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Bad company culture costs UK economy £23.6 billion

The benefits of positive workplace cultures include improved morale, better customer service and lower staff turnover

Employees quitting their jobs because of poor company culture costs the UK economy £23.6 billion per year, research by breatheHR has revealed.

The Culture Economy report found that a third (34%) of British employees have quit their jobs as a result of dissatisfaction with their company's culture.

And yet culture is still not seen as a priority in many small businesses, with the report finding that more than half (60%) of SME leaders feel a strong culture is a 'nice to have'.

The report also revealed the benefits of positive workplace cultures, including improved morale and relationships (cited by 44% of employees surveyed), better customer service and satisfaction (listed by 43%), and reduced employee turnover (35% cited).

It referenced research by the Chartered Management Institute (CMI) that revealed effective leadership could improve Britain’s productivity by 23%. However, breatheHR's research found that 53% of employees distrust their senior management team and think managers ‘don’t know what they are doing'.

Patrick Woodman, head of research for the CMI, 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; management and leadership play a crucial role in 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."

He added: “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.”

The report also found that three-quarters (75%) of SME decision-makers are satisfied with their productivity, but one in five (22%) do not measure business productivity.

In response to low productivity among SMEs, 12 organisations – including Siemens, John Lewis and GSK – recently launched Be the Business, an initiative offering practical advice and mentoring sessions for clients struggling with low productivity.

The Culture Economy used a range of primary and secondary evidence on culture and its wider effects. Opinium Research ran an online survey of 2,005 UK adults and 500 senior decision-makers in SMEs on behalf of breatheHR.