It’s not the money driving the “great resignation” in which 4.3 million employees quit their jobs in January, followed by another 4.4 million in February.
A major research project completed a couple of months ago makes this clear. The MIT Sloan Management Review researched 600 companies that had higher quit rates than their sector benchmark and assessed vast numbers of employee resignations. A toxic company culture is 10 times more likely to predict turnover than pay.
Here’s what researchers learned. Pay was the 16th most important factor in employee retention. A toxic corporate culture, which includes poor managerial treatment of workers, dishonesty and a lack of ethics, disrespect, bullying, and abusive or cut-throat behavior, was 10 times more important than pay as a reason employees left employers.
In addition to costing employees, research proves a toxic culture decreases workplace engagement among remaining employees by 20%. Not only is the great resignation hamstringing many employers, but turnover contagion is on the rise, with employee resignations inspiring coworker resignations.
Multiple other studies corroborate the bottom-line price employers pay for allowing disrespect and other forms of bad treatment. One of the most famous, documented by the Quality Management Institute and the Harvard Business Review, reveals:
• 80% of employees exposed to incivility spent time worrying about the incident and their coworkers’ rudeness;
• 78% of employees experiencing incivility said their commitment to their employer declined;
• 66% said their work performance declined;
• 63% lost work time avoiding the offender;
• 48% intentionally decreased their work effort.
Employers that want to retain their talent and achieve high performance need to fix their culture, instead of applying temporary Band-Aids in the form of raises and bonuses to achieve retention and incentivize productivity.
What can employers do? Lots.
Take an honest look: You can’t fix a problem you won’t look at. Do you have a code of conduct that few follow? Do you employ managers, supervisors or coworkers who run roughshod over others? Do some of your top producers engage in unethical behavior to which you turn a blind eye?
Leader actions: As I wrote in my recent book, “Managing for Accountability: A Business Leader’s Toolbox,” leaders shape the organization’s culture and need to walk their talk, modeling the ethics and behaviors they want to see in their organization. If leaders want employees to work with honesty and commitment, leaders need to demonstrate integrity and work ethic.
Intervene: Problems don’t get better when they’re ignored. Giving lip service to respect but ignoring managers or employees who shave the truth, bully, or get ahead through unethical treatment works as well as ignoring mold in a refrigerator.
Mold spreads, and bad behavior drives out good employees. What would happen if you purged your worst bad actors? Some astute employers are taking action, as when Netflix fired 3 managers for trash-talking their colleagues on the company’s Slack channel.
Manage your organization: Leaders need to invest in the actions that create healthy places. This includes:
• Actively engaging with their employees and soliciting employee input so they can understand and act to address their employees’ concerns;
• Establishing a company ethics policy;
• Training managers, supervisors and employees in effective communication and conflict management skills so problems can be addressed before they fester;
• Rewarding good behavior and creating organizational justice;
• Ensuring harassment policies are up to date given the rise in cyberbullying that accompanies remote work.
The payoff? You’ll retain your best talent. You’ll become an employer of choice, able to attract other solid performers, giving you a competitive advantage. And your leaders and employees will feel good about going to work today and tomorrow.