedule and a lack of clarity in their work. Employees may work themselves to exhaustion because they’re fearful of repercussions. While this can temporarily lead to higher output, it’s also likely to lead to decreased quality in the long run.
By comparison, employers who encourage workplace flexibility see higher engagement, more productivity, and decreased turnover.
5. Poor communication and lack of transparency
When employees don’t have access to clear, consistent information, it fuels uncertainty and distrust. If leadership makes decisions behind closed doors, employees may wonder what else is being hidden. Inadequate communication can also lead to confusion about priorities and expectations.
Open and transparent communication, on the other hand, builds trust and alignment. When leaders share information freely — including the reasoning behind difficult decisions — employees feel respected and valued. They understand how their work contributes to larger goals.
Non-toxic workplaces provide clear channels for two-way communication and encourage employees to ask questions, share concerns, and provide feedback without fear of retaliation.
6. Ineffective leadership
Leadership sets the tone for the entire organization — employees mirror what they see from the top.
This means that if leaders are inconsistent in their decision-making, show favoritism, don’t acknowledge their mistakes, or make promises they don’t keep, they’re setting up a toxic culture where accountability doesn’t matter.
But in a high-trust workplace, great leaders help employees by listening with intention, showing gratitude, communicating clearly, supporting personal and professional development, and caring about their teams as people both inside and outside of work.
7. Absence of recognition and appreciation
People want to know that their efforts matter. Without that acknowledgement, even the most motivated employees may start doing the bare minimum because they've learned that going above and beyond makes no difference.
Recognition can be formal, such as rewards and bonuses based on performance, or informal, such as simply thanking an employee for a job well done.
In both cases, the key to having a strong culture of recognition is to be specific about what the recognition is for, to offer it promptly when it’s deserved, and to connect it to the bigger picture within the organization.
8. High employee turnover
Our research reveals that toxic culture has a huge impact on employee retention and is a major flight risk driver.
In our 2021 survey, respondents indicated that they didn’t intend to stay with their employer long-term, citing a lack of the following as their reasons:
- Purpose in their work
- Looking forward to coming to work
- Feeling proud to work at their company
- DEIB
That turnover is more than just an inconvenience. It’s a significant cost to the business. According to the Society for Human Resource Management (SHRM), the cost of recruiting can be three to four times a position’s salary.
How to improve a toxic company culture
If toxic company culture is the problem, can it be fixed?
In short, yes. But it will take time and consistency.
“Rebuilding trust is possible,” says Julian Lute, senior strategic advisor at Great Place To Work. “Steady, consistent focus in the right places will help you gain traction in support of your efforts to be better.”
Julian recommends three ways leaders can start to change toxic company culture:
- Accepting accountability for past mistakes and current issues
- Following your words with your actions, demonstrating a commitment to change
- Committing to ongoing, transparent, and two-way communication with employees
Many organizations that achieve Great Place To Work Certification™ score high on fairness, equity, inclusion, and belonging efforts and experience high retention figures.
Take Bitwise Industries, which tripled in size while others struggled to hire and retain staff.
CEO and founder Jake Soberal credits the rapid workforce growth to their commitment to diversity and individualism and meeting employees’ needs (rather than only expecting employees to meet company needs).
"It’s not: We will tolerate you, we will charitably serve you,” he says. “It’s: You are essential to our collective success. We have continually gotten better if for no other reason than we’ve added wonderful people who have expanded the edges of that culture and enriched it.”
Focusing on employee needs pays unending dividends, as evidenced by decades’ worth of research. Organizations that prioritize connecting purpose to employee work and fostering diversity and inclusion, among other things, experience a positive workplace culture and higher retention.
Using employee surveys to fix toxic company culture
Employee surveys can be an incredibly powerful tool for diagnosing a toxic company culture. Just like a doctor uses tests to identify what’s causing a patient’s symptoms, we can use surveys to get to the heart of any issues within our workplace.
Surveys can help you pinpoint problems preventing you from creating a more positive environment:
- Gathering honest feedback: Surveys give employees a safe space to share their thoughts and experiences, confidentially if needed. By encouraging honest feedback, you can gain valuable insights into how your team members truly feel about the work environment and identify areas that need improvement.
- Spotting patterns and trends: By analyzing survey results, you can identify patterns and trends in engagement, collaboration, and willingness to recommend their workplace. This information helps employers recognize potential issues, like favoritism, lack of recognition, or poor communication, that may be contributing to a toxic culture.
- Inclusivity and representation: Surveys ensure that everyone’s voice is heard, no matter their role or position within the organization. By including all employees in the process, we can better understand the unique experiences and challenges faced by different individuals and groups.
- Measuring progress: Regular surveys allow us to track our progress over time. As we make changes to address the issues uncovered in the surveys, we can gauge the effectiveness of our efforts and make any necessary adjustments to keep moving in the right direction.
- Encouraging open communication: Surveys can help foster a culture of openness and transparency, demonstrating that leadership values employee input and is committed to creating a positive work environment. This can encourage team members to share their concerns and ideas more openly, both during the survey process and in their day-to-day interactions.
- Identifying strengths and opportunities: While surveys are excellent for spotting problems in a toxic company culture, they can also help us recognize what’s working well. By celebrating our strengths and building on them, we can create a more resilient and positive culture that benefits everyone.
- Building trust and collaboration: When employees see that their feedback is taken seriously and leads to meaningful change, it can strengthen trust and collaboration among team members. This shared commitment to creating a healthier work environment can bring everyone together and make the organization stronger.
Is your workplace showing signs of a toxic culture?
Great Place To Work’s employee engagement software can be your secret hidden ace in diagnosing a toxic company culture. Gather honest feedback, spot patterns, and measure progress, all while fostering trust and collaboration. Ask us today about how we can work together to help you create a happier, healthier workplace for everyone.
