Impact of Company Culture: Positive Examples and Negative Signs

In the dynamic landscape of today’s business world, the influence of company culture cannot be overstated. In fact, recent statistics from breatheHR have sounded a stark alarm, revealing that a staggering one-third (34%) of British employees choose to walk away from their jobs due to the dire consequences of a toxic workplace culture. It’s a sobering realisation that underscores the undeniable truth: poor corporate culture is not just detrimental but can be devastating to a company’s success.

Although, this alarming figure isn’t isolated incidents; they form part of a broader trend. A shocking three-quarters (75%) of employees across various industries confess to having personally endured a toxic workplace culture. The repercussions of such an environment are profound, impacting employee morale, productivity, and ultimately, a company’s bottom line. We delve deep into the intricacies of company culture, explore its effects on both businesses and employees and provide insights into what the difference between good and bad culture looks like.

The Importance of Company Culture

Simply defined, company culture is the environment in which your employees operate. It is one of the main factors that make your business what it is, as it focuses primarily on the employees. And what is a business without employees?

All businesses have a company culture which scales along with your business. Defining and nurturing the culture you want from the start is crucial in ensuring you attract the right kind of audience — from potential employees to clients. It also counts towards creating a healthy work-life balance for your employees.

Startups are fantastic environments for attracting new talent. They welcome ambitious millennials keen to swim in the deep end and hear the CEO sitting next to them debate decisions. They welcome experienced professionals eager for the rollercoaster of challenges of what really could be the ‘next big thing’.

But startups are wired to grow quickly. Their ambition is to scale up and streamline existing workflows. But when the focus is on year-on-year revenue stats, it’s not uncommon for the people actually driving the growth to be overlooked. This could lead to employees feeling neglected and, eventually leaving, damaging your employee retention rates. This is a fundamental symptom of bad company culture which, as we’ll come to see, can seriously impact your bottom line.

The significance of culture in today’s business ecosystem

So, in today’s rapidly evolving business landscape, success extends beyond balance sheets and profit margins. Good company culture is a pivotal force that shapes the very core of an organisation. The significance of a healthy and vibrant company culture cannot be overstated and here’s why:

• Employee engagement and retention: A positive culture fosters engagement, loyalty and a sense of belonging amongst employees. It also helps attract and retain top talent, reducing the costly cycle of turnover.
• Productivity and innovation: Good team culture encourages open communication and creativity which allows employees to feel empowered to think outside of the box, leading to more original and breakthrough ideas.
• Reputation and brand image: A company with a strong and positive culture is more likely to be seen as an employer of choice and therefore more susceptible to finding the best talent on the market. A study by WorkBuzz’s State of Employee Engagement Report 2022 found that almost half (45%) of UK employees rank “a great culture” as the most important factor when looking for a new job, so it’s a key factor in the decision-making process.
• Business performance: Perhaps most importantly, there is a direct correlation between poor company culture and business performance. Companies with a healthy culture are more adaptable to market changes, experience lower turnover costs and have higher levels of customer satisfaction rates.

Spotting the Warning Signs: Symptoms of Bad Corporate Culture 

Recognising the signs of a deteriorating or negative company culture often involves paying close attention to subtle but telling indicators. These signs may include a decline in employee enthusiasm and engagement, increased absenteeism, a lack of transparency in communication, poor leadership, fear of retaliation, a rise in workplace conflicts and a general atmosphere of mistrust. They’re easy to spot when you know what you’re looking for.

A good example of poor company culture in action is if employees frequently voice concerns about unfair treatment or unethical practices and no steps are taken to resolve the issues - alarm bells should start ringing.

Monitoring employee feedback through surveys, conducting regular one-to-one meetings and actively seeking input from various levels of the company can help uncover these warning signs early. This allows leaders to take corrective actions and nurture a healthier work environment.

A deep dive into bad company culture examples

A bad company culture breeds presenteeism, burnout and high turnover. While these may sound a bit like buzzwords, they’re poisonous symptoms of poor company culture - and it’s essential that every CEO, founder and manager actively avoid them.

Not only can they create toxic work environments, but they’ll push your top talent out the door. Here are some of the prime symptoms explained:

• Presenteeism is turning up to work for more hours than required. For some business leaders, that might sound like real dedication. But regularly getting in early and leaving long after contracted hours can be a sign that your employees are trying to overprice their abilities or — worse — trying to overcompensate for imposter syndrome.
  This culture of needing to “show face” could be blamed for the general decrease in sickness-related absence days throughout the pandemic. However, it’s been theorised that the findings point to a larger issue of presenteeism, whereby employees continue working despite feeling unwell. A June 2020 study by Canada Life UK backed this theory, reporting that 46% of employees felt pressure to be ‘present’ during lockdown.
• Imposter syndrome is believing you got a job out of sheer luck and you’re anxiously waiting for someone to realise, tap you on the shoulder and say: “You don’t really know what you’re doing, do you?”
  Employers can unwittingly worsen this in their employees by setting unrealistic targets and a “never let them see you sweat” mentality.
• Burnout is the result of excessive, prolonged, work-related stress. Symptoms include poor performance, low levels of creativity, nausea or headaches, exhaustion and workplace insecurity. Employees experiencing burnout have usually overworked themselves due to the pressure to perform or may not have had a support system to help them cope effectively with workplace stress.

 In a Digital Detox survey by Just Eat for Business, it was found that 43% of UK workers polled admitted to sometimes feeling the effects of burnout, showing that it is an issue that all management teams need to address. The effects of burnout can be so severe that, if left unnoticed, it can cost the business - research by Deloitte revealed that the cost of poor mental health to employers reached a massive £56 billion in 2020-2021.

Naturally, employees can’t thrive in an environment of poor company culture and will leave in search of a more supportive environment.

What are company culture examples?

As mentioned, company culture is what makes your business tick. While you might think it covers perks and benefits, such as free health insurance, work drinks and snacks and refreshments, the culture actually goes well beyond that. And if there are signs of bad company culture, there are signs you can look out for to see if you have a healthy one too.

Company culture can include your employees feeling comfortable to:

• Take a full hour for lunch
• Share personal issues with colleagues
• Say: “No”
• Speak openly about their mental health
• Stand up for themselves
• Feel excited about career progression
• Feel safe enough to fail on occasion
• Say: “I don’t know how to do that”
• Take time off
• Make the most of flexi-time

As a startup grows and scales, it can be easy to forget about the all-important company culture. In this case, employees can find themselves working under extreme pressure to reach mounting deadlines. If this isn’t caught early, it can create unrealistic expectations and toxic attitudes amongst teams.

The Cost of Poor Work Culture

Neglecting company culture can have significant costs and consequences for organisations. Toxic corporate culture often leads to a loss of talent, low productivity and worse. Other repercussions of toxic corporate culture examples include:

• Increased employee turnover: A toxic company culture can lead to higher employee turnover rates and the cost of recruiting, onboarding, and training new employees can be substantial for businesses. It is estimated that to replace a salaried employee it can cost between 6-9 months’ salary - for mid-range positions you can expect to pay around 20% of the employee's salary and for executive positions you can expect to pay a whopping 213%.
• Reduced productivity: Whether it’s a toxic leader, excessive workloads or office gossip, a poor work environment can lead to decreased employee morale and engagement, resulting in lower productivity levels.
• Higher absenteeism: Unhealthy work environments can lead to increased absenteeism as employees may take more sick days due to stress-related illnesses. This can disrupt operations, lead to missed deadlines and increase costs for covering absent employees as a result. This costs the UK economy £28 billion due to the loss of working days because of stress, burnout and poor mental health.
• Legal costs: In extreme cases, legal costs can rack up. Neglecting issues like harassment or discrimination within the workplace can lead to legal action against the company. Legal fees, settlements and damage to the company’s reputation can be costly.

In business, time is one of the most valuable currencies a company has. So, when days are lost to onboarding replacements, low morale, and stress-related illnesses, that’s valuable money lost that could be funnelled into the growth of your business. Taking steps to improve your work culture is a wise business investment as it can help you compete better in your industry and save money in the long run.

How to Avoid Creating a Bad Company Culture

Create a company culture where it’s okay to say ‘no’

If your employees are feeling insecure, they’re likely to say yes to every extra task that comes their way, even if it means staying late — and especially if they don’t know that saying no is an option.

As a manager, you can lead by example here. When you’re open about pushing back on your workload without having your employees fill in the gaps, they can stop comparing their behind-the-scenes stress to your productive highlight reel.

When they’re given any extra work, allow them the freedom to say: “My current priorities are XYZ, which would you like me to deprioritise to fit your new tasks in?”

Offer clear expectations

In startups, it’s common to have one-man-band departments. Ensure you’re clear with how you measure success in their role and be realistic with them. A lack of clarity combined with unmanageable workloads can lead to burnout, as it runs the risk of keeping employees behind to stay late to meet difficult demands.

Remember, you want to encourage sustainable growth — not firecracker growth that shoots up to the sky, shines brightly, and then dissolves.

Build a company culture that doesn’t punish failure

Everybody knows that failure is part and parcel of success. No great thing ever prospered without its fair share of setbacks — and not just in the world of startups.

The French state railway ordered $15bn worth of trains that were too wide for hundreds of platforms. George Bell could have bought Google for $1m in 1999 but said no — it’s now valued at $1420 bn.

Create an environment where sharing failure is just as important as sharing success. After all, learning from your mistakes is crucial to the success of your business.

Introduce a well-being offering

Your well-being offering should be less of a perk and more of a necessity. The next generation of workers, Gen Z, can spot tokenism when it sees it, so try to think beyond free fruit and a kettle for hot drinks.

Rather than piecing together a package and hoping it lives up to employee expectations, consider asking your teams to help you design the well-being offering that will suit them the most. Ask what they expect, what they value the most and look at how to alleviate jobs that give them the most stress.

Remember, workplace well-being is a combination of financial, physical, and mental. Offerings can even include budgeting support and financial planning. For a bit of inspiration, take a look at how these office spaces can boost employee well-being.

Make company culture everyone’s responsibility

A common bad company culture example is when an “us-versus-them” mentality begins to form. In this, the more junior employees may feel disconnected from senior team leaders — even in startups that say they have no hierarchy.

Giving your employees accountability also gives them agency. If they’re responsible for contributing to the company culture by helping others, cheerleading their teams and boosting morale, they become a part of the solution and will be more willing to take positive steps.

Even in hybrid working arrangements, creating a company culture is easy. By keeping your employees a number-one priority and being intentional about connecting in person with face-to-face meetings, you can easily nurture positive relationships and confident teams that are happy at work.

Great Company Culture Can Boost Business Success

By successfully increasing employee engagement, well-being, and job satisfaction, you’ll also be improving your bottom line. A recent study found that 69% of organisations that adapted the business during the pandemic found that the company culture offered a competitive advantage. A further 72% reported that the culture was behind the success of changing initiatives.

Taking the time out to establish your company culture - and continually working on improving and adapting it - can work wonders for your employees and business.

Knight Frank’s Contribution to a Successful Corporate Culture

The relationship between the workspace and company culture is a dynamic interplay that can significantly influence the success and overall well-being of any company or organisation. The right office space has the power to negate negative workplace culture and instead foster an environment where employees thrive, collaborate, and innovate. At Knight Frank, we understand the profound impact of workspace on culture and are dedicated to shaping office environments that drive change.

Encourage collaboration and connectivity

 A thoughtfully designed workspace can break down silos and encourage open communication among employees. Collaborative spaces, comfortable meeting rooms and communal areas become hubs for interaction. This further promotes teamwork, knowledge sharing and a sense of belonging, ultimately shaping a culture of unity and cooperation. A study found that companies that prioritised collaborative working were 5 times as likely to be high-performing.

Improve flexibility and adaptability

Today’s workforce seeks flexibility in how and where they work. Knight Frank’s expertise lies in creating flexible workspaces that accommodate different workstyles and preferences. This adaptability encourages a culture of trust, where employees have the autonomy to manage their time and tasks efficiently.

Drive innovation and creativity

Innovative workspaces can spark creativity and inspire new ideas. That’s why Knight Frank specialises in integrating fresh design concepts, promoting a culture of experimentation and forward-thinking.

Support well-being and productivity

An office space that prioritises comfort, natural light and ergonomic design promotes physical and mental health. Employees who feel valued and cared for are more engaged and productive, leading to a culture of vitality and achievement.

Reflect company values

The physical workspace is a tangible representation of a company’s values and identity. At Knight Frank, we collaborate with organisations to align their office designs with their core principles. A workspace that reflects these values reinforces a culture of integrity and purpose.

Boost your company culture with your dream office space