May 13, 2025

Are you ignoring an important factor of your total cost of risk?

Your culture isn’t only about your people, it’s also about your bottom line.

Some management teams take an “if it ain’t broke, don’t fix it” attitude towards corporate culture, believing that, if they don’t see anything overtly negative, all must be well.

Unfortunately, some organizations have cultures where people are stressed, teams aren’t operating effectively, productivity is stagnant, and, if employees haven’t yet left the fold, they soon could.

A recent Society for Human Resources Management (SHRM) State of the Workplace report shows that only 56% of respondents rate their culture as Good or Excellent.

A 2022 SHRM study learned that more than 1 in 5 U.S. workers (21%) had quit their jobs due to workplace culture or politics.

Culture is often viewed as a “people” issue that can affect employee health and benefits, focusing on issues such as stress, lowered productivity, and lack of job satisfaction. But those results of a poor corporate culture ultimately have a fundamental effect on the financial side of your business.

How a poor corporate culture can lead to costly risk

It can result in a wide range of problems that could disrupt a company’s ability to effectively manage risk. Here is how a poor culture can decrease your financial bottom line.

Lost productivity

The Employee Benefit Research Institute reports that the average absenteeism cost to an employer due to the stress of working in an unhealthy culture is approximately $3,600 for hourly employees and $2,650 for salaried employees.

Losing key talent

The SHRM Q3 2024 Civility Index found that U.S. workers experiencing incivility at work take an average of 1.6 days off per month just to avoid it—and 57% of employees working in a poor culture are actively looking for a new job.

SHRM also discovered that workers in a positive culture are nearly four times more likely to stay with the organization.

It costs a lot to replace talent

SHRM research shows that replacement costs can be as high as 50%-60% of an employee’s salary with overall costs ranging anywhere from 90%-200%. That’s the result of the added costs of:

Recruitment
Onboarding
Separation costs such as severance pay
Temporary staffing

In addition, there are “hidden costs” such as:

Lost productivity
Lower morale
Loss of valuable experience and knowledge
Customer service issues
Increased workload for remaining employees

Loss of reputation

Difficulty recruiting new hires, especially once employees begin leaving
Strong, positive culture attracts competitive talent
A negative culture can create employees that provide subpar experiences for customers resulting in lost revenue
Those same employees can “poison the well” for the company with anyone inside and outside the company, particularly potential new hires

Safety issues

According to OSHA, 2 million employees will be victims of workplace violence this year. On average, 1.5 of every 1,000 employees will be affected. According to OSHA, organizations that have cultures that don’t allow workplace violence and actively work at reducing employee stress are less likely to experience violence.

Workplace stress

A negative culture is often the cause of stress in the workplace, leading to mental health issues, physical ailments, time away for medical reasons, overuse of the health plan, and potentially workers’ comp claims. According to the Employee Benefit Research Institute, financial stress—debt, student loans, living paycheck to paycheck—causes a 20% loss of productivity for the affected employee.

Culture can be a powerful tool for mitigating risk

As the psychologist Carl Jung once said, “You are what you do, not what you say you’ll do.” In other words, actions speak louder than words. Culture is all about how you act. Strong cultures can lead to high quality experiences for both employees and customers.

But how does that mitigate your risk? A positive work culture has been shown to:

Reduce workers’ compensation injuries by as much as 48
Decrease medical benefits costs in general by an average of 30%
Result in a 41% lower absenteeism rate
Make you 50% less likely to face employment practice discrimination lawsuits

You can see how having a strong workplace culture can help avoid financial damage to your company.

We can help you identify and evaluate your current culture

A lot of companies are uncomfortable with the idea that their culture might not be what they believe or hope it is. They view assessing and working on changing their culture to be difficult, expensive, and time-consuming. Our approach makes it easy to get started and find clarity on the work to be done to ensure your culture is supporting your employees as well as your business strategy.

What is the goal of doing our baseline culture assessment?

Learn the actions and language that enable your current culture
Discover what employees and leadership believe is your mission—and learn whether or not it’s being carried out
Find out the reasons your organization does what it does—in the way it does it
Unearth the beliefs that drive behavior
Define the cultural future you aspire to create

Once we have defined the state of your culture, we can help you develop a plan to create the culture you want through intentional action and focus on the following elements:

Positive leadership that continuously invests in people, gives employees more autonomy, and provides clear goals and purpose
Providing resources that help employees thrive, including support for mental, physical, and social well-being
Offering meaningful work and opportunities for career growth in multiple paths, appreciation and recognition, and transparent performance management
Open and consistent communication with regular coaching and feedback
Empathy from management to employees and vice versa

We can also help you develop the culture you want

We work with you to make the most of your strengths, mitigate or even eliminate the weaknesses, and develop a Culture Shift Action Plan to help you move forward.

The plan includes creating a “Culture Code” that defines the behaviors, attitudes, and actions (both leadership and employee) that help you build the kind of culture that supports everyone.

The plan also involves creating guidelines and agreements, so everyone knows and understands their roles in the process. It helps you evaluate why you’re doing what you’re doing to build a new culture as well as designing the “how.”