What Is The Cost Of Doing Nothing About Your Workplace Culture?

Full Transcript Below

[ANNOUCER]: Breaking down everyday workplace issues and diagnosing the hidden sickness, not just the obvious symptom, our hosts, James and Coby.


[COBY]: Did we lose a patient?


[JAMES]: No, that’s just my lunch.


[COBY]: Hey, thanks for joining us. I’m Coby. He’s James. So let’s get started with a question. What is the cost of doing nothing about your workplace culture?


[JAMES]: There’s actually quite a lot to unpack from a pretty simple question. And I think whether you are actively ignoring issues or if you just don’t know how to investigate or identify the problems, doing nothing about your workplace culture is gonna cost you a ton of money. And in my mind, this really needs to be followed up with some questions. Like what are the problems that I should be on the lookout for? How are they costing me money and how much are they costing me? And what can I do about it? So, really first, I think to answer the question is what are the problems that arise when you do nothing about your workplace culture? And it includes things like higher rates of turnover. It’s lower productivity, it’s poor communication, incivility, disengagement, burnout, higher rates of mistakes lack of inclusion and belonging, and more. And what’s really interesting about this and about the question of what’s the cost of doing nothing is that none of this is going to show up as a line item on your balance sheet, which makes it really, really easy for many business leaders to completely overlook.


[COBY]: So what you’re kind of saying with the kind of what the doing nothing part is that, I mean, obviously there’s big problems that come with doing nothing, but we can kind of almost like break doing nothing up in almost like two kind of categories. Like there’s the actively ignoring. So almost like the active avoidance choosing to see it and do nothing and then there’s doing nothing maybe in a more passive avoidance like you don’t really know or you’re unsure or something that you’re not seeing. So there’s really that active avoidance piece and the passive avoidance piece that kind of comes from doing nothing.


[JAMES]: Yeah, I think if we’re gonna use terms like active and passive, then we need to be clear that, you know, there are some situations that like if it’s active avoidance, then it’s something that you see and you just can’t be bothered to deal with the situation. And that’s, that’s bad. Whereas yeah, passive avoidance would be more the doing nothing because you, you either don’t, haven’t identified the problems you don’t know to be on the lookout for the problems. You know, you don’t see the situations because you don’t have the right information. You don’t know how to investigate it or how to identify the problems. And whether it’s active or passive avoidance, the problems are still gonna be there and the costs are actually going to be the same in my mind. The real distinction is kind of that willful actively ignoring the situation versus not knowing any better.


[COBY]: OK. So maybe, maybe even to, just to kind of put some more clarity on it, we should think of it more like there’s doing nothing because you’re choosing to ignore something or there’s doing nothing because you really don’t know any better.


[JAMES]: Yes. And I think there’s a lot of, I think there’s far more of the latter than the former, right?


[COBY]: Because one of the things that kind of comes up when we talk about, you know, again, workplace culture and the problematic issues that arise is we try to help kind of organizations managers HR professionals understand the more how to make this more tangible, how to make this more real. And one of the ways that we do that is we use a term that we call “labor value loss”. And this is the term that we use to describe the hidden or overlooked costs of some of the common challenges that arise in our workplace. Labor value loss is what it looks like when your human capital is poorly maintained or it’s the expensive repercussions of a poorly maintained workplace. But really it’s about the hidden costs or the accumulative costs of inefficiencies and waste which exist in our workplace. And it’s an important thing for us to use the term that we hope people really kind of gravitate to because the reality is on average, companies are only running at 33% efficiency. So there is an extensive amount of waste and loss and the benefit that comes from our workplaces and the benefit of a term, and the perspective of labor value loss is it allows us to see that we’re running inefficiently and we can put a bit of a dollar figure or put some tangible kind of reality behind it. So we can actually address it, you know, with more intention.


[JAMES]: Yeah, the biggest value there around labor value loss is that being able to make the business case because in our experience in talking with senior leaders in doing this type of work, the biggest challenge is that if something is not like if it’s not identified as a line item, if we can’t put that direct dollar figure to the problem, then it doesn’t get fixed because there are other things that are going to take priority. And yet we’re talking, we’re not talking about a little bit of money trickling out. We’re talking tens of thousands, hundreds of thousands of dollars seeped out of your organization on a regular basis because of these really common and pervasive issues.


[COBY]: Yeah. And even to look at it again like the cost of poor maintenance or it’s the cost of, again, the inefficiencies. Like we talk about inefficiencies sometimes relating labor value loss to almost like, the cost of a poorly efficient home, right? Like when you think about heating or cooling cost, depending on where you live, if you’ve got a poorly insulated home or a leaky home, leaky windows, then you may not see the heat being lost and your expenses going up. You know, you don’t see that on your monthly, you know, expenses. You just know that you’re having these extensive expenses that are really adding up and you’re not able to really address, you know, which window its coming out, like, which door is leaky. So it’s a matter of realizing that these hidden costs add up in our workplaces just like these hidden costs add up in our home.


[JAMES]: Yeah, you’re gonna see that your energy costs are on the rise, but you’re not gonna be able to identify specifically where and this is the same type of thing, right? We’re gonna see that our, employee costs are on the rise, right? We are spending a lot on salaries. We’re spending a lot on employee training on different programs, but we’re not getting the productivity, we’re not getting the results that we think we should, right? And labor value loss is really the mechanism that you can use to drill down into that to find the specific value that is being lost from different problems.


[COBY]: Yeah. So like I said, we have some stats that we use to kind of help again, make this real, that we use in our training or some of our content. So I’ve got a few of them here. And what I think we’ll do is we’ll, I’ll bring one up, we’ll talk a bit about it, kind of put some kind of con behind it and then we’ll see how many we can kind of get through without making this too long of a conversation. But most importantly, I think once we can go through a few, we should definitely end the episode. OK. What can we do to address this stuff and how do we actually fix these problems? So we’re not, you know, we’re not at the whim of labor value loss.


[JAMES]: Spoiler alert. It’s gonna relate to your workplace culture.


[COBY]: OK. So the first one is one that I like, I like to use when we’re talking about a lot of stuff around recruitment and retention and that’s the cost of turnover. Now, if that says the result of 22 case studies shows the typical cost of turnover is 20% of an employee’s salary, which means that when an employee leaves the cost of them leaving and having to replace them is 20% of what that position salary is lost during that process. And that is a really important, step for people to know who deal with high turnover if you’re routinely losing, you know, like 10 to 20 employees in a department, for example, then, you know, then it’s gonna be 10 to 20 times, 20% of the annual salary of those positionsis going with them. So, turnover, replacing employees, and how losing employees is not a cheap process.


[JAMES]: And it’s funny to me because there are so many businesses that I have worked with over the years that have taken a kind of a commodity view to employ to their employee relationship where they’re not really too concerned about, hanging on to employees because they’ve just kind of accepted that we’re gonna have high turnover and high turnover is kind of the cost of doing business. But even at a minimum wage salary, you’re still talking thousands of dollars per employee. And some of these businesses that, come to mind that I will not mention, they’re recruiting literally 80, 100 people a year to fill vacancies. And it’s just, it’s constant, it’s constant churn of employees and they’re just burning through people treating them like a commodity. If, even if call it 100 people. Every one of them is working minimum wage. You’re probably talking, what, $3,000 to $5000 at 20% of their salary take a low end number, $3000 at 100 employees. $300,000 lost on an annual basis on a conservative number for a smallish manufacturing company in a rural area. That’s terrible.


[COBY]: Yes. And then, and then those exact same businesses are like, well, we can’t afford, a better onboarding process. We can’t afford…


[JAMES]: We can’t afford to pay people more. We can’t afford or nobody wants to work anymore. Let’s ok. Let’s not get back on that. So, because I’m just gonna end up ranting and getting angry again.


[COBY]: Yeah. But it, it, it’s one of those things where, like, you know, it, it’s, the thing about labor value loss is like, you know, often it’s the cause of why you can’t afford more proactive strategies or it’s why you can’t afford to, you know, do things better around employees that, you know, because your employee costs are already so


[JAMES]: Yeah. And the turnover stat, what I find interesting about the turnover stat is we’ve looked at a lot of statistics and we spend a lot of time tracing the route origin of where those stats come from. Right. The original, study that it comes from because oftentimes these things just get circulated and reposted and blogged about or whatever we found this is to be one of the more conservative numbers around from day one. Right. There’s a ramp up period as they adjust to the team, to the new situation, to the everything, right. These are pretty common and to when you think about it in that light, 20% is kind of on the low end.


[COBY]: Yes. Absolutely. Well, because, I mean, some of the other staff talk about it being as high as 50% to 200% and I’m sure, I’m sure in some, in some positions like, you know, very high, performing sales, something like that. Yeah, 200% may even, that may be, conservative, but I like the 20% because we say, ok, even at your lowest end, you’re still losing this much.


[JAMES]: A ton of money.


[COBY]: Exactly. And again, that’s the cost of doing nothing about the reasons employees are leaving, right? So when it comes to, you know, lot of the main causes around a job dissatisfaction is a perfect example. One of the main causes that people leave is job dissatisfaction. If you’re doing nothing to address job dissatisfaction, then this is the cost, you’re gonna have to accept one that you’re already losing. Like we’re not saying if, if you don’t do something soon, you’re going to lose it. We’re saying this stuff is happening to your businesses right now if these are problems. So that’s another thing to be aware of as we go through these I wanna move on to another one which is a really important set, especially recently, which is a stat around labor value loss of burnout. Now, the cost of burnout related absences and loss productivity can be as close to 25% of an employee’s annual salary. One thing I should mention too, all the stats we talk about in this conversation, I’m gonna put into the description, in the show notes. So if anybody want it wants to refer back to these, they’re all listed there. So I just wanna make sure that that’s clear.


[JAMES]: We cite our sources.


[COBY]: Absolutely. So yes. So burn out has a 25% of an employee’s annual salary cost, which again is significant. And the thing that keep in mind too is when it comes to the burnout related co the burnout related cost around productivity is that, is that it, it, that, that cost is associated with, with however long you have an employee who is burned out however long that might be.


[JAMES]: Yeah, I mean, if it, if somebody’s just, well, I mean, but this also kind of ties in the conversation, the language that I really don’t like, but it’s still prevalent around quiet quitting, right. the cost doesn’t go away. It’s year, over year, every year, every, the longer that a person is burnt out and just performing the bare minimum or not performing even the bare minimum, it’s costing you a ton of money and burnout is pervasive. I mean, with everything that’s happened over the last really the, well, I mean, it’s been pervasive for a long time but especially, it seems like the last five years where we’ve gone through, massive, societal shifts and huge, global interruption like COVID and everything else that has come as a result of that. And this mental health crises and physical health crises and everything that’s going on burnout is more prevalent now than ever. And it’s guaranteed you are, you have people in your organization who are burnt out or on the verge of burning out and if you don’t take the time to address it and address it, help the individual, it’s going to cost you money. It’s not just about, oh, it’d be nice to be able to help these people out. No. Do it selfishly so that you can, your business can continue to make more money.


[COBY]: Well, and you think about it too, if you can compare the cost of burnout and the cost of employee turnover, that if you have a burnout employee who’s costing you 25% of their annual salary through a through rent related absences and loss of productivity. And then that person quits, that’s 25% and then 20%. So you’re losing, say 45% of that person’s And then often it, it can grow through the organization, right? So if you have teams that are burned out, then a lot of it falls on to the managers which causes the managers to burn out and enough managers burn out, then the directors burn out and so on and so on and so on. It just the multiplier effect gets significant. And burned out is something that you really have to take seriously and stop because 25% of a handful of employees annual salary is a big loss. But when you’re talking like, you know, divisions being burned out and that cost them those swell to catastrophic numbers.


[JAMES]: Well, and think about the impact that leadership has on an organization, right? The interactions that they have the way that like, we already know that so much of the employee experience and what people experience on a regular basis is it as a direct result of their supervisor or manager burnout is important to address regardless and throughout the of the multiplier effect because it’s like a virus that is just going to continue to spread until you take active measures to stop it.


[COBY]: And until you do, like, if you’re choosing to do nothing or you don’t know any better and you’re doing nothing still cost. So another stat that’s I find very very interesting. And this is a stat from the University of Calgary is around sexual harassment. Now, this stat says the relationship between sexual harassment and reduced productivity has been directly established and a person experiencing sexual harassment loses productivity equivalent to 45% of their annual salary. And that is, that is massive. You’re basically, a good employee who is experiencing sexual harassment is immediately working at almost half capacity. Yeah, and that’s something where part of we get into a bit of the kind of you know, comp complexities of the different of the different, like, you know, gender roles and gender gaps that exist in the workplace is that, you know, that again, this unfairly and substantially affects women over men, so it again, it also adds to some of the pervasive problems that exist in the workplaces around the gender inequity and a lot of it has to do with the effect of what, you know, may have been common in place, you know, interactions in previous generations. Doesn’t that, you know, is still a horrific, you know, productivity reducing, psychologically damaging reality that exists in most workplaces. And again, to a point that it almost drops a person down to being a half capacity,


[JAMES]: 45%. Like that’s, that is a staggering amount when you consider how unfortunately like sexual harassment on is still a pervasive issue in the workplace. Yes, awareness is getting better. Yes, many companies are taking tangible steps to address it. Yes, there are policies that, you know, there’s zero tolerance for oftentimes the investigation process is very complex because you need to get all your ducks in a row. It affects their mental health, they’re everything else and it’s just…


[COBY]: …and what we’re saying is that, you know, like, obviously the impact on the person experiencing sexual harassment is like, like you said, it’s way beyond their productivity. There’s so much that damaged the person psychologically emotionally, mentally. There’s so much around that. But selfishly as a business, if you, if the, you shouldn’t have sexual harassment because it’s an awful thing. If that isn’t enough to get you to do something, then selfishly realize, oh, well, you’re also losing But if that, but if that isn’t enough to invoke action, then think of it selfishly from a dollars and cents standpoint that you…


[JAMES]: Clearly you need the business case, not just the, you know, moral imperative to do something about it. And one of the ways that organizations try to get around, any type of gender disparity is by making very clear performance based incentives, right? I mean, that’s a legitimate strategy and a good one. And so that because it should not just be subjective, I like this person more so I’m gonna pay them more, right? It’s performance based, that’s, you know, you laid out in your performance framework that, you know, here’s what it requires in order to hit your bonus or to get a pay raise or, you know, here’s what we’re looking for for you to do. in order to reach that promotion, we think of that as a completely gender neutral solution to this issue. But what I find interesting that you’re talking about is that if sexual harassment influences performance, then it also by effect influences whether or not somebody is going to receive a promotion, receive a pay raise even when we are trying to account for whether or not for you know, gender equality, right?


[COBY]: Yeah. Well, and this is again, going back to the workplace culture impact on so many things like performance and everything like that too is again if the environment tries to reward performance, but also allows, you know, these performance robbing pieces that hit certain populations more than others, then you’re ingraining inequity into the workplace, right?


[JAMES]: That’s interesting. Yeah, I like that comparison. Well, I hate that comparison. I like that comparison.


[COBY]: Let’s move on to another one. So workplace incivility. So I so an uncivil workplace where microaggressions and rude and passive aggressive behavior are common. This can reduce employee performance to a cost of $14,000 annually or about 26% of the average annual salary. Now, workplace incivility is kind of a good…


[JAMES]: I like that term.


[COBY]: It’s a good way to look at some of the less tangible pieces. Like maybe things aren’t bad enough to fall into the sexual harassment realm or maybe or around or maybe they’re not bad enough to fall under like, you know, the toxic workplace or some of the more severe things. But again, microaggressions, rude, passive aggressive behavior, again, incivility amongst your employees where conflict is common is something that often going back to the kind of are you doing nothing because you’re choosing to ignore or doing nothing because you don’t know any better. Usually when it comes to work with sensibility, this is more commonly, in my opinion, choosing to ignore, do nothing because you choose to ignore it because well, people just don’t get along or well, you know, you can’t make everybody happy or..


[JAMES]: Personality conflicts or right? Like we, we chalk it up to excuses on because it it’s so hard to nail down specifics, right? It is as much like yes, we can define incivility. But unless you are keeping copious notes of your every interaction with a person, it’s going to be really hard to prove a pattern of incivility to take it to a point where it actually address it hits a performance management or progressive disciplinary procedure where because we account for bullying, we account for harassment but I mean, bullying, we even in the language around bullying and harassment, a single instance, well, less so harassment but a single instance of bullying is rarely considered bullying, right? So in order to get to any part where we even move into a disciplinary framework, we need to have a copious amount of data if we’re looking at incivility, so it can go fly under the radar for years without us addressing it because it’s not bad enough to trigger our disciplinary procedures. It will sometimes be costing us a ton of money.


[COBY]: Yeah. Well, sometimes when we’re talking about the benefits of a highly productive workplace culture, one of the things that we, we tend to hear from, you know, small business owners a lot more often. But, you know, executives and directors is like that too is about the, you know, workplace culture is a nice to have. It’s a, it’s something that’s an optional add on. You know, if things aren’t, if things aren’t really bad, then they must be good. It’s kind of where a lot of that comes from. But what’s important to talk about workplace incivility is this is the business case why if it’s not reaching the levels of, you know, actionable discipline and you know, harassment violations, then it must be ok. This says no. This says you are still losing a lot of money again, 26% of the average an of the average annual salary of employees salary is being lost. Every employee. This is, this is what’s cool about this too. Every employee who is working in this environment of incivility is experiencing a 26% drop in their performance worth of their salary in their performance. And this is really important to realize that just because it’s not bad enough to be legally actionable, doesn’t mean that you are not paying through the nose to have these problems in your workplace, whether you’re choosing to ignore them or not.


[JAMES]: And what I find like what I find interesting and I think the question that I would pose to anybody listening would be to ask you to think about the last week at work. How many interactions with coworkers with, how many times have you gone home and complained to your partner or, you know, talked about somebody at work did something that bothered me today.


[COBY]: Well, and think about for managers if you have a lot of, you know, like maybe you, you call them nitpicking or, you know, personality conflicts or, you know, you gotta keep these, you get, you, you know, these people can’t work well together, those types of common everyday experiences that are just, are just often the norm to you. Maybe you need to take a hard reflective look and say, well, are these actually the symptoms of an incivil workplace? And is this why our performance isn’t as high as it should be for the talented people that we’ve employed because, because of this culture of incivility, we have people working a lower performance to the cost of 26% of their salary is being lost.


[JAMES]: Often it’s be if they’re acting out in the workplace or if they’re expressing these microaggressions or whatever the behaviors are, it’s often because they are dissatisfied with something in the workplace, there’s something that is bothering them, there is job dissatisfaction present that is causing them to act out in a manner that causes this incivility.


[COBY]: Absolutely. And that’s, yeah, you’re right. Like, I mean, we did an episode we talked about is, last season is job dissatisfaction. Really? That dangerous. Well, yes. it is because, and we don’t talk about workplace incivility in there, but this 26% of labor value loss represents is, is exactly the type of thing that is the result of job dissatisfaction. Yeah. So let’s move on to another one. work, poor workplace communications. I’m sure we’ve all been there this one and for any of you internal coms, people pay attention to this one. So research by Grammarly and the Harris poll found that poor workplace communications is a pervasive problem, burdening businesses and employees alike costing businesses approximately, $12,506 per employee every year or about 21% of the average employee’s salary. So bad communications, ineffective communications can slow down productivity enough that the employees who are experiencing it lose the equivalent of 21% of their annual salary in, issues regarding to poor work quality, poor sales, poor productivity.


[JAMES]: What I find interesting like this is a new stat. and it’s one that I’m excited to talk about because it, I mean, it’s from a 2023 report. I think the study actually happened in 2022 and then it was released in 2023. But whatever, I mean, it, it’s a very recent, study and report and poor communication doesn’t actually get talked about frequently in turn in this, in these terms of what is it costing your business? And I find it really interesting, that we’re able to put a dollar figure on it because we know that communication breaks down regularly, whether it’s internal communications or external communications, communication breakdown happens a lot. Mistakes in, like when you’re passing on information or when you are reporting on something, any mistakes that are happening in that, to actually have, like to be able to put some numbers around. This is really exciting for me.


[COBY]: Yeah. And like you think about, you know, even just for, so where is this money? You know, where’s the loss coming from? Well, even if you think about it from one single aspect, let’s look at jobs where you have to have an employee cover another employee who’s late or absent or whatever. Right. The poor communications around, you know, shift covering can be one single example where that 21% of an employee’s salary is lost when you’re running under, when you’re running, you know, down a person or whatever. Right. Because, you know, the idea of like, you know, people being late and they’re being in miscoverage or, you know, that kind of thing can really add on to slowing down people’s workloads or slowing down the, you know, type of whether it’s sales or whether it’s client work or whatever it is, that type of single instance kind of can help you kind of put a little bit of clarity on where does that money go? Well, it goes to people being overworked people, you know, missing appointments, people, you know, not being where they should be at the, at the appropriate times and that’s just a single example of a poor workplace communication and, and again, of a multitude of them. Yeah. So I think it’s really important, especially again, like I say, if you’re an internal comms person, maybe realizing that, you know, this could be part of how you present a business case for your recommended approvals with, with any of these. I mean, if any of these, you know, turnover, sexual harassment ability, if that is an area that is part of your job duty, the business case that you might be able to make when you kind of do some rough calculations, using labor value loss could be a great way for you to present. Here’s why we should be fixing it because here’s this, here’s how much this is costing us annually. And that might be something that may grab the attention of the C suite more so than other strategies around. This is a problem that we should fix. But here’s, you know, here’s some tangible money that we’re already losing. So even if we spent half of what we’re losing on the solution, then we nip the problem in the bud. Right?


[JAMES]: Yeah. What I like about this stat and the study that it came from the study actually talks about miscommunication as a big part of the communication mistakes, right? And that business leaders responded that 66% of them experienced miscommunication at least once a day and 48% said that they experienced it multiple times a day and that both business leaders and knowledge workers responded 100%. Every single survey respondent said that they experience it at least once a week. 100%. Yes, I’ve experienced this problem at least once a week. And we know that this problem is costing, what did you say the stat was 26%, 21%.


[COBY]: Yeah. Yeah. So think of every employee in your organization who is affected by poor communication, which is everybody is experiencing the loss of that $12,000 per employee or 21% of their annual salary. That’s, that’s mind blowing. So, I got one more and then we should, then we’ll talk about how do we fix it? But the last one I have is interesting. It’s a bad employer brand. Ok. So, the need for additional wages to make up for a poor reputation as a bad employer, businesses need to spend about, $4723 or at least 10% more per hire to convince a candidate to take a job at the company with a poor employer brand.


[JAMES]: Ok. So that’s like a quote from the, so you’re, the stat is saying that if you have a bad employer brand, you have, in order to attract somebody to your business, you have to pay, you have to offer 10% more just to get them interested. Wow.


[COBY]: Yeah, exactly. So think about, you know, the, like, I mean, any employer branding, people out there that has a part of the responsibility, then, you know, saving 10% on every candidate is a pretty good sales pitch for why this makes a difference. But think about again, you know, if you are a 10 person company then, you know, whether it’s the, around the $4000 that’s still $40,000 more you have to spend because of how bad this brand is costing you. But you get up to, you know, the, the, the average small business, it’s usually like, you know, 70 to 100 employees and you’re still, you still have to pay that 10% more that $4000 or whatever, you know, based on your, on your salary ranges, right? That is a massive amount that hurts your competitive advantage in the labor market because to make up to, compete with your competitors who maybe have a better culture, you have to pay higher. But again, thenif the culture is, if a bad employer brand isn’t, isn’t just reputation is actually the culture is bad, then you get into the turnover cost, then you get into the burnout cost and you get in civility cost and it’s just, you know, like, you know, the old adding machine ching, ching numbers go in those papers are, you’re losing money. Like you wouldn’t believe you might as well just have a fire hose of cash, shooting, shooting out of your organization.


[JAMES]: I want a fire hose of cash. Yeah.


[COBY]: Well, you want shooting into your company. Not under company. Yes.


[JAMES]: Well, and I mean, it’s not just mom and pop shops that have a bad employer brand. I think we can all identify different, large entities that do not have a stellar reputation for how they treat their employees


[COBY]: Well, for the person listening to this. How would you describe your job to your, friends who may, who may be able to fill a vacancy if you’re not giving it a glowing recommendation that, that’s likely that your company may not have a great employee brand.


[JAMES]: If you’re not willing to recommend that a friend take a job with your company, you’re probably falling into the bad employer brand. That’s a good, that’s a really good, indication.


[COBY]: All of these costs, the labor, the labor value loss are what happens is happening right now. But if we choose to do nothing about the culture that creates these problems, then this is the, these are the year over year consisted, every employee, you know, again, fire hose of money being that, that that’s leaving your organization. And the truth is that a lot of the solutions around improving workplace culture are, can be tangible measurable, practical and companies are especially now are realizing they have to do it. But one of the problems that they may run into is, well, we can’t afford to. Well, here’s the thing you can’t afford not to if you’re losing money from a bad brand, from high turnover and from an incivil workplace, you know, you’re talking like, you know, 10% loss here, 20% loss here 21% loss here that you may be working to a point that your employees, the culture is causing your employees to almost lose half if not, you know, if not 75% of their annual salary because this stuff come compounds Yes, there is there’s crossover. But ultimately, it’s, you’re realizing that you’re hiring somebody and you’re losing half of their salaries worth because of the environment that you have them working in.


[JAMES]: Yeah, it, it’s losses in sales, it’s losses in customers. It’s in customer retention. It’s, you know, missed opportunities. It’s, you know, mistakes that happen. It’s all of these things that add up to a tremendous cost to your business. And, yeah, I mean, it’s really, it’s not like it’s a line item where you’ve purchased a piece of equipment and you can see that asset and, or you can see, you know, how much that specifically cost, but it’s still costing you money and if the longer you ignore it, the more it’s going to cost you.


[COBY]: Yeah, I mean, doing nothing about your workplace culture is one of the reasons why you’re potentially hemorrhaging money. And it’s and the idea of like, you know, just like going back to the analogy, I said earlier about it being like a poorly insulated home, if you know, if you’ve got giant cracks and holes in your wall and then you’re wondering why your heating or your cooling costs are so high. Well, there’s an obvious reason but the thing is that because this stuff isn’t even as visible as a giant hole in your, you know, in your foundation, these things become the hidden costs. But this is something that we need to be talking about, especially if we’re in a, in a management position and we’re, and we’re accountable for productivity, for performance, for solutions, understanding labor value loss and, and how do we actually resolve them should be, be a vital component to how you manage and how you have success in your position. So, on the heels of talking about the insulation of our homes, we need to understand that the way that we can, you know, better improve the efficiency of our home is not that different from the way that we could better improve the efficiency of our business. We need insulation, right? We need to insulate the temperature of our home to maintain the costs associated with that environment where we need to insulate the productivity of our workplaces again, to maintain that kind of environment. So we call this idea Productivity Onstallation. It is the pieces that we need to resolve the cracks and holes in our workplaces that are causing turnover that are causing burnout, incivility, and poor employer brand and those the things that we need to be looking for to address, but also being able to put in tangible practical solutions that will reduce this loss reduce these costs, reduce the problems and the systemic issues that the environment, the culture that we’re in is coming from productivity insulation is how you resolve labor value loss and productivity insulation is something that every workplace could do because there is a, there are practical strategies that you can be enforced to make them happen.


[JAMES]: Yeah. And going back to like my initial answer to this question, I left off with one of the questions. What do we do about it? Well, what you do about it is you insulate your productivity, how you do that is by developing your workplace culture. It starts with the workplace culture hierarchy. It starts with understanding the factors of your workplace, understanding whether or not they are competitive, sufficient, and equitable. And we have a lot of information available for you in previous podcast episodes, youtube, videos, knowledge suite articles to help you really figure out how to get started with the workplace culture hierarchy. But you need to focus on the first two stages of Compliance and Psychological Safety. For productivity insulation, those are going to be your best bet. And what’s interesting is we’ve talked about this a bit in terms of, you know, it’s, it’s hard to identify or not sure how to investigate just we have trained ourselves to look for insulation problems in our homes, right? We can identify a crack in our foundation because we know what to look for, we can identify a door that doesn’t latch property because we know what to look for. The Workplace Culture Hierarchy is your investigative guidelines. It’s how we train ourselves to look for the warning signs of labor value loss. And it’s your playbook for how do we address it.


[COBY]: Yeah, I mean, like you see the bottom two stages address primarily job dissatisfaction and psychological safety. And we talk about things like burnout and incivility. You know, those are usually some the the symptoms of the of the root causes that is job dissatisfaction and ideas around, you know, poor communication and even sexual harassment. A lot of that was probably going to be greatly impacted by the lack of psychological safety. So again, there are some tangible, practical ways to identify, to measure and to resolve a lot of these issues. And the tools and the guideline of the workplace culture hierarchy is an amazing place to start. Like if you, if this interests, you make sure you check out an episode from last season on how you build a workplace culture where we break down the hierarchy in more detail there. Because the hierarchy is your blueprint to insulating your productivity and it’s a really important element that will allow us to say, OK, let’s look at the root causes of a lot of these issues instead of just trying to address the symptoms and realize that the environment that people are in is one of the major causes that is allowing for all these expensive labor value loss issues to be prevalent and we can solve them. It isn’t gonna be simple, easy or likely inexpensive because especially if they’re systematic, sorry, they’re systemic. But realizing that we’re already spending this money through waste. That if we divert some of that and investing it just like insulating your home. Yes, it’s expensive to buy insulation and to fix the windows and doors, but it pays in dividends in the long run. And that’s the reality of productivity insulation. So it’s really important to realize that you, that the cost of doing nothing is immense and putting some steps into action and getting, and getting ahead of it is gonna be, it will pay off in the short term and exceptionally in the long term.


[JAMES]: Yeah, I mean, I like the way you said that the cost of doing nothing outweighs the cost of addressing it.


[COBY]: Right. All right. I think I’ll do, a wrap up. I think this, this is a great conversation. Yeah. So what is the cost of doing nothing about your workplace culture? Well, there’s two kinds of doing nothing. There’s doing nothing because you choose to ignore it and there’s doing nothing because you don’t know any better. But the problem is either of those has the same effect. It’s an absence of effort. It’s avoidance and the thing is that because we often let a lot of the workplace culture, things go. This has created the reality of where a lot of our workplaces or where most workplaces are running at only 33% efficiency. And what this causes of our expensive, expensive problems like labor value loss and what labor value loss can be. It’s the hidden and overlooked cost of common challenges that arise in our workplace, things like employee Turnover, which can cost an average of 20% of an employee’s salary. Burnout, which can cost an average of 25% of an employee’s salary. Sexual harassment, which can cause an equivalent of 45% of an employee’s salary. Workplace incivility, which can be about 26% of an employee’s salary for every employee in the civil, in the incivil environment. A poor workplace communications can cost 21% of every employee’s salary who’s affected by the poor communications. And a bad employer brand, which can have a business needing to spend 10% more per hire to convince a candidate to work there. How we resolve these issues is to insulate our productivity is in is to address these problems by investing in the strategies that will allow us to protect the efficiencies of our workplaces like we would protect the efficiency of our home. And how we do that is by leveraging the structure of the workplace culture hierarchy, which is can be your blueprint to resolving many of these issues and these issues are going to persist until you choose to stop doing nothing. And to understand that you’re already spending more probably than you would on a solution. So it’s time to accept, this is a cost that we’re already spending. So let’s divert that money into being proactive to resolve these issues. So we can actually start to get the most out of our employees and our business. All right. So that about does it for us for a full archive of our podcast and in the episodes hosted on our youtube channel, visit www.roman3.ca/podcast. Thanks for joining us.


[ANNOUNCER]: For more information on topics like these, don’t forget to visit us at Roman three dot C A side effects of this podcast may include improved retention, high productivity, increased market share, employees breaking out in spontaneous dance, dry mouth. A version of the sound of james’ voice, desire to find a better podcast…


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