It’s not money that’s driving the ‘big quit’ in which 4.3 million workers left their jobs in January, followed by another 4.4 million in February.
A major research project completed a few months ago makes this clear. The MIT Sloan Management Review studied 600 companies that had quit rates higher than their industry benchmark and assessed a large number of employee quits. A toxic company culture is 10 times more likely to predict revenue than salary.
Here’s what the researchers learned. Salary was the 16th most important factor in employee retention. A toxic corporate culture, which includes managerial mistreatment of workers, dishonesty and a lack of ethics, disrespect, bullying and abusive or harsh behavior, was 10 times more important than salary as a reason why the employees left their employer.
In addition to costing employees, research proves that a toxic culture reduces remaining employee engagement in the workplace by 20%. Not only is the big quit hampering many employers, but turnover contagion is on the rise, with employee quits inspiring co-worker quits.
Several other studies support the price employers pay for allowing disrespect and other forms of abuse. One of the most famous, documented by the Quality Management Institute and the Harvard Business Review, reveals:
• 80% of employees exposed to incivility spend time worrying about the incident and the rudeness of their colleagues;
• 78% of employees who are victims of incivility declare that their commitment to their employer has diminished;
• 66% said their performance at work had decreased;
• 63% lost work time by avoiding the offender;
• 48% intentionally reduced their work effort.
Employers who want to retain talent and achieve high performance need to fix their culture, instead of applying temporary band-aids in the form of raises and bonuses to ensure retention and boost productivity.
What can employers do? Many.
Take an honest look: You can’t fix a problem you won’t look at. Do you have a code of conduct that few people follow? Do you employ managers, supervisors or co-workers who overwhelm others? Are some of your top producers engaging in unethical behavior that you turn a blind eye to?
Leader Actions: As I wrote in my recent book, “Managing for Accountability: A Business Leader’s Toolbox,” leaders shape the culture of the organization and must follow their lead, modeling the ethics and behaviors that they want to see in their organization. If leaders want employees to work with honesty and commitment, leaders must demonstrate integrity and work ethics.
Intervene: Problems don’t get better when they are ignored. Pretending to respect, but ignoring managers or employees who deny the truth, bully, or advance through unethical treatment, much like ignoring mold in a refrigerator.
Mold is spreading and bad behavior drives good employees away. What would happen if you purged your worst bad actors? Some shrewd employers are taking action, like when Netflix fired 3 managers for insulting their colleagues on the company’s Slack channel.
Manage your organization: Leaders should invest in actions that create healthy places. This includes:
• Actively engage with their employees and solicit their feedback so that they can understand and act to address their employees’ concerns;
• Establish a corporate ethics policy;
• Train managers, supervisors and employees in effective communication and conflict management techniques so that problems can be resolved before they escalate;
• Reward good behavior and create organizational justice;
• Ensure harassment policies are up to date given the increase in cyberbullying that accompanies remote working.
The reward ? You will keep your best talent. You will become an employer of choice, able to attract other high performers, giving you a competitive advantage. And your leaders and employees will feel good going to work today and tomorrow.