Cruel corporate cultures will not thrive for long — experts say

NEW YORK — Companies with a corporate culture that degrades employees, pits them against each other and encourages workers to toil more for less money may flourish in the short term but the results are unlikely to last for long, management experts warn.

Abusive practices in the workplace will eventually take a toll in lost creativity, waste and employee turnover that could hit productivity and company profits.

"I don't think it is sustainable over the long haul," said Larry Johnson, a corporate culture expert and author. "There are a lot of companies that do very well by having a fun and exciting culture where you don't have to treat people like slaves or drive them against the wall."

American corporate culture came under the spotlight when the New York Times wrote an expose last month that described tech giant Amazon as a "bruising workplace". 

Many employees worked long hours, were criticised by managers, sabotaged by co-workers and dismissed in an annual culling to weed out the weak, the newspaper said.

Jeff Bezos, the chief executive officer of Amazon, challenged the depiction of the company he founded in 1994, saying it was an Amazon he did not recognise.

Amazon is not the first company that has been scrutinised for how it treats its employees, nor is the corporate culture it is accused of promoting unique.

Kim Cameron, a management professor at the Ross School of Business at the University of Michigan, said any company that belittles its workers is limiting its growth and potential.

"It could grow and flourish far greater, from three to eight times more, by implementing positive practices," he added.

Technology company Google ranked first for the sixth time in Fortune magazine's 2015 list of best companies to work.

Diminished creativity, loyalty

Employees thrive in a positive environment, are less likely to report feeling burned out, or to call in sick, and are more committed to the organisation, according to research published in the Harvard Business Review.

By contrast, Cameron indicated that an abusive corporate culture breeds contempt, diminishes creativity, commitment and loyalty that will impede growth because employees will leave. 

It also costs from three to about eight times more to hire a new employee than to keep one, he remarked.

"So for organisations that say we are just going to turn over all these people, it's enormously inefficient and costly," Cameron said.

He is also critical of stack ranking, a process in which managers grade employees on a bell curve. He believes it de-motivates workers, does not promote honesty in appraisals and breeds a culture of prima donnas and back stabbing.

Johnson, the Arizona-based co-author of the book "Absolute Honesty: Building a Corporate Culture that Values Straight Talk and Rewards Integrity," is also not a fan of stack ranking.

"To have them [employees] fight it out like gladiators in the arena with a few every year being slaughtered, I think is detrimental to corporate health and culture," he said.

Johnson likens corporations with negative cultures to going through a military boot camp.

"A lot of people go there to get the training. They spend a year or two and they go on to do their own thing," he said. "There is a better way to run a company with a culture that is benevolent and celebrates their people."