Toxic culture is every franchise biggest risk. It doesn’t matter what industry, toxic culture can damage employees mental and physical health, negatively affect results and targets from being achieved, generate silos and factions, destroy leadership and company reputations, generate high attrition and is also a barrier to hiring high potential employees in the future.
And yet, many organisations refuse to see toxic culture as a risk. The negative publicity faced by organisations with alleged toxic cultures has a detrimental effect in almost every area of the business. In 2023, a toxic culture in the Confederation of British Industry saw the company come close to complete collapse. A year on, it’s still struggling to recover.
Toxic cultures harm humans, results and reputations. Yet toxic culture is preventable. By understanding what culture is and the actions required to address the risks of toxic culture occurring, leaders and managers can not only create a great place to work, but also – as a by product of this – achieve results, keep their best people, attract others who can help to strengthen it and safeguard the reputation of the organisation and safeguard their own legacy too.
The best working cultures in the world are led by business leaders that recognise the importance of culture investment and they will spend 1-2% of revenue to get a 23% rise in productivity and the results that come with that. It’s no accident that a company such as US-based IT company Cisco, for example, is continually successful. Their CEO Chuck Robbins credits their success to the culture that they build and continually evolve, rather than the products they build and sell. In 2019 he said ‘My ultimate goal is for Cisco to be the best place to work in the world.’
Thankfully, many other forward-thinking CEOs now understand the need for meaningful work on defining culture to avoid the opportunity for toxicity. In one research report, 92% of CEOs acknolwedged that improving their culture would increase company value; likewise, improving the employee experience (a fancy way of saying ‘culture’) is the number one priority for HR leaders.
These leaders also recognise that employee generational attitudes have shifted and that in order to retain their best people and attract those that can further help them fulfil their ambitions, they must work hard to build a culture of belonging and respect.
So, how to avoid a toxic culture? The secret lies in meaningful culture definition. As an organisation, you get the culture that you choose to build. Leaders that put time, thought and effort into building a culture in a meaningful way, will avoid the conditions that lead to toxicity.
This means involving employees – of all ages and tenures – in defining the values, behaviours and ways of working, rather than telling them what they are. Employees will take pride in upholding a culture that they feel they have had a say in. They will take accountability for its positive evolution and actively manage those that seek to undermine what they’ve built.
It also requires an investment in management training. Millions of pounds are wasted every year investing in a special few potential ‘leaders’ on complex leadership development programmes, when cultures are built, productivity generated and results achieved through competent middle managers.
When middle managers understand how to build teams, communicate effectively, set expectations, have courageous conversations, and motivate the individuals on their teams to achieve a set of results, everyone benefits. Employees feel motivated to achieve and CEOs see their organisations succeed in almost every metric.
Of course, this approach takes time and costs money, but it’s an investment worth making. Not only is it reflected in the bottom line, it’s also reflected in the cultural reputation that the organisation has, which in turn attracts other high potential people who want to perform at the highest level in a values-driven environment.
Having worked with almost 100 teams in 20 countries I can tell you that this approach works for any organisation. From sports teams to call centres; sales teams to start ups; banks to hospitality. Toxic culture is the biggest risk that organisations face, only by choosing to actively build culture, can leaders everywhere avoid the conditions that will lead to this risk becoming an issue that the media takes an active interest in.
Colin D Ellis is a five-time best-selling author and culture consultant. His latest book Detox Your Culture is released in Australia in December. Find out what kind of culture you have right now at www.fiveculturesquiz.com