4 Ways Bad Company Culture Negatively Impacts a Business

4 Damaging Consequences to a Bad Company Culture

Bad company cultures result in a wide range of consequences for both businesses and the employees working at them. From decreased employee retention to a decline in long term employee health, bad company culture can significantly harm both the revenue and human resources of an enterprise.

A focal issue present when auditing or attempting to improve organizational culture is the attitude of senior management. The stubbornness, or even outright denial of, senior management can create a considerable roadblock to acknowledging and combatting a negative corporate culture.

Thankfully, there are many solutions that businesses can undertake to improve a company culture that is negative or not ideal. 4 damaging consequences of a bad company culture include-

1. Top Talent Reduction

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A toxic corporate culture is one thing sure to drive out and deter top talent employees. Alternatively, the best way to secure top talent workers is to supply a great company culture.

As of 2017, up to 75% of CEOs fail within the first year and a half in their role at a large market cap corporation. People want consistent, strong leaders in senior management positions, and a negative organizational culture actively prevents that from occurring.

Especially for senior management positions, a reduction in top talent can be costly for an enterprise. These reductions are not only financially devastating but also impact harder to quantify sectors like employee morale.

When top talent employees see that their senior management is not contributing to a positive corporate culture they are unlikely to remain long term at an enterprise. Senior management and human resources need to work together to accomplish a great company culture.

A great way to make sure that top talent employees feel valued at a business is by providing professional development opportunities in addition to financially incentivizing hard work performed. Both employee satisfaction and employee engagement levels are increased when employees feel appropriately recognized for their achievements in the workplace.

2. Employee Health Issues

A toxic work environment has real physical health consequences for its workers. Stressful work environments result in higher rates of employee sickness.

Additionally, employee absenteeism increases in a work environment where employees feel excessively stressed out. Beyond physical health problems, toxic organizational culture can result in significant mental health issues for employees, which in turn negatively impacts their productivity levels.

The low rates of employee engagement and employee satisfaction experienced in negative company cultures lead to burnout and lost productivity. In fact, each year in the United States lost productivity costs $225.8 billion.

With an average lost productivity cost of $1,685 per employee, corporations are discovering that it is well worth the investment to improve workplace culture. As an added bonus, healthier employees generally have much higher productivity rates in comparison with their less healthy counterparts.

Maintaining employee satisfaction lets employees know that they are valued beyond the work they produce. Company cultures that focus on a healthy work life balance and employee recognition is a culture that employees want.

3. Negative Brand Reputation

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From negative employee feedback to personal social media posts, there are virtually endless outlets to spread the word about a toxic corporate culture. Bad workplace culture can deter not only top talent applicants but even possible business partners or customers.

Leadership must implement solutions to improve company culture in order to avoid the development of a bad brand reputation. Corporate culture is a team effort that everyone from senior management to lower level employees contribute to.

4. Productivity Problems

Case studies have shown that improving company culture can boost average enterprise profit by 400%. Although the figure is staggering, it is no surprise that happier employees are much more productive at the workplace.

A negative work environment and company culture is not a place that people work well at. Especially for industries where employees work together closely or have many interactions with customers directly, improving company culture should be a top priority.

The best way to improve company culture is a hotly debated issue in the corporate world. However, some agreed-upon best practices for creating and maintaining a great company culture include-

  • Pleasant work environment
  • Strong core values and company mission
  • Team building exercises
  • Professional development opportunities
  • Employee recognition for hard work
  • Realistic company goals
  • Employee feedback opportunities
  • Proper training for new employees

Key Takeaways

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  • Good company culture influences not only the business directly but the employee experience overall. From engaged employees to company values congruency, the benefits of great company culture are noteworthy.
  • 4 significant consequences of a toxic work environment and negative company culture include a top talent reduction, employee health issues, damages to brand reputation, and productivity issues.