Have you recently heard a friend or family member refer to their work environment as toxic? Most people would answer yes. Yet, when you ask human resources or leaders the same question, they will be more likely to explain how the overall feedback relating to organisational culture is positive or demonstrates significant improvement.

It can be argued there has never been a time when a greater focus on organisational culture has occurred in Australia. This is supported by numerous government initiatives to legislate these improvements, like the Fair Work Legislation Amendment (Closing Loopholes No.2) Act 2023. So why is there a disconnect?

McKinsey's research suggests a disconnect exists between how employees and employers perceive mental health and well-being in organisations. This study across 15 countries found that employers tend to overlook the role of the workplace in driving employee mental health and wellbeing, engagement and performance. Work environments can lead to toxic behaviour, often in isolated pockets – at a site, within a team or from just one individual. In these circumstances, a workplace is not created equal for all employees, despite the efforts of senior leaders and human resources. Microcultures are common in organisations, where one group within a larger organisational culture has beliefs or interests at variance with those of the larger culture; they can be unifying, divisive or both.

While different aspects of toxicity, such as disrespect, unethical behaviour, and abusive management are symptoms of toxic cultures, the same three factors are the most powerful predictors of toxic behaviour in the workplace: toxic leadership, toxic social norms, and poor work design.

1. Toxic Leadership

Leaders are usually the first place that blame is pointed when a culture becomes toxic, and rightly so. With more than 60 percent of negative workplace outcomes due to toxic workplace behaviour, it is the responsibility of leaders to address issues quickly and effectively.

Employees look to leaders for guidance on culture but tend to discount lofty statements about abstract values. Instead, they closely observe what leaders do for signals about what behaviour is encouraged, expected, and tolerated. Therefore, they don’t understand when leaders fail to address toxic cultures or behaviours in the organisation, which impacts morale significantly. Most people have an innate sense of what is fair or just, which is why performance suffers when employees believe a situation is unfair. This real or perceived injustice often seems worse when much of the organisation has a good culture. Over time, this can lead to distress or toxic behaviour by the impacted employee/s.

Unfortunately, many employees feel uncomfortable expressing concerns about toxic leadership in company surveys or directly with their manager. This is why how an organisation measures culture is critical – averages can be disadvantageous for employees experiencing toxicity, which means drilling down into sites, divisions, and teams is essential. Complementing this approach with coaching to enhance leader awareness and attitudes is recommended.

2. Toxic Social Norms

Social norms describe what is deemed acceptable in the workplace. Leadership and social norms are very often intertwined, but not always.

A common example is a microculture created by high-performing sales teams. In such a team, which may contribute significantly to organisational growth and even innovation, the rules may start to differ over time because leaders don’t want to disrupt outcomes. Yet this can create an individualistic culture in an otherwise team environment. It can also result in a reluctance for leaders to correct inappropriate behaviour or a lack of conformance to processes.  Another example is where practical jokes are accepted, which can be fun for some employees and cause distress for others. In both instances, animosity with surrounding employees may escalate, increasing organisational risk.

The diversity of a team may also impact social norms. Meta-analysis of nearly 400 studies found women are more likely to experience toxic culture than men, and most of this difference is driven by mistreatment linked to their gender, specifically sexual discrimination and sexual harassment. Underrepresented minorities were more likely to experience bullying and disrespectful behaviour in the workplace. This is why diverse teams can play a significant role in improving culture.

The above examples demonstrate how easily microcultures can form. We know that organisations are dynamic, which means they can shift from positive or at least acceptable to toxic quickly. Australian employers have an obligation to provide a psychologically safe work environment for every employee and a positive duty of care to prevent discrimination and harassment. However, not all toxic behaviours fall foul of the law, yet they can still impact employees.

Setting and reinforcing clear expectations of behaviour at all levels across the organisation will assist in reducing toxic social norms. Establishing a culture for continuous feedback, where employees get used to giving and receiving feedback and feel safe to do so, will also help.