How a Bad Company Culture Can Inhibit Revenue

Those who work in an office setting know how company culture affects not only the overall mood within the four walls of the space but also the mental and physical well-being of every individual in it. 

Your organization’s culture is composed of a variety of factors including social, material and ideological. Respectively, these refer to members’ roles and authority, expectations and achievements, and values, beliefs and ideals.

Some organizations pursue a more aggressive approach to company culture in an attempt to maintain or increase its sales. However, studies show that negative workplace ethos can have harmful effects on revenue. Here’s how.

How a Bad Company Culture Can Inhibit Revenue

How Bad Company Culture Negatively Affects Revenue

Overly Stressful Conditions Impact Employee Health

The term “burnout” has become a staple buzzword in many industries because of the prevalent negative cultures and behaviors in the workplace. Job burnout is known as a kind of work-related stress in which a person feels physical and emotional exhaustion

It is also a state where the individual has reduced feelings of accomplishment, as well as loss of personal identity. Ultimately, it has negative impact on physical and mental health, which can have direct effects on performance and attendance, as well as the revenue it yields.

According to reports, high-pressure organizations spend 50% more on healthcare costs than those with a balanced environment. Moreover, a study shows that missed work due to sickness and other reasons can result in $225.8 billion in productivity losses.

Various factors can create an overly stressful workplace condition. This includes a lack of control and recognition, lack clarity about expectations, workplace dynamics, extreme expectations, socialization and boundary issues, and lack of work-life balance. 

Ineffective Culture Results in Poor Customer Relations

Those who work front-facing jobs or jobs that require direct interaction with customers are prone to burnout. This is because they not only deal with managers and teammates, as well as various types of customers, some of which could have less regard for good manners.

When these individuals move in an environment where the culture is ineffective and even toxic, their physical and emotional health are more likely to suffer, which can result in poor customer relations.

This can create a bad reputation for the company and can turn away existing and prospective clients. In turn, this can cause a drop in sales and revenues

Inattention to Culture Results in Lack of Employee Engagement

Employee engagement refers to the commitment of employees. This is what pushes them to give their best performance and even goes above what is expected of them, which can contribute to revenue generation.

The thing about this concept is that it is treated as an approach to the workplace, with employee engagement as the end goal. Certain conditions should be met to achieve it including room for fostering an enhanced sense of self and well-being.

This means that the organization’s leaders should pay attention to cultivating its culture and the factors that shape it such conditions that make employees want to come to work, technology that aids in performing their job efficiently and effectively, and the actual space.

According to studies, workplaces that pay attention to and invest in these factors can rake in almost four times the average profit they get. They also report over twice the average revenue.

An Aggressive Environment Leads to High Turnover Rates

Lastly, an overly stressful and aggressive environment can result in an almost 50% increase in turnover, which leads to additional costs related to recruitment, training, lost expertise and lowered productivity. High turnover rates can also have an impact on morale.

As a solution, many companies create strategies to lower voluntary turnover. Their approaches include establishing a work environment that is conducive to work, flexible hours, work from home, and perks such as office gyms and other facilities.

This shows that their well-being is a top priority for them. However, job progression, bonus opportunities and salary increases are also effective incentives for workers.

How a Bad Company Culture Can Inhibit Revenue

Bottom Line

The negative effects of bad company culture can be far-ranging, not the least of which is revenue, it is important to evaluate your organization’s conditions and ethos to see whether changes should be made. This way, you can ensure the well-being not only of your company but also your employees.