What Is a Bad Company Culture? And What Should Leaders Do if Their Culture Is Bad – or Worse?

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Mark S. Babbitt, Contributor
S. Chris Edmonds, Contributor

In today’s workplace, leaders often struggle to objectively understand the quality of their company culture. Some tend to lean into what the ‘About Us’ page on their website says instead of striving to learn if they have a bad company culture—or not.

Even worse, when provided with either qualitative or quantitative evidence that their culture is not ideal—and perhaps even toxic—some leaders see those who articulate their unhappiness as malcontents. 

Soon after those talented but disappointed employees leave the company for a better culture (and better leadership), company executives discount them using words like, “They were never a team player.”

Far too often, the result is that the people who genuinely care about improving the company culture leave. And the people who tolerate a bad company culture—either because they don’t care enough or because they realize they don’t have many other career options—stay.

A bad company culture is one in which talented employees can’t flourish. The detrimental effects of a bad company culture can lead to decreased productivity, employee dissatisfaction, and high turnover, ultimately impacting the success and sustainability of the organization.

So, how do leaders see the quality of their company’s culture through an objective lens? How do they know whether their workplace is purposeful, positive, and productive—or is driving good people away? 

Later in this post, we’ll discuss how leaders can generate data to help determine whether their culture is systemically flawed or flourishing. For now, let’s look at the most likely indicators that your company’s culture sucks.

Employee-Driven Indicators

Even if a leader hasn’t yet grasped how their company culture impacts productivity and does or does not provide a validating climate for contributors, your employees are fully aware. Quite often, they’ll express their frustrations through:

• High Employee Turnover
  Suppose the human resources team or hiring managers can’t keep up with the number of qualified people choosing to work elsewhere. In that case, it’s likely that your company culture isn’t respectful enough to retain top talent.
• Low Employee Referrals
  Employees who believe in the company’s servant purpose and appreciate their work environment are far more likely to refer friends and colleagues. If the number of referrals driving qualified team members into your candidate funnel is lower than 10%, you have a crappy culture.
• Low Employee Engagement
  If your employees aren’t engaged and only working to collect a paycheck, they aren’t being innovative or proactive, let alone productive. If your company suffers from low engagement, chances are the root cause is a less-than-inspiring company culture.
• Unresolved Negative Feedback
  It’s counterintuitive, yes, but employees who care the most often complain the most. After all, if a team member is going through the motions, they won’t help drive change. Ultimately, nothing erodes a positive culture faster than an employee who tried to speak up but was quashed or ignored.
• Lack of Accountability
  When employees choose not to demonstrate accountability for positively contributing to the company culture or when management doesn’t hold them accountable for behaviors that counter the perceived company culture, a productive culture can’t thrive.

Organizational Indicators

Leaders don’t need to wait for employees to signal that a poor company culture has taken root. Instead, they can look for one or more of these systemic issues.

• Continuous Conflict
  With a bad company culture, especially where there is a lack of accountability for failing to respect the work and thoughts of others, conflict becomes contagious. As people choose sides, that conflict can spread like a summer wildfire. Too soon, the only resolution is to let malcontents go—or watch talented, productive team members walk away.
• Failure to Communicate
  Once communication between departments, teams, and managers becomes ineffective or infrequent, people tend to operate within silos and cliques. Worse yet, when company culture isn’t clearly defined, groups form independent sub-cultures. Circular in nature, these sub-cultures often prove to be why internal groups can’t communicate well enough to collaborate.
• Low Productivity and Profits
  It makes sense that just one or two of the issues described above, especially those listed under “Employee-Driven Indicators,” might lead to long-term low productivity and profit. If a company suffers from three or more symptoms, the culture is sick, and a leader must take immediate action.
• Resistance to Change
  Speaking of circular, once a culture reaches a certain level of toxicity, leaders will observe employees adamantly resistant to change. Especially in fear-based cultures where accountability is nearly nonexistent, employees see new initiatives—even those designed to improve their work environment—as lip service rather than an attempt to drive real change. This phenomenon makes driving change extremely difficult (but, as you’ll soon see, not impossible).

Other Organization-Wide Issues

Although perhaps not leading indicators, a leader can often assess a less-than-ideal or declining company culture through:

• Higher-than-normal absenteeism and tardiness
• The prevalence (and, in some cases, acceptance) of unethical behaviors
• Poor work-life balance (especially among senior leaders, managers, and key personnel) that leads to burnout
• Teams that consistently take a reactionary view toward meeting demands instead of focusing equally on the long-term investment in people and processes
• Leaders who resort to micro-management or other controlling management practices rather than providing actionable inspiration to their team and trusting talented, engaged team members to do their best work daily

If a senior leader starts to see any combination of these not-always-leading indicators, it is time to make an assessment of their company culture a high priority.

So You’re Guessing That You Have a Bad Company Culture… Now What?

As we say in our bestselling book, Good Comes First: How Today’s Leaders Create an Uncompromising Company Culture That Doesn’t Suck, the first challenge culture leaders must take on is “guessing” versus “knowing.”

Even if you can say that your organization is battling several of the indicators above, it is one thing to suspect you have a culture that needs immediate attention versus unequivocally knowing that you must learn to become a better culture leader. 

And the difference isn’t minimal. Because “guessing” that you might have a bad company culture leaves a leader some wiggle room, the leader’s hope is that the culture organically fixes itself. 

“Knowing,” on the other hand, creates a sense of urgency and a requirement for action. A leader knows they must act, or they’ll continue to lose good people, the people who stay will remain disengaged, and productivity and profits will continue to suffer.

Getting to “Know” (Or, What to Do Next)

To graduate from thinking to knowing, consider leveraging these proven tools to assess your company culture.

The Organizational Constitution: Thoroughly Define Your Culture

This is a must-do first step if you haven’t formally defined your culture in writing. Failure to do so is as unjust as asking a student to take a final exam on a subject they haven’t yet studied.

In Good Comes First, we thoroughly discuss the Organizational Constitution—a document that helps define (and eventually align and refine) your company’s culture in three steps:

1. Servant Purpose | By carefully crafting your company’s servant purpose, you clearly state who you serve and how; essentially, a servant’s purpose is your company’s “reason for being” (other than making a profit, of course).
2. Values and Behaviors | In succinctly defining your three to five values and then clarifying exactly how those values will be demonstrated in daily interactions by further specifying them in tangible, measurable, and observable behavioral terms, you clearly set expectations for every team member and leader in the company. For example, if one of your values is “respect,” one of the behavioral terms you might use to define that value might be “treat every person as a valued contributor.”
3. Strategies and Goals | By including your organization’s strategy and goals in the Organizational Constitution, you’re indicating that this company isn’t just going to be a great place to work; it must deliver expected results, day in and day out. Otherwise, you might have a group of people who find they love working for your company but don’t get critical work accomplished in a timely manner.

Once you’ve written and socialized your Organizational Constitution, each employee will know the company’s overarching purpose, the behaviors expected in the workplace (and, by default, the behaviors leadership and peers will no longer tolerate), and the company’s direction. 

Now, every contributor can make an informed decision on whether they want to align with the company’s defined culture—or not.

Constructive Culture Conversations: Ask, Listen, and Observe

Once you’ve formalized your Organizational Constitution, you must understand how well every team member (especially formal leaders) demonstrates desired behaviors in your workplace. And when it comes to how behaviors positively or negatively impact your work environment, no one knows better than your employees. They just haven’t been asked the right questions yet. 

It’s time you asked.

Sit down, along with fellow leaders and managers, and ask influential employees:

• What is it REALLY like to work here?
• When it comes to our culture, what is working well? What is not?
• Are people—from leaders to interns—held accountable for living our culture?
• What can I personally do to improve company culture?
• What can YOU do to improve company culture?

When a senior leader sincerely asks these questions, they must actively listen, digest responses, and observe non-verbal communication that might indicate a less-than-earnest input, conflicting thoughts, etc. When leaders engage, they quickly become better culture leaders. 

These candid conversations also enable a leader to show vulnerability by saying, “You know what? I haven’t paid enough attention to this… I must do a better job.” They can also establish themselves as role models for accountability by saying, “I can’t expect others to model our defined values and behaviors unless I do. You can now expect that from me.”

The bottom line: As awkward as these conversations can be—and as hard as it might be to hear their employee’s version of the truth—consistent positive change can only happen after leading a “Let’s make our culture work better for everyone” conversation.

Objective Data Collection: Irrefutable Input from Internal Customers

The culture conversation is an excellent way to collect and act on qualitative data. However, we’ve found that many people, especially when resistance to change is apparent, prefer to act based on objective qualitative data.

For that reason, we’ve developed and perfected three surveys that The Purposeful Culture Group will customize for your workplace:

1. Values and Behaviors Survey | In a quick questionnaire designed to avoid survey fatigue, employees rate leaders on the degree to which they demonstrate their organization’s defined values and behaviors in daily interactions. This customized survey provides every formal leader in your organization with a profile, noting employee perceptions of how well leaders align with your unique values and behaviors.
2. Executive Team Effectiveness Survey | A formal survey where all staff members provide feedback on how well your senior leadership team operates according to ten best practices. Like the values survey, the company provides the executive team with a report that shows a snapshot-in-time view of how employees view the executive team’s alignment with those best practices.
3. Workplace Intelligence (WQ) Assessment | This assessment, usually administered a year or so after we’ve been working with a client, asks all staff members to provide feedback on how well their organization’s models have proven company culture cornerstones. This assessment provides a total overall WQ score for each team, department, and division and a composite report for the entire company.

Used alone or in conjunction with each other, these three assessments help leaders thoroughly understand and evaluate their company’s culture. Most importantly, they can help leaders identify the areas that require the most significant improvements. 

The goal, of course, is to co-create—along with all stakeholders (senior leaders, division leaders, team leaders, and team members)—a purposeful, positive, and productive work environment.

Getting to “No” (Or, What NOT to Do… Ever)

Now that you know what to do next in your culture assessment and change journey, let us share what NOT to do. Specifically, let’s discuss the traps leaders fall into while attempting to drive culture change.

Management by Announcement

Once a company creates and publishes its Organizational Constitution, scrutiny from employees, naturally, goes way up. By definition, that scrutiny makes them hyper-cynical of every new plan. This makes perfect sense; employees have learned over the years that “MbA” (managing by announcements) is a tool used far too often. 

They’ve also learned that what a leader says is going to happen rarely actually happens. Skepticism becomes not only a natural reaction but sometimes an insurmountable barrier to success.

Knowing that employees may not initially believe that the Organizational Constitution is here to stay, leaders must embrace culture change before they ask anyone else to embrace change, let alone become change champions themselves. 

Leaders must realize any announced change is purely hypothetical for employees until they see leaders doing it—modeling it—over and over again, over time.

Without fail, gaining traction and credibility starts with leaders modeling their company’s valued behaviors and living its servant purpose while remaining relentlessly focused on achieving major goals—and not by solely announcing that a desired change is coming.

Don’t Play Buzzword Bingo

In our work, we’ve seen leaders attempt to make systemic culture problems disappear by applying the lessons learned in what amounts to a game of Buzzword Bingo. To help make this point, here are two real-world scenarios:

• Over the last 30 years, corporations have spent billions of dollars to improve “employee engagement.” Despite this investment, about 30% of all employees have remained actively disengaged since this metric was first tracked. Thirty years, billions of dollars, hundreds of programs—and we haven’t moved the needle one tiny bit.
  
  Why? Because if your company culture sucks—if it is painful to show up to work every day—no employee will ever allow management manipulation tactics to influence their level of engagement.
  
  Employee engagement is organic; furthermore, it is forever connected to how employees feel about their experience in a specific work environment. So, despite their best efforts, management can’t manipulate engagement levels.
  
  Fix the culture—make work a fulfilling, validating experience where people can grow personally and professionally—and engagement will improve dramatically. Only then can you forget about artificially (and temporarily) improving engagement.

• One buzzword making a comeback recently is “conflict management.” Leaders seem to be applying the tools learned in two-hour training sessions to reduce conflict without deliberately looking at the root cause of that conflict.
  
  One example using the respect value from above is: A top-performing male employee routinely fails to demonstrate the respect value by telling sexist jokes in the breakroom and demeaning a newer female colleague.
  
  The new team member tries to laugh it off at first. But over time, after tolerating this disrespectful behavior for as long as humanly possible, she fights back.
  
  People choose sides. The conflict becomes more global than personal. The man’s disrespectful, toxic behavior, which his male managers have tolerated, now severely impacts the workplace.
  
  Yes, conflict exists in this situation. But conflict is not—and never was—the root cause; instead, it is a symptom of the real problem: disrespect.
  
  By definition, conflict management requires two (or more) parties who feel they are in the right to be willing to engage to resolve differences and address issues. In this case, the male employee was never in the right; maintaining his alpha male status was more important than modeling the company’s respect values.
  
  From the first misogynistic comment and leadership’s first failed opportunity to hold the misaligned player accountable, this was a culture alignment problem, not a simplistic “conflict management” issue.

As a leader (right or wrong), you are held responsible for the bad (or worse) culture you tolerate. And yet, fixing a bad company culture is not an easy task. Complicating this problem is that we taught today’s leaders how to be business leaders, not culture leaders; most leaders barely heard the word “culture” in business school. 

Of course, not everything we learn comes from the classroom. But we can’t go to our predecessors and mentors for been-there, done-that advice because most old-school leaders never even considered what it would take to change their company’s culture, so they haven’t been there. 

Nor have they done that. It’s like being taught how to swim by being thrown into the deep end of the pool!

Still, before it’s too late, today’s most effective leaders proactively enter these murky waters. Some leaders feel the need to dive in head-first; through a series of educated guesses, they make up culture change as they go. Instead, we suggest wading in, starting with ignoring what your ‘About Us’ page says. 

Your first objective: From your employees’ perspective and through the collection of objective data, know exactly how bad (or good!) your culture is now—and what area of that culture demands the most attention—from you, the culture leader.

Then go to work.

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