More than 24 million Americans left their jobs between April and September of 2021 according to the U.S. Bureau of Labor Statistics ― an all-time record that no employer felt good about contributing to.
With all the talk about inflation and the competition for employees, one might think that the prospect of making more money has been the primary reason so many people have moved to new jobs.
Think again. According to a study conducted by MIT researchers, the top five predictors of attrition (employees leaving companies) were directly related to toxic workplaces.
Compensation ranked as the 16th predictor. It didn’t even crack the top 10. The MIT study analyzed 34 million online employee profiles to identify U.S. workers who left their employer for any reason — including quitting, retiring or even being laid off — between April and September 2021.
Researchers found that the “Great Resignation” affected blue-collar and white-collar sectors equally. The hardest hit industries included apparel, retail and specialty retail, and fast food. (I found it fascinating that management consulting had the second highest attrition rate while also employing the largest percentage of white-collar workers.)
While industry category explained some of the variation in attrition rates, companies known for having a healthy culture experienced less turnover than expected regardless of industry.
In fact, a toxic corporate culture was 10.4 times more powerful than compensation in predicting a company’s attrition rate against its industry peers.
Let that sink in a bit.
We’ve talked about the importance of having a good workplace culture countless times in this space. As HR professionals, we know how important culture is for recruiting, retention, performance and overall job satisfaction. This study affirms the powerful correlation between culture and attrition that we HR pros have seen for decades.
The study pointed to several factors that contributed to workplace toxicity: failure to promote diversity, equity, and inclusion; workers feeling disrespected; and unethical behavior. I’ll add a couple more: lack of empathy, harassment, and an unwillingness to terminate toxic employees.
So while companies were scrambling to increase pay rates and set up hybrid and remote work environments, they instead could have been investing in cleansing their toxic cultures — a move that likely would have paid off in more ways than just stopping employee turnover. Toxic cultures create a great deal of waste in terms of time, management resources and HR capacity.
A poor work environment hits employers directly where it hurts: their wallets. It is insanely expensive and drives down morale faster than a runaway train.
As I noted, the other factors noted in the study that contribute to attrition aren’t terribly removed from a poor culture:
- Job insecurity and reorganization: Good cultures tend to be more stable
- High levels of innovation: When innovation, speed and long hours are prized more than culture, turnover is inevitable
- Failure to recognize employee performance
- Poor response to COVID-19
Being a non-toxic company is one surefire way to slow down the churn of turnover. What can companies do? Of course, the best step is to not become toxic in the first place.
Changing a toxic culture is a long-term strategy that can be costly in terms of energy, time and money. It often involves bringing in new leadership and management, hiring HR consultants and improving communications, which includes having uncomfortable discussions with the workforce. It could also include updating or enforcing policies that have been overlooked.
The MIT study points out four key components to reduce turnover in the short term while the bigger toxicity issues are being dissected and improved. These are:
- Career pathing: Build opportunities for lateral job moves
- Social events: Company-organized events that bring people together to enjoy team building and make internal connections
- Remote work: Like it or not, it is here and still insanely popular
- Predictability: Make schedules more consistent for front-line employees
A healthy, productive company requires solid morale and a positive culture. Not only will it save hassles in the short term, it will protect the company in the long run from future challenges and events beyond our control. Culture is the glue that holds a company together as well as the fuel that powers its success.
Tina Hamilton is president and CEO of myHR Partner Inc., a Lehigh Valley human resources outsourcing firm that manages HR for clients in 34 states. She can be reached at firstname.lastname@example.org.