Does Workplace Culture Impact Productivity and Performance?

We’re conditioned to see hard-charging, relentless commitment to work as the key to success. Research, however, has shown that exactly the opposite is often true. Not only is a winner-takes-all environment detrimental to an organization’s productivity, a pleasant, positive environment actually yields better results for employees and employers.

Research suggests that engagement in work is associated with feeling valued, secure, supported and respected, and it is generally negatively associated with a high-stress, cutthroat culture.


Consider studies published by the Queens School of Business and the Gallup Organization that found that disengaged workers were absent 37 percent more than engaged workers. These disaffected employees had 49 percent more accidents and 60 percent more errors and defects.


Organizations with low employee engagement scores experienced 18 percent lower productivity, 16 percent lower profitability and 65 percent lower share price over time.


Research also shows that workplace stress leads to an almost 50 percent increase in employees deciding to look for a new job. And, as most managers know, high turnover costs high dollars. According to the Center for American Progress, replacing one employee costs about 20 percent of that employee’s annual salary.


Meanwhile, businesses with highly engaged employees received 100 percent more job applications.


Realizing this, many companies have instituted generous employee benefit programs and offer perks like gym memberships, on-site daycare and the ability to work from home. However, as well-intended though those may be, the perks are not likely to compensate for a negative work environment. Another Gallup poll showed that employees actually prefer workplace wellbeing to material benefits.


Workplace culture, be it positive or negative, has an impact on employees’ happiness, longevity and the company’s bottom line. And freebies and perks don’t make up for an unpleasant environment. So what can managers do to fix a toxic office? We’ll look at some ideas in the next post in this series.

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