A new report has revealed the damaging effects of toxic company culture.

Called ‘The Culture Economy”, and produced by breatheHR, the report claims that culture has a clear impact not just on business success, but on the wider economy and reveals that poor company culture costs a staggering £23.6bn per year.

Not only is it costing the economy, its also costing people their jobs. The report found that a third (34%) of British employees quit due to bad workplace culture.

Despite this, over half (60%) of SME leaders consider company culture as a ‘nice to have’ in their business. This should be higher; as the report found that establishing a positive culture is key to the company’s success, in terms of health and productivity.

According to the the HSE Health and Work Strategy work-related stress is the second greatest cause of 45% of lost working days.

Yet a large chunk (75%) of SME decision makers are satisfied with their business productivity and one in five (22%) don’t measure business productivity at all.

Jonathan Richards, CEO and founder, at breatheHR commented on the importance of productivity: “Culture isn’t a soft option. It has a clear impact not just on business success, but on the economy and our society. This includes productivity.

“However, one way to boost productivity levels is improving management quality and giving employees autonomy and purpose, as our report reveals. All of which validates the fact that businesses are now operating in a culture economy, and small businesses who fail to realise this won’t last long,” he added.

So, what contributes to negative company culture?

A lack of trust is a key factor. The report found that 53% of employees who distrust their senior management, think their bosses ‘don’t appear to know what they were doing’.

Other reasons for distrust in management include: they’re not transparent (45%), they play too much office politics (41%) and are self-centred (41%).

Emma Jones, Founder at Enterprise Nation, summarised the report: “The call is clear. Company culture is as important as business strategy when it comes to growth and long-term success.”

A percentage of SME decision makers understand the importance of positive culture, stating that it leads to: improved morale and relationships (50%); employees going the extra mile (44%); better customer service and satisfaction (43%); improved individual performance and productivity (43%) and reduced employee turnover (35%).

To measure ‘culture’, this report looked into issues such as psychology, employee engagement, productivity, health and wellbeing, personal development, together with business purpose and values.

They interviewed a range of SME leaders, including Lars Jörnow, partner at EQT Ventures; Danny McCubbin, culture manager at Jamie Oliver Ltd; and Jess Gilbert, head of engineering at Masabi.

Oliver said that “people have found their voice” and they expect to be able to exercise that voice within their workplace.

This is a positive and crucial trend; people need to speak up if they can pursue change. And change is definitely needed. The report found that 69% of working women, who don’t trust the management of their companies, say its because they don’t feel supported by them – compared to 50% for men.

At the same time, one in five (19%) women say they are overlooked for promotion.

Trust is important, as is diversity, the report states. “If your workforce does not reflect your operating environment, it’s unlikely you’ll be able to anticipate and respond to the changing needs of different communities and audience segments to the detriment of your innovation pipeline and long-term success.” 

On a more positive note, three-quarters (76%) of the UK workforce are engaged and focused at work, compared to 8% who admit they aren’t.

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