What is negative corporate culture?

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Organizational culture should be the vision you have for your company, but this is not always the case. Only 12 percent of employees believe their company is effective at driving their desired culture. Another 64 percent feel they do not have a strong work culture. Whether you are aware of it or not, your company has its own culture. Without direction and positive influences, negative factors can take hold, shaping your culture in a way that can become harmful for your business.

These elements can hinder your company’s development of an effective culture:

1. Poor communication.

Companies must ensure leaders at all levels communicate values, vision, norms, goals and major changes effectively and regularly so that employees fully understand the processes taking place. When there is little bottom up communication, employees don’t feel their voice is being heard or feel intimidated to speak up, encouraging fear rather than respect.

A survey by the American Psychological Association found that 1 in 4 employees don’t trust their employers, and a study by Fordham University found that roughly half of managers did not trust company leaders. People will never be happy when jobs are being cut, but taking time to communicate the reasons for downsizing and where the company is going shifts the mood from abandon ship to mutual understanding.

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2. Toxic employees.

Too much competition and a toxic work environment lead to a decrease in knowledge sharing, an increase in company politics and a transfer of destructive norms. A Harvard Business School study found that each toxic worker costs a company $12,000 in turnover costs.

Employees exposed to a toxic worker are 46 percent more likely to be fired for misconduct themselves, resulting in the spread of toxic behaviors to the rest of the team. This is magnified when the individual is in a position of authority, causing a cascade effect from managers to employees. While it may seem common sense to hire the candidate with the best technical skills, hiring for culture fit will help you to maintain the vision you have for your company.

Related: What to do When Your Company is Being Held 'Hostage' by a Toxic Employee

3. Focus on profit.

Deloitte found companies that don’t have a strong sense of purpose tend to focus more on the bottom line (69 percent) and short-term returns (52 percent). A combined Columbia and Duke University study, found that a focus on figures over people can encourage unethical behavior. Shiva Rajgopal of Columbia University explained, “Our research provides systematic evidence -- perhaps for the first time -- that effective cultures are less likely to be associated with short-termism, unethical behavior or earnings management to pad quarterly earnings.”

Several scandals that have appeared in the media lately, including Volkswagen, Toshiba, Zenefits and ANZ Bank, have all been attributed to toxic cultures that encouraged unethical business practices.

4. Resistance to change.

Phrases such as “we always do things this way,” “that won’t work here” and “it’s not my problem” hinder progress. Google’s study on collaboration found that within 258 companies, 73 percent of employees believed their company would be more successful if they were encouraged to work in flexible and collaborative ways. Yet the biggest barriers to creating a culture of collaboration were changing working styles and habits (22 percent), a lack of incentives to work collaboratively (17 percent) and a lack of leadership (14 percent).

Related: Should You Ditch Annual Performance Reviews? It Depends.

5. Performance management.

A company’s performance management system can also have a negative influence on its culture. Though once extremely popular, stack ranking has now been discredited by HR experts, thought leaders and even its founder, General Electric. By ranking employees against each other, the system generates a fear of failure. This leads to low risk-taking and innovation.

Another popular system, once a year performance reviews, hinder modernisation and learning agility by failing to provide coaching and feedback at a pace that matches industry changes.

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Your company’s culture has a profound effect on the ethical behavior of your employees. A positive corporate culture encourages employees to behave in responsible, ethical ways, resulting in a happy workplace, team collaboration and employee empowerment. Negative corporate cultures, on the other hand, can promote unethical behavior, causing a wide variety of problems.

When managers are unethical, employees will emulate the bad behavior. Eventually, the unethical environment will hinder business. For example, if managers take credit for subordinates’ work, some employees will start to imitate the behavior. Honest employees will begin to protect themselves by hiding their work from their colleagues and supervisors. The resulting lack of teamwork and collaboration will limit the company’s potential.

In contrast, if managers model ethical behavior for employees and reward good behavior, the positive corporate culture will instill how ethical behavior makes good business sense and helps everyone succeed, according to the book “ORGB,” by Debra L. Nelson and James Campbell Quick.

If a company’s culture rewards employees who pursue personal advantage rather than focus on contributing to the performance of the entire team, employees might overstep ethical boundaries to get ahead. For example, suppose a manager rewards top performers without analyzing how they achieved their results. Some employees might use unethical methods to move ahead, such as stealing others’ ideas. Once a few dishonest employees prosper in this way, the rest of the employees will soon see that stealing others’ ideas is an effective way to move up in your company.

A lax corporate culture makes it easy for unethical behavior to prosper. If your company doesn't act quickly to punish or remove unethical employees, they will run rampant over ethical employees. As a business owner, you have a responsibility to maintain order within your organization by disciplining employees who are ethically out of line and by rewarding ethical employees.

Corporate cultures that discourage honest discussion allow unethical behavior to spread unimpeded. Instead, a company should encourage employees to report unethical behavior before it becomes a widespread problem. Providing whistleblowers with protection and encouraging employees to report problems help foster an organization that is ethical from top to bottom, according to the book “Organizational Behavior,” by Don Hellriegel and John W. Slocum.

The good news is that, if you notice unethical behavior among your staff as well as sense a negative culture, you can assume the two are connected. Take steps to turn your negative culture towards a positive one, and much of the unethical behavior will cease. Unfortunately, company culture usually is the result of the attitudes of your leadership team, according to a Forbes article by Kerriann Worley, VP of sales for CBS Radio.

Changes, therefore, need to come from them, and it's hard for people to change the way they think and act. One way is to replace your current leaders with new ones who have positive attitudes. This person will probably have to come from the outside, because team members will have the attitude of the culture around them.

If you believe you have strong leaders and don't want to lose them, you can try to change some of their behaviors. Be open with them about what you want to accomplish. Identify the negative behaviors and what you want to substitute for them. For example, if hypercompetitiveness is a problem, team up rivals so they have to work together towards a common goal.

If unethical practices have been common, such as stealing from the supply room or taking two-hour lunches, be up front about what you want to occur. Hold a workshop to explain what constitutes unethical behavior. Let everyone know that these types of behaviors must stop, for the good of the company and fairness to co-workers.

As measurable actions improve, such as an increase in billable hours now that lunches are back to one hour, invite everyone to an impromptu celebration with light refreshments, and compliment them on beginning to turn the culture around.