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How a toxic workplace affects a business’s bottom line


A recent report by the Society for Human Resource Management found that poor workplace culture has lost businesses nearly a quarter of a trillion dollars over the last five years. This number is not only alarming due to its enormity, it’s also very telling of how management and HR are struggling to tackle this problem.

No business strives to be considered a toxic workplace, but it obviously still occurs, and is often only addressed after the consequences have been felt. Human resources has a duty to combat this, and it’s important to know how to recognize what poor company culture is and specific actions that can be taken in response.

Signs your business has a toxic culture

It can be hard to pin down one clear definition of a toxic workplace. Every employee will have a different preference for what encompasses a positive culture, just as they would for a negative one. For further understanding of the issues highlighted by SHRM, here are three general signs that your business has a toxic culture that could be affecting your bottom line.

1. High employee turnover

If workers are fleeing your business in large numbers, obviously something is wrong. When new hires are leaving just as quickly as they arrive, you’re not only losing the resources you invested in them, but also need to repeat the process again to fill the open position.

High employee turnover is a huge drain on resources, and is the main reason why businesses have lost $223 billion dollars over the past five years from having an unsavory culture.

2. Tension between management and employees

Exaggerated boss vs. employee dynamics have long been used as the basis for popular television sitcoms and comedies. Unfortunately, this tension isn’t so funny in real life, and is a pretty blatant signal that your company culture is substandard.

As Forbes outlines, if there is mistrust and employees are constantly feeling the need to defend their work, management might be to blame for creating this dilemma. Additionally, one unstable manager can spread their malignant practices to others, seriously impacting the company culture.

3. No interconnectivity

Work isn’t supposed to be about constant socialization, but if your business takes an every-man-for-himself attitude, as Forbes calls it, it’s a red flag. Without support or trust amongst each other, employees are less inclined to stick around and will be actively seeking greener pastures.

What can HR do?

Your employees are your best resource for getting to the root of the problem. Open up discussions, either in groups or one-on-one. Also, consider using anonymous satisfaction evaluations and exit interviews to receive honest opinions.

As SHRM found, 76% of employees agree that their managers set the workplace culture, and 58% left a job because of their manager’s poor handling of it. So, more often than not, managers are to blame for poor workplace culture in the eyes of employees.

Knowing this, HR can set better standards for hiring and checking in on management. Consider using a management aptitude test that will evaluate a candidate based on their interpersonal effectiveness and delegation skills. Managers must possess a wide array of traits and skills to succeed, and a test of this caliber can help determine if they do.

Again, listening to your employees is one of the best things you can do to prevent or remedy a toxic workplace before it starts impacting your business’ bottom line. Make sure you have competent managers, and are making efforts to promote diversity and connectivity in the workplace to find a balance between being an efficient business and an enjoyable place to work.