Toxic Workplace Cultures Are Costing Employers Billions

E mployee turnover triggered by poor workplace culture drained nearly a quarter of a trillion dollars from businesses over the last five years as workers fled managers who they believed created the caustic environment, according to a study released Wednesday by the Society for Human Resource Management (SHRM).

Johnny C. Taylor, Jr., SHRM-SCP, president and chief executive officer of SHRM, said the $223 billion figure should push CEOs who may have only talked about the importance of culture into embracing the critical role culture plays at every company.

"Culture is more than a word. It is the operating system of an organization," Taylor said while speaking about the research at Workplace Convos & Coffee, a pop-up coffeehouse SHRM created in the Oculus transit hub at the World Trade Center in New York City. It attracted thousands of attendees yesterday and is open again today.

Taylor said paying attention to the workplace environment is especially important now as the fractious political climate in the U.S. could increase tensions and lead to even worse turnover.

"The level of toxicity in the workplace is at an all-time high," he said, adding that the impeachment investigations are dividing employees all over the country regardless of any employer rules about discussing politics in the office. "You don't think employees are talking about impeachment?" he asked rhetorically. "Well, they are."

Taylor said finding ways for employees to respectfully discuss their different political views is critical for companies. Otherwise, the levels of toxicity will only grow. He added that calls fielded by SHRM from members seeking advice on how to deal with conversations about national politics have doubled since the midterm elections and now represent 10 percent of the 600,000 annual inquiries.

Workers may not believe that their managers have the skills to foster such sensitive dialogue, according to SHRM's report The High Cost of a Toxic Workplace Culture: How Culture Impacts the Workforce—and the Bottom Line. Overall, 76 percent of employees agree that their managers set the workplace culture. Yet 40 percent of employees surveyed say their bosses fail to frequently engage them in honest work conversations, while 36 percent believe their supervisors don't know how to lead a team. Moreover, 58 percent of those who left a job because of workplace culture cited their manager as the reason behind their decision.

Amid the dissatisfaction, nearly 40 percent of HR professionals say there have been more complaints of sexual harassment and discriminatory treatment in their workplaces in the last two years than in the two years prior. Twenty-six percent of workers ages 65 to 74 said they have experienced age-related discrimination at work, while 20 percent of those ages 25 to 34 said the same.

How to Make Workplace Culture Better

Cheslie Kryst is the reigning Miss USA. She is also a litigation attorney and holds a master's degree in business administration and a bachelor's in marketing and human resources. She joined Taylor onstage at the Oculus and said that the increased reports of sexual harassment in the research could signal that individuals are becoming more comfortable in calling out wrongdoing. Taylor asked the 28-year-old how her generation fights ageism. "Everyone you know knows something you don't. Everyone has something to give," she said. "My generation needs to understand that."

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. Speaking as part of a panel discussion at SHRM's event, Anderson explained that companies do realize the importance of culture but 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 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, N.J., provider of payroll systems. "Engagement is the responsibility of all team leaders," she said. "All leaders are responsible for our performance."

But 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."