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New SHRM Report Shows That Toxic Workplace Cultures Costs Organizations Billions

October 4, 2019

By Heather Nezich, courtesty SBAM Approved Partner ASE

One in five Americans have left a job in the past five years due to bad company culture. The cost of that turnover is an estimated $223 billion, according to a new SHRM report on workplace culture.

The report, The High Cost of a Toxic Workplace Culture, surveyed American workers to explore the impact of workplace culture on both the well-being of workers and the bottom line of businesses. It found toxic culture costs companies a fortune in turnover and absenteeism; highlighted common indicators of bad workplace cultures, such as discrimination and harassment; and underscored the alarming impacts on employees.

“Billions of wasted dollars. Millions of miserable people. It’s not a warzone—it’s the state of the American workplace,” said SHRM president and CEO Johnny C. Taylor, Jr., SHRM-SCP.   “Toxicity itself isn’t new. But now that we know the high costs and how managers can make workplaces better, there’s no excuse for inaction.”

The research also uncovered a skills gap at the management level. SHRM found employees hold managers—more than leadership or HR—most responsible for culture. They also say their managers often lack the soft skills needed to effectively listen, communicate, and ultimately lead.

Key findings of the report include:

  • Nearly half of employees (49%) have thought about leaving their current organization, while nearly one in five have left a job due to culture in the past five years.
  • Turnover due to culture may have cost organizations as much as $223 billion over the past five years.
  • 76% of Americans say their manager sets the culture.
  • 26% say they dread going into work.
  • 25% don’t feel safe voicing their opinion at work.
  • 25% don’t feel respected and valued at work.
  • 33% say their manager doesn’t know how to lead.

In addition to this workplace culture report, SHRM also released its 2019 Workplace Fulfillment Index, which revealed that 56% of workers feel less than fulfilled at work. It also explored which factors contributed most to fulfillment, and found workers ranked cultural factors, such as meaningful work and flexibility, as more fulfilling than factors such as commute times or professional development.

According to Employee Benefit News it costs employers 33% of a worker’s annual salary to replace them.  In addition, there are also the indirect costs of training a new employee, productivity loss, and knowledge loss.  It’s important for organizations to maintain a positive culture.  The resulting improvement in retention could save organizations millions of dollars.

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