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Putting Out the Fires – How Toxic Culture is Costing your Company

Matt Moore

Over the years, either in our Employer Resources & Newsletter or at the Seasonal Human Resource Association conference, you’ve likely heard us talk about the importance of focusing on your company culture to create an environment that makes employees feel appreciated and happy in their roles. “Culture” can be a bit of a nebulous concept to define and identify opportunities for improvement, but fortunately for us, smarter minds than ours have been researching this topic for years, and we can all take benefit by taking note of their findings.

Earlier this year, the father/son research team of Dr. Donald Sull and Charles Sull released their research paper “Toxic Culture is Driving the Great Resignation” in the MIT Sloan Management Review. Their study analyzed 34 million profiles of employees who had resigned between April and September 2021 (a time period during which 24 million Americans left their jobs, an all-time record) in order to identify patterns and root causes for the increased pace of attrition across all industries. Their research identified 5 topics that were the strongest predictors of attrition relative to employee compensation. The strongest predictor cited, by a wide margin, was Toxic Company Culture, which was 10.4x more likely to contribute to attrition than compensation.1

To break this down further, they identified five cultural attributes (The Toxic Five2) that most contributed to a toxic company culture, which were: Disrespectful, Noninclusive, Unethical, Cutthroat, Abusive. These findings revealed that, although compensation is certainly important to employees, it is far from being the largest determinant in whether or not an employee will stay with your company.

Heading into the upcoming operating season in the midst of an ongoing labor crunch, retention should be first and foremost on every employers’ mind. Every new hire and returning employee is irreplaceable. Turnover expense will be at its highest level in decades as rehiring costs are unlikely to ease in the near future. While we encourage every employer to take a deep dive into the Sulls’ research (which we provide links to below), we wanted to provide 3 ideas to implement in the season ahead to promote employee wellness, and root out and address possible toxicity within your company culture.

Implement Regular Feedback – In a recent podcast discussing their research, the Dr. Sull stated that “even the healthiest cultures have pockets of toxicity.” We’ve all experienced this. Overall, your company is having a great season, but that one department just seems to be struggling – high turnover, low morale, frequent issues. If employees don’t have easy opportunities to share their feedback with management, and vice versa, your company won’t be able to identify and remedy those pockets of toxicity within your organization until it’s too late. Implement monthly/quarterly reviews, provide staff the ability to submit anonymous feedback, encourage an open door policy. Dealing with issues that are negatively impacting your company culture and employee experience is not an easy task, but it pays enormous long-term dividends in terms of improving the well being of your staff, reducing crippling turnover expense, and strengthening your reputation as an employer that cares about its people. Whether it’s once a month or twice a season, make sure you and/or your leadership team commit the time to review feedback and implement changes while your seasonal staff is still on site. Showing that you’ve reviewed their feedback and taken action on it will demonstrate your commitment to the quality of their experience.

Provide Opportunities for Lateral Job Moves – Another compelling find from the Sulls’ research was that lateral career opportunities were 2.5x more likely than compensation and 12x more likely than a promotion to be a predictor of employee retention. The logic is that not every employee wants to move up the ladder and take on the additional pressure and stress that often accompanies the added responsibilities of a promotion. However, the change of pace and chance to try something new / learn new skills is something that a lot of employees found compelling and desirable. Do you have opportunities within your organization to rotate your team members across different departments? Do you any of your positions have complimentary skill sets (Reservation Agents could easily pickup the duties of a Campground Attendant or Retail Clerk, etc.) that would be adaptable to lateral moves? It’s an outside-the-box concept to be sure, but the realm of hospitality jobs is in the midst of a sea change, and it will never be the same as it was pre-pandemic. Being open to testing new business models that are attuned to changing employee preferences and labor market dynamics will be paramount in determining which employers thrive in the future. Keep in mind, lateral job moves need to be communicated and agreed upon by both employee and employer well in advance. Springing new job responsibilities on an employee mid-season with no prior conversations is a sure-fire way to push them towards seeking a new job.

Provide Fixed/Predictable SchedulingA 2019 study by the Institute for Research on Labor and Employment found that service industry employees with unstable work schedules experienced negative mental and physical health outcomes and higher likelihood to change jobs. Providing as much notice as possible for schedule changes (5 days+), eliminating on-call shifts, and minimizing/eliminating “clopening” shifts (where an employee works a closing shift followed by an opening shift with less than 11 hours between shifts) was shown to dramatically increase employee well being and reduce the likelihood of attrition. This will certainly be a challenge in the hospitality sector, but again, the landscape is changing rapidly as we speak, and operational changes (revised business hours and service offerings, etc.) and business model revisions are being built and tested as the economy evolves and adapts to its new surroundings. Job seekers are likely seeking out your opportunities because they want to explore your Great Place. Being clear and consistent about the time they get to do that will be appreciated.

In an Employer Resource from a few months ago (Earthquakes, the Ice Trade, and the Next Era of Hospitality), we discussed how historical events and new technologies have upended (and even eliminated) entire industries in the past. Such an upheaval is happening today across a number of industries and around the world. Over time, the models of the past will be revised, rebuilt, or discarded altogether until an equilibrium is discovered. Those companies who stick to the pre-pandemic models will likely struggle to attract and retain talent (and therefore customers), while those that test new models based on research and shifting demands will lead the way in establishing the framework of the future economy.

References / Sources

1“Toxic Culture Is Driving the Great Resignation”

2“Why Every Leader Needs to Worry About Toxic Culture”

“10 Things Your Corporate Culture Needs to Get Right “