Will Toxic Leaders Get Your Organization Cancelled?

BY Kathy Crosett
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Why are people leaving your company? Are they running for the exits because they found a better deal with a competitor? Or could a darker force be at work? A newly published study in the MIT Sloan Management Review by Donald Sull, Charles Sull and Ben Zweig points to one organizational element that drives departures and could get your organization cancelled. Let’s take a look at the data.

What Can Get Your Organization Cancelled?

The researchers reviewed millions of profiles of employees who left their positions during a six-​month period last year. These folks all worked for what was labeled the Culture 500, a sample of large, mainly for-​profit companies.

In the past year, we’ve heard about attrition rates soaring as high as 19%. Researchers verified this has happened, especially in apparel retailing. In internet-​related jobs, the attrition was 14%. However, in health systems, attrition rates came in at 6%, and for airlines, the rate was 5%.

Researchers went a step further and looked at the culture of specific companies in an industry. In the airline industry, for example, attrition ranged from a low of 3.6% at a company deemed to have a great culture versus 7.6% for a company with a culture that needs improvement.

It turns out a toxic culture has a huge impact on retention and whether your organization will get cancelled.

Employee Concerns and the Impact of Toxic Culture

These days, employees worry about whether they’ll lose their jobs or have to increase their workloads substantially because of negative economic conditions. More than one study, including our own research, has found that employees want to be recognized for the work they’re doing. When managers don’t take the time to reward and thank team members for a job well done, those team members feel slighted and will move on.

However, those cultural elements fade in comparison to a toxic culture. Researchers report, “A toxic culture is 10.4 times more likely to contribute to attrition than compensation.”  When company leaders exhibit “unethical behavior” or disrespect employees continuously, they can expect an outflow of talent.

In fact, the unethical behavior and employee mistreatment problems go far beyond losing employees. Leaders who allow these problems to continue also risk seeing their company get cancelled.  As Forrester states, when consumers cancel a company or brand, the result is: 

A widespread public campaign (often via social media) to hold a company accountable for the consequences of a perceived wrongdoing. This may include, among other things, calls for boycotts, terminations, and product changes.”

Improving Company Culture

It's not easy to rebound following cancellation. The process takes time. Your public relations and social media machines will have to work overtime to repair the damage. And you may need to engage in a very public firing of the offending employees.

Mostly importantly, you’ll want to avoid these situations in the future. Ask your team members to take psychometric assessments and use the results as you plan how to promote and retain employees. A great assessment platform doesn’t just return results. Using the data, you’ll see whether a current team member might display toxic tendencies in a managerial role. In addition, you’ll have insight into each individual’s mindset. With hard data at your fingertips, you won’t have to guess at how well an employee will do in a new position. And you can avoid promoting an individual into a role that might bring out negative leadership traits. Corporate leaders often think they understand their staff members; using assessment results will give you the data and certainty you need.

Photo by Nicola Barts from Pexels