5 traits of “toxic” companies

We know what makes a workplace pleasant: collaborative leadership, good relationships with colleagues, rewarding work, recognition for what we do and many other variables. But what are the telltale signs of a toxic company?

It is very hard, especially from the business owner’s point of view, to recognize the situation. The impact of a negative work environment on employees, customers and profit is very strong but not always direct. So it becomes important to stay alert and to recognize that even processes designed to have a positive impact can produce the opposite effect.

Below I summarize the five main points to keep an eye on:

1. A low level of cohesion: This is probably the most important point. Cohesion in the workplace increases employees’ satisfaction, their commitment and their sharing of goals, while reducing stress and conflict (see my earlier post: Cohesion in the workplace). A lack of cohesion leaves people isolated and defenseless, leading to behaviors that are harmful to the worker and to the organization.
   1. Keeping a low profile: Workers learn to stay passive, without taking part or offering their ideas, because they fear being attacked (worse still if publicly). (It is the opposite of what Edmondson, 1999, calls psychological safety: the shared belief that the team is safe for interpersonal risk taking. In a study of 51 work teams in a manufacturing company, it was associated with learning behavior.) Besides raising the level of stress, this behavior wipes out creativity and any activity that has not been laid out in a process.
   2. Bullying and mobbing: The lack of bonds among colleagues weakens not only the group’s defense mechanisms but also the familiarity that is an important deterrent against the bully.
   3. Negative attitudes: A work environment lacking collaboration, enthusiasm and trust breeds negativity, which always leads to poor-quality work and high turnover.
2. Communication patterns that are undefined or do not work: An important indicator of a toxic work environment is the presence of significant communication problems among office colleagues, departments and levels of the hierarchy. These problems always turn into communication problems with customers and suppliers, and they have a direct impact on the company’s service level and revenue. When communication does not work, negativity becomes a defining feature of the organization. This leads to a growing lack of trust in management and in what the company does. These problems often stem from:
   1. Mediated communication: the use of third parties to deliver messages (in particular, intermediaries along the chain of command).
   2. Partial information: the tendency to circulate as little information as possible, on the assumption that it is not everyone’s business. It is increasingly hard to define specific roles; people now have to interact with and influence one another on many levels.
   3. Conflicting information: the lack of an official line of communication allows unofficial channels and poorly defined procedures to emerge, which leads to the spread of inconsistent information.
   4. Total lack of communication: employees learn of decisions after they have been implemented and have no chance to step in and make their own contribution. In the article “Motivation and work: the importance of task, organization and goals,” I cite an important parameter for people’s motivation in the workplace: “Experienced Responsibility for Outcomes of the Work,” that is, the degree to which the worker feels responsible for the results of the work. This parameter is driven to zero by a lack of communication, and the impact on motivation is very strong (Hackman and Oldham). The model is described in Hackman and Oldham (1976), who tested it on 658 employees working on 62 different jobs in seven organizations.
3. Processes that are undefined or do not work. There are several reasons why a company fails to define its processes or to get them followed:
   1. Obsolescence: Defining who has to do what is not something to be done once and for all from above; it has to be a continuous process.
   2. Lack of involvement: To make sure processes are followed, the people who do the operational work should be involved as much as possible in defining and revising them.
   3. Little attention to simplification: A process has to be designed to simplify the work of the people involved, not just that of top management.
   4. Too many rules: Too many processes cage people’s work and create bureaucracy and delays that take their toll on the internal structure and on customers.
   5. Constant emergencies. Living in a permanent state of urgency is more and more common in a market as fast and fluid as the one we all find ourselves in today. Often, though, urgency is the child of disorganization, and this is a situation that often starts at the top, with those who create processes and are the first to disregard them.
4. Inadequate leaders. Leadership is not an ability that comes automatically with the role; it is a trait that requires attention, training and self-criticism. Companies often try to improve the work environment starting from the bottom, without considering that the environment is largely the product of the current leadership. The leader’s impact on all the points above is obviously very high, and so responsibility for problems in the work environment is always proportional to hierarchical level. Some negative characteristics of leaders can be:
   1. leaders who are too focused on themselves or on one specific activity
   2. authoritarian leaders
   3. leaders who show little respect for people or for rules
   4. manipulative leaders, who take credit for other people’s results
   5. incompetent or ineffectual leaders
5. Respect for private life. The intrusion of work into private life is a phenomenon typical of the last two decades and one that keeps growing. Many large organizations are revising their procedures to limit the damage of “telepressure” (Barber and Santuzzi, Journal of Occupational Health Psychology), which refers to the urge to read and answer email outside working hours (and other online activities). In Italy, Law 81/2017 on remote “agile” work requires the agreement between company and worker to set out the measures that ensure disconnection from work devices. The main cases are:
   1. Working after hours: if it persists over time, this is a sign of disorganization. Numerous studies have shown that productivity and quality of work deteriorate drastically as hours worked beyond the normal schedule increase. A study of workers in munitions factories, most of them women (Pencavel, 2015), shows that below a certain threshold output is proportional to hours worked; above the threshold it rises at a steadily decreasing rate. There is also an increase in errors and a reduction in cohesion.
   2. Interference in private life: finding out at the last minute about after-hours work, or about sudden changes of plan that affect one’s private life, rules out the detachment that guarantees a “safe zone” in which people know they can clear their minds and turn to something else (this also applies to email, which can intrude at any moment of the day). These moments are extremely important because they make it possible to reduce stress considerably.

The main stress factors in the workplace include a toxic environment, an excessive workload, isolation, role conflict and role ambiguity, lack of autonomy, barriers to career development, difficult relationships with managers and co-workers, and managerial bullying.

When these stressful situations drag on, the employee can face a significant risk of developing physiological and psychological disorders, some of them serious. For long hours the data exist: according to estimates by the WHO and ILO (2021), working 55 or more hours per week is associated with a 35% higher risk of stroke compared to working 35-40 hours. For the company the risk involves absenteeism, organizational dysfunction, reduced productivity, high turnover, relationship problems among colleagues and with customers, sabotage (conscious and unconscious), and contagion to other employees.

Responsibility for a toxic work environment is often spread across the entire organization and involves not only individuals but the group dynamics that take shape in the company. Obviously, though, the higher levels of the organization bear greater responsibility for how the problems arise and, even more, for the lack of a strategy to solve them.

Alberto Viotto