10 Signs of a Toxic Work Environment (and How to Improve Your Workplace Culture)

We all have 24 hours in a day. And after the hours we spend sleeping, the biggest chunk of our day is spent working—eight hours every weekday and another five or so on the weekend.¹ Imagine if all that time at work felt like being trapped in a soul-sucking pit filled with busy work, disrespect and ridiculous stress. Unfortunately, that kind of toxic work environment is all too real for millions of workers. And 44% of them blame their leadership team for the toxic work culture.² That’s a huge wake-up call!

Every business—including yours—either creates or accepts its workplace culture. When you create it, you fire up your team with positive values, clear expectations and a sense of purpose. But if you accept whatever your team dishes out, you leave room for toxic habits to creep in and take root. And unless you want 44% of your employees thinking you’re the problem, you can’t afford to let that happen.

That’s why you need to understand what work culture is and why it matters. Then we’ll take a look at the signs of a toxic work culture and how you can improve yours.

What Is Workplace Culture and Why Is It Important?

Workplace culture, also called company culture, is the collective attitudes and behaviors of your organization. It’s how your company does things—and it’s not one-size-fits-all. You get to choose what’s most important to your company—values like excellence in the ordinary, focused intensity and unified teamwork. Then you can hire folks who share those values and motivate your team to protect them as you grow.

When you’re already bending over backwards every day to keep your business moving full speed ahead, you may wonder if culture really matters. The short answer is yes. Workplace culture isn’t some fluffy HR rah-rah tactic that makes more work for you. A healthy company culture frees you and your team to do work you love and have a more positive impact on your customers.

The way your team experiences your business has a major impact on how effective they are in their roles. A miserable work environment (maybe even what you’d call a hostile work environment) is bad for your business’ brand and growth potential. It’s also lousy for your team members’ productivity and mental health. The opposite is true too—a healthy culture keeps your team happy and engaged in their roles, which helps your business grow. In fact, businesses with the highest employee engagement are 23% more profitable than those with low employee engagement.³

With all that in mind, you can’t afford to turn a blind eye to your work environment. So let’s be crystal clear on the symptoms of a toxic work environment. Then you can prevent it from spreading into your business.

10 Characteristics of a Toxic Work Culture

1. Team members don’t feel safe to communicate openly with their leaders.
2. Passive, aggressive or passive-aggressive communication is the norm.
3. Illegal, dishonest or unethical behaviors are tolerated.
4. Turnover and team member absenteeism are high.
5. Morale is low.
6. Leaders pressure their team members to work long hours, not take vacation days, and neglect work-life balance.
7. Team members fear failure or being fired without warning.
8. Gossip, cliques and work-related drama go unchecked.
9. You have so many poor-performing donkeys on your team that you can’t attract thoroughbreds.
10. Leaders use a transactional, micromanaging style of leadership instead of inspiring and motivating their team through transformational or servant leadership.

Examples of Great Workplace Culture

Now that you know what you don’t want in your company, what’s a healthy model to shoot for? Here are some examples of thriving workplace cultures:

Zappos

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This online shoe giant consistently gets ranked as one of the best corporate cultures in America—and that doesn’t happen by accident. When describing its work environment, Zappos said, “We’ve learned that if you identify your company’s core values, hire by them, onboard team members by them, and truly live by them, then your business is on a long-term path to success, profit and growth.” From its hiring practices to customer service to work environment, Zappos reinforces the company’s core values.

BELAY

BELAY was named one of Inc. magazine’s Best Workplaces of 2021 and listed in FlexJobs’ Top 100 Companies to Watch for Remote Jobs in 2023. The virtual staffing firm has built an engaged team and award-winning culture—even while working 100% remote. BELAY knows how workplace culture is built: with values, not gimmicks. “[Our culture is] not Ping-Pong tables, fully stocked beer fridges, and nap pods,” BELAY explained on their website. “We instill our mission and values of gratitude, teamwork, vision, passion, fun and God into every one of our nearly 1,200 remote workforce team members.”

Ramsey Solutions

Yes, Ramsey Solutions is known for our culture too—one that attracts crazy-talented thoroughbreds who work and play hard on a serious mission of hope. The company’s culture is built on values like:

• Righteous Living. We believe character matters. All the time.
• Crusade. We are crusaders doing work that matters.
• Self-Employed Mentality. We all care and take responsibility like we own the place.
• Family. We balance family and working hard.

And some of the perks that flow out of those values are healthy communication, work (and service) team members love, flexible schedules and the freedom to be at work when we’re here and at home when we’re home. That’s why thousands of people apply to work at Ramsey Solutions every year.

6 Tips for Improving Your Workplace Culture

Okay, so workplace culture is a big deal. And whatever your culture is like, remember this: If you’re a leader, you’re either creating it or tolerating it. If you think your business needs to change, decide what you want your workplace culture to look like, and do the hard work to move it in that direction. Here are six ways to improve a toxic work environment—and to make a good culture great!

1. Lead With Values

Lead your business with strong core values. Your values clearly define what your business stands for (and what it doesn’t). So when you commit to them as a company, you create a culture where people with similar values can love the work they do—and thrive.

Core values communicate:

• What you expect from your team
• What your team can expect from you
• How your business should interact with customers

Your core values also help you make good hires, better business decisions and a strong impression in the marketplace. So, if you haven’t already, think about what you want your business to stand for and write 

out your company values. But keep in mind that defining your values isn’t enough—you have to live them out. And your team needs to do the same.

2. Give Your Team a Mission

For many business owners, a mission statement is just a checked box—something they put on their website and forget about. They don’t really use it to inspire their team, make decisions, or drive their business forward. But doing that has a negative effect on company culture, team member engagement and productivity.

Mission is so important that in The State of Work 2021, over half of U.S. employees said they would take a pay cut for a job that provides more meaningful work. Bestselling author and speaker Simon Sinek said it well: “Working hard for something we don’t care about is called stress. Working hard for something we love is called passion.” To have a purpose-focused culture, ask yourself, Why does my business exist? Then lead your business toward fulfilling that clear mission.

3. Level Up Your Hiring Process

The people you invite to join your team have a big impact on the health of your culture. Chances are, you’ve made a bad hire before. (We get it. Welcome to the club.) But just one bad hire can hurt morale, productivity and your business’ reputation. And whether a team member chooses to leave or you show them the door, turnover is expensive—to the tune of nearly $15,000 every time you lose one.⁴ That’s a pretty hefty incentive to hire carefully.

You don’t want to look for skills and experience alone. Look for character qualities that align with your company’s core values—and take your time! We know sometimes you just need to get someone, anyone, with experience in the door. But the biggest mistake you can make is rushing the process. It takes time to get a clear sense of a person’s values, personality and passions so you can gauge if a candidate is a good fit for your team.

We recommend a thorough approach when it comes to adding new members to the team. Twelve components, to be exact. That may seem like a lot of time and effort, but remember: Hiring the wrong person can cost you a lot more.

Related article: How to Hire Employees: The 12 Components to a Good Hire

4. Stop Tolerating Office Gossip

Workplace gossip is par for the course. No big deal, right? Wrong! Gossip is destructive—it can kill team unity. We define gossip like this: Saying something negative about anyone or anything to someone who can’t do anything about it. Team members only need to tell their leaders about the bad stuff—not each other—because their peers can’t fix it. And sharing the bad stuff in the name of venting just creates drama, speculation, mistrust and confusion.

Here’s a smart rule to live by: Pass negatives up, and pass positives all around.

All this talk about gossip may bring to mind some habits in your own conversations that need to change. The good news is, if you're the leader, you’re the problem and the solution. So commit to setting an example for healthy conversations. Then communicate to your team that you won’t tolerate gossip at work anymore and stick to your guns. You have to follow through and hold people accountable to your no-gossip policy if you want to remove gossip from your work environment. 

Related article: Gossip Is Poison to Your Team

5. Communicate With Transparency

When people don’t have all the information, they tend to jump to conclusions. Some people also have a bad habit of assuming the worst. That’s why companies with winning cultures talk openly with their teams. You don’t have to share everything, but you do need to be transparent with your team to build trust. Communicate early and often with your team—about the bad stuff and the good. 

Here are a few topics to cover with your team often:

• The mission of the business
• Core values
• Vision for the future
• Team transitions and changes
• Revenue goals and how the business is performing
• The why behind business decisions
• Your appreciation

All these things build deeper, stronger connections with your team and keep everyone on the same page. 

Related articles:

How to Communicate Effectively

10 Easy Ways to Show Employee Appreciation

6. Show Them the Money

Money isn’t the only thing that matters to team member engagement, but it does matter. Do you want people who are super fired up to help your business win every day? Then make sure you’re paying them well and incentivizing them for excellent work.

Ramsey Solutions uses many compensation plans—from commission for salespeople to monthly profit sharing to bonuses. Even if you can’t overhaul your entire payroll, you can come up with other creative ways to reward your team (like team outings, complimentary lunches or a surprise gift card for that person who went above and beyond during a tough week). 

Related article: 6 Small-Business Money Mistakes (and How to Avoid Them)

What’s Next: Do the Hard, Good Work to Build a Healthy Work Environment

Changing workplace culture is hard—but you can do it, and it’s worth the effort. When your people work together and love what they do, there’s really nothing you can’t achieve as a team. At every stage of business, culture matters—whether you’re a Treadmill Operator, Pathfinder, Trailblazer, Peak Performer or even a Legacy Builder. But you’ll find it’s best to focus on culture in the Trailblazer stage and beyond. This is when you’re ready to work on your business instead of just in it.

If you’re not sure which stage you’re in, check out our free EntreLeadership Stages of Business Assessment. You can also learn more about the Stages of Business and how to inspire a strong workplace culture by listening to The EntreLeadership Podcast. You’ll get real-life leadership insight from respected leader and small-business expert Dave Ramsey.