The underlying costs of having a bad company culture

Breathe, HR software provider for SMEs, reveals the cost of bad company culture: a staggering £15.7 billion per year.

Around 1 in 5 (21%) of SME employees quit their job due to poor company culture last year according to a new ‘The Culture Economy 2020 report.

The report found one-third (33%) of SME decision makers experienced or witnessed workplace bullying in the past year. In addition, 31% of business leader respondents experienced or handled harassment cases in the last year. Interestingly, most employees (57%) reported that senior management handled the situation poorly.

Despite this, the percentage of people quitting their jobs due to poor workplace culture is down 13% in comparison with data from 2018 – outlining businesses are making this more of a priority.

Company culture during a pandemic

The report details due to Covid-19’s widespread impact – whereby millions of British jobs could be axed and the majority of British workers are having to work from home – creating an engaged culture must remain front of mind for businesses alongside cashflow.

Jonathan Richards, CEO and co-founder at Breathe comments: “Although we’re seeing fewer people quit their jobs due to bad company culture than a couple of years ago, I urge SMEs not to take their focus off company culture right now. Given the current pandemic, employers cannot ignore culture problems if they want people to continue delivering for them.

“During these unprecedented times, your people need proper leadership, support and reassurance – if you want to achieve business continuity. Building and maintaining a positive culture is challenging enough in normal circumstances, so now more than ever it’s crucial to focus on keeping the culture alive across a remote workforce

Key findings

  • Harassment in the capital – almost half (48%) of London employees reported experiencing harassment in the last year, with 36% of Londoners admit to leaving a job because of the culture
    • This figure for bullying was highest among male respondents (24%), with London workers reporting highest cases of foul play among those surveyed (39%).
    • Employees: 21% witnessed bullying in the past year and a further 20% (1 in 5) were involved in harassment cases.
  • Trust in management is worryingly low – around 1 in 10 employees (13%) lack trust in company leaders, and of these 56% report they don’t feel adequately supported by management.
    • Only 15% of UK workers have a ‘lot’ of trust in their company leaders (down from 23% in 2018).
    • Of those who did not have trust in their management, over half (57%) said that they did not appear to know what they are doing followed by 56% who said that they did not feel supported by them.
  • Toxic culture fuels staff churn – women are more likely (23%) to leave a job due to culture than men (18%).
    • Generational split: the 18-34 cohort cited a far higher percentage of culture-related resignations (23.5%) in comparison to mature counterparts (aged 35+).
    • Interestingly those who quit their job due to toxic company culture was more common in the tech sector (36%) than any other.

Putting employees first

Jonathan Geldart, Director General, IoD explained: “We must be aware that as economies tighten, especially during these times of economic and health crisis, pressure and stress levels will rise and as a collective we need to make sure mental health is top priority, as well as treating others with respect. Bullying behaviour and harassment at their core cause deep unhappiness, and this unhappiness in a culture can make or break a business. It’s important we don’t lose sight of the necessity in keeping talented employees happy.”

Jonathan Richards added: “SMEs are uniquely placed to weather this health storm. We’re blessed with technology that can keep us connected and keep the community alive. Plus, our size, entrepreneurial spirit and nimble nature means we can pivot, adapt, and survive – as long as we continue to put our people first.”
Rate This: