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Toxic Workplace culture 10 times more likely to drive employees away, study shows
There has been a general assumption that low compensation is driving The Great Resignation. But according to a recent report from MIT Sloan Management Review, employees are quitting their jobs in droves because of toxic workplace culture, not low pay. In fact, the report says toxic workplace culture is 10.4 times more likely to contribute to an employee quitting. Data analysis identified three elements of a toxic culture:
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Failure to promote diversity, equity and inclusion
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Workers feeling disrespected
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Unethical behavior
Retail workers are the most likely to quit, but firms like Space X also have a high termination rate. After toxic corporate culture, the other top predictors of worker attrition are: job insecurity and reorganization (3.5%); high levels of innovation (3.2%); failure to recognize employee performance (2.9%); and poor response to Covid-19 (1.8%). Low compensation actually ranked 16th among the topics predicting turnover. Perhaps the most shocking finding was that corporate culture predicted employee exodus more than burnout or compensation.
The Downstream Effects of Toxic Culture
As we ended 2021 and began the New Year, mental health issues were on the rise. One of every three employees said their return to the workplace had a negative impact on their mental health, and they’re feeling anxious and depressed, according to a study from McKinsey and Company. Another poll of 1,000 people by All Points North (APN) Lodge, (APN Lodge) found that Americans are confronting more mental health issues such as 36.7% more anxiety, 32.5% more panic attacks and 27% more depression due to these events. The perceived stigma of having a mental health challenge is keeping many from seeking treatment. More than half of Americans (54%) are seeking help to cope with trauma.
“As the data shows, an increasing number of individuals are struggling with mental health, which of course makes sense—it’s been quite a year,” said Noah Nordheimer, CEO of All Points North Lodge. “But the only way we’ll get through it is by taking the steps to improve ourselves and our minds. At APN, we want all of our clients to feel that they are supported and being treated for their own individual struggles.”
As the workplace headed into 2022—the third year of the pandemic—the rise of job burnout jumped to an all-time high. The American Psychological Association’s (APA) Work and Well-Being survey found that 79% of the 1,501 employees experienced work-related stress in the month before the survey. Three in five workers said work-related stress caused them to have a lack of interest, motivation and energy at work. A total of 36% had cognitive weariness, 32% emotional exhaustion and 44% physical fatigue—a 38% jump from 2019.
According to the report, issues like the politicization of masks and vaccines and feelings of lack of support from the government and workplaces have caused workers—especially those in public-facing jobs—to become cynical about their jobs and about the public in general. “This kind of cynicism is powerful because it undermines the people’s feelings about the value of their work, which can help motivate them during hard times,” said organizational psychologist, Michael Leiter, honorary professor of organizational psychology at Melbourne’s Deakin University. The APA report stated that because pandemic-related stressors won’t stop anytime soon, stress-reducing measures should be top of mind for employers and legislators. And Christina Maslach, professor emerita of psychology at University of California, Berkeley added, “As demands increase, organizations need to focus on maintaining balance, taking things off the plate when they add something new. That’s especially important in health care settings where attrition rates are especially high.”
4 Short-Term Strategies To Manage Retention
Between April and September 2021, more than 24 million American workers quit their jobs according to the U.S. Bureau of Labor Statistics. As we enter the new year, Workhuman’s January, 2022 Human Workplace Index insists the decisions employers make will be critical to their team, and 81.5% of workers feel more empowered to hold their leaders accountable for a better workplace in 2022. Over half (56%) said they would only wait 30 to 60 days for employers to make needed changes before they consider leaving.
The report from MIT Sloan Management Review identified four predictors of employee retention for Culture 500 companies from April through September 2021 and suggested corporate leaders can utilize these strategies to increase retention in the short term:
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Lateral career opportunities were found to be 2.5 times more predictive of retention than compensation.
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Remote work arrangements was the next leading predictor(1.5)
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Company-sponsored social events followed (1.3)
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Offering predictable schedules came in last (1.2)
The authors of the MIT Sloan Management Review report—Donald Sull, Charles Sull and Ben Zweig—concluded that their research identified the previous four steps to boost retention in the short term, adding,
“Leaders who are serious about winning the war for talent during the Great Resignation and beyond, however, must do more. They should understand and address the elements of their culture that are causing employees to disengage and leave. And above all else, they must root out issues that contribute to a toxic culture.”
Singer/songwriter Jewel partnered with SaksWorks to launch a work culture curriculum offering deeper engagement and loyalty while also creating greater productivity. She wisely stated that our work shouldn’t make us sick, and company leaders have a responsibility to detoxify their work cultures:
“Workplaces lost an estimated one trillion dollars in a year due to depression and anxiety alone. It behooves employers to get involved and help solve this for their employees because we have to. Traditionally, would it be an employer’s job to start thinking about these things? No, but you have humans in your workplace, and you have to handle the fact that these humans are struggling. There are simple solutions to make that pain point go down. We’re realizing emotional health affects our physical health and then improves productivity and reduces turnover. We have to find a way to create a wholistic system that benefits productivity. Connection cures so much. If you could create a highly-connected work environment and show leaders why it’s a win-win, it should increase their bottom line.”