The Toxic Microcosm: How Small Business Exaggerates a Toxic Work Culture

We know the US labor market is tight. With record low unemployment rates, companies are looking at ways to attract and retain top talent. Workplace culture plays a huge role in employee retention and engagement, so it’s not surprising that “toxic culture” has become a household phrase. And we know what toxic culture looks like on a large scale. When businesses collapse. When employees protest. But what does it do to small business? 

Toxic culture in small business is more harmful, more pronounced, and more difficult to repair.

Small business shops.

The Small Business environment

According to the Small Business Administration, 99.9% of US businesses are small businesses, and small business employees account for 47.5% of US employees. A large number of those have fewer than 100 employees. For small business, every change, every hire, and every work relationship is impactful. They are at the greatest risk of creating a toxic workplace culture.

Toxic culture in small business is more harmful, more pronounced, and more difficult to repair.

Who’s in charge?

When you only have a handful of employees, they end up wearing multiple hats, including managers. Leadership roles are murkily defined and/or positions change so frequently that it’s hard to be sure who’s in charge. That uneasiness and change causes employees to become self-protective. Everyone has their own loyalties that take priority over the management structure. The reporting/managerial structure is subverted. 

Once that leadership structure is broken, you might see some managers avoiding “problem employees” entirely, choosing to work with only those that are easy to get along with. This looks like favoritism, and creates even more distrust.

Does anyone actually work around here?

This business balances precariously on the shoulders of a couple of talented individuals. As a result, these employees feel so secure in their jobs that they do whatever they want. It doesn’t always mean they slack off, but they feel justified in setting their own goals and following their own process. 

“If you don’t like what I’m doing, fire me. Oh wait, you can’t!”

Other workers become resentful and suspicious of how their coworkers are spending their time. The hardest workers become overburdened, so much that they no longer have the energy to do what they love or even look for a way out. 

Woman sitting with two bosses

What did you hear?

In this toxic environment rumors run rampant. It’s exaggerated in small business because each employee has a direct line to get the “truth.” There’s no formal method of mass communication, because it’s not necessary for getting work done. But pretty soon everyone is comparing notes and making speculations.  

How dare you say that!

The employees are on edge. Feedback and coaching is considered a personal attack. If the company is young, employee reviews might be new for both the employees and the managers. Add that to the rumor mill and a harsh review by a rookie manager might send the whole office into a frenzy thinking everyone’s about to be fired.

Not my circus!

Now the managers are suspicious and on edge as well. They feel contempt. They feel like no one is respecting their authority. Everyone is pointing fingers and placing blame, and in a scramble for some amount of ownership, managers are taking credit for every little tidbit of good work. Blame, on the other hand is passed off. Credit is not shared.

In a toxic culture managers are taking credit for every little tidbit of good work. Blame, on the other hand is passed off. Credit is not shared.

There’s hope in numbers

Some of these issues are present in larger companies, but size can also shield a company from a full-blown toxic takeover. In large companies there are separate social dynamics in small groups and in whole business locations. The company may experience some toxic bubbles that never reach the rest of the population.

Two women in conversation

Nobody’s Doomed

Small or large, there’s hope. Culture can change with concerted effort. Leadership that is invested in workplace culture improvements with policy changes and targeted right-fit hiring. It will take practice breaking the old habits, but it can be done.

Do you have experience affecting small business cultural change? I’d love to hear your tips and insights in the comments.

—Written by Nina Ottman

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