Why dysfunction in your culture affects your profitability

We scribe on all things HR to add value to your organisation

by | Jul 7, 2020

Many organisations wait to triage and seek help for dysfunctional cultures until they are at critical level. At Red Wagon Workplace Solutions, we encourage leadership teams to recognise challenges and identify the need for help at an earlier stage in the cycle.


It’s a rather bleak phrase, but cultural dysfunction can simply be defined as an impairment in the operation of a team or company. We can all doubtless name a team we’ve worked in, or worse still, a whole organisation, which suffers disconnect in the various moving cogs in the corporate wheel. Non optimal functionality is more common than you’d expect, but the outcome is always less than favourable to commercial profitability.

Inhibited culture can be easy to diagnose.

Less engaged employees? High churn of customers and staff? Systems or process hindering teams from effectively doing their job? Employee lethargy ‘it’s not my problem’ attitude? These are just a few of the classic symptoms of needing to overhaul your company culture before they impact on your bottom line. A recent Deloitte survey found that 94% of executives and 88% of employees believe a distinct workplace culture is important to business success.

So, what are some of the underlying root causes of a dysfunctional workplace?

There’s a direct correlation between employee happiness and shareholder returns. It makes sense that employees who feel trusted, engaged and enabled will have reduced absenteeism, increased proactivity to tackle any challenges and lower turnover. It’s no coincidence that 13 companies who appear on Fortune’s annual ‘100 Best Companies to Work For’ list see higher than average returns with cumulative results as high as 495% instead of 170% (Source CFO)

Poor cultures struggle to hire or retain the best employees, with negative company feedback working its way round organisations and board tables quickly. With the high churn of staff, comes a whole host of classic HR and profitability issues – large scale disruptive change costs money – in retraining, engaging and delivering results. This is especially pertinent when new team members are recruited back into the same dysfunctional team and without the root cause being fixed, the cycle repeats itself. Often undervalued, is the Intellectual Property which walks out of the door literally and metaphorically with each disengaged member of staff – valuable information worth thousands, perhaps millions of dollars, which hasn’t been systematically categorised and logged.

It’s a sad state of affairs when corporate culture reaches this stage – the pain points have overcome the tipping stage of acceptability. Morale sinks to all time low for remaining employees.

It’s what comes prior to this tipping point which is worthy of consideration. The importance of a unified culture extends to much more than just a genial atmosphere in the coffee room. The core stability and values of a company, alongside the mission and goals must be aligned. Confusion sets in without clear leadership and communication on these elements, to every level of an organisation. Employees need to understand and be supported by leadership teams on their WHY. Why they are working on projects, what they hope to achieve and how they will get to the end of that strategic journey. Lack of this leadership clarity breeds dysfunction, leading to a lack of team cohesion and quickly escalates to create a sizable impact on the bottom line.

Prevention is better than cure. Far better to conduct regular ‘mood checks’ amongst employees and promote a transparent culture which encourages problems to be raised and pain points fixed, than sweep challenges under the carpet. Healthy organisations understand that to encourage growth and success, cultural dysfunction needs to be addressed. There’s little point putting the metaphorical band aid on, if the ailment isn’t first cleaned out and treated. Change can be painful, but extremely powerful.

For guidance in how to strengthen the leadership qualities of your team, call or message Susan at Red Wagon Workplace Solutions for an initial consult.

About the author

As President and South Australian State Councillor of the Australian HR Institute (AHRI), Susan is a valued advisor and thought leader to her clients and the HR community. Maintaining an extensive understanding of employment law and business acumen through her work and connectivity to the AHRI and the business community, Susan is a master at finding innovative people orientated solutions, carefully balanced with the commercial reality.


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