What's the impact of negative workplace culture?

We all know that negative company culture has implications for people and for SMEs. But what is the impact of operating within a toxic workplace culture? 

A positive company culture has been shown to increase productivity, improve business agility, offer better employee engagement, drive organisational purpose and improve results, which combine to deliver a clear competitive advantage.

But, workplace culture has a much wider remit than that, with the potential to impact positively on local communities and beyond. 

In this blog, we take a look at the far-reaching impact of negative workplace culture. Let’s start with a quick recap on what negative workplace culture looks like.

What's the definition of negative workplace culture?

A negative workplace culture generally consists of poor communication, an unsupportive environment, a competitive 'everyone for themselves' mindset (the opposite of a people-first approach).

Toxic environments foster & encourage unhealthy working practices, (such as working through lunch, or working long hours to be seen to be efficient - even when research shows it's not productive). 

A negative work environment is one where bullying and harassment behaviours can thrive. 

What are the causes of a negative company culture?

Poor company culture can be caused by a number of factors. It usually happens because leaders have created an environment where communication is poor, there is a focus on profit (not on employees) and hyper-competition, micromanagement or bullying behaviour exist.

Consequences of negative culture include gossiping, lack of trust, low employee engagement & morale, as well as higher rates of absenteeism & presenteeism.

Businesses that operate in this way are likely to have a high employee turnover rate, little awareness of inclusivity or DEI practices, and are less likely to listen to feedback from their team. 

The spotlight on negative workplace culture

Negative workplace culture isn’t something that's easily contained. It spills out into employee's lives, with a much wider impact. Here’s how:

Economic & environmental costs

Poor economic performance has huge implications for everyone. In an increasingly competitive global market, businesses not fulfilling their potential are in danger of going to the wall. This has an effect on jobs and consumer spending. A downward spiral of poor economic performance can end in recession. It’s a problem that goes further than the businesses it closes.

On the plus side, corporate social responsibility (CSR) and environmental, social and governance (ESG) policies are examples of growing aspect of positive company culture, which has far-reaching effects on the world around us.

Contagion

Toxic cultures infect others. When a toxic culture causes a business to close (or lose customers/staff/clients), this has ramifications for other businesses in the supply chain.

People that work in a toxic environment often carry this with them - or sadly, in some cases, this might be the only work culture they've ever known. This can often manifest as micromanagement, or poor leadership behaviour (that then perpetuates more negative culture filtering down- sigh). 

Trust

Poor company culture promotes unethical behaviour both inside and out of the workplace. Unethical behaviour destroys trust. Disengaged employees also develop a lack of trust. When this behaviour spills into life outside of work it has implications for the kind of community we live in.

A lack of empathy and trust in society fuels a culture of division and fear. A decade ago, former US President, Barack Obama, said “The biggest deficit we have in our society and world right now is an empathy deficit. We are in great need of people being able to stand in somebody else’s shoes and see the world through their eyes.”

It is positive company culture that will help us to do this, not negative. Businesses have a responsibility, just like individuals, to pursue the best for the society and environment we live in. A lack of trust creates barriers within a business and beyond it.

Wellbeing & health costs

Employee health is probably one of the most concerning aspects of a negative company culture. A negative vibe in the workplace can lead to poor mental health outcomes. In fact, harassment and conflict at work can have a detrimental effect on our physical and emotional wellbeing, as well as our mental health. This has implications for business productivity, employee relations, family dynamics and society as a whole.

The cost of poor mental health to UK employers was estimated at £56 billion per year in 2023, according to New Leaf Health. In addition, there are cost implications for the NHS. This doesn’t just affect business, it has implications for the economy as a whole.

The first edition of Breathe's People First Culture Series focuses on the types of wellbeing support SME employees actually want. Read the research to find out more. 

Societal happiness and relationships

How we think, feel and behave has an impact on those around us. Poor culture has a huge effect on how employees feel at work. It also bleeds into how people feel when they are not at work.

People don’t just 'switch on' happiness when they get home after a bad day at the office. Spending all day in a negative environment has implications for our level of happiness outside of work. 

Breathe's core value from the outset has always been 'people first'. This manifests in everything we do - it's how we treat our customers, stakeholders & each other. The impact of putting people first is far-reaching and a hugely positive cycle.

In the words of Richard Branson; "Clients don't come first - employees come first. If you take care of your employees, they will take care of the clients."

Co-creating a positive culture in your small business

Negative workplace culture  can create unhappy, burned-out and depressed people. The impacts of negative company culture on productivity, employee engagement and overall business success are plain to see. The link between business and a happier, more engaged society may be less obvious. 

SMEs sit at the heart of local communities across the UK. The social & economic challenges businesses face are many, but recognising the power of company culture to effect change isn’t just good for business - it's good for everyone. 

Download the research to discover the power of working with your team to co-create your SME's culture in our People First Culture Series, edition 4.