How to spot and fix a toxic culture before your top talent quits?

Every leader needs to learn to recognize, prevent and shift a toxic culture into a productive one to keep their key employees.

The main reason people leave organizations is toxic culture. Toxicity is not just annoying; it causes real damage in people’s physical and mental health and in business results. Leaders need to identify pockets of toxicity in their organization and address toxic behaviors to maintain (or regain) psychological safety. However, non-toxic is not enough. Transitioning to a growth culture boosts engagement, productivity and well-being of employees.
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Toxic culture is the key driver of resignation

The great attrition does not affect all companies the same. Researchers found big differences in resignation rates between organizations[i] – in the range between 2% to more than 30% across companies; and even in the same industry, the differences are significant (i. e. in media and entertainment, 6.2% in WB compared to 14.2% in Netflix) – and they set out to explore where these differences come from. It wasn’t the paycheck or the working conditions. The most important factor was the company culture. Toxic culture is the number one reason people leave an organization, followed by job insecurity and reorganization, high levels of innovation and a failure to recognize employee performance – all of which are far more important than compensation. High levels of innovation as a resignation predictor might sound surprising – but in the companies with high level of innovation, workers generally also spoke negatively about work-life balance and their workload. Fast paced companies are attractive but working there long term is not sustainable for most people.

Short term steps to increase Retention

There are a few short term steps companies can take to keep their people, like offering lateral career opportunities, remote work arrangements, company-sponsored social events and offering predictable work-schedules, and higher pay. However, if nothing changes about the culture, the best people will inevitably leave.

Every leader needs to worry about toxic culture

Toxic means poisonous and “causing unpleasant feelings, harmful and malicious”. Toxicity isn’t merely annoying, it inflicts real damage to people’s dignity, self-worth, and both physical and mental health, driving stress, anxiety, and burnout[ii], as well as increasing their odds of suffering a major illness, such as coronary disease, asthma, diabetes and arthritis[iii]. Your boss might have a bigger impact on your health than your doctor! Sick leave is usually also at least in part employer’s cost, that flows directly into the organizational bottom line. If psychological safety is necessary for people to thrive in the workplace, toxicity is a direct opposite of that, thus influencing worker’s productivity and engagement[iv].

It is not something we can “leave at the office”, it seeps into the private lives of the people, damaging their relationships, casting a shadow on their family and thus reaches far beyond the workspace.

Culture comes from the top

Toxicity is not somebody else’s problem. Unfortunately, it is widely spread – 10% of all Americans mentioned one or more elements of a toxic culture in their Glassdoor reviews between 2016 and 2020. Even in companies with highest Glassdoor ratings, there might be people of minorities who experience the culture as toxic, and in most large organizations, distinctive microcultures exist within the same company, so even the best cultures often contain pockets of toxicity. That means in an average US company about 6000 employees feel like getting punched in the stomach every time they pull over at the company parking lot. Some behaviors we see in organizations are quickly and easily observable, like harassment and bullying. However, toxic culture is not always visible to the unaware eye. Some behaviors can easily go unnoticed if we are not directly affected by it, especially to the leadership. Leaders need to pay attention to all aspects of culture toxicity to be able to take preventive action. The top team has an enormous impact on an organization. When the CEO has served in the army, the company is 60 and 70% less likely to commit corporate fraud; whereas if the CEO has a traffic violation, it’s 25% more likely to do so. Culture change must come from the top.

Preventive action

What matters most is finding out about the pockets of toxicity and the specific toxic behaviors people engage in. The first thing a company needs to do to improve on their toxic culture is provide a safe way for workers to report these behaviors, a clear policy of accountability and carefully planned execution to fix the issue[v]. In toxic culture, people often fear retaliation and when trust in leadership is low, they don’t care to report as they know nothing will change. We need to make company culture a priority over the profits and the public image of power figures. As long as the boss gets away with harassing his secretary, or everyone conveniently ignores their top salesperson screaming and insulting sessions, nothing can change[vi].

Non-toxic is not enough – people need to feel safe

While discovering and managing the pockets of toxicity is a necessary part of deliberately developing company culture, it is not nearly enough to keep your top talent. Employees also care about being supported by their leaders, leaders living organization’s values, and yes, they care about benefits and perks, but they also care about learning and development opportunities, job security - and nobody ever has anything good to say about reorganization.

There is only one variable that all great, healthy cultures have in common: psychological safety[vii]. Workplaces should be places where people can grow and develop, where they are intrinsically motivated to contribute, where they are respected and valued and seen, even where they can belong, and work together for a higher cause. Our High Performing team program is built to boost psychological safety, and one of our coaches, Keith Webster, observed: “What we see/hear is that the teams/organisations that work with us become more engaged, aligned, they communicate and collaborate better and thus become stronger together.” These results show in the final evaluations, on Gallup’s Q12 culture survey, people’s comments, and other qualitative data and also in their business outcomes.

People spend almost a third of our waking hours at work. The quality of that time affects everything else in life. We in e2grow are on a mission to change the world by changing the world of work – and with enough leaders, independent and internal coaches on board, it’s becoming possible.

[i] Sull D., Sull C. and Zweig B. (2022): Toxic Culture Is Driving the Great Resignation, MIT Sloan Management Review, Jan. 11, 2022,

[ii] Robbins J., Ford M., and Tetrick L. E. (2011): Perceived Unfairness and Employee Health, Journal of Applied Psychology.

[iii] Goh J., Pfeffer J. and Zenios S. (2016): The Relationship Between Workplace Stressors and Mortality and Health Costs in the United States, Management Science 62(2).

[iv] Agovino T. (2019): The High Cost of a Toxic Workplace Culture, Society for Human Resource Management, September 2019.

[v] Perna M. C. (2022): Toxic Work Culture Is The #1 Factor Driving People To Resign, Forbes.

[vi] Tyalor S. G., Kluemper D. H., Bowler W. M. and Halbesleben R. B. (2019): Why People Get Away with Being Rude at Work, Harvard Business Review.

[vii] Edmondson A. (1999): Psychological Safety and Learning Behavior in Work Teams, Administrative Science Quarterly, 44(2).

Katarina Veselko
Featured e2grow partner
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