10 Things Your Corporate Culture Needs to Get Right

D. Sull and C. Sull

MIT Sloan Management Review

Originally posted 16 September 21

Here are two excerpts:

What distinguishes a good corporate culture from a bad one in the eyes of employees? This is a trickier question than it might appear at first glance. Most leaders agree in principle that culture matters but have widely divergent views about which elements of culture are most important. In an earlier study, we identified more than 60 distinct values that companies listed among their official “core values.” Most often, an organization’s official core values signal top executives’ cultural aspirations, rather than reflecting the elements of corporate culture that matter most to employees.

Which elements of corporate life shape how employees rate culture? To address this question, we analyzed the language workers used to describe their employers. When they complete a Glassdoor review, employees not only rate corporate culture on a 5-point scale, but also describe — in their own words — the pros and cons of working at their organization. The topics they choose to write about reveal which factors are most salient to them, and sentiment analysis reveals how positively (or negatively) they feel about each topic. (Glassdoor reviews are remarkably balanced between positive and negative observations.) By analyzing the relationship between their descriptions and rating of culture, we can start to understand what employees are talking about when they talk about culture.

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The following chart summarizes the factors that best predict whether employees love (or loathe) their companies. The bars represent each topic’s relative importance in predicting a company’s culture rating. Whether employees feel respected, for example, is 18 times more powerful as a predictor of a company’s culture rating compared with the average topic. We’ve grouped related factors to tease out broader themes that emerge from our analysis.

Here are the 10 cultural dynamics and my take

1. Employees feel respected. Employees want to be treated with consideration, courtesy, and dignity. They want their perspectives to be taken seriously and their contributions to be valued.
2. Employees have supportive leaders. Employees need leaders who will help them to do their best work, respond to their requests, accommodate their individual needs, offer encouragement, and have their backs.
3. Leaders live core values. Employees need to see that their leaders are committed to the company's core values and that they are willing to walk the talk.
4. Toxic managers. Toxic managers can create a poisonous work environment and lead to high turnover rates and low productivity.
5. Unethical behavior. Employees need to have confidence that their colleagues and leaders are acting ethically and honestly.
6. Employees have good benefits. Employees expect to be compensated fairly and to have access to a good benefits package.
7. Perks. Perks can be anything from free snacks to on-site childcare to flexible work arrangements. They can help to make the workplace more enjoyable and improve employee morale.
8. Employees have opportunities for learning and development. Employees want to grow and develop in their careers. They need to have access to training and development opportunities that will help them to reach their full potential.
9. Job security. Employees need to feel secure in their jobs in order to focus on their work and be productive.
10. Reorganizations. How employees view reorganizations, including frequency and quality.

The authors argue that these ten elements are essential for creating a corporate culture that is attractive to top talent, drives innovation and productivity, and leads to long-term success.

Additional thoughts

In addition to the ten elements listed above, there are a number of other factors that can contribute to a strong and positive corporate culture. These include:

• Diversity and inclusion. Employees want to work in a company where they feel respected and valued, regardless of their race, ethnicity, gender, sexual orientation, or other factors.
• Collaboration and teamwork. Employees want to work in a company where they can collaborate with others and achieve common goals.
• Open communication and feedback. Employees need to feel comfortable communicating with their managers and colleagues, and they need to be open to receiving feedback.
• Celebration of success. It is important to celebrate successes and recognize employees for their contributions. This helps to create a positive and supportive work environment.
• By investing in these factors, companies can create a corporate culture that is both attractive to employees and beneficial to the bottom line.

Why Every Leader Needs to Worry About Toxic Culture

D. Sull, W. Cipolli, & C. Brighenti

MIT Sloan Management Review

Originally posted 16 March 22

Here is an excerpt:

The High Costs of a Toxic Culture

By identifying the core elements of a toxic culture, we can synthesize existing research on closely related topics, including discrimination, abusive managers, unethical organizational behavior, workplace injustice, and incivility. This research allows us to tally the full cost of a toxic culture to individuals and organizations. And the toll, in human suffering and financial expenses, is staggering.

A large body of research shows that working in a toxic atmosphere is associated with elevated levels of stress, burnout, and mental health issues. Toxicity also translates into physical illness. When employees experience injustice in the workplace, their odds of suffering a major disease (including coronary disease, asthma, diabetes, and arthritis) increase by 35% to 55%.

In addition to the pain imposed on employees, a toxic culture also imposes costs that flow directly to the organization’s bottom line. When a toxic atmosphere makes workers sick, for example, their employer typically foots the bill. Among U.S. workers with health benefits, two-thirds have their health care expenses paid directly by their employer. By one estimate, toxic workplaces added an incremental $16 billion in employee health care costs in 2008. The figure below summarizes some of the costs of a toxic culture for organizations.

According to a study from the Society for Human Resource Management, 1 in 5 employees left a job at some point in their career because of its toxic culture. That survey, conducted before the pandemic, is consistent with our findings that a toxic culture is the best predictor of a company experiencing higher employee attrition than its industry overall during the first six months of the Great Resignation. Gallup estimates that the cost of replacing an employee who quits can total up to two times their annual salary when all direct and indirect expenses are accounted for.

Companies with a toxic culture will not only lose employees — they’ll also struggle to replace workers who jump ship. Over three-quarters of job seekers research an employer’s culture before applying for a job. In an age of online employee reviews, companies cannot keep their culture problems a secret for long, and a toxic culture, as we showed above, is by far the strongest predictor of a low review on Glassdoor. Having a toxic employer brand makes it harder to attract candidates.

The info is here.

Here is my take:

The article identifies five attributes that have a disproportionate impact on how workers view a toxic culture:

• Disrespectful
• Noninclusive
• Unethical
• Cutthroat
• Abusive

Leaders play a pivotal role in shaping and maintaining a positive work culture. They must be aware of the impact of toxic culture and actively work towards building a healthy and supportive environment.

To tackle toxic culture, leaders must first identify the behaviors and practices that contribute to it. Common toxic behaviors include micromanagement, lack of transparency, favoritism, excessive competition, and poor communication. Once the root causes of the problem have been identified, leaders can develop strategies to address them.

The article provides a number of recommendations for leaders to create a positive work culture, including:

• Setting clear expectations for behavior and holding employees accountable
• Fostering a culture of trust and respect
• Promoting diversity and inclusion
• Providing employees with opportunities for growth and development
• Creating a work-life balance
• Leaders who are committed to creating a positive work culture will see the benefits reflected in their team's performance and the organization's bottom line.