How Leaders Can Transform a Toxic Culture into One of Caring and High Performance
Part 1 of 2
By Christine Maassen, MA, CPHR, ACC, MHI Associate
At this point, sufficient alarm bells have rung to indicate that we are in the midst of "the Great Resignation" – with masses of people quitting their jobs and employers struggling to fill the voids. While Canada has not experienced this phenomenon to the same extent as the United States, recent Canadian statistics indicate that we face a similar fate as our southern neighbours. So, what should employers do armed with the knowledge of this ongoing, unprecedented phenomenon?
In a pair of articles (article 1, article 2) published in March 2022 in the MIT Sloan Management Review, Donald Sull and his colleagues broke down the drivers of the Great Resignation, using millions of online employee profiles to identify the top predictors of employee turnover. A toxic corporate culture is by far the strongest predictor of attrition, followed by job insecurity and reorganization, then high levels of innovation, then failure to recognize employee performance, and finally, poor response to COVID-19.
In predicting a company's turnover, toxic corporate culture was ten times more powerful than compensation. Helpfully, Sull and his colleagues dissected the components that make up a toxic corporate culture: disrespect, noninclusive, unethical, cutthroat, and abusive. Notably, a toxic culture poses high human and financial costs, with strong associations with physical illness and mental health problems, which, in turn, affect the company's bottom line.
“Benchmarking toxic culture to compensation offers valuable insight into what matters most for employees as it debunks the convenient myth that people leave for higher pay. In light of this evidence, employers must acknowledge that there is a direct correlation between the work environment and organizational success.”
At MHI, we have witnessed the individual struggles of employees and the organizational struggles of employers firsthand. And while employers recognize that there is a problem, many don't know how to address it or where to begin. Nevertheless, the current dilemma is an invitation to ponder a few questions, especially given these latest insights revealed about employee motivations.
To restate the findings of the articles mentioned above in an overly simplified manner: people are no longer willing to tolerate work circumstances that make them feel uncomfortable or, worse, sick.
This is significant because an engaged workforce is a key differentiator in business performance and an organization's ability to adapt quickly to the ever-changing landscape businesses navigate. The acronym VUCA, short for volatility, uncertainty, complexity, and ambiguity, first used in 1987, describes the reality of today's business environment. And there is consensus that the rate of change will not slow down, quite the contrary. The only way for an organization to keep up with ever-changing needs in a sustainable manner is for everyone to be mobilized and engaged. Today's business requires "all hands on deck," and in the past two years, people have been abandoning ship.
I invite you to reflect on, especially if you are in a leadership role, whether you are willing and able to hear the heartbreaking message that employees are sending through the great resignation. In a recent podcast, Scott Sonenshein, Professor of Management at Rice University, highlighted that leaders should not overlook that they are no longer managing the same workforce as in 2020. He stated, “You've either got to change, or you got to get out of the way for this one. I just don't think there's any turning back, and I know that's a really strong statement."
Do you see the need for change?
Another aspect to consider is the function of the Human Resources (HR) department. The outdated and entrenched organizational framework frequently casts HR functions in a dual role: on the one hand, a combination of transactional and sometimes tedious administrative tasks, and on the other, the responsibility to deal with undesirable and sometimes damaging outcomes of challenging organizational cultures. Limiting the scope of an HR function to these parameters is costly and narrow-minded. Costly because when dealing with the outcomes of cultural issues, we pay professionals to handle a repeating cycle of "course correction" without affording them an opportunity to address root causes. Narrow-minded because it makes it too easy for leaders to keep the blinders on and avoid the required difficult conversations aimed at truly understanding the dynamics at play and their source. Indeed, frequently associated with this construct of HR's purpose is a belief that how people feel at work is "HR's problem." While it is wise to enlist the assistance of an HR partner to handle tricky people matters, seeking help too often becomes transferring one's responsibility.
“A leader is responsible for their relationship with their team, not HR. So, when thinking about people challenges, I invite you to ponder the important question, "How does our culture impact our people, and how are our people really doing? And, as a leader or colleague, in which way am I contributing to the culture positively or negatively?”
To continue simplifying the meaning of recent statistics, we need to know: as stated previously, employees are critical to an organization's ability to remain successful. And, before anything else, employees are people. People have needs related to their humanity, and they have feelings. Oh, I just used the "f-word," didn't I? Once we acknowledge that employees come to work as whole people, we become attuned to the urgency to create workplaces aligned with this reality.
Want another way to look at this? We must acknowledge that the prevalent paternalistic command-and-control model used to organize work has reached its expiration date and is making people sick; different lenses, the same landscape.
Perhaps you're reading this and thinking: okay, but then what? …
Stay tuned for our next issue of The Support Your People Newsletter which will feature Part 2 of this discussion.
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