Culture of Fear for a Better Bottom Line

Category Business

Company culture makes a difference for employees, which means hiring and retaining talent that effectively meets goals. If a company is leading with fear and lack of self-awareness, the company is more likely to have a high turnover. “If your organization doesn’t have a healthy culture, then two things can happen. First, the workplace environment can be unpleasant and friction-filled, which ultimately may lead to attrition by your best employees,” said Ken Staut, founder and CEO of GrowthFountain, an equity crowdfunding platform. “And second, your organization won’t reach its full potential, because not everybody within your organization shares the same values or buys into the company mission.” “People won’t stay [at the company],” said Lior Rachmany, CEO and founder of Brooklyn-based, Dumbo Moving + Storage. “If people feel overly watched or that they will get shouted out if they make a mistake, they will leave your company as soon as they can.”

That attitude comes at a price. It’s costly to replace employees. According to a CAP study, to replace an employee who earns $30,000 to $50,000 a year, it will cost a company 20 percent of that employee’s annual salary. For example, to replace an employee who makes $50,000 annually, it would cost the company $10,000.

“A negative, fear-based work culture can absolutely affect the bottom line of any company because replacing unhappy employees is expensive,” said Phil Shawe, founder and Co-CEO of TransPerfect,  a translation and content management company. “Each time you lose an employee, whether they were a high or low performer, it costs the company a lot to interview, hire and train each new hire.”

 

Positives of a healthy culture

It’s possible leaders of companies see “positive culture” as startup culture. You don’t need to provide employees with getaways or a beer tap if that doesn’t match your company’s values. Rather, making employees feel welcome and part of the process goes a long way.

“Life is too short. If team members aren’t having fun, if they don’t enjoy the environment where they spend most of their waking moments, they’ll look for something else to do,” Staut said.

The positives to having a good company culture are increased motivation to come into the workplace, Shawe said.

This means a larger emphasis on the creative flow of ideas and collaboration, along with a higher retention rate of employees and promotional hiring from within, he added.

“If you have a good culture, your employees will be more open to learning/being mentored because they will trust your leadership,” Rachmany said.

 

Fixing the culture

It can be an overwhelming task tackling such a sweeping problem. Fixing company culture isn’t an easy undertaking, but it can be done. It takes hiring and retaining the right people. [See Related Story: 4 Ways to Improve Your Company Culture]

“There’s an old saying: If you hire someone for a paycheck, they’ll work for your money. But if you hire someone who believes what you believe, they’ll work for you with blood, sweat and tears,” Staut said. “Passionate employees who believe in your company’s mission and share your company’s values will help you succeed.”

Matthew Gonnering, CEO of Widen, a digital asset management company, suggests these five approaches to move your company in the right direction:

  • Don’t hire emotionally ignorant leaders. Some leaders instill fear in people because they don’t know any other way to motivate; they are not self-aware and not empathetic to the needs of others. Keep them out; encourage self-discovery.
  • Leave your baggage at the door. New hires bring all kinds of behaviors with them that are not natural: At their previous job, they were told to not question, not share, don’t think, just do. Not only is that not normal, it pollutes the work culture of their new job. A business  needs inquisitive employees who are willing to question everything. We think on-boarding mentors can help with this.