What impact does negative workplace culture have on wider society?

The relationship between business and society is changing. People are beginning to show an unparalleled distrust of big business and globalisation. There has been a seismic shift in what people expect from business and it is driving a huge cultural change in how businesses operate.

While it may feel like we've seen an unprecedented level of scandalous business malpractice over the past few years (Uber, Weinstein, the gender pay gap at the BBC, to name a few), another view is that the digital age of transparency and consumer empowerment is beginning to weed out the worms. The lens is closing in on businesses like never before.

The recent interest in company culture has focused largely on the benefits to employees and ultimately business success. A positive company culture has been shown to increase productivity, improve business agility, offer better employee engagement, drive organisational purpose and improve results, which combine to deliver a clear competitive advantage.

But, workplace culture has a much wider remit than that, with the potential to impact positively on local communities and beyond. Corporate social responsibility, for example, is a growing aspect of positive company culture, which has far-reaching effects on the world around us.

In this blog we take a look at the impacts of negative workplace culture on wider society. Let’s start with a quick recap on what negative workplace culture looks like.

The spotlight on negative workplace culture

Poor company culture can be caused by a number of factors. It usually happens because leaders have created an environment where communication is poor, there is a focus on profit (not on employees) and hyper-competition, micromanagement or bullying behaviour exist. Other consequences of negative culture include gossiping, low employee engagement, higher rates of absenteeism and presenteeism, a lack of empathy, a lack of flexibility and high employee turnover.

But negative workplace culture isn’t something that is contained. It spills out into employees lives and affects society at large. Here’s how:

The economic cost

In our report on The Culture Economy we found that poor workplace culture is costing the economy £20.2 billion a year. It is a hole that needs to be plugged.

Poor economic performance has huge implications for everyone. In an increasingly competitive global market, businesses not fulfilling their potential are in danger of going to the wall. This has an effect on jobs and consumer spending. A downward spiral of poor economic performance can end in recession. It’s a problem that goes further than the businesses it closes.

Contagion

Toxic cultures infect others. When a toxic culture causes a business to close, this has ramifications for other businesses in the supply chain.

Trust

Poor company culture promotes unethical behaviour both inside and out of the workplace. Unethical behaviour destroys trust. Disengaged employees also develop a lack of trust. When this behaviour spills into life outside of work it has implications for the kind of community we live in.

A lack of empathy and trust in society fuels a culture of division and fear. A decade ago, former US President, Barack Obama, said “The biggest deficit we have in our society and world right now is an empathy deficit. We are in great need of people being able to stand in somebody else’s shoes and see the world through their eyes.”

It is positive company culture that will help us to do this, not negative. Businesses have a responsibility, just like individuals, to pursue the best for the society and environment we live in. A lack of trust creates barriers within a business and beyond it.

Wellbeing and health costs

Employee health is probably one of the most concerning aspects of a negative company culture. A negative vibe in the workplace can lead to poor mental health outcomes. In fact, harassment and conflict at work can have a detrimental effect on our physical and emotional wellbeing, as well as our mental health. This has implications for business productivity, employee relations, family dynamics and society as a whole.

The cost of poor mental health to UK employers was estimated at £56 billion per year in 2023, according to New Leaf Health. In addition, there are cost implications for the NHS. This doesn’t just affect business, it has implications for the economy as a whole.

Here is a great example of how negative company culture can affect an employee's mental health.

Societal happiness and relationships

How we think, feel and behave has an impact on those around us. Poor culture has a huge effect on how employees feel at work. It also bleeds into how people feel when they are not at work. People don’t just switch on happiness when they get home after a bad day at the office. Spending all day in a negative environment has implications for our level of happiness outside of work.

Negative workplace culture creates lonely, burned out and depressed people. We have to ask the question, is this the kind of society we want to live in? To change the world around us we have to promote happiness and well-being at work.

The impacts of negative company culture on productivity, employee engagement and overall business success are plain to see. The link between business and a happier, more engaged society may be less obvious. Business has the opportunity to contribute to social change. Consumers can see it and are taking the reins.

SMEs sit at the heart of local communities across the UK. The social and economic challenges businesses face are many, but recognising the power of company culture to effect change isn’t just good for business it’s good for the future of our country.