The true cost of poor culture

You’ll have heard the line repeated as truth many times.  

“People don’t leave companies, they leave people.”  

On rare occasions, it’s true. But only on very rare occasions.  

Because generally, the people in the company – the managers, the leadership team, the executives – are the company. Or a product of the company.  

If a toxic manager is enough to make an employee leave, then the company’s culture isn’t strong enough to prevent that toxicity from flourishing in the first place.  

Culture is how your organisation works in practice, regardless of what mission statements and company values say. And Australians value culture higher than any other workers in the world – Deloitte found 94% of Australians believe a company’s culture is ‘important’ or ‘very important’.  

Great businesses have a strong, positive culture. Their employees are unified in purpose and have a mutual agreement on how they interact with each other, how they work together and how they present externally.  

To the ultimate benefit to all concerned. And your bottom line.  

Here’s why. 

Recruitment costs. From placing job ads and the time it takes to run an interview process to the time investment of handovers and on-boarding new staff, recruiting takes significant time and money.  

Of course, some people outgrow a role or company, and that’s fine. Minimise the number of people leaving, however, by not only recruiting well in the first place, in line with your culture but ensuring the environment is conducive to bringing out the best in the right people, too.   

The average cost of a hire is estimated to be anything from $5000 to 20% of the employee’s salary. For any size of business, those costs quickly add up. 

A strong culture impacts many things. Absenteeism reduces, incidences of workplace stress decrease, and you’ll have a more engaged staff. And more engagement and a happier workplace means higher productivity. If your people are disengaged, then you’ve got problems. Studies show disengaged workers have 37% higher absenteeism, 49% more accidents and made 60% more errors.  

If your culture is good, and your team is performing well, then you’ll need to devote fewer hours to manage them. From performance management to necessary micromanagement, from coaching to dealing with grievances, an underperforming team sucks hours out of leaders’ time – time which should be spent on the business. 

Remember, good culture starts from the top – but toxic team members can ruin the whole fruit bowl. 

Ensure you and your leadership team are living and breathing your company culture day in, day out. It’s not about words written on the wall, or documents that never see the light of day; it’s about how you behave, interact and hold each other accountable.  

If behaviour that falls outside of your desired culture isn’t called out immediately, you’re condoning it. And others will copy.