Company culture can have a big impact on employee retention and employee engagement. At which point do you realize it’s your company culture that’s impacting the bottom-line? How do you know when it needs to change?
Company culture has never been more important than in the modern workplace. A company culture informs a company’s brand identity — its core values and objectives — while also working to attract and retain better talent. Millennial workers now demand a strong, positive culture and value it above other concerns, such as pay and benefits.
Yet corporate culture often develops organically. Forming and cementing over the years, it is reinforced and rearticulated by the behaviors and attitudes of both lower-level employees and management. Often these cultures solidify unintentionally and without clear direction. As the company evolves over time, the culture no longer stands for its current values, mission and goals. The result? A poor-performing, or toxic, culture that is at odds with organizational goals and values — in turn, leading to lower employee engagement and motivation and higher staff turnover.
So is it time for a cultural change? Because cultures develop naturally, it can be hard to spot when the culture no longer accurately represents what a business stands for. Many companies claim to have an idea of the organizational values they propagate but are unable to demonstrate how they’re implemented.
In this article, we’ll take a look at some of the tell-tale signs that a company’s culture has turned stale.
Poorly organized space
Evidence of a business culture needs to be tangible and observable. Impartial observations of the culture in action are an important means of noticing whether the culture is functioning. To undertake this kind of “cultural audit”, a culture walk is a good place to start. A culture walk is the practice of actively engaging with the workspace and employees — walking around the office and taking note of how daily operations are managed and how the space is organized.
It may not seem significant, but the space of the office itself can provide an insight into the overall functioning of company culture. Walk around and note down the following:
- How is the office laid out? Where do people sit?
- How are common areas used?
- What is displayed on walls/desks/boards?
If the company values teamwork and collaboration, but employees are segregated and work from sterilized cubicles, it’s a sign that company culture is not being prioritized.
Poor internal communication
While conducting your culture walk, take the time to talk to employees and observe how internal communication functions. Consider the following questions:
- How do your employees interact with each other? Are conversations in-person or conducted via emails and memos?
- What is the overall tone of communication — informal and amicable, professional and distant or rude and abrasive?
- What is the relationship between employees? Is there a sense of teamwork, or do people tend to keep to themselves?
Poor internal communication is one of the most obvious symptoms of negative company culture. Where internal conversations are difficult, forced and irregular, employee motivation and engagement is stunted and inhibited. For a positive company culture to flourish, it’s essential that values, visions, goals and norms are communicated effectively and regularly. Failure to do so has severe implications — employees feel as though their voices are being silenced and are afraid to speak up and share questions, ideas and concerns. Trust and respect are the casualties of poor internal communication.
A survey by the American Psychological Association discovered that 25% of employees don’t trust their employers, while another survey, by Fordham University, found that over half of managers don’t trust their company leaders. Without mutual understanding and respect, and the trust that comes with it, sustaining employee engagement and keeping retention up becomes a difficult task.
Setting up interviews and circulating surveys are useful ways to garner feedback from employees themselves and can be used to identify negative patterns of communication.
Ineffective performance management
Cultures are reinforced and rearticulated by managers. In turn, poor managerial practices are key indicators of a toxic company culture. Of the many poor management practices to look out for, micromanaging and hypercompetition are among the worst offenders.
Micromanagement places employees under constant scrutiny. It creates an atmosphere of tension and mistrust, and a thriving company culture has no place for the practice. It’s easy to spot too. Micromanagers are the ones that constantly circle their employees, adding tasks on top of tasks and keeping an all-too-close eye on the work being done. In this environment, creativity, initiative and ambition are stifled and replaced with a never-ending process of jumping through hoops and ticking boxes. Employees feel belittled and patronized and engagement and motivation take a hit.
Hypercompetition is at the other end of the scale but has similarly destructive cultural implications. Once a popular form of performance management, stack ranking is now widely discredited by HR experts. Pitting employees against each other as they desperately try to move further up the table generates a culture of fear and desperation. Afraid of failing or missing the mark, employees are less likely to pursue risky or innovative projects in favor of playing it safe. It also actively discourages knowledge-sharing and teamwork and instead promotes toxic office politics.
Toxic behaviors and bad habits
Unsurprisingly, toxic behaviors and bad habits are another clear symptom that a company’s culture has gone sour. Misconduct, whether in the form of tardiness, gossip or work attire, are all small but significant signs of disengagement and negativity. To spot bad practices and repeatable negative behaviors and habits, you need to look from the top down.
Behaviors and habits cascade from the top. If managers are consistently late to work or are prone to gossiping about other employees, chances are similar attitudes and approaches will be echoed throughout the workforce. A study by Harvard Business School found that employees exposed to toxic behaviors are 46% more likely to be fired for misconduct themselves. Moreover, these kinds of “toxic workers” who echo bad behaviors cost roughly £10,000 in turnover costs, according to the same study.
Driving profit and ensuring that the company excels each quarter is important, but prioritizing profit above all else creates a poor company culture. Above profit should be a strong sense of company purpose and vision. These overreaching company objectives and mission should be the driving force behind profit and sustaining both retention and engagement.
Companies that fail to establish a strong purpose are 69% more likely to focus on the bottom line and 52% more likely to emphasize short-term results. The result? A demotivated workforce with poor retention rates. A study by Columbia and Duke University found that focusing on figures and profit over employee satisfaction can lead to unethical behaviors and systemic failings. When employees feel like they’re only cogs in the proverbial wheel, they’re more likely to become disengaged and frustrated.
Each of these are clear signs that it’s time for a cultural change. Yet cultural change is a long and complex process. It takes patience, honesty and time to fully implement. Remember that cultures are often sedimented into a company and, as with any change, can be disruptive and difficult to undertake. A considered approach and a thorough investigation into problematic areas in your current culture is a great starting point.
Author: Stuart Hearn has over 20 years of experience in HR and is the CEO of Clear Review, an innovative performance management software company.