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    Organizational Culture Makes a Difference

    Published September 18, 2017

    The 3 Hidden Costs to Every Organization

    Did you know your organization’s work culture is just as important as your business strategy? Workplace culture is just as essential, if not more essential than your firm’s business strategy and so, fostering a positive work culture should be your top priority. Unfortunately, organizations with complex hierarchies often forget the importance of organizational culture and its impact on the work staff.

    It may come as a surprise to you, but having a stressful, highly competitive work environment leaves a detrimental impact on the long-term outlook of the firm. A company having such a stressful working atmosphere often ends up at a disadvantage in terms of hidden costs. Read on to know about how a high-pressure work culture can inhibit your firm’s progress.

    1. Healthcare Costs

    An article, published in the Harvard Business Review, titled Proof That Positive Work Cultures are More Productive, cites a study conducted by the American Psychological Association which suggests a 50% or greater increase in healthcare expenditure associated with high-pressure firms. Each year, the galactic amount of $500 billion dollars is drained from the US economy only because of workplace-stress. In addition to this enormous cost, a total of 550 million workdays are lost each year due to job-related stress.

    It is no surprise that stress is one of the major causes of heart disease. In fact, belonging to middle and low-level hierarchies itself has a correlation to disease and death. A large-scale study, conducted by Anna Nyberg at the Karolinska Institute, on over 3000 professionals showed employees at the bottom of the hierarchy were at significant risk of heart disease.

    2. Disengagement Costs

    While many organizations foster a high pressured, cutthroat work environment to ensure engagement of employees, in fact, it proves to be counterproductive. According to years of research and dozens of organizational theories, inevitable stress leads to disengagement in the long term. Engagement in work makes employees feel secure, valued and respected but it works negatively when employees are subjected to high pressure, causing them to lose interest.

    There is a high cost associated with disengagement. In two separate studies done by Gallup Organization and Queens School of Business, disengaged workers were reported to have high absenteeism rates, more workplace-related accidents and more errors and defects in their work. Conversely, firms with a higher engagement rate enjoy significantly more job applications.

    3. Retention Costs

    Possibly the most impactful cost of having a negative work environment is the lack of loyalty. Firms where employees are pressured into working harder do not wish to stay at the job longer, even when they are offered monetary perks and benefits. The high turnover rates indirectly cost the firm for recruiting and training new candidates.

    Big companies often offer perks such as gym memberships and flexible work schedules, but employees still hold workplace wellbeing dearer than material benefits, according to a Gallup poll.

    Want to know more on how to improve your Organizational Culture in the workplace? We would be excited to give you our best ideas. Please Click here to connect with one of Magna Leadership’s advisors.

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