Bad Business Culture

Christy Mori & Dr. Josephine Palermo chats about what makes a culture “bad” and how people can avoid joining a “bad” business culture and tips for business owners and leaders who want to change their culture to work for them and the people they serve.

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Christy  0:17  

Welcome to Use Action Growth. Shifting business culture one conversation at a time. My name is Christy Mori, I’m joining Dr. Josephine Palermo, whose superpower is to create business cultures that transform organizations team by team. This week, we’re talking about bad business culture.

Christy  0:38  

And we’re back. So how’s it going this week, Joe? 

Dr. Josephine Palermo  0:41  

Oh, I’m good, Christy. How are you? 

Christy  0:44  

Yeah, not bad. Not bad. Spring, spring is here in Melbourne and we just got notice a week ago? Can’t count all my days, I think. But we can reopen or nonessentials can reopen a few weeks. Yeah, so one of the businesses that you own is a shared workspace a co working space. 

Dr. Josephine Palermo  1:06  


Christy  1:06  

In the Abbotsford, Richmond area in Melbourne so a shout out to higher spaces. 

Dr. Josephine Palermo  1:14  

Yes, absolutely. We ride on the river. It’s such a beautiful spot. I can’t wait to get back there and I know that that so many of our members are going to love it there very soon. 

Christy  1:27  

Yeah. So that’s exciting for us today. So today, we’re talking about bad business culture and specifically, what makes the business culture bad, and how does someone avoid joining a bad business culture? And if the business has a bad culture, how would they flip it to good culture? So that one might be next week. We’ll just see how it goes. So starting off, what prompts us to talk about this today? 

Dr. Josephine Palermo  1:54  

Well, Christy, I’ve had a number of different clients who actually asked me a question about bad cultures, because they always end up in organizations where they would describe the culture as being negative and all bad, and so I thought that other people might have the same questions about you know, why they end up in bed cultures and what to do about it, because it can be absolutely crippling and really devastating for people. 

Christy  2:23  

Definitely, especially when work is something that we spend so much of our lives and our time in. It can really affect the rest of our lives.

Dr. Josephine Palermo  2:30  

For sure. 

What makes a business culture bad?

Christy  2:31  

Yeah. So what are some key attributes that we can identify together for what makes a business culture bad?

So Christy, I think before we talk about what makes a business culture bad, let’s just describe what a culture is. For those people that are kind of asking the question. So culture is a blend of values, beliefs, norms, it’s how things are done in that organization, it’s what’s to do, you know, one of the things that people talk about, what are they not allowed to talk about, what are the symbols, rituals, you know, what stories kind of circulate in an organization like that. They are those things that really come together to develop and, you know, describe the culture. And culture in particular, really drives our way of working, as the way in which we interact socially in the workplace, and also what we focus on, what we reward, what we recognize in others. So it’s a really critical aspect, because it can have a negative or positive impact on individuals, and any company actually, in relation to performance, happiness, and engagement. So that’s culture. So then, let’s talk about bad culture. Now, when labeling culture as “bad” today, but that’s really a shortcut way of saying that the culture is ineffective in helping businesses achieve its goals. Because if a culture is having a negative impact, then that’s going to lead to negative consequences for the organization as well. You can’t have people aligned and really, you know, going above and beyond to achieve a goal if there’s some negative impacts from behaviors and mindsets and also ways of working. So, so that’s why we were sort of talking about it as “bad.” I think it’s important to also talk about the impact of culture, because many of the people I think working in organizations are probably just putting up with culture, and they might be blaming themselves. So that’s why I also wanted to talk about bad culture because I want to kind of almost get it out of the taboo place that it’s in and assure people that if they are working in bad cultures, it may be something that they’re doing. It might be a perception that they have but more generally, it’s probably not. It’s not their fault. It’s because a culture is made from a collective understanding of the ways things are done in a particular organization and that comes from the leaders, it comes from their peers, it comes from other people in the organization, it comes from the organization’s history too. And all of those things come together to form culture. So one individual is not necessarily going to be to blame for culture. Having said that, though, the CEO or leadership team have an enormous impact on how culture is created and maintained in an organization. But, again, it’s a collective effort, if you, you know, you create culture, because of the collective behaviors and beliefs of the people involved.

Intro  6:05  

I once heard from somewhere that in organizations, that impact of culture is mainly from top down. It’s very difficult to go from like bottom up in terms of employees trying to change their culture upwards. Like good leadership is what is a key attribute of making it good. 

Dr. Josephine Palermo  6:33  

Yes. It is. And when we look at the social science around this, there are lots of factors but absolutely shared values and leadership are very important. And it is often the CEO or those people, they’re the key positions or key executive positions, or leadership positions that really drive that in. Even in smaller organizations where you have founders. You will see that the founders will really drive the culture of the organization, and not just with their employees, they’ll drive it with their suppliers. And also with their clients or customers. So they’ll create that environment that people can either thrive in, or they can’t thrive in.

Christy  7:19  

So specifically, what are some really pitfalls of bad business culture? Like, culture of fear, micromanaging, is there some key commonalities? 

Dr. Josephine Palermo  7:34  

And you know what, bad culture or descriptions of bad culture will change according to kind of our societal expectations as well, because of course, organizational cultures fit into a larger national culture. And societal culture. But having said that, I think that as an individual, you know you’re in a bad culture when you experience that sinking feeling in your gut. You know what I mean? it’s a feeling you experience because maybe you’ve seen some behavior, or you experience a set of tensions in the organization or in the environment and they just don’t sit right with you. And that could be a sign that you’re in an environment where you can’t simply flourish. But it doesn’t mean that it’s a bad culture, necessarily, it might just be that there’s a lack of feet. So we have to kind of acknowledge that. But there are some cultures that we call toxic, and those toxic cultures away, perhaps, behaviors and mindsets are allowed to flourish that are unethical, according to most of the kind of, I guess, societal or national norms around that. Or perhaps where people are really conflicted in what they see because you can see that there are values of fairness, respect, integrity, honesty, and courtesy that are just not upheld in that organization. So, there are some beliefs, some shared beliefs, shared norms, that are really characteristics of bad culture. And micromanagement at the leadership level, might drive the culture, but it’s a leadership characteristic micromanagement. You can have a leadership characteristic like micromanagement, but the culture isn’t bad. it might just be that the nature of work requires a more detailed support from that supervisor or from that leader. However, what we know is that societal norms are shifting in relation to what people care about and what they need. And so, you know, you were focusing, I guess, Christy, on micromanagement because a lot of people today in 2020 really value autonomy. You know, that’s a motivational driver for a lot of people, and so we would consider micromanagement as not meeting the needs of most people who want that level of autonomy, but micromanagement may have met the needs of people, you know, 30, 40, 50 years ago, who felt very secure, having leaders, you know, give them tasks, tell them what to do, be very supportive in a detailed way around how that task is done. So those things shift with time. But yeah, I think that when you look at that culture, are you conflicted? Because your values don’t align with how fairness, respect, integrity, honesty, and courtesy are applied in that culture?

How to avoid joining a bad business culture

Christy  10:47  

Yeah, you made an interesting point about toxic versus not a great fit. Do you mind just delving a little bit into that, so differentiating that on how some people can navigate through whether something’s toxic? Or maybe they’re not the right fit? 

Dr. Josephine Palermo  11:07  

Yeah, that’s a great question. I think that when you have a culture that is toxic, for me, in particular, is where you have an organizational culture that has a leadership style that’s very closed. Where their feedback loops are not there. So employees can’t speak their mind, there’s a real lack of trust in the organization, there’s a culture of blame in the organization. So where dialogue is shut down. So anytime you have an organization culture where dialogue is shut down, or only is the privilege of certain people in the organization, because that’s where you get into cliques, for example, you will have, for me, a toxic culture, because that’s where that small number of people who are creating the norms in the organization, are going to create them to benefit themselves. So they may be exclusive. They may not be including people who have diverse views. And so you end up with a feeling of alienation from everyone else. I think that, you know, we’ve experienced, for example, in the full of a lot of the big financial institutions in Wall Street, where those cultures were described as toxic, and they were described as toxic because the small amount of people making decisions and creating the norms in organizations were driving certain values that were forcing people in a way to behave illegally, or to behave scrupulously, without considering other people around them. So, I think that those cultures are where you also get people who don’t feel like they can speak up, and then you have to get whistleblowers to really break open some of what’s happening in those cultures. So toxic is on the extreme end. It’s, you know, it’s where you will see behavior with people, you know, dialog is shut down, but you see behavior that really is erring on unethical and illegal.

Christy  13:28  


Dr. Josephine Palermo  13:29  


Christy  13:30  

It goes towards that? 

Dr. Josephine Palermo  13:30  

I think so, yes. And I, you know, we call it toxic because it makes good press. But toxic, what we mean by toxic is, if you think about the metaphor, is the environment poisonous? And no matter who you are, as an individual, if you’re in an environment that’s poisonous, there’s no way you can flourish in that. There’s no way that you can influence that, and your reactions to that are always going to be either where you feel excluded, or you feel like you’re forced to do things you don’t want to do. And I think that that’s kind of where you get into that toxic environment. Bad cultures can be toxic as well. But bad cultures are cultures where, you know, I’m talking about where there’s not a good fit, or where the practices are just not a good fit for most people. They’re not meeting the needs of people’s motivational drives, they’re not meeting the needs of their sense of fairness and respect. And people might stay in those cultures because they have other needs that are met. So maybe their need for security is met, they don’t want to lose their job, they have been paid well, or they need the job to pay their obligations, your rent, and mortgage, or whatever that is. Oh, and sometimes they’ll stay in a bad culture because they might see it as a stepping stone to a career development, that path that they particularly want. So, people, there’s all different reasons why people will stay in a bad culture. It’s not necessarily toxic. I feel like the litmus test for toxic is, “Are you being forced to do things that you know are unethical or illegal, or just really against your own moral code?”

Christy  13:47  

And that’s something that we all have to decide for ourselves. 

Dr. Josephine Palermo  15:25  


Christy  15:26  

Yeah. And so how can someone actually avoid joining a bad business culture from the start?

Dr. Josephine Palermo  15:35  

I think that people don’t ask enough questions about the culture when they are in the recruitment phase, or onboarding phase of an organization. So often, people want to join an organization, or they want a job and they’re, as a potential employee, they’re trying to make a good impression. So you’ll go to an interview, and often the people interviewing you will get to know you, and they’ll ask you a lot of questions. But that’s also a really great opportunity for you to ask them a lot of questions. And often, you know, at the end of an interview, people will say, you know, the interviewers will say, “Have you got any questions?” and people might ask a question about renumeration, or they might ask a question about strategy of the organization. But this is an opportunity to ask a question about the organization’s culture.

Christy  16:38  

That’s so true, yes. 

Dr. Josephine Palermo  16:41  

You’re on the power seat around that because then you can decide whether that organization is really right for you. I was just listening to a podcast where the interviewer, it was a TED daily talk podcast, and the interviewer was interviewing Reed Hastings, who’s the CEO of Netflix. And he was describing his culture where it’s quite a competitive culture at Netflix. And he, he himself said, you know, if you are not the kind of person that likes to be challenged all the time, this is not a great culture for you. So I would expect someone who was going for an interview in Netflix to ask a question about that. What does it mean to be competitive at Netflix? What’s a normal day like in this role at Netflix? How would you focus on performance, and recognition, and reward at Netflix? So you can get a sense of what the culture is like, and then you can decide whether you really do want to be in a culture that values competition highly or not because that’s not for everybody. Some people will flourish in that environment and others won’t because for other people, it can have a negative impact, a high competitive culture, and it can sometimes lead to feelings of insecurity and worse. So just because certain people have different needs around that. So it may not be right for you, even though in an ideal state, you might really be thinking a job at Netflix would be great, because they actually pay this stuff really well. But is it worth putting yourself in a culture that isn’t aligned to you? So a really good question to ask, in that situation is, “How are things done here? Could you give me an idea of what a normal day looks like at Netflix?” And also, the other question could be, “On a normal day at Netflix, what do you care about?” And you can ask that of the people who are interviewing you. And that’ll give you a really great idea of what they value, what are some of the norms of the organization, because when you ask people, “How are things done here on a given day?” They’ll give you an idea on how did they structure work, what do they talk about? How did they manage employees, time, and workflow? And also, what do leaders do?  What is the activity or behavior of leaders in that day? And for example, Christy, to the earlier discussion about micromanagement, if you ask a micromanager, “What’s a normal day for you? What do you care about in a normal day?” They might give you an idea. They might in their answer, that they are actually very focused on correcting employees work, on reviewing employees work in a detailed way that then doesn’t align with you, and you can make a decision about whether you really want that job or not.

Christy  20:07  

So you’re saying as potential employees, that we’re not asking enough questions about the culture really, because we have a choice to whether to join them. 

Dr. Josephine Palermo  20:22  

Yes. Absolutely. 

Christy  20:23  

And maybe sometimes, too many of the times, people compromise because they just want the job. 

Dr. Josephine Palermo  20:30  

They do, yes, they want the job. And I get that, and you know, that’s an imperative. it’s a tricky thing. I think though that being aware of a culture can also help you manage a culture. Manage yourself in that culture. So if you know what you’re walking into, you’re going to be less surprised when certain behaviors hit you. And I think that that helps you cope as well, and manage your own stress levels, it helps you manage your own sense of identity, sense of your own competency, etc. So, for example, if you know that you’re walking into a culture that is highly competitive, then you’re going to yourself, be a bit more prepared to focus on the things that you know will help you navigate that culture better on any given day. So I just think it’s better to be prepared, even if you feel like you don’t have the choice to accept a job or not, because you need a job. You can still have a choice in the way that you prepare for that, the way you set up your support structure. You might need for example, to have some buddies outside of that organization to make sure that they’re giving you a bit of perspective, or reminding you that you really are great. I can be your cheering squad for you, all of those things will help. It’s better to know.

Christy  22:05  

So thanks for all that advice, Joe, especially about the asking of questions at the actual interview process about the culture specifically. And I know that that’s gonna really help a lot of people. 

Outro  22:18  

The next week, we’ll be talking about good culture, the attributes, and if you’re a business owner, how you can take your culture to the next level. Thanks everyone, for joining us, and we’ll chat with you next week. Bye. Take care. Bye.



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