Consider New Data Sources to Measure Workplace Toxicity
August 16, 2022
A 2022 survey conducted by Flexjobs found that toxic company culture is the number one reason people quit their jobs (62%). It’s clear employees want and expect more from their employers today, and many will prioritize ethics over pay. As Boomers exit, Millennials and Gen Z are exceedingly conscious about where they spend their time and energy. In fact, according to Great Place to Work, Millennials are over 22 times more likely to stay at their job for a long time when they believe their company has a high-trust culture (almost two times more than Baby Boomers).
But while toxicity can be bad for business, how damaging is it really? Toxicity shows up in a number of places, from employee attrition, engagement, morale, and productivity to obvious revenue offenders like penalties, settlements, and reputational damage. Looking at just one metric, employee attrition, it’s estimated that toxic culture cost U.S. employers $50 billion per yearbefore the Great Resignation. On the flip side, companies with healthy cultures have three times greater total returns to shareholders.
Costs directly linked to toxicity:
Toxicity cost businesses more than $44 billion per year before the Great Resignation (2019). In 2022 that number equates to $50 billion.
As an HR or compliance leader, you understand the widespread risks of toxicity and the upside of great company cultures. But in order to build a successful program, you need buy-in from the business. That entails proving that your investments have or will positively impact the business. And that requires measurement.
By leading with a data-informed understanding of your ethics and compliance training programs, you can prove that your initiatives are valuable and work to serve the needs of the business while building a more ethical, toxic-free culture.
How to Track & Measure Efficacy: A Data-Informed Approach
When measuring efficacy, you can use data to correlate the value that your solution delivered to the business for example:
Improved ethical behavior is linked to training
Higher engagement is a result of better communications
Lower turnover is caused by a decrease in toxicity
These behaviors essentially become key performance indicators (KPIs) to help you measure the effectiveness of your investment while helping prove the case for future investments.
Measurement also provides you with the insight to move from hindsight to foresight, enabling you to be proactive with the solutions your program needs to be successful. The more you know about what’s actually happening in your org, the more influence you have on positively impacting your compliance and ethics program outcomes.
3 Steps for Measuring the Efficacy of Your Program Investment
By measuring your program effectiveness, you can prove that the steps you’re taking to create a more ethical culture are working while also increasing recognition for the value that you’re driving across the organization. Or you can identify areas for improvement and investment.
A compliance and ethics program does more than protect company revenue from regulatory fines, penalties, and litigation. It also contributes to profitability in the form of lower turnover, better talent acquisition, and engagement–while also contributing to less quantifiable impacts such as product innovation, brand reputation, morale, and more.
Here are a few tips for tracking and measuring your program and investment efficacy:
Define your optimal KPI mix and start tracking: Where will the value of an ethical, toxic-free culture show up? Reduced turnover, retention, top talent, brand reputation, etc. These data can be used to prove either what is working or what is not.
Devise a formula to measure based on what you want to prove: Using your defined KPIs, you can prove that your investment solved a problem (or is working toward solving) and how it’s contributing to the overall ethical balance sheet of your company. You can use the examples below to get started, but of course, tailor them to the needs of your business. We’ve used the letter X in the examples below so you can fill those spaces in with the values that are relevant to your business.
We invested [$X] to improve non-compliant and toxic communications. As a result of this technology investment, over the last [X time]:
Voluntary turnover decreased by X%
Toxic and unethical behavior cited in exit interviews decreased by X%
Reports of retaliation dropped by X%
Toxic behavior on digital channels decreased by X%
We know this because [X language] associated with [X toxic behavior] decreased by X%
Top talent hires increased by X%
Engagement improved by X%
Brand perception improved X%
Calculate value: The value you drive will not always be a hard dollar amount. Be sure to also communicate efficiencies gained, such as reduction in time and personnel to develop curriculum and train employees.
These improvements equate to [$X] saved in employee turnover and acquisition efforts.
Likewise, with X solution we are now able to more effectively target toxic behaviors and adjust our training program and communications efforts accordingly.
In the end, measuring the impact of compliance and ethics initiatives can be elusive. There’s no one right formula. Every company is unique, with different solutions in place, challenges, and cultural DNA. Start by targeting the key behaviors you want to change and then continually track those behaviors.
“Your culture is defined by the worst behaviors that you’re willing to accept as an organization,” says Karen Jones, Managing Director at Denison Consulting.
But do you know what those worst behaviors are? Not without measuring your performance.
Doing the work to expose bad behavior means making the right investments to continually stay in the know, stay curious, and use data to inform your program’s strengths and weaknesses. This will elevate your company culture over time.
Employees have made it loud and clear that fair, equitable, and just cultures are a top priority. Now is not the time for companies to sit on their heels. Now is a time to be proactive about ethical behavior and make culture a competitive differentiator. The shifts in the economy mean that every dollar counts, and reducing turnover, retaining top talent, improving engagement, and reinforcing ethical behaviors are proven ways to positively impact the bottom line.