Breathe, HR software provider for SMEs, reveals the cost of bad company culture: a staggering £23.6 billion per year. The report, The Culture Economy, found a third of British employees quit their jobs due to bad workplace culture (34%).

Despite this, Breathe found over half of SME leaders (60%) consider company culture as a ‘nice to have’ in their business.

Read the full Culture Economy report now to discover the full impact that poor company culture is having on UK small businesses

This mindset has far-reaching knock-on effects. According to the Chartered Management Institute, effective leadership could improve Britain’s productivity by 23%. However, with over half (53%) of employees – surveyed by Breathe – who distrust their senior management, thinking their bosses ‘didn’t appear to know what they were doing’, there is some work to be done.

In addition, the survey revealed three-quarters (75%) of time-strapped SME decision makers are satisfied with their business productivity and one in five (22%) don’t measure business productivity at all.

Jonathan Richards, CEO and founder, at Breathe comments: “Culture isn’t a soft option. It has a clear impact not just on business success, but on the economy and our society. This includes productivity, an area many SMEs struggle with and don’t have the time to dedicate to it. However, one way to boost productivity levels is improving management quality and giving employees autonomy and purpose, as our report reveals. All of which validates the fact that businesses are now operating in a culture economy, and small businesses who fail to realise this won’t last long.”

Other key findings:

  • Wider impacts of a positive work culture – SME decision makers stated positive culture led to: improved morale and relationships (50%); employees going the extra mile (44%); better customer service and satisfaction (43%); improved individual performance and productivity (43%) and reduced employee turnover (35%)
  • Trust in business leaders – a fifth of workers (20%) don’t trust their senior management. Of these, the main reasons for distrust was because: they don’t feel supported by them (59%); they don’t appear to know what they’re doing (53%); they’re not transparent (45%), they play too much office politics (41%) and are self-centred (41%)
  • Generational differences – interestingly, the highest levels of trust in leaders and management were amongst young people 18-34-year olds (63%) and the lowest was among 35-54-year olds (56%)
  • Engaged and focused Brits – three-quarters (76%) of the UK workforce are engaged and focused at work, compared to 8% who admit they aren’t

Patrick Woodman, head of research for the Chartered Management Institute, said: “As this timely report shows, a strong, inclusive company culture is essential for long-term business performance. The tone is set from the top, so management and leadership play a crucial role and creating the conditions for workers to thrive. In particular, transparency and communication are vital for building trust and engendering a sense of purpose among staff.

“The top three things every manager should start to do are share their thinking with their team, admit to their mistakes and uphold their company values. Employers must also recognise the pivotal role played by managers at the heart of their organisations, and support and develop them to succeed.” 

Richards continues: “Our results also uncover a trust epidemic happening across UK businesses. Again, this is fuelled by poor workplace cultures plaguing SMEs, resulting in them losing their top talent. Although there are many small businesses with fantastic and inspiring cultures, over half of them still don’t value its importance – this is largely due to time constraints. As such, we’ve alleviated some of the work by creating a culture plan and recommendations to follow. It’s time for those business owners to sit up and pay attention. After all, it makes business sense to do so.”

Culture economy