A dysfunctional culture within a company can seriously hinder its success, or even break a business. As Peter Drucker said: “Culture eats strategy for breakfast.” Yet often, businesses focus on revising strategy again and again before they ever look at their culture as a possible reason for their struggles. As more and more organisations around the world take a culture-lead approach to business, knowing whether or not your business has a healthy culture becomes increasingly important if you want to compete.

 

The signs that a company’s culture is dysfunctional aren’t always instantly apparent, though. It’s kind of like the story about the boiling frog – sometimes the culture deteriorates subtly over time until all your best people and clients start jumping ship. Since it’s not ideal to wait for that to happen before doing something about an ailing culture, here are 5 signs you could look out for if you want to nip the decay in the bud.

 

1. Increasing absenteeism

According to Gallup’s 2017 report on the State of the American Workforce, disengaged employees are absent from work as much as 37% more often than engaged employees. Disengaged employees, in turn, are a sign that your company’s culture is not as healthy as you may like to think it is.

 

If one or two employees tend to call in sick every Wednesday, that’s a reason to be concerned for their wellbeing. If the number of people taking sick leave, arriving late or leaving early, or abusing the company’s flexible working hours policies across your business is showing an upward trend, this speaks to an issue in the company’s culture.

 

2. Leaders or top performers that defy the rules

A healthy company culture thrives because of a shared set of values and behaviours that everyone identifies with and embraces. When influential individuals, such as people in leadership positions or star performers, start to defy those shared behaviours and get away with it, it’s a sign that your culture is becoming dysfunctional.

 

By rules, I don’t mean bureaucracy or red tape that nobody can remember the point of – often breaking these rules can lead to great innovations and successes because people are trying something different. I’m referring more to the social rules – the agreed behaviours that form the core of your company’s value system. These kinds of rules govern, for example, how people respond to a colleague’s family emergency, how mistakes are handled, how praise and recognition are given and so on.

 

When powerful and influential people start to behave in a way that contradicts the company values – punishing mistakes instead of helping people learn from them, for example – you likely have a problem with a dysfunctional culture. Not because they’re going against the grain as such, but because they are powerful and influential enough for others to emulate their behaviour. We’ve all heard friends and colleagues complain about the politics at work making it impossible for them to get anything good done anymore. This is how it starts.

 

3. Drops in profitability or productivity at the team level

Another highlight in Gallup’s study is around productivity and profitability. Disengaged teams are as much as 18% less productive, and 15% less profitable. These are sneaky statistics because there can be any number of alternative explanations for them. The economy is battling, there’s been a delay in confirming a big order or project, we’re waiting for feedback from the client, the sales team isn’t bringing us business and so on. It’s up to a business’ leadership to determine whether these reasons are valid in full, and for how long, or if they are only part of the problem.

 

In a dysfunctional culture, these kinds of challenges are the perfect excuse to abdicate responsibility and disengage. In a healthy culture, where employees are engaged and find purpose in their work, you’re more likely to hear a cry of: “Challenge accepted!”

 

4. A rampant grapevine

Rumours and innuendo are difficult to measure, and the bain of existence for internal communicators, leaders and anybody who has a hand in driving and sustaining a healthy culture. But as hard as it is to measure grapevine activity and water cooler complaining, it’s just as difficult to avoid in a dysfunctional culture. The more you find yourself hearing negative rumours or complaints, the more dysfunctional your culture is becoming.

 

5. High stress levels

South Africa is the second most stressed country in the world according to Bloomberg. There are many reasons for this, but they don’t give companies exemption from taking at least some responsibility. Our work and work environment is one of the big contributors to our stress, and dysfunctional culture can make for very unpleasant work environments.

 

If your company offers medical aid or an Employee Assistance Programme such as Kaelo’s Ask Nelson or ICAS, you likely have access to reports that will help you identify how much stress your employees are under and whether it’s within your industry’s norm or not. If you’re seeing upward trends or steady results that are higher than the norm, you should start investigating whether you have a company culture problem that is contributing.

 

If you don’t have access to data like this and don’t have the budget to implement this kind of programme, look out for stressed behaviour in team members and colleagues. Increases in sick leave being taken can be an indicator of high stress levels as well.

 

There are many more ways to identify a company culture heading towards crisis, but these five things can be early warning signs. Step in early to avoid the next phase – losing your top talent, losing your best clients, trouble attracting the skills you need and loads of complaints on Hello Peter.