In political circles in Alaska, it was bombshell news: the HR director for the mayor of the City of Anchorage resigned without warning, citing a “toxic, hostile, and demoralizing work environment” that included public berating, unreasonable assignments, and scapegoating for missteps that have plagued Mayor Dave Bronson’s brief time in office.

The news reported by Alaska Public Media hit wires in early February 2023, roughly 18 months after HR Director Niki Tshibaka took the job. Tshibaka’s tenure was not without controversy; one of his hires allegedly fabricated a résumé, and he was at the center of a wrongful termination lawsuit filed by a different employee. Still, it was a blow, especially considering Tshibaka’s role as head of HR.

It also was just another step in a systemic collapse. Tshibaka’s departure was “the latest in a series of resignations and firings among top city officials,” all of whom cited the same lousy workplace vibe. The moves crippled the Anchorage municipal government and left officials scrambling for a way to manage day-to-day business tasks; some citizens complained about experiencing delays with services due to the lack of staffing.

The current drama in the government of Alaska’s largest city is no different from workplace dramas that play out in organizations of all types. Over the past 10 years, ethics disasters at Fortune 500 companies originated with inadequate leadership that also created toxic cultures. At Wells Fargo, leaders encouraged employees to fabricate accounts to make sales performance appear better. At Volkswagen in 2015, officials admitted to cheating on diesel emissions tests.

But it’s not just high-profile cases that exemplify unhealthy cultures. One in 10 workers at large U.S. employers experience toxic workplace culture, and more than 80% of North American CEOs and CFOs say their corporate cultures are not as healthy as they should be, write researchers Donald Sull and Charles Sull in MIT Sloan Management Review. The researchers also found that women are 41% more likely than men are to experience toxic workplace culture.

According to Michael Schwendeman, senior research scientist at Heidrick & Struggles, an executive search company, the problem of toxic workplace culture is important for a variety of reasons: It’s bad for the bottom line, bad for organizations trying to engage and keep employees, and bad for those workers’ well-being.

“Culture can be a great benefit to an organization and something that can help the organization thrive; it also can be a huge impediment and obstacle to success if it’s not healthy and productive,” says Schwendeman. “If you don’t address culture to the point where it’s building up workers, you find yourself in a situation where the culture itself can be tearing them down.”

Toxic culture also has a clear financial cost. In their 2022 research, the Sulls (who are brothers) found that leaders recognize the stakes: more than 90% of North American CEOs and CFOs said they believe that improving their corporate culture would improve financial performance.

There are actions that organizations can take—with changes in leadership, social norms, and work responsibilities—to detoxify a venomous culture and ensure the working climate does not become a liability. Interviews with experts, academic research, and experienced business leaders say the detoxification process has four parts:

1. Assess the organization’s culture to understand what specifically has gone awry.
2. Change the practices, work processes, and managers as needed, to remove the turmoil.
3. Demonstrate progress on these efforts and what changes employees can expect.
4. Lean on middle managers to serve as ambassadors who can make cultural changes and win support from employees.

Healing a damaged culture can be a lengthy process that requires buy-in across the organization. By identifying and addressing the causes, leaders can dramatically improve employees’ experiences, minimize unwanted attrition and disengagement, and build a more supportive workplace.

What culture is, and how it can spoil

A large part of an organization’s culture is created by the way people in power treat coworkers who aren’t in power, and the way those coworkers respond. If leaders aren’t treating subordinates with respect, the entire culture soon sours like milk in hot weather.

On one level, this means toxic culture is fundamentally a leadership issue. So leaders must examine their own actions and management strategies to avoid a cultural debacle. On another level, it means that toxic culture often starts in a leadership team and spreads like a contagion.

Benjamin van Rooij, professor of law and society at the University of Amsterdam, has studied the phenomenon of toxic cultures, and sees culture as a “container term.” He says, “If you don’t get culture right, everything else will fail.” Even if a company struggling with toxic culture gets a new CEO, trust issues can persist for years.

“In a company where the person at the top said, ‘We’re going to do the right thing’ but didn’t, people at the bottom knew the promise wasn’t serious and resented it,” van Rooij says. “So when a new leader comes in and says everything is different, how will people believe the new leader if they’re used to hearing one thing but seeing another?”

Edgar Schein, the late MIT Sloan School of Management professor and top academic on organizational theory, described leadership and culture as inextricably linked. He posited that elements of the work experience—how people dress, how long they stay at work, the goals they promote, the unwritten rules they follow—are all pieces of a cultural puzzle that interact all the time. Schein also posited that culture is mainly a top-down phenomenon, meaning that while one bad apple can poison the culture in a particular department or team, widespread culture ultimately comes from leaders across the organization.

Five Signs of a Toxic Work Culture

• Disrespectful communications: when business leaders deploy a confusing communication style, or when they don’t heed employees’ requests and perspectives. For example, a company might list “respect” among its corporate values, but if managers don’t learn employees’ names or they keep colleagues waiting for meetings, the message is meaningless.
• Non-inclusive climate: when leaders either normalize discrimination or allow workforce cliques to develop without trying to bridge the gaps. For example, researchers Deepa Purushothaman and Valerie Rein found women of color suffered stress and burnout symptoms at workplaces in which managers passed them over for promotions and asked them to do more than their fair share of work.
• Unethical behavior: when companies try to cut corners or break the law, such as the Volkswagen and Wells Fargo situations noted above.
• Cutthroat competition: when leaders pit workers against each other. Some employees compete, fearing retribution if they don’t, while others find the dynamic exhausting or uncomfortable. Example: In 2013, Microsoft abandoned a “stack ranking” employee evaluation system that forced managers to assess a portion of their workers as underperforming.
• Abusive demands: when leaders wield power to force employees to behave a certain way. For instance, leaders expecting immediate responses to their texts day and night will burn through admins and quite possibly other employees, too. This also is where work design comes into play—jobs with a consistently overwhelming workload lead to a toxic culture.

It’s worth noting that while culture is a collective experience, individuals can perceive a given culture differently. In addition to the research noted earlier, that women are 41% more likely to experience toxic culture than men, a separate meta-analysis published by the American Psychological Association in 2018 found that racial minorities also are more likely to experience poor treatment at work.

Culture matters because it can help the organization thrive—or cause it to flounder. Schwendeman, the research scientist at Heidrick & Struggles, says the best cultures are measured regularly, on a spectrum. “You need healthy culture to be able to drive your business strategy and deliver outcomes,” he says. “Organizations should be aiming to create cultures where they engage and energize the people who work there, not the other way around.”

Four steps for a culture refresh

Once an organization recognizes its culture is toxic, it’s important to reverse the trend. Doing so involves strategic thinking and working on multiple levels. “Changing a culture—taking a toxic culture and making it healthy—is difficult,” says van Rooij.

Research by van Rooij and Adam Fine says the process involves four key steps.

Step 1: Assess the toxic culture to understand what has gone awry and where.

Historically, employee surveys have been a good gauge for determining what has gone wrong. The problem is surveys only gauge what people know and are willing to share. They rarely include illegal or illicit activity, for example. Furthermore, if the survey questions are not specific enough, they may not identify concerns.

Instead of surveys, van Rooij suggests a deep analysis of structures, values, and practices that he calls a “forensic ethnography,” which means conducting interviews like a forensic psychologist and piecing together how, where, and when things went off track, and exploring the why behind every aspect of how the company operates.

“Normally when you have a crime scene you go through forensics to understand whodunit,” he says. “We’re not looking at one person. Instead, we’re looking for a culture.”

This process takes time, van Rooij says, at least a year in most cases to gain insight into the value systems of key players, for example. While a complete picture is impossible, he notes that when the forensic work is done sufficiently, an organization should be able to pinpoint the location of toxicity and come up with a remediation strategy.

Step 2: Change toxic structures by shaking up practices that caused turmoil.

Once an organization has a basic strategy for changing culture, it’s important to deconstruct those structures that represent the status quo.

Sometimes it’s easy to identify those parts and counteract them—such as removing incentives that cause harmful or unethical behavior. Other times, the problems infect an organization’s values and practices, and require further action to help teams understand what’s happening and adjust or change their ways of working. This can include changing the managers in charge of that work.

Schein referred to this as “unfreezing” the system and waking up a culture through incremental changes, including encouraging leaders to unlearn old behaviors.

The aftermath of public scandals that highlight organizational wrongdoing often involve a leadership shakeup and other moves to right the culture. In the case of Wells Fargo, for example, ended up changing CEOs twice in the wake of its scandal, paid more than $2 billion in government fines and customer fee refunds, and overhauled its top executive ranks, as The Wall Street Journal noted. It also set up a unit devoted to working with regulators.

For its part, Volkswagen also appointed a new chief and completely changed its business focus in the wake of its diesel emissions scandal—by shifting to producing electric cars, as The New York Times reported.

Observers of both companies say that each company has a long way to go to completely rehabilitate their cultural problems—demonstrating the challenge facing leaders. Fixing a broken culture takes commitment over time.

Step 3: Demonstrate progress so employees understand the changes and what they mean.

Van Rooij says that when a company is remediating a toxic culture, communication must be two-pronged.

One key step is to make the goals clear, such as lower attrition rates. Communication can occur in a multitude of ways: Slack channels, intranet, company newsletters, even in basic e-mails and in-person messaging. Another step: report progress toward those goals so everyone in the organization feels like part of the plan. “It’s all about trust,” van Rooij says. “The more clearly a company can communicate what’s wrong and how they’re going to fix it, the more easily employees will trust that change is actually going to happen.”

To engender that kind of trust means empowering staff to participate in the detoxing process and to speak out about it, says Schwendeman. This includes the ability to organize within their team, to participate in decision-making on issues that directly concern their work, and to have strong protections in disputes with supervisors.

Step 4: Lean on middle managers to serve as ambassadors who can enact culture changes.

Because they interact directly with upper-level leaders and individual contributors, middle managers are important elements in improving damaged cultures. Middle managers who do this effectively can lead by example. They also can serve as de facto spokespeople for the C-Suite, passing along messages about how change will look and why it’s important.

Schwendeman, who previously worked as a consultant helping companies work to repair toxic cultures, refers to middle managers as “culture champions.” “Any time there was real change that needed to happen, that was the most effective way of doing it,” he says. “People serving in the role of ambassadors help get things done.”

Employee-engagement data supports this theory. Data from Gallup going back to 2015 indicates that “managers account for 70% of variance in employee engagement,” which means a good manager can make a world of difference for every employee’s perception of culture. On the flipside, middle managers also have the potential to affect an organization negatively. In their research, the Sulls found “middle managers were 2.5 times more important in predicting misconduct compared with companywide factors,” and that the importance of middle managers was six times greater among those managers who don’t work at headquarters offices, since they can exercise more discretion.

The Cost of Ignoring Toxic Culture? High

Poisonous cultures can make people want to leave or not want to join a company.

Employee turnover triggered by toxic workplaces cost U.S. employers nearly $45 billion per year before the COVID-19 pandemic, according to a 2019 estimate by the Society for Human Resource Management.

Additional research conducted by Donald and Charles Sull during the Great Resignation of 2021 indicates that a toxic corporate culture “is 10.4 times more powerful than compensation in predicting a company’s attrition rate compared with its industry.”

Toxic culture also affects the morale and health of employees. Researchers have long recognized the mental health risks of negative work environments—including stress, anxiety, and depression. (Women of color are at particular risk.)

Back to the future of employee engagement

Experts in the field say that for cultural repair efforts to succeed, they have to include employees in a two-way conversation. In their research, the Sulls found that missing this step is a common mistake. Experts also note other unforced errors:

• Failing to report back to employees what leaders found in their examination of the organization’s problems
• Reporting what leaders have done with that information to engineer change
• Reporting the progress that was made
• Omitting efforts to follow through on changes leaders have identified as being necessary

“Follow-through is critical. Sometimes it can be the difference between a successful campaign and one that ends up falling short,” Schwendeman says.

Culture management is typically reactive—companies only get involved when they know there’s a problem. But what if companies were able to reduce toxicity at work by reducing stress overall, making workplaces less toxic by making them less stressful?

In their research, the Sulls outline several ways to reduce the kinds of stresses that can lead to toxic workplaces. For example, they suggest:

• Reducing nuisance work so employees don’t feel like they are laboring needlessly.
• Clarifying job descriptions so people understand who does what.
• Listening to workers’ concerns, to help them reduce their emotional labor on the job.
• Allowing employees the freedom to complete tasks on their own and to pursue new projects.

To van Rooij, that last point is one of the best ways to fend off the onset of a toxic culture. Empowering workers to take ownership and accountability for their tasks at work, including the labor that occurs outside the narrow parameters of their jobs. He also advocates empowering workers to speak up about everything from pay to culture and janitorial services. This is a great mechanism for finding out what’s going wrong and how to act on it, he says. And if a company has established unrealistic targets or has become complacent in its ways, empowered workers will organize and fight for change.

“When workers come together, they feel stronger and better knowing they’re in a group,” he says. “In many ways, the best antidote to toxic culture is simply working together.”

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