Cost of Not Changing: Creating a Toxic Environment

For the past few weeks, we have been exploring topics that ask the question: At what point is the rising cost of continuing what you’re doing enough to cause you to change?

Let’s face it; most of us really don’t like to change. Our human nature is such that we like to stay in our personal comfort zone and on our well-worn paths of predictability. But, unfortunately, these paths can lead to dead ends. They have a cost.

This series is all about looking at a variety of costs incurred from not changing. More specifically, what are the costs, hidden or otherwise, when a company fails to change the way they approach critical labor shortages and its associated impacts.

Previously in this series we covered costs such as Stress on Employees, Loss of Customers, and The Tyranny of the Urgent. Today, we will address a topic that seems to creep in slowly over time no matter how hard we work to avoid it: the very real costs that are incurred when your company culture is slipping into decline. If left unattended, a faltering company culture can become unhealthy, even “toxic”, causing significant impacts and unintended costs.

Many factors in a work environment can negatively influence culture, including poor leadership, failure to adhere to core values, and toxic personalities. But perhaps the quickest way to sabotage a culture is to ignore or avoid addressing known problems. Unresolved issues and failure to “do something about them” very quickly leads to a lack of trust between leadership and employees. Like any relationship, once trust is eroded, it is hard to get back. In fact, it’s been said that trust is “earned in pennies, spent in dollars”.But before we consider ways to fix the decline, let’s go over some signs that your company culture may be trending in the wrong direction.

Red flags of a declining company culture

Leadership/managers/supervisors are not consistently living out your core values

Employees look to leaders/managers for direction, or at least they should. In turn, your leaders should be conducting themselves everyday in a way that aligns with your company’s mission, direction, and core values.

However, if your frontline leaders are not consistently following and living out those values, your team will soon follow suit. An organization that begins to drift from those fundamental tenants will start to experience distrust and skepticism. Generally, the distrust leads to resistance to authority and diminished enthusiasm for the direction of the business. Ultimately, divisions and barriers form between leaders and employees and team cohesiveness is lost.

You are experiencing higher rates of employee turnover

One of the best indicators that you may have a culture in decline is a spiking employee turnover rate. Bad culture drives good employees away.

In fact, it is often your company’s highest achievers that are often the first to react to the decline by looking for new prospects elsewhere. There are lots of reasons people look for other opportunities, but “I no longer enjoy coming to work” is routinely the top factor.

In addition, a bad culture keeps quality new applicants away. In a recent study, it was found that “over 1/3 of U.S. employees say they would turn down the perfect job if they thought the culture wasn’t a good fit”.

Culture matters and people leave when it’s in decline.

Higher than normal absenteeism or tardiness

You’re likely seeing a trend here, but disengaged employees are not motivated to come to work. In fact, they dread coming in if the culture is bad and look for excuses to stay away. Even worse, when they do come in, a big portion of their energy is spent either looking for or dreaming about a new job.

Additionally, when you have unexcused absences, you stretch an already-understaffed team by asking them to pull up the slack. The drain on your committed employees becomes even more acute and the problem is exacerbated, resulting in declining morale and weakened culture.

Extended periods of overtime

Every company experiences periods where it takes “all hands on deck” to meet a deadline or make a quota—that’s just normal business. But when extra hours and never-ending overtime are the norm, it could be a sign of culture in decline.

Excessive overtime is a clear indicator that an underlying staffing problem exists. When it’s not addressed, it sends a signal to your employees that fixing the underlying issue is simply not a priority. It also suggests that your employees and their quality of life are not a priority either.

In an organization that uses overtime as a solution to a staffing shortage, employees juggle far too many responsibilities and managers have unrealistic expectations. Both of these lead to declining morale and decaying culture.

Failure to adapt to changing dynamics

This one is not so obvious, but often culture starts to deteriorate simply because an organization fails to evolve and grow. Companies can often get stuck in old paradigms and legacy processes that could benefit from a fresh perspective or innovative improvement.

For example, many organizations insist on maintaining traditional methods in their staffing and hiring approach. These methods are often ineffective or even irrelevant and can lead to difficulty in finding and replacing critical staff members. In hiring practices, and other crucial processes, when companies fail to evolve, it sends a signal to your employees that you are not really interested in solving challenging issues that directly impact them.

And, as noted previously, when employees feel they are being marginalized or their problems are ignored, your culture and morale takes a hit.

The solution: recognize the red flags and act

Refocus on your core values

• Take a hard look at your core values and validate and/or update as necessary
• Communicate them as often as possible
• Make sure your leadership team, from the top down, leads by example—not just in word, but in actions
• Hold your folks accountable for maintaining and adhering to your values—this is especially important for your frontline leaders
• Make sure that the same standards apply to all

Do not accept high attrition and turnover as “normal”

• Investigate root causes based on factual data—do not assume you know the “why”
• Be willing to “own” the problems and develop actionable plans to address
• Establish meaningful exit interviews, employee engagements, and 360 reviews
• Enlist your employees to be part of focus teams who are empowered to help solve the problem

High absenteeism and tardiness

• Make sure you managers and leaders set the pace – they should be on time and reward solid attendance
• Spend some time trying to understand the “why”—don’t assume you know
• Be understanding of extenuating circumstances
• Do not tolerate repeat offenders, as doing nothing sends the wrong message

Overworking staff and too much overtime

• Assess workloads—rebalance and reallocate current staff if possible
• Manage customer expectations and don’t overcommit
• Make sure to offset extended hours with time-off rewards and bonuses
• Get help by augmenting your team with a quality staffing partner

Failure to adapt 

• Encourage and reward continuing education and innovative leadership
• Stay abreast of the ever-changing dynamic of your workforce
• Understand the “gig economy” and the associated implications to traditional hiring
• Adapt and understand that long-term commitment to a single company is waning
• Adjust to the fact that traditional hiring practices may no longer work for your industry

Conclusion

Running a business is hard enough without creating unnecessary headwinds—so don’t be the last to recognize your culture is in decline.  Pay attention to the signs noted above and be open to criticism and feedback. It may be time to do an overhaul of your culture and be ready to change if needed.

As Albert Einstein famously stated, “The definition of insanity is doing the same thing over and over again and expecting a different outcome.” Don’t be afraid to change—a healthy workplace culture is invaluable and well worth the effort.

If your staffing is affecting your company culture, don’t hesitate to reach out for a risk-free assessment: www.skillwork.com/contact-us.