Turnover from Toxic Workplaces Costs U.S. Companies $223B

A toxic workplace is the primary reason employees quit their jobs.

They may dread coming to work, feel they can’t communicate honestly with their supervisor, or witness or experience sexual harassment or age discrimination.

Workers flee companies and managers who they feel are responsible for a caustic environment—and the cost to companies is astronomical.

A recent study by the Society for Human Resource Management, The High Cost of Toxic Workplace Culture, shows 58% of employees who quit a job say their managers are the main reason they left—with turnover costing U.S. employers more than $223 billion over the past five years.

Johnny C. Taylor Jr., president and CEO of SHRM, said the staggering $223 billion figure should push CEOs to embrace the critical role culture plays at every company.

“Culture is more than a word. It is the operating system of an organization,” Taylor said.

Lack of Communication

The SHRM report says that lack of communication between managers and workers “is a leading contributor to the culture issues facing many organizations.”

The report’s findings include:

• 49% of American workers have thought about leaving their current organization
• Nearly 20% have left a job over the last five years due to culture
• 58% say their manager is the reason they left
• 30% say their manager doesn’t encourage a culture of open communication
• Nearly 25% dread going to work, don’t feel safe speaking up on work related matters, and don’t feel valued and respected
• 30% say their workplace culture makes them irritable at home

The report says managers are in a prime position to build strong and positive workplaces by listening to employees, holding workers accountable, setting expectations, and clarifying information.

A key to improving culture is looking inward to examine how companies’ internal systems block diversity and inclusion, said Lauren Anderson, executive director of NY Tech Talent Pipeline, which provides job training and placement.

Culture

Anderson said companies realize the importance of culture.

But, she added, “the challenge standing in the way is the inability to see when policies perpetuate a culture.”

For example, she said that if companies rely on referrals to find new employees, and employees’ professional circles consist only of people like themselves, then that preference for using employee networks to find new hires can inadvertently thwart diversity efforts.

The lack of communication between managers and workers is a leading contributor to culture issues.

The push to change culture can’t be the responsibility solely of human resources, added Rita Mitjans, chief diversity and corporate social responsibility officer at ADP, a Roseland, NJ, payroll systems provider.

“Engagement is the responsibility of all team leaders,” she said. “All leaders are responsible for our performance.”

Bottom Line Impact

But Mitjans said she thinks some managers will become more willing to get involved when they hear about the $223 billion impact of poor workplace cultures.

“That’s a lot of money that could be going to the bottom line.”

“What became clear is that a bad workplace culture can derail an organization, creating a toxic atmosphere that leaves employees frustrated and produces a very real bottom-line impact,” SHRM’s Taylor added.

“A strong workplace culture, however, ensures employees act in the best interest of their organization and feel fulfilled within it.

“Organizations that build a great workplace culture will ultimately win the war for talent, innovating, and growing for years to come.”

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For more information, including how an employee engagement survey can help assess your company’s culture, contact CBIA’s Phillip Montgomery (860.244.1982).