man frustrated at work

How is a Toxic Company Culture Created?

What happens to create a bad work culture? Here, we map out how a negative work environment starts.

Are you worried your company culture could be a problem for your business? Have you noticed a lack of engagement or quiet quitting? Or, maybe employees are actually quitting.  

For a company to thrive in today’s marketplace, the primary concerns can no longer be about profits and productivity. In order for businesses to remain competitive, it is important the company culture reflects what employees want.  

At MacklinConnection, we help companies develop a work culture that is responsive to everyone's needs and is focused on the well-being of all employees. We’ve seen firsthand how a positive company culture, built on trust and caring, can improve all aspects of a business.  

It is possible for every company to be a place employees actually want to work. When they feel like they are cared about, people want to give their best and show up fully. Here, we’ll discuss how a bad work culture is created to help you notice if your company might have a culture problem.

What causes a shift in company culture? 

Kara Large: Do toxic work environments start out that way. Or is there a moment when things start to change or shift? And now, all of a sudden, you have a company that nobody wants to work at.

Deb Dendy: That's a really good question. I think it can happen several ways. 

The Role of Leadership in Toxic Work Culture

Deb Dendy: One way a company culture problem can start is through leadership. For example, a leader at the company might be unwilling to notice they need to change their style. Or a leader might do things a certain way and others will mimic that behavior. And it's not behavior you would want to be around. 

Sometimes you see in the news someone becomes a CEO of a company, and the business becomes a toxic place to work because that person wasn't caring for others. When people are just in it for the money, and not for caring for their employees, this can create a company culture problem. 

Employees Shaping Work Culture

Deb Dendy: Rather than a work culture problem coming from a leadership position, it could also come from an employee coming in with a background from some other company. If the company does not have a good work environment, it can rub off on people. Behaviors might have been accepted as normal that actually create company culture problems

Invariably, employees are going to change jobs. So they're going to come with some background of where they already worked. You can have someone come into a company who worked at a place with a toxic company culture. And there were some negative behaviors that were acceptable in that old environment. They don't notice they need to change their behavior now when they come into the new job.

This way of being should be addressed during onboarding. What is acceptable at your company and what is not acceptable should be discussed. Because if it is not, a new employee's behavior can seep in and start to impact others.

Kara Large: So it's kind of a case of one bad apple spoils the bunch? You have a team that's been working well together. Then someone comes in, and their background is cutthroat, and no one trusted each other at their last job. They come into this team where things have been working well. I could see how that could go south quickly. It could be those people who have been working together against this one person. Or the new person's attitude starts infiltrating the group. But either way the team is no longer cohesive.

Deb Dendy: I think in that case leadership needs to step in and say, "The way you're acting is not how we do things."

For some people, they may not be able to see that they need to change. And that's okay, too. Because it's not fun for that person who's coming in. Now it's them versus this team, right? So, it may just not be the right place for them. The sooner you can know that as an employer and an employee then you're treating them with dignity. 

The Importance of Onboarding in Establishing Company Culture

Kara Large: To preserve a good work culture, it seems important to consider in interviews and in onboarding that the people you're hiring won't clash with the work environment. Even if someone might be brilliant in their field, if they're not necessarily a good fit for the work culture, that could have poor effects, no matter what they produce. 

Let's say caring about people is the number one factor for your company culture. And this has been continuously shown in studies to be the primary driver of success for a company. So no matter what one person might be able to do, if the rest of the group is going to be thrown off, what is best for everyone must be considered. And it might be that that person just is not a good fit. 

Do some companies start out with a bad work culture?

Kara Large: What about businesses that form and the company culture has never been great? Is this something that happens? Do people create a company and don't think about what the work environment is going to be like? Or maybe there hasn't been a lot of thought put into cultivating a place that people want to work? How is a bad company culture created from the start?

Deb Dendy: This scenario is making me think about purpose. What is the purpose for having a company? Is part of the purpose to take care of employees? Is part of that purpose to pay them a wage and take care of them so they can live a good life? 

If your purpose is just "let's make money, hand over fist," your culture might be shaped in a way that is counter to taking care of your people in the best way. You might not want to pay them benefits because then you wouldn't make money, right? 

So it seems to me the company culture starts with the purposes of the business. 

Kara Large: And if it's profit driven only, that's probably a sign right away that this might not be a place people want to work. Obviously, you create a business to make money. But if that's the sole purpose, I can't see that that would be indicative of creating a good work environment. Because you want people to be machines, to produce, so you're seeing better revenue each quarter. This makes me think about big box stores or big restaurant chains where it seems the primary purpose is probably profit. People don't want to work for those places anymore.

Deb Dendy: They notice the people leading the company aren't in it to take care of them.

Kara Large: And by shifting your purpose to "How do we make this a better workplace?" from "How do we make the most money?" the money will naturally come. 

Deb Dendy: Imagine finding that place, especially today, when there's so many people that are leaving their companies. Think about what it costs to replace an employee - in training and recruiting, and all of that. What would that look like if your purposes were around really taking care of people? I imagine you could have a line outside your door, or a virtual line of people signing up to interview. Because people know you're going to take care of them, and that's what everyone wants.

Kara Large: That to me denotes success today. If people want to work for you, you're doing something right. To me, that is a better margin to measure off of. If people are asking to work for your company or people are fighting to get a job there, whatever you're producing is going to be ten times better. Because people want to be working there. They want to show up. And the creativity and innovation that they're coming up with is going to help you evolve and grow.

I think there was maybe an old model of doing business that is no longer working where your purpose was profit. And now it seems like your purpose needs to be about the people that you're serving and the people that you're employing.

The Problems with a Bad Work Culture

Deb Dendy: If people don't like the work environment, they just show up and do the bare minimum and then go home. You don't get the best out of them. If you don't care about them, they aren't going to care about what they're doing. They'll just do what they have to do to get by.

We've worked with companies that have had serious company culture problems. Once they worked on their culture, they noticed their retention rates went up. Their employee retention is amazing. Their profitability went up. You might think in order to have high profits, people have to work like machines. Well, that's not been our experience. Our experience is when people really enjoy their work and enjoy coming to work, the profitability of a company increases.

How do you notice if the company culture is a problem? Or if it is changing into something that doesn't work for everyone? Are people not meeting their commitments? Is there silence in meetings? Are people leaving? If people are leaving there's an opportunity to find out what you can do better.

Do you think you have a problem with your company culture?

Are people excited to come to work for your company? Does your company culture work for everyone? Or is your work culture driving people away?

One of the most important factors for today's employees is a positive work culture. If you have a company culture people want to be a part of, your employees will show up more engaged, creative, and innovative. 

We’ve seen businesses with the worst employee retention rates and toxic work environments start to thrive by prioritizing building a better company culture. 

Whether you are already in a leadership role, or looking to shape a better work culture in your workplace, we are here to help you create a work environment that people are excited to be a part of. You can schedule a consultation with one of our executive business coaches to learn more about how we can work with your company.