Improving a Company’s Bottom Line

People are the only organizational asset that matters

To grow a successful organization, a leader must recognize that the most valuable asset within the organization are the people. It does not matter what the product or service you offer is, quality begins and ends with the team. As such, the importance of corporate culture cannot be overstated. More than 90% of North American CEOs and CFOs believe that improving their corporate culture would boost financial performance. 

However, a startling disconnect exists between the perceptions of executives and the reality experienced by employees. Despite the acknowledged importance of a healthy corporate culture, a staggering 75% of workers report some form of harassment from abusers while at work, and an alarming 80% of workers suffer from work-related stress, with 40% of job turnover attributed to this stress. No business is immune to these issues unless proactive measures are taken to identify and address them.

The disconnect between executives’ beliefs and employees’ experiences has far-reaching implications on both a human and corporate level. While most executives recognize the crucial role of a healthy culture in driving results, over 80% also acknowledge that their organization’s culture falls short of what it should be. This issue is within management’s control. Surprisingly though, most executives who recognize that their business’ culture is suboptimal will also provide excuses for why leadership failed to invest in upgrading corporate culture. This lack of leadership investment stands as the most significant obstacle to solving the problem and improving the bottom line on which investors judge leadership. 

It’s astonishing that public company leadership, which is always judged on financial performance indicators, more often than not overlooks the simplest short and long-term lever to drive an improvement in results: investing in their own staff beyond hard skills training! 

While will defer the issue to a later time, or dismiss it as ‘other people’s problems,’ the most common barrier to progress stems from uncertainty about where to begin. Many executives perceive “fixing culture” as an indictment of their existing operations and a daunting and amorphous undertaking, lacking in hard metrics and clarity on which specific aspects to focus on and what concrete actions to take. 

While there are a myriad of factors to consider as you peel the layers of the onion, there are simple factors that can be addressed to set the foundation on its proper course. Five key attributes of culture: respect, inclusivity, ethics, constructiveness, and morality, serve as the foundation for a positive culture in any organization. Conversely, the presence and tolerance of any one of their opposites will render the entire culture toxic.

The effects of a toxic workplace extend far beyond what is verbalized, permeating the entire organization and inflicting serious and lasting harm on affected employees, both at work and at home. Workers exposed to the elements of a toxic culture are more likely to experience heightened stress, anxiety, depression, and burnout, and studies clearly demonstrate that they face an increased likelihood of being diagnosed with a serious physical disease as a result. 

Over time, a toxic culture takes a heavy toll on organizational performance. While employees bear the pain, employers’ bottom lines bear the cost of health care expenses. The costs are not limited to increased fees for employees with medical benefits. When toxic subcultures are allowed to fester within an organization, affected employees are more likely to disengage from their work, tarnish their employer’s reputation on employee review sites, and seek employment elsewhere. Studies show that turnover costs the company 200% of each employee’s salary. With the average U.S. salary at $60,000 annually, this cost is debilitating.

Toxic workplaces are not only costly but also prevalent. Research on large U.S. employers reveals that approximately 1 in 10 workers describe their workplace culture as overtly toxic. However, 80% report it as unduly stressful, which indicates the unreported issues are far more significant. 

No company is immune from the effects of toxicity, as the root issues are based in human behavior. Even companies with healthy cultures will contain pockets of toxicity due to abusive managers or interpersonal conflicts among members of certain teams. By identifying and addressing these issues, leaders can significantly improve employees’ experiences and minimize the costs associated with a toxic workplace, such as unwanted attrition, disengagement, and negative word of mouth.

The disconnect between executives’ beliefs about the importance of corporate culture and the reality faced by employees is a pressing issue that demands attention. By recognizing the significance of a healthy culture, investing time and resources in improving it, and proactively identifying and addressing toxic subcultures, leaders can create a work environment that fosters employee well-being, engagement, and productivity, ultimately driving superior organizational performance.

Remember, more than 90% of North American CEOs and CFOs believe that improving their corporate culture would boost financial performance, and yet, a staggering 75% of workers report some form of harassment from abusers while at work, and 80% of workers suffer from work-related stress. These issues don’t stay at work.

We know that addressing the challenge will positively impact performance, and yet most businesses choose to ignore it.  What other step in operational optimization could be more impactful to your bottom line and people’s lives?