Culture is critical for your business's long-term growth and profitability.
Ultimately, businesses with strong company culture perform better than companies without it -- for instance, organizations with deliberately developed company cultures experience a 14% turnover rate, compared to a 48% turnover rate at companies without strong culture.
Those same culture-strong businesses also see a 19% increase in operating income, as well as a 28% boost in earnings growth.
Many organizations might look at high turnover rates and believe that the issue is their workforce quality. However, that is not the real cause of turnover rates. High turnover rates, as well as other operational issues, are often reflective of bad company culture.
To fix an organization's culture, you must start at the top -- which is why I've cultivated this list of the seven ways corporate leaders unwittingly erode trust and create a toxic company culture. Keep reading to make sure you're not accidentally making one of these grave mistakes.
1. Allowing "helpfulness" to go awry.
No one likes being micromanaged. It clearly implies a lack of trust.
Sometimes, managers nitpick every task and assume they're assuring success -- but, instead, all they're doing is aggravating their employees.
Additionally, those managers have created an opportunity for team members to simply follow directions, contribute the bare minimum, and collect a paycheck.
"In an environment of trust, employees have the freedom to explore, innovate, create, stretch, and yes, sometimes make mistakes," says Bob Whipple of Leadergrow Incorporated.
"These mistakes can be thought of as waste, but enlightened leaders think of them simply as learning opportunities."
Instead of detailing how every assignment should be completed, managers should establish clear goals and ensure employee preparedness to undertake the job at hand. Managers should express trust, encourage creativity, and push for safe, thoughtful risk-taking.
2. Encouraging hasty hiring.
A bad hire is literally no good for a company. Few veteran staff members are going to want to work longer or harder to carry a bad hire's dead weight, and few established teams want to adopt a new member who doesn't add value or mesh well with the culture.
Additionally, a bad hire could lead to lost revenue, or a bad reputation with certain customers.
While it might be tempting to cut corners when recruiting for positions that must be filled quickly, it's never a good idea. There's far too much at stake.
"A comprehensive company-wide background screening policy can help to mitigate this risk by verifying the information that candidates provide before hiring, rather than finding out about issues afterwards," says Scott Girdler of HireRight.
When screening for future employees, always do so in a way that correlates to their prospective duties and responsibilities.
3. Showing blatant favoritism.
Awarding a favorite employee with promotions and bonuses.
Ignoring when a certain high-performing employee breaks dress code.
Looking the other way when that golden team member keeps irregular hours.
Ultimately, this kind of behavior is frustrating to other employees, and leaves them feeling neglected and unmotivated. It can also lead to lawsuits.
Humans are innately biased, so leadership and organizations as a whole must adopt more awareness when making decisions. The best way to avoid inherent biases is by practicing decision making across multiple, diverse leaders instead of leaving those choices to a single supervisor.
4. Bucking the spirit of teamwork.
A company's leadership may often mistake cooperation with collaboration -- a big no-no.
Whereas cooperation involves individuals working independently alongside each other, collaboration involves collective work.
Cooperation leads to individual achievement, which can breed competition and contempt.
Collaboration, on the other hand, creates a culture of sharing where individual success is reliant on group success.
Building a collaborative spirit starts with creating optimized communications. "Having a central place for teams to collaborate, brainstorm, exchange ideas and keep track of progress is absolutely crucial," shares Raphaela Brandner of MeisterTask. Nothing builds more trust, camaraderie and a shared sense of purpose than supporting open exchange among team members.
5. Encouraging gossip.
Gossip is simply an element of the human experience -- but its one that managers frequently ignore.
Additionally, depending on the gossip, and whether it is about personal matters or the company itself, some managers may even engage in it.
A certain amount of gossip is always going to exist. However, what lies at the heart of rampant gossip in the workplace is the desire to know exactly what is going on. Leadership should curb gossip whenever possible by making sure to disseminate and broadcast information thoroughly and effectively.
For example, managers can prevent rumors of layoffs by being frank and open about potential downsizing.
If certain employees are at the root of the workplace gossip machine, employ coaching, progressive discipline, and warnings to stop the behavior.
6. Sending mixed messages with employee recognition.
If an employee excels in an organization by operating outside of what the company culture prescribes, then that behavior is what will truly define the company culture.
"Boards and compensation committees need a complete picture of the relationship between compensation as it relates to corporate culture,” says Pearl Meyer’s David Swinford. "One that includes both financial and non-financial rewards, and that goes beyond the board's statutorily-defined responsibility for oversight and compensation of talent."
It is paramount to define compensation, accolades and recognition based upon long-term business and leadership strategies throughout the organization.
7. Putting up with bad behavior.
Company leaders often believe that tolerating certain behaviors is part and parcel of being open-minded and promoting diversity. Again, this is a misconception. Whatever a manager tolerates will ultimately determine the company culture.
Micromanaging, rewarding bad behavior, favoritism, and gossip -- if you tolerate it, it will take root and proliferate.
Confronting and eliminating bad behavior may be the most difficult aspect of leading a workforce team because it involves having hard, honest conversations. But those difficult conversations are necessary because there is much more at stake than being uncomfortable.
Don't take the easy way out by saying nothing. Speak up, act, and promote the culture you want your organization to develop and maintain.
Take a look at The Ultimate Guide to Company Culture to learn more about different types of cultures, and get ideas to improve your own workplace culture today.