Canada is expecting a new wave of people quitting their jobs in 2022. What’s even more interesting is the main driver behind people leaving: toxic work cultures.

The US experienced record levels of employees quitting in 2021 - and so did Canada, though not at the same heights. Now a recent Bank of Canada survey shows that Canada is likely to see another wave in 2022, with 1 in 5 workers saying they expect to quit their current job in the next 12 months.

But why? The “Great Resignation” seemed predictable. Employees held off on making job moves in 2020, despite rising burnout, in order to maintain job security in the face of the pandemic and mass layoffs. Then once 2021 came it was time for action. That made sense, but it leaves companies wondering why, in 2022, we’re expecting yet another wave.

And the answer is toxic work culture.

Highlights we’ll expand on in this article:

Toxic work culture has risen to the #1 reason employees are quitting
Toxic culture is 10.4x more powerful than compensation in predicting how high a company’s turnover will be
High levels of innovation have become strongly correlated to high levels of turnover
Firing a toxic employee adds more than twice as much to a company’s bottom line as hiring a superstar

Toxic company culture is now the #1 reason employees are quitting their jobs

While compensation will always be a huge factor in retention, culture has now risen in importance. A recent study by MIT measured over 170 topics related to employee attrition and found that a toxic corporate culture is 10.4x more powerful than compensation in predicting whether a company would have high turnover. That’s huge.

**Source: MIT Sloan Study, Top Predictors of Attrition During the Great Resignation**
The authors analyzed the impact of more than 170 cultural topics on employee attrition in Culture 500 companies from April through September 2021. These five topics were the leading predictors of attrition. Each bar indicates the level of importance of each topic for attrition relative to employee compensation. A toxic culture is 10.4 times more likely to contribute to attrition than compensation.

A recent survey by FlexJobs revealed similar findings: toxic culture was the number one reason (62%) people said they recently or planned to quit their jobs. Further indicators of this issue continue to pile. For example, Google searches around this topic are surging. Searches for “toxic work environment quiz” are up 700%, “HIPAA violations in the workplace” is up 350% and “workplace mobbing” is up 190%. Meanwhile, “top workplaces 2022” has increased 500%.

What makes a culture toxic?

The word “toxic” can be a scary one. It feels a bit like the shadow of a monster. You don’t know how to describe it in words right away, but you know what you’re looking at it once it’s in front of you.

In the workplace, toxicity can include a variety of things such as bullying, harassment, unethical behaviour, a disregard for employee health, or human right violations. Among dozens of elements studied by MIT, it found that these three were leading elements of a toxic culture:

Failure to promote diversity, equity and inclusion
Workers feeling disrespected
Unethical behaviour

Consider having each of these expanded, defined a bit

High levels of innovation can be a success story or a warning sign

Work it harder, make it better. Do it faster, makes us stronger.

Yes, it’s a Kanye lyric. It’s also how many companies feel today as the pressure to innovate (and innovate fast) has reached a feverish boiling point. Rising consumer expectations, ongoing disruption and increasing competition have made innovation a do-or-die priority in most industries. However, it’s how companies are achieving that innovation that could be concerning.

You might have missed it, but in the MIT chart above High levels of innovation was the 3rd top predictor of high attrition.

MIT compared companies within their respective industries and found that those with higher levels of innovation also had much higher levels of attrition than their competitors. For example, employees of Netflix were 2.3x more likely to quit than employees of Warner Bros and employees at Tesla were 3x more likely to quit than employees of Ford.

**Source: MIT Sloan Study, How Culture 500 Company Attrition Rates Compare Within Industries**
During the Great Resignation, companies within the same industry have experienced varying degrees of attrition correlated to their levels of innovation.

But surely, employees want to be part of innovation? It’s true - being part of innovative work creates a sense of pride and purpose for most people. That’s why innovation is more of a correlated outcome than the true causation of attrition.

The problem arises when a company’s path to innovation is paved with longer hours, unmanageable paces of work, and heightened stress levels. In MIT’s research, they analyzed over 1.4 million Glassdoor reviews using a Natural Language Understanding platform and found that when employees rated their company’s innovation positively, they were also very likely to speak negatively about the worklife balance and manageable workload.

While being innovative is critical to success, the reality is that turnover has proven to be extremely costly to companies - both financially and in respect to productivity. So in order to remain competitive in the long term, and not just the short term, companies will need to evaluate how they can achieve a balance between being innovative and not driving all of their innovative employees away.

Firing a toxic employee is more impactful to profits than hiring an all-star

What’s even more interesting is that research from Harvard showed that firing a toxic employee adds more than twice as much to a company’s bottom line as hiring a superstar. The monetary savings they found from avoiding a toxic hire don’t even include other potential cost savings - such as avoided litigation and regulatory penalties or decreased productivity that comes from low morale. However, because companies are typically focused on who to add versus who to subtract from their organization, this opportunity for correction often goes unactioned.

This ripple effect doesn’t get talked about enough. Toxic people motivate other employees to leave the organization faster and in larger numbers, which diminishes the productivity around them. They also accelerate burnout for the employees who do stay, jeopardizing their coworkers’ mental health and performance. Furthermore, studies show that toxic people often feel overconfident which leads to undue risk-taking and costly outcomes.

Wondering how to identify a potentially toxic worker? Here are three key predictors research has found:

The person has a very high level of “self-regard” and selfishness. They rarely worry about how their behavior affects others.
The person is overly confident - taking big risks without proper reasoning and even engaging in misconduct because they think they can get away with it.
The person states emphatically that the rules should always be followed - no matter what.

Wondering if toxic work culture is an issue at your company?

Take The Quiz

Our take

Over the past couple of months we’ve had hundreds of interviews with candidates and have heard in detail why they are seeking out, or have at least become open to, new opportunities. And without a doubt, toxic culture has become a primary motivator.

One of the biggest issues around toxic culture (besides the obvious) is that it has become a taboo subject to talk about.

Employees are afraid to bring it up within their current companies. At the same time, they’re hesitant to ask questions about culture traits or worklife balance during interviews, fearing hiring managers will think they’re incapable of dealing with any level of stress. It’s created a hear no evil, see no evil, speak no evil arena. Employees hop from job to job having to find out first hand if a new company is better, the same, or worse than the previous. And companies struggle to identify and address issues because their employees don’t have a safe space to share feedback on what’s happening.

The bottom line is that even if a workplace is suffering from toxicity, there’s always the opportunity to cure. It begins with creating the space for open and honest feedback. A great method of facilitating this is through anonymous employee satisfaction surveys with open ended questions. There are many strong leaders capable and willing to tackle culture issues so long as they receive the visibility they need to identify the issues.

At Ari Agency & Ari Executive, we’ve spent almost two decades helping companies find game-changing talent that elevate the performance and culture of teams. We specialize in the most in-demand talent across digital, marketing, design and innovation-focused functions including executive leaders. Contact us today to learn more about how we can help you improve your talent acquisition strategies and find your next all-star.

Get In Touch