What drives a toxic culture and how to stop drinking the Kool-Aid before it’s too late

Toxic culture is driving the Great Resignation. People don’t quit jobs but toxic workplaces – the number one factor driving people to resign. The remote work revolution didn’t make toxicity disappear, but actually turned bad cultures into worse ones.

Even those who enable toxic behaviors end up victims of its poison. Mark MacGann, who led Uber’s lobbying effort to win government favors, felt powerless to question or change the company’s ways. He quit in fear that the backlash against Uber would put his family at harm.

MacGann, who recently revealed himself as the whistleblower who leaked more than 124,000 documents to the Guardian, drank too much of his own Kool-Aid. After spending years persuading governments that Uber would lift society, he became a victim of the monster he helped create. “We had actually sold people a lie. How can you have a clear conscience if you don’t stand up and own your contribution to how people are being treated today?” MacGann told the Guardian. He decided to speak out to right some fundamental wrongs.

Toxicity doesn’t happen overnight – it’s the result of systematic efforts between those who encourage poisonous behaviors and those who enable them. Everyone drinks the Kool-Aid until it’s too late.

In this post, I will explain the characteristics of a toxic culture and how to detect the early signs. You don’t need to wait to be full of remorse to do something about it.

The Toxic Five – What Poisons Company Culture

Toxic culture is the best predictor of attrition. It’s 10 times more powerful than how employees view their compensation in predicting turnover. Not only does it encourage people to quit but it also makes it harder to replace them.

When does a culture becomes so awful that it's not just annoying but also toxic?

Company cultures are like families. They come in all shapes or forms and most suffer from some dysfunctionality, although they are able to operate despite – or even because of – their flaws.

However, there’s a difference between a dysfunctional workplace and a toxic one. It’s not the intensity that separates one from the other but an assemblage of clear signs: “The toxic five.”

There’s a consensus that toxic cultures are harmful, but not so much when it comes to defining the key signs to identify them. Recently, a group of researchers revealed five descriptors of a textbook toxic work culture. By analyzing 1.4 million Glassdoor reviews, they found that employees describe toxic workplaces in five ways: disrespectful, non-inclusive, unethical, cutthroat, and abusive. The authors coined the “Toxic Five” to describe what poisons company culture.

While organizational culture can disappoint employees in various ways, these five elements have by far the largest negative impact on how people rate their employers.

1. Disrespectful:

This one has the largest impact on an employee’s overall rating. A lack of courtesy, consideration, or dignity for others causes division and resentment. When people don’t feel respected – both personally and professionally – they stop collaborating and sharing information with others.

Take Amazon’s recent blow-up as an example. The tech giant has a paid leave problem that costs people money – and sometimes their jobs. The New York Times dubbed it “Amazon’s worst human resources problem.”

Amazon’s employees consistently reported that the company has systematically underpaid people who took parental leave. Workers were even fired because the attendance software mistakenly marked them as no-shows, or doctor’s notes vanished into black holes in the corporate databases.

It doesn’t matter that Jeff Bezos has recently acknowledged that the system was “inadequate”– Amazon employees felt disrespected.

2. Non-inclusive:

Although respect gets more mentions in employee reviews, LGBTQ equity has a similar impact on how people view workplace culture. Inequality is not limited to gender, race, sexual orientation, or age but also disability and remote work inequality.  

Another key element of a non-inclusive culture is the club mentality. On the one hand,  many people are excluded from both membership and benefits without understanding why. On the other hand, unspoken members – those who attended the same college as the boss, for example – get all the promotions and growth opportunities.

Inclusivity requires more than supporting Pride Month. Failing to be inclusive all year round could also cause employee attrition. Nearly 40% of LGBT+ employees are considering changing employers and finding a job in a more inclusive culture, according to Deloitte’s 2022 LGBT+ Inclusion at Work Survey.

Disney employees expressed disappointment in the company’s response to Florida’s “Don’t Say Gay” bill, noting that Disney had contributed to the campaign of politicians behind this controversial bill. Finally, in response to criticism, Disney publicly condemned the bill.

3. Unethical behavior:

Dishonesty and a lack of integrity and ethics – usually with a weak regulatory compliance - are some of the characteristics of this toxic behavior. An unethical culture is easy to spot. Leaders often make false promises, lie, mislead their teams, or sugar coat problems to avoid talking about real issues.

When former Theranos CEO Elizabeth Holmes talked about making blood testing easier and less painful with just a finger prick, people listened. Tyler Shultz, a biology major, wanted to join the revolution, too. Later in the game he would discover that test results weren’t running on the device Holmes invented but on regular lab equipment.

Shultz was one of the whistleblowers who revealed Theranos’s deceit and shortcomings. Holmes was finally convicted on four charges tied to investor fraud.

4. Cutthroat competition:

Aggressive workplace cultures taken to the extreme quickly become ruthless, promoting individualistic behaviors. Uncooperative teammates, backstabbing, sabotaging colleagues, or throwing others under the bus are all the result of cutthroat cultures. When individual goals  are rewarded rather than ollective ones, people will do whatever it takes to win – even at the expense of their teammates.

Netflix is the poster child of aggressive cultures, providing employees freedom but also brutal accountability. There’s no room for b-players at the video streaming company. However, the company had long prided itself on practicing radically candid feedback as one of its core values. Co-CEO Reed Hastings would take any questions, regardless of how critical or sensitive the topic.

Most recently, Netflix leaders are no longer as open to criticism as they used to be. For example, chief content officer and co-CEO Ted Sarandos ignored executives feedback about The Closer, a show that a majority found full of transphobic jokes. Employees not only started feeling ignored and found the organization was less open to feedback, but some were even fired for “giving too much feedback.”

Netflix updated its culture deck to include a line on artistic freedom: “If you’d find it hard to support our content breadth, Netflix may not be the best place for you.”

5. Abusive patterns:

An abusive culture is the result of sustained hostile behavior – not just someone having a bad day. Continuous bullying, harassment, yelling, and shouting from mangers create a hostile environment. Abusive leadership puts people in a lose-lose situation. Research shows that when companies tolerate toxic behavior, problems like sexual harassment become more prevalent.

Elon Musk has recently expressed hostility to remote work, demanding that executives spend at least 40 hours a week at the office. He even floated the idea of firing 10% of Tesla’s workforce because he had a “super bad feeling” about a potential recession.

All this while the company has been slapped with more violations and fines for workplace safety violations – more than all U.S. automakers combined. The company is also dealing with lawsuits brought by several women for sexual harassment.

A Toxic Culture: How to Read the Signs

A company doesn’t become toxic overnight. People fail – or don’t want – to read the signs until it’s too late. Here’s how to spot some of the most common ones that indicate your company is becoming poisonous.

People repeat mantras without questioning them

“It’s only when you come off the hamster wheel and you take a step back that you realize how crazy all was,” Mark MacGann told the Guardian when asked if he was aware he broke the law on Uber’s behalf.

From one office to another, everyone repeated the mantra that came from the top: “Don’t ask for permission. Just launch. Hussle. Enlist drivers and go out, do the marketing, and quickly people will wake up to what a great thing Uber is.”

The strategy was to knowingly break the law and then change the law. In most countries, Uber was not allowed – it wasn't authorized. However, that didn’t stop employees from repeating the mantra and hustling.

Everyone drinks the Kool-Aid

Employees aren't the only ones to drink the Kool-Aid. Investors, influencers, and journalists often fall into the same trap.

When Theranos became the hottest ticket in town, people failed to ask basic questions. Did people fall for Holmes being the female version of Steve Jobs? Her all-black outfit, turtleneck, and charisma explain the media fascination with the Theranos 'former CEO. A question that’s still unanswered is why investors never requested to see a demo. Everyone drank the Kool-Aid and failed to do basic due diligence: to check if the technology they were funding actually worked.

Companies reward winning at all costs

In his former career as a lobbyist, MacGann made $750,000 as an SVP at the New York Stock Exchange. So, why would he join Uber for one fourth of that?

The answer is simple: the millions he could make as a financial reward if Uber realized its global ambitions.

When taxi protests against Uber exploded in many countries, then-CEO Travis Kalanick ordered a counterprotest to keep the controversy burning. Although executives warned Kalanick that his decision was dangerous for the drivers, he didn’t blink. “I think it’s worth it. Violence guarantees success,” he replied. Uber’s hustle principle meant doing  anything to reach its goals, no questions asked.

Heroic leaders are given a pass

Toxic cultures expose people to psychosocial threats. From poor interpersonal relationships and a lack of support to job insecurity and excessive controls, toxic workplaces harm employees wellbeing.

Most toxic work cultures originate with poor management, usually at the top. So, why are those leaders often given a pass? The traits traditionally valued in leaders – confidence, charisma, and extroversion – are often correlated to toxic cultures. Research shows that healthy organizations don’t require heroic leaders. Instead, they need leaders who take care of people and culture, foster interpersonal connections, provide help and resources, and most importantly, get things done.

Dissent and speaking out are punished

Elizabeth Holmes wasn’t just an inspirational and persuasive CEO; she also mastered how to keep its teams silent. The most important enabler of Theranos’ scam wasn’t people but secrecy. Holmes used the notion of confidentiality and protecting trade secrets to keep investors and partners from looking into what was really going on.

Theranos’ CEO arranged the company so that everyone was purposefully siloed. By not allowing them to speak to each other, she created the illusion of protecting the business while actually making sure no one could uncover her dirty secret: her invention was all a scam.

People enable toxic leaders

Toxic cultures don’t happen in a vacuum – leaders need enablers to turn their toxic behaviors into part of the organization’s DNA. Holmes, Kalanick, Sarandos, and Musk – to name a few – poisoned their cultures under everyone’s watch. From government officials and the media to employees and senior executives, they wouldn’t have gone so far if it weren’t for their enablers.

When culture starts to go wrong, you can choose to speak up or act as bystander. As MacGann reflected on his behavior: “I regret being part of a group of people which massaged the facts to earn the trust of drivers, of consumers, and of political elites. I should have shown more common sense and pushed harder to stop the craziness.”

The former lobbyist finally realized it was his duty to speak up and right some fundamental wrongs. He first leaked thousands of confidential documents – the Uber files. But that wasn’t enough. MacGann finally revealed his identity and came clean: “Morally, I had no choice in the matter.”

‍

Healthy workplace cultures happen by design, not chance. Get your copy of "Remote, Not Distant" – a roadmap to design a thriving workplace culture.