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Why Every Leader Needs to Worry About Toxic CultureDonald Sull,…
Why Every Leader Needs to
Worry About Toxic CultureDonald Sull, Charles Sull, William Cipolli, and Caio Brighenti
Pinpointing the elements of toxic culture in an organization can help
leaders focus on addressing the issues that lead employees to disengage
and quit.
Toxic culture, as we reported in a recent article, was the
single best predictor of attrition during the first six months
of the Great Resignation 10 times more powerful than
how employees viewed their compensation in predicting
employee turnover. 1 The link between toxicity and
attrition is not new: By one estimate, employee turnover
triggered by a toxic culture cost U.S. employers nearly $50
billion per year before the Great Resignation began. 2
While most everyone agrees that toxic workplaces are bad
news, there is much less consensus on what makes a culture
toxic as opposed to merely annoying. Scholars have
proposed multiple, sometimes conflicting definitions of
toxic culture, and a quick review of blog posts and
managerial articles surfaces dozens of warning signals of
toxic culture with little overlap across them. 3 In Glassdoor
reviews, employees criticize their corporate cultures for
hundreds of flaws including risk aversion, excess
bureaucracy, insularity, and an impersonal feel, to mention
just a few.
Employees grumble about a lot of things, but which elements
of culture are so awful that they qualify as toxic? You might
gripe about an old-school or bureaucratic culture, but is that
enough to knot your stomach as you pull into the parking lot
in the morning? How can we distinguish between a culture
so awful that it qualifies as toxic versus one that’s merely
irritating?
Pinpointing the elements that make a culture toxic is the first
step to improving it. Leaders will dissipate their effort and
attention if they try to improve every aspect of corporate
culture that some employees find irritating. Instead, they
should focus on addressing the core issues that cause
employees the most pain and lead them to disengage, bad-
mouth their employer, and quit.
To understand what makes a culture toxic, we analyzed the
language employees use to describe their organization.
When workers write a Glassdoor review, they rate corporate
culture on a 5-point scale and also describe their employer’s
pros and cons. The topics they choose to write about reveal
which factors are most relevant to them. By analyzing the
relationship between how they describe their employer and
how they rate its culture, we were able to shed light on the
cultural factors that best predict a toxic culture. We studied
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more than 1.3 million Glassdoor reviews from U.S.
employees of Culture 500 companies, a sample of large
organizations from 40 industries.
In an earlier analysis of the Culture 500 data, we focused
on the topics that best predict a company’s overall culture
rating based on the average of all employee reviews in that
organization. 4 Measuring company-level culture is an
excellent way to identify factors that matter to many
employees, such as benefits, perks, and job security.
Focusing on company-level averages, however, might miss
elements of toxic culture that are highly significant for a
small percentage of the workforce. Therefore, for this study,
we analyzed culture at the individual level.
To home in on what makes a culture toxic for employees,
we focused on their negative comments. We used the text
analytics platform developed by CultureX to identify which
topics each employee discussed negatively. (We measured
128 topics in total.) We then analyzed which of the topics
mentioned had the largest negative impact on how
employees rated corporate culture on a 5-point scale. 5
The Toxic Five Culture
Attributes
We grouped closely related elements into broader topics and
identified what we call the Toxic Five attributes
disrespectful, noninclusive, unethical, cutthroat, and abusive
that poison corporate culture in the eyes of employees.
(See “The Toxic Five.”) While organizational culture can
disappoint employees in many ways, these five elements have
by far the largest negative impact on how employees rate
their corporate culture and have contributed most to
employee attrition throughout the Great Resignation.
Noninclusive
Seven of the 20 most powerful predictors of a negative
culture rating relate to how well Culture 500 companies
encourage the representation of diverse groups of employees
and whether they are treated fairly, made to feel welcome,
and included in key decisions. Collectively, this cluster of
topics is the most powerful predictor of whether employees
view their organization’s culture as toxic.
The CultureX platform’s assessment of whether
organizations provide a fair and inclusive environment for
specific demographic groups includes five topics: gender,
race, sexual identity and orientation, disability, and age. All
of these identity-related topics rank in the top decile of
strongest predictors of a toxic culture. If an employee speaks
negatively in a review about how members of the LGBTQ
community are treated, for example, their culture rating will
be 0.65 lower on a 5-point scale on average.
Two other topics capture comments about exclusion that
may or may not be linked to an individual’s demographics
or identity. The topic cronyism includes comments about
nepotism and managers playing favorites for example, by
promoting their buddies or graduates from the same college
rather than the most qualified candidates. The topic general
noninclusive culture includes reviews containing terms like
“cliques,” “clubby,” or “in crowd” that indicate that some
employees are being excluded without specifying why.
None of the diversity, equity, and inclusion topics emerged
among the top predictors of a company’s overall culture in
our previous analysis using collective employee ratings. This
absence highlights the danger of measuring corporate
culture exclusively in aggregate terms. If leaders focus on the
average review of corporate culture among employees, they
may miss issues that affect a small number of employees in
profound ways. Respect, for example, is mentioned 30 times
more frequently in employee reviews than LGBTQ equity is,
but both topics have the same impact on an employee’s view
of culture when they are discussed negatively in a review.
Disrespectful
Feeling disrespected at work has the largest negative impact
on an employee’s overall rating of their corporate culture of
any single topic. Surprisingly, mentioning disrespect has a
slightly stronger negative impact on the culture rating than
when an employee comes right out and describes their
culture as toxic (or uses other extremely negative terms, like
“dystopian,” “dumpster fire,” or “soul-crushing”).
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In our previous research, we found that respect or the
lack thereof was the single strongest predictor of how
employees as a whole rated the corporate culture. This
further analysis demonstrates that whether you analyze
culture at the level of the individual employee or aggregate to
the organization as a whole, respect toward employees rises
to the top of the list of cultural elements that matter most.
Unethical
Ethics, like respect, is a fundamental aspect of culture that
matters at both the organizational and individual levels. The
topic unethical behavior captures general comments about
integrity and ethics within an organization. The most
common terms in reviews classified under this topic include
“ethics,” “integrity,” “unethical,” “shady,” and “cheat.” Under
a related topic dishonesty employees described
dishonest behavior in dozens of ways, including “lie,”
“mislead,” “deceive,” and “make false promises,” as well as
adjacent terms that suggest shading the truth, such as
“smoke and mirrors” and “sugarcoating.”
The topic regulatory compliance includes comments in
which employees explicitly discussed their employer’s failure
to comply with applicable regulations. Frequently
mentioned regulations include the Occupational Safety and
Health Administration standards, which protect workers’
safety on the job, and the Health Insurance Portability and
Accountability Act, which safeguards sensitive patient
information.
Cutthroat
Nearly 10% of employees in our sample made a comment
related to teamwork or collaboration in their Glassdoor
review. Employees frequently grumbled about
uncooperative teammates or the lack of coordination across
organizational silos. Comments about friction in
coordination, while common, have a very modest impact
on how employees rate their corporate culture. These run-
of-the-mill frustrations are not clear warning signs of toxic
culture.
In contrast, when employees talked about colleagues actively
undermining one another, their comments strongly
predicted a negative culture score. The 1% of employees who
cited a cutthroat culture employed a vivid lexicon to describe
their workplace, including “dog-eat-dog” and “Darwinian”
and talked about coworkers who “throw one another under
the bus,” “stab each other in the back,” or “sabotage one
another.”
Abusive
We define abusive management as sustained hostile behavior
toward employees, as opposed to a boss who has a bad day
and takes it out on team members. 6 The most frequently
mentioned hostile behaviors in our sample are bullying,
yelling, or shouting at employees, belittling or demeaning
subordinates, verbally abusing people, and condescending
or talking down to employees.
Nearly one-third of employees said something about
management in their review, but just 0.8% described their
manager as abusive. When employees did mention abusive
managers, however, it depressed their culture rating by an
additional 0.50 on average.
When employees join a company, they expect to find a
culture that is inclusive, respectful, ethical, collaborative, and
free from abuse by those in positions of power. Not only are
these baseline elements of a healthy corporate culture, they
are also what companies typically promise in their official
core values. In an earlier study, we found that “integrity”
mentioned by nearly two-thirds of companies was
the attribute most frequently listed among companies’ core
values, while collaboration ranked second, respect fourth,
and diversity and inclusion ninth. When corporate culture
fails to deliver on these fundamental commitments,
employees understandably react with something stronger
than annoyance or disappointment.
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
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organizational behavior, workplace injustice, and
incivility. 7 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. 8 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%. 9
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. 10 By one estimate, toxic workplaces added an
incremental $16 billion in employee health care costs in
2008. 11 The figure below summarizes some of the costs of
a toxic culture for organizations. (See “The Organizational
Costs of Toxic Culture.”)
According to a study from the Society of Human Resource
Management, 1 in 5 employees left a job at some point in
their career because of its toxic culture. 12 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. 13
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. 14 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. 15 Having a toxic employer brand makes it
harder to attract candidates.
Other costs of a toxic culture are harder to quantify but can
still add up. Extremely disengaged employees are nearly 20%
less productive than their engaged counterparts because
they put in less effort and miss more days on the job. 16
Nearly half of employees who felt disrespected at work
admitted to decreasing their effort and time spent at
work. 17
Then there’s the reputational risk. Among U.S. CEOs and
CFOs surveyed, 85% agreed that an unhealthy corporate
culture could lead to unethical or illegal behavior. 18 For
example, after fraudulent sales practices at Wells Fargo were
exposed in 2016, the bank paid billions of dollars in fines and
lawsuits and saw its corporate reputation suffer the largest
single-year drop in Harris Poll history. 19
Why Every Leader Needs to
Worry About Toxic Culture
You might think that toxic culture is somebody else’s
problem, limited to a handful of high-profile flameouts like
Wells Fargo or The Weinstein Company and not something
your organization needs to worry about.
Unfortunately, cultural toxicity is widespread. On average,
10% of American employees in large companies mentioned
one or more elements of a toxic culture in their Glassdoor
reviews in the five years between 2016 to 2020. 20 This
translates into more than 6,000 miserable workers for the
average large American company. 21 There is a wide spread
around that average: Culture 500 companies ranged from 2%
to 22% of employees discussing toxicity in their Glassdoor
reviews. When 1 out of every 4 employees mentions toxicity,
it’s fair to say that the corporate culture as a whole is toxic.
Even at companies with the highest Glassdoor ratings,
hundreds or thousands of employees might experience the
culture as toxic. Women, underrepresented minorities, or
older employees, for example, might have a much more
negative view of the culture than other employees. In most
large organizations, distinctive microcultures coexist within
the same company, often across business units, functions,
geographies, or acquired companies. Individual leaders also
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create subcultures within their extended team. Whatever
their origin, microcultures can diverge from the broader
corporate culture, which means that even the best cultures
can contain pockets of cultural toxicity.
In a forthcoming article, we will lay out concrete steps that
leaders can take to detox their corporate culture. The first
step, however, is acknowledging that pockets of toxicity exist
even in the healthiest corporate cultures. Leaders must dig
beneath the rough segmentations (like functions or
countries) to assess culture at the level of individual leaders
who create for better or worse microcultures within the
organization as a whole. When measuring corporate culture,
averages obscure as much as they illuminate.
About the Authors
Donald Sull (@culturexinsight) is a senior lecturer at the
MIT Sloan School of Management and a cofounder of
CultureX. Charles Sull is a cofounder of CultureX. William
Cipolli is an assistant professor of mathematics and
cofounder of the Data Science Collaboratory
(@datascicollab) at Colgate University. Caio Brighenti
(@caiobrighenti) is a football information analyst with the
Detroit Lions.
References
1.1. D. Sull, C. Sull, and B. Zweig, “Toxic Culture Is Driving the Great
Resignation,” MIT Sloan Management Review, Jan. 11, 2022,
https://sloanreview.mit.edu.
2.2. “The High Cost of a Toxic Workplace Culture: How Culture Impacts
the Workforce and the Bottom Line,” PDF file (Alexandria, Virginia:
Society for Human Resource Management, September 2019),
https://pmq.shrm.org.
3.3. Academics and management writers have proposed multiple, subjective
definitions of what makes a culture or leader toxic. See “Is Your Workplace
Tough or Is It Toxic?” Knowledge@Wharton, Aug. 12, 2015,
https://knowledge.wharton.upenn.edu; and M. Taventi, “Managing Toxic
Leaders: Dysfunctional Patterns in Organizational Leadership and How
to Deal With Them,” Human Resource Management 6, no. 83 (2011):
127-136.
4.4. D. Sull and C. Sull, “10 Things Your Corporate Culture Needs to Get
Right,” MIT Sloan Management Review, Sept. 16, 2021,
https://sloanreview.mit.edu.
5.5. We fit a Bayesian ordinal logistic mixed effects model to predict each
review’s culture rating on a 5-point scale. We used 128 culture topics
and their associated sentiments as predictors, with company as a random
intercept. For each review, each of the topics could take one of three
values: It could be discussed positively (1), discussed negatively (-1), or
not mentioned at all (blank). The model was fit with 10,000 iterations after
burn-in for each of four chains. All R-hat values were <1>
6.6. In his excellent review and synthesis, Bennett Tepper notes that there
is no universally agreed-upon definition of abusive management, which
overlaps with research constructs, including petty tyranny, supervisor
aggression, and supervisor undermining. See B.J. Tepper, “Abusive
Supervision in Work Organizations: Review, Synthesis, and Research
Agenda,” Journal of Management 33, no. 3 (June 2007): 261-289. There is,
however, widespread agreement that abusive management (which Tepper
calls “abusive supervision”) consists of sustained nonphysical displays of
hostility and typically excludes discrimination or harassment based on
gender, race, or other demographic attributes. Common examples of
hostile behavior include bullying, yelling at subordinates, swearing,
belittling people, or displaying extremely aggressive behavior.
7.7. The empirical research on these topics is massive, but these recent
review pieces provide a useful introduction: M. del Carmen Triana, M.
Jayasinghe, and J.R. Pieper, “Perceived Workplace Racial Discrimination
and Its Correlates: A Meta-Analysis,” Journal of Organizational Behavior
36, no. 4 (May 2015): 491-513; Tepper, “Abusive Supervision in Work
Organizations,” 261-289; R.I. Sutton, “The No Asshole Rule: Building a
Civilized Workplace and Surviving One That Isn’t” (New York: Business
Plus, 2007); J.J. Kish-Gephart, D.A. Harrison, and L.K. Treviño, “Bad
Apples, Bad Cases, and Bad Barrels: Meta-Analytic Evidence About
Sources of Unethical Decisions at Work,” Journal of Applied Psychology
95, no. 1 (2010): 1-31; J.M. Robbins, M.T. Ford, and L.E. Tetrick,
“Perceived Unfairness and Employee Health: A Meta-Analytic
Integration,” Journal of Applied Psychology 97, no. 2 (March 2012):
235-272; and L.M. Cortina, D. Kabat-Farr, V.J. Magley, et al., “Researching
Rudeness: The Past, Present, and Future of the Science of Incivility,”
Journal of Organizational Health Psychology 22, no. 3 (July 2017):
299-313. Research on rudeness and incivility is explicitly framed in terms
of violations of norms of respect, see LM Andersson and CM Porath, 1999,
” Tit for Tat? The Spiraling Effect of Incivility in the Workplace,” Academy
of Management Review, 24(3): 454. Other research has established that the
components of toxic culture are correlated with one another. In a recent
meta-analysis of 105 articles on incivility, Yao et al. ran a confirmatory
factor analysis based on their meta-analytic correlations, and identified
a single latent factor with incivility loading at 0.82, abusive supervision
(0.63), sexual harassment (0.51), and undermining (which we call
cutthroat at 0.50). J Yao et al., 2022, “Experienced Incivility in the
Workplace: A Meta-Analytical Review of Its Construct Validity and
Nomological Network,” Journal of Applied Psychology, 107(2): 193-220.
8.8. Robbins, Ford, and Tetrick, “Perceived Unfairness and Employee
Health,” table 5 for U.S. employees.
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9.9. J. Goh, J. Pfeffer, and S. Zenios, “The Relationship Between Workplace
Stressors and Mortality and Health Costs in the United States,”
Management Science 62, no. 2 (February 2016): 608-628, table 3. Estimate
based on odds ratio for self-reported physical illness and physician-
diagnosed physical disease for an unfair workplace culture.
10.10. A.C. Enthoven, “Employer Self-Funded Health Insurance Is Taking
Us in the Wrong Direction,” Health Affairs, Aug. 13, 2021,
www.healthaffairs.org.
11.11. Goh, Pfeffer, and Zenios, “The Relationship Between Workplace
Stressors,” table 7.
12.12. “The High Cost of a Toxic Workplace Culture,” Society for Human
Resource Management, September 2019.
13.13. Estimated cost of replacing an individual employee includes direct
costs (recruiting, signing bonus, background checks) and indirect costs
(time required for a new employee to achieve full productivity, knowledge
lost when seasoned employees walk out the door), from V. Gandhi and
J. Robison, “The ‘Great Resignation’ Is Really the ‘Great Discontent,'”
Gallup, July 22, 2021, www.gallup.com.
14.14. “Mission & Culture Survey 2019,” PDF file (Mill Valley, California:
Glassdoor, 2019), www.glassdoor.com. This survey of 2,025 U.S. adults
was conducted by The Harris Poll in June 2019.
15.15. In a separate study, Jason Sockin found that a workplace characterized
by disrespect and abuse was the strongest predictor of an employer’s
overall rating and its culture and values rating on Glassdoor out of 48
features. See J. Sockin, “Show Me the Amenity: Are Higher-Paying Firms
Better All Around?” working paper, University of Pennsylvania,
Philadelphia, November 2021, table 5.
16.16. Gallup estimates that actively disengaged employees are looking for
another job, and their lower productivity costs their employer 18% of their
salary each year. See: Gandhi and Robison, “The ‘Great Resignation’ Is
Really the ‘Great Discontent.'”
17.17. In a survey of 800 managers and employees who experienced incivility
in their workplace, nearly half reported that they decreased their work
effort and spent less time at work. See C. Porath and C. Pearson, “The
Price of Incivility,” Harvard Business Review 91, no. 1-2 (January-
February 2013): 114-121.
18.18. J.R. Graham, C.R. Harvey, J. Popadak, et al., “Corporate Culture:
Evidence From the Field,” working paper 23255, National Bureau of
Economic Research, Cambridge, Massachusetts, March 2017.
19.19. E. Flitter, “The Price of Wells Fargo’s Fake Account Scandal Grows by
$3 Billion,” The New York Times, Feb. 21, 2020, www.nytimes.com; and
“Harris Poll: Corporate Reputation Politically Polarized as Companies
Wrestle With Taking a Stand for Their Values,” The Harris Poll, Feb. 9,
2017, https://theharrispoll.com.
20.20. Both current and former employees write Glassdoor reviews. In our
sample, 10.4% of current employees and 16% of former employees
mentioned one or more elements of a toxic culture in their reviews. Our
findings are in line with other estimates of the prevalence of toxic
workplaces in U.S. employers. A comprehensive study found that 13% of
U.S. employees encountered workplace aggression on a weekly basis. See
A.C.H. Schat, M.R. Frone, and E.K. Kelloway, “Prevalence of Workplace
Aggression in the U.S. Workforce: Findings From a National Study,” in
“Handbook of Workplace Violence,” eds. E.K. Kelloway, J. Barling, and
J.J. Hurrell (Thousand Oaks, California: Sage, 2006), 47-89. In a Gallup
poll, 6% of U.S. and Canadian employees reported that they had been
disrespected in the previous 24-hour period. See “State of the Global
Workplace: 2021 Report” (Washington, D.C.: Gallup, 2021), 36. A 2019
survey conducted by the Society for Human Resource Management found
that 20% of employees had left a job in the preceding five years. See “The
High Cost of a Toxic Workplace Culture,” Society for Human Resource
Management, September 2019.
21.21. The average number of employees in the Culture 500 companies is
64,176, which is very close to 60,629, the average number of employees
in the Fortune 500 in 2019. See “New American Fortune 500 in 2019:
Top American Companies and Their Immigrant Roots,” New American
Economy, July 22, 2019, https://data.newamericaneconomy.org.
ii.. Sull, Sull, and Zweig, “Toxic Culture.”
iiii.. “The High Cost of a Toxic Workplace Culture,” Society for Human
Resource Management, September 2019.
iiiiii.. Gandhi and Robison, “The ‘Great Resignation’ Is Really the ‘Great
Discontent.'”
iivv.. “Mission & Culture Survey 2019,” Glassdoor.
vv.. Gandhi and Robison, “The ‘Great Resignation.'”
vvii.. Porath and Pearson, “The Price of Incivility.”
vviiii.. Goh, Pfeffer, and Zenios, “The Relationship Between Workplace
Stressors,” 608-628.
vviiiiii.. Ibid.
ix.ix. Graham, et al., “Corporate Culture: Evidence From the Field.”
x.x. L. Guiso, P. Sapienza, and L. Zingales, “The Value of Corporate Culture.”
Journal of Financial Economics 117, no. 1 (July 2015): 60-76.
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The Toxic Five
Five attributes disrespectful, noninclusive, unethical, cutthroat, and abusive have by far the largest negative impact on how
employees rate their company’s culture in Glassdoor reviews. Each bar represents the marginal impact a negative mention of a
topic had on an employee’s rating of their organization’s culture. If an employee says they feel disrespected in their review, for
example, their culture rating will be 0.66 lower on a five-point scale on average, all else being equal.
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The Organizational Costs of Toxic Culture
Employee attrition is higher
A toxic corporate culture was 10 times more predictive of attrition than compensation during the first six months of the Great
Resignation.
i
Twenty percent of employees have left a job because of its culture.
ii
Replacing an employee can cost companies up to twice the employee’s annual salary.
iii
A poor employer brand makes it harder to attract talent
A toxic culture is the strongest predictor of a negative Glassdoor review.
Seventy-three percent of U.S. job seekers apply to a company only if its corporate culture aligns with their personal values.
iv
Employees are disengaged and less productive
Three-quarters of the most disengaged employees are looking for a job; this loss of productivity costs companies up to 18% of
the employee’s salary each year.
v
Nearly half of employees who experienced incivility at work decreased their effort and time spent at work.
vi
Higher health care costs hurt the employer’s bottom line
Employees who view their workplace as unfair are 35% to 55% more likely to suffer from major disease.
vii
Incremental health care costs from toxic workforces were $16 billion in the U.S. in 2008.
viii
Risk of reputational damage and legal liability is higher
Eighty-five percent of CEOs and CFOs believe a toxic corporate culture could lead to unethical or illegal behavior.
ix
Low corporate integrity is associated with lower financial value.
x
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Thanks for answering the following questions
1) why management must worry about toxic leadership in its ranks
2) why do management teams with good, capable employees follow their toxic leadership?
3) How can the governing board take responsibility for toxic culture?
