Ideally every workplace would be the epitome of positivity, with employees and leaders happily walking through the doors to do the best work of their lives for your company, but the value of health within your team goes beyond just a cheerful co-worker. Let’s examine the other factors at play when it comes to the difference between a thriving and toxic work culture. 

What is the actual economic cost of a toxic work culture to your bottom line? What happens when the workplace becomes toxic? 

A survey of American employees found a common indicator of toxic work culture is costing companies an estimated $223 billion over the past 5 years due to high turnover and absenteeism. Among the key findings, “Approximately 3 in 4 working Americans believe management establishes workplace culture, laying the foundation for them to succeed at work.” More than ever, organizations simply cannot achieve their goal without managers establishing a culture that breeds employee satisfaction, and leaders are the critical touch point for employees who are productive, engaged, and fulfilled at work.   

Here are 4 costly factors to consider when addressing the importance of workplace culture at your company. 

• Employee Turnover: A negative workplace culture can become expensive as employee turnover increases. Between the expense of onboarding, training, and recruiting, backfilling a role can cost anywhere from six to nine months’ salary for that position, according to Insight Global. Workers are less likely to tolerate a toxic work environment and turn to movements like quiet quitting. As a symptom of deeper workplace issues, quiet quitters become disengaged, eager to move on, and resort to doing the bare minimum to fulfill their job duties. This can happen as a result of workplace culture where they might feel unheard, discouraged, that their time isn’t respected, or they can’t advance in their job to accomplish career goals.
• Increased Absenteeism: Sick leave, extended leave, and absenteeism are common in workplaces where workers feel stressed, unsupported, or unwell (Canada Safety Training). BDC states that mental illness is considered a top cost driver for employers, making up for about 30% of short-term and long-term disability claims, but accounts for 70% of workplace disability costs. The expense of hiring temporary staff or paying overtime for absent employees increases financial burden and can disrupt overall productivity and workflow. When the root cause of workplace culture is addressed, businesses can lead with more stable and predictable operating costs.      
• Reputation Damage: In the age of transparency on social media, former or current employees sharing their experiences on platforms such as Glassdoor, Indeed, and LinkedIn can form a negative employer branding. Keeping customer’s trust and loyalty requires real authenticity from the inside out. Unhappy employees are more likely to provide poor customer service, leading to dissatisfied customers and lost revenue. Your company culture shapes how potential customers see you (Igniyte), including prospective high-value employee recruits. In a survey conducted by Glassdoor, “77% respondents said a good company culture precedes salary when considering a new job.” If current employees express poor work culture, top talent you want to recruit will likely not want to work there. 
• Legal Issues: Legal actions stemming from harassment or discrimination claims often come from toxic workplace cultures, which can not only be costly, but also damaging to a business's reputation (CSTC). The financial hit for legal fees, court costs, and settlements can be substantial, with the average payout claims as high as $25,000 per claimant. It opens the company up for further legal scrutiny, increased insurance premiums, and legal entanglements. Proactively working towards a healthy workplace culture can directly support your company’s financial health. 

Avoid these issues altogether, and examine the heartbeat of your workplace culture today! 

Leading in today’s ever evolving world can be difficult, and you don’t have to do it alone. If you would like to learn more about workplace culture, leadership development, emotional intelligence training, team building, professional coaching, or strategy planning sessions, let’s talk. Contact us for a free consultation by clicking this link: Innovative Connections or calling us at 970-279-3330.

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