Do you know how much workplace toxicity could be costing your organization per year? Many companies prefer not to know—to believe their employees are leaving because of bigger paychecks. But the truth is, they just want a better place to work—free of unethical and toxic behaviors. This means HR and compliance leaders have an opportunity to make the case for stronger programs and can gain investments in those programs.
The Society of Human Resources Management (SHRM) estimates that 1 in 5 employees left a job at some point in their career due to toxic workplace culture. That’s 20% of U.S. workers.
Doing some simple math, here’s how to calculate workplace toxicity’s impact on the bottom line of a company employing 10,000 full-time, salaried employees (spoiler alert: it can cost up to $60,000,000):
Voluntary turnover rate = 25% based on 2021 Bureau of Labor statistics (=2500 people at a company of 10,000)
20% of employees leave due to some form of toxicity (1 in 5) based on SHRM research
20% of 25% attrition = 500 people at a company of 10,000
The average cost to replace an employee = one-half to two times the employee’s annual salary according to Gartner (for an FTE making $60,000 per year, that equates to $30,000 to $120,000 in fully loaded recruiting and training costs)
$30,000 to $120,000 in recruiting & training x 500 people = $15,000,000 to $60,000,000 per year in voluntary turnover costs related to toxicity alone
Two years of “uncertainty” and social unrest have led to certain economic decline. Making the business case for any investment just got harder—let alone investments in ethics and culture, which have traditionally (and tragically) been viewed as “soft” business impacts. But the hard and harsh reality is:
Companies that do not invest in ethical, fair, and just workplaces risk current and future revenue. Not just in the form of fines and penalties, but people.
We are at an inflection point in our society. Employees have had enough and it’s not all about pay, it’s about better places to work. With up to 65% of employees looking for new jobs and turnover rates at historic levels, companies are losing top talent and precious institutional knowledge at alarming rates. And it’s keeping executives up at night. In a 2022 PwC C-Suite Survey, 48% of executives say that talent acquisition and retention challenges are the biggest risks to achieving growth targets.
Executives need to take note of shifting employee expectations because pay alone will not solve the problem. To stop the bleeding, companies will need to invest in building ethical, toxic-free workplaces that differentiate their brand and attract and retain talent.
Fairwords is here to help. Reach out today to learn about how in-the-moment training can reduce toxicity in your workplace.