Why senior managers are ignoring workplace culture, and why it’s bad news

It’s been ten years since Rachel McAdams played a spunky new studio exec who quickly (and publicly) fired the deadweight co-anchor from her struggling morning show.

She explained it to her boss pretty simply. “He was lowering the morale of the show.”

We love watching a creep get publicly canned on the big screen because we relate. Unfortunately, most people have worked in a crummy workplace at least once in their careers.

Even so, you may not realize just how bad a toxic workplace can be for business.

In The Values-Driven Organization, author Richard Barrett quotes David Gebler, who believes “… the cultures created by our leaders can be a significant risk factor to a company’s success.”

If that’s the case, why isn’t every senior manager making workplace culture their top priority?

What exactly is work culture?

While culture isn’t as tangible as profits or sales, it can make or break both.

According to one definition, “Culture is the character and personality of your organization. It’s what makes your business unique and is the sum of its values, traditions, beliefs, interactions, behaviors, and attitudes.”

Barrett places significant focus on values, saying “I predict that in the twenty-first century, the rat race will be replaced by the values race.”

“Who you are and what you stand for have become just as important as the quality of the products and services you sell,” he says.

Why is a negative work culture a big problem?

“Leaders who allow fear-driven values to dominate the culture of their organization are a liability to investors,” says Barrett.

Financial disasters like Enron and the 2008 mortgage crisis back him up.

The potential risks you’ll face by ignoring a toxic culture are grim: ethical violations, stress-related sickness, high staff turnover, an inability to attract talent, and lower profits.

Fostering a positive workplace culture is more important than ever

People are checked out at work, and employee engagement is suffering.

“Thirty percent of U.S. employees are engaged at work, and a staggeringly low 13% worldwide were engaged,” according to a Gallup study.

Barrett wants to tackle this problem with a paradigm shift “from short-term decision-making to long-term decision-making; from ‘what’s in it for me’ to ‘what’s best for everyone,’ from being the ‘best in the world’ to the ‘best for the world.’”

He’s not wrong. When you invest in fostering a positive corporate culture the results are clear.

“According to E&Y, 55 percent of the FTSE 350 companies have seen a 10 percent increase in operating profits driven by their investment in culture,” Barrett tells us. “Overall 92 percent of the Board Members of these companies said a focus on culture has improved their financial performance.”

What does a positive work culture look like?

Trust and engagement

“Leaders and organizations need to embrace and live their most deeply held values because that is how they generate trust,” says Barrett.

Trust is critical for productivity because “employees are more willing to do all they can for leadership when they are confident leadership will have their backs,” note authors Osborne and Hammoud in an article focused on effective employee engagement.

And Stephen Covey states in The Speed of Trust, “Trust always affects outcomes—speed and cost. When trust goes up, speed will also go up, and costs will go down. When trust goes down, speed will also go down, and costs go up.”

Autonomy

After trust is built, you need to show your faith by getting out of your employees’ way and listening to them.

“When employees are competent and recognized, group dynamics converge to create a sense of ownership of outcomes, workplace environment, and organization,” report the authors of a study on ethical leadership in the Journal of Business Ethics.

And Osborne & Hammoud tell us that there’s value in listening to your employees vent. It’s a great way to find out what they need to succeed.

Well-being

“Work-related stress has become a major issue all over the world. In 2002, the European Commission calculated the costs of work related stress at €20 billion per year in the 15 member nations,” says Barrett.

Feeling unable to cope with work demands, a lack of connection and resonance with your direct superior, a mismatch between your values and the values of your organization, and an inability to meet your psychological needs are all causes of workplace stress.

Others include change programs, cost reduction exercises, staff cuts, sexual harassment, racial discrimination, and bullying.

It all adds up to burnout.

When you meet your employees’ needs “you will be able to unlock their creative potential,” says Barrett instead of making them “frustrated, angry and depressed” if you don’t.

How do I build a positive work culture?

The first step is to measure the culture of your company using a tool designed to do just that. Barrett has created two scores to tell you if your workplace culture is working for you: Cultural Entropy vs. Cultural Health.

Once you’ve gathered the data, you can improve workplace culture based on what you’ve learned.

The bottom line is it has to come from the top. “If you want the culture of your organization to evolve, you must either change the leaders or the leaders must change,” says Barrett.