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Would you know if your business had a toxic culture?

28 Oct 2020 By Ed Mayo

With many workers doing their jobs from home, bullying and harassment can quickly escalate without bosses’ knowledge if not kept in check, warns Ed Mayo

It’s been a year of uncertainty and anxiety, your workforce is remote and your business is under pressure. How would you know if your culture was turning toxic?

For some, the knowledge comes too late. The rash of recent cases of alleged workplace bullying at Unicef UK, The Jockey Club and the Home Office is a sign that things have gone badly wrong. Anyone can get things wrong, but when matters make it into the public eye or a court of law, the story is typically one of a pattern of bullying unfolding over time rather than a single, out-of-character incident. 

When cultures turn toxic, all of the voluntarism, the discretionary effort that marks out staff teams in the most productive firms, goes out of the window. As trust evaporates, so does truth. People will not speak up, at least not within the organisation. Formal reporting continues but is open to being gamed. The Harvard Business Review has suggested that successive corporate scandals demonstrate that performance systems based on specific, challenging goals can cause staff to cheat on tasks or misrepresent their performance. Those at the top are therefore in the dark. Boards, which rarely talk about culture in the first place, are taken by surprise when things that go wrong, go public, whereas staff on the frontline know that is just how it is.

When cultures start to go rogue, the wrong place to reach is for the rule book. Of course, rules are important. They can set and shape expectations and they clarify accountabilities. And they can set the processes and give people assurance of allegations being dealt with fairly. But it is not the state of rules that matter so much when things start to slide, or the extent of procedural compliance with those rules.  What really counts is culture and values.

The former director general of the Institute of Directors, Simon Walker, sees values as “the next frontier” in business. “Not so long ago,” Walker says, “the idea that corporations might hold core values would have been considered fanciful. Times are changing. In an era of radical transparency… values are now understood to be one of the foundations of successful companies.” 

Morgan Stanley is one example of a company that agrees. “Long-term and enduring success lies in having a strong culture and talented employees who live our values,” explains its chair and CEO, James P Gorman. One way it is acting on its conviction is by working with us at Pilotlight. We help Morgan Stanley staff to learn about values by helping them to partner with small charities on the frontline of social need in a year of pandemic. 

There are plenty more ways you could develop values in your staff. Johnson & Johnson has its founding ‘credo’ chiselled into the wall of its New Jersey headquarters and other offices across the globe. Midcounties Co-operative, a food retailer operating 225 stores in England, appointed a chief values officer in 2019 to lead work across the business.  

In fact, you don’t have a choice in the matter – listed companies are now required by the UK Corporate Governance Code to monitor their culture and ensure that directors act in line with corporate values. The best examples of corporate values are not the same old generic ones shared by so many different companies – honesty, responsibility or other outputs of a long-forgotten staff workshop – but distinctive and relevant descriptions of the culture that the business aspires to. 

In a positive culture, incidents of potential cheating or bullying are addressed early, before they are repeated, made visible and scrutinised. There is time then to act. There is no repeating pattern of bad behaviour, the hallmark of a toxic culture. 

The challenges of remote working, safe workplaces and organisational change have put HR directors at the top table in 2020, with far more of a voice than most had experienced before. To stay there, at a time of stretch, stress and risk, they need now to be leaders on culture and values.   

Ed Mayo is chief executive of Pilotlight and author of Values

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