Chicago Booth Review Podcast How to Fix a Toxic Working Culture

Lucia Annunzio: You've been raised on a paradigm that vulnerability is weakness. Authenticity is your superpower, and most leaders leave their superpowers at home.

Hal Weitzman: Does your workplace have a toxic culture? Most US companies do according to Lucia Annunzio, adjunct associate professor of executive education at Chicago Booth, the hallmarks are a lack of transparency, short-termism, and top-down leadership. As a result, employees feel micromanaged, stressed, and disengaged. So what can managers do to stop the toxicity and create a healthy work culture? Welcome to the Chicago Booth Review Podcast, where we bring you insights from some of the world's top management thinkers. You're hearing this episode early as part of Chicago Booth's Executive Education Professional Forum. Lucia Annunzio not only teaches senior executives at Booth, she also conducts studies and collects data about how their employees perceive them and the culture they create. She recommends creating double loop communication in the workplace, a culture driven by leadership, but led by employees.

Lucia Annunzio, thank you for coming on the Chicago Booth Review Podcast.

Lucia Annunzio: Thank you for inviting me. I really appreciate it.

Hal Weitzman: You and I have talked about what's going on in the American workplace, and you said something which surprised me, which is why I wanted to have you on the podcast, that you think that most corporate culture is toxic culture. What do you mean by that?

Lucia Annunzio: Yes, at least many of them, and I don't think it's intentional. Toxic cultures are cultures where people feel stifled. They are micromanaged, they're told what to do, when to do it, how to do it, why to do it, and they're even told, "And if you do a really good job following my instructions, you can get my job one day." But when you tell people what to do, when to do it, you're telling people not to think. You're telling them to leave their brains at the door. People don't want to leave their brains at the door. They feel stifled, they feel suffocating. And worse than that, when people micromanage, they tend to take all of the credit and none of the blame. And then people start saying, "Hmm, what's in it for me? Why should I work hard? Why should I put any effort? Any effort I do doesn't get rewarded. Any mistake I make gets punished. It's not worth it."

So a lot of people in the world today, and I've done focus groups all over the world, feel like they're going to come to work, do as little as possible without getting caught doing something wrong. That's horrible. I mean, you should go to work and enjoy, not every day, but going to work should be about using my brain, having a good time, making friends either in person or online and liking my job. And unfortunately, there aren't a whole lot of people that feel like that. We have record levels right now of people having mental illness, applying for mental illness benefits on their insurance at work, anxiety, stress, sadness. Where's that coming from? If people were-

Hal Weitzman: We did just go through a pandemic, to be fair.

Lucia Annunzio: Yeah, well, but the pandemic's now been over for two years. Now, of course, some of that is residual, but is it? Because it's increasing now, not decreasing. Right now, according to Zippia, 68% of the American workforce is disengaged. According to Gallup, that disengagement globally is costing the world $7.8 trillion or 11% of global GDP. It's expensive not to treat people well, and yet we unconsciously and most of the time not on purpose do it. And that's just to me unfortunate because it's not that hard to turn it around.

Hal Weitzman: Before we get to that, to the solutions, is it your idea that toxic workplace culture has gotten worse? Is it a relatively new phenomenon? Has it always been with us? Where did it come from?

Lucia Annunzio: I think it came, I hate to say this, but from the baby boomer generation. I think they were the first American generation to really make money. We're college educated. I think when baby boomers started out, they wanted to change the world, and I even think they wanted to change the world for the better. Then they got really good jobs, they got comfortable, they got greedy, and they've developed, not everyone, I know great baby boomer leaders, so please, anybody who's a baby boomer listening to this, as Linda Ginzel, my colleague at Booth would say, "Stereotypes are true in the general, not necessarily in the specific." So they began to have a style of leadership that doesn't work. Yeah, it gets results, but it got results in a world that wasn't competitive. It got results in a world that wasn't global. It got results when there were straight lines and not as much uncertainty, and then the world changed. But the leadership style did not change.

Hal Weitzman: So you mean it wasn't always toxic, but it kind of became toxic?

Lucia Annunzio: I think that you could be that kind of leader and get away with it in a world that didn't require as much brainpower, and you were also able to do things for employees that you're not able to do for employees today. You could guarantee a job for life. You can guarantee a pension plan. You could guarantee that when you finish at this company, you're going to be set. You can retire at a young age. You can go on and have a happier life. Well, that ended in the '90s. There's no guaranteed employment anymore. That doesn't happen. There's certainly no guaranteed job anymore, no matter how good a performer you are, because the world is constantly changing, platforms are... As they should, and companies have a fiscal responsibility to their shareholders not to keep old models of doing business alive. So that means people are going to lose their jobs.

But the toxic culture is when people lose their jobs, how do they lose their jobs? How are they told they're going to lose their job? How is that information communicated to them? I don't know if you saw all of the press on Google. Google, and I understand why they did it, but there had to be a better way, they had a massive layoff. And they informed people over email on a Sunday, and there were people who actually went to work on Monday, couldn't get into the building.

There was one young woman on TikTok saying that her boss called her and her boss didn't know she was going to be laid off, and they were both crying together on the phone. Now, okay, I don't know what Google could have done better, should have done better because I wasn't there. I don't know what kind of cybersecurity risks there were. You got a bunch of techies. I just know there had to be a better way than that. Plus it backfired on Google. I mean that TikTok video went viral. She was blasting them, and what was even worse, she said she got a great severance package. She got to keep her insurance. She was given pay through a period of time where she wasn't working. I mean, she was so impressed by what she got and yet so livid by how she was treated.

What companies have to realize is toxic work environments are how you treat employees, not what you do for them. I can't tell you how many leaders have said to me, "Well, they make so much money and they've got a good job and they've got career mobility." Well, you know what? Your best people are going to get a job anywhere. Your best people are employable, and if that's your attitude, they're going to leave and mediocrity is going to set in because the only people that are going to stay are people who feel they're stuck. And I see that in companies all the time. The workforce is stuck. They don't feel they have options and they stay because they get a good paycheck. They've got good benefits, but that's the only reason they stay or it's close to home. I can take care of my elderly parent, I can drive my kid to school, but they hate their jobs. You don't get the best work from people who hate their jobs, and you certainly don't get good customer service from dissatisfied employees.

Hal Weitzman: So it sounds like a part of this is about not good communication or lack of transparency, but that's not something that's changed. I mean, so was that always there or...

Lucia Annunzio: Well, again, before the world changed, before open information, you didn't have to tell your employees the truth 'cause they wouldn't find it out. Today-

Hal Weitzman: Well, but in the example you gave about Google, you would have to tell them that they're fired.

Lucia Annunzio: No, no, no. But I mean, you could keep certain things a secret. You could not worry about your data being shared with your competitor online easily and with easy access. You didn't worry about somebody putting something on their computer, a thumb drive and copying things and hiding them and putting them in a safe. You didn't worry about those things back then, and that made it easier. Micromanagement was always a bad technique. It just didn't have as many negative consequences. Good leadership is good leadership is good leadership. It hadn't changed. That's just bad leadership. Throughout time, good leaders are good leaders.

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So tell us, update us, how has that changed? How has workplace culture changed in the past through the pandemic and now in this hybrid work world?

Lucia Annunzio: Well, I'm hopeful, and what gives me hope is that many baby boomers are retiring from senior jobs.

Hal Weitzman: You really down on the baby boomers.

Lucia Annunzio: I am.

Hal Weitzman: Are you a baby boomer yourself?

Lucia Annunzio: Yes, I am.

Hal Weitzman: So, okay, so you're speaking-

Lucia Annunzio: That's why I said, general.

Hal Weitzman: You're here attacking...

Lucia Annunzio: Well, I'm saying that they unintentionally did really bad stuff. And I think the next generation people in their late forties, fifties who are taking over, they get it. They understand that that doesn't work. They understand the harm of toxic cultures. When I teach open enrollment at the University of Chicago, the people who take my class are those people, they're senior executives as you know, hell, you have the same people. It costs a lot of money to go to the University of Chicago. People travel from all over the world. Their companies are investing a whole lot of money in them. So you get an exceptional group of very talented executives, and they're looking up and saying, "Eh, I don't know."

And what I love about teaching right now more than I've ever loved about teaching before, is I can say to them what I just said on the program, that way of leading doesn't work. It's short-term focus. You may get today's results, you won't get them tomorrow, and they know it. I said, you've been raised on a paradigm that vulnerability is weakness, authenticity is your superpower. Most leaders leave their superpowers at home, their softness, their kindness, their empathy. Those are your superpowers. And now, there's tons of research to support that. My favorite research is Ernst & Young's, empathic leadership increases productivity, efficiency, engagement, loyalty. And why is it my favorite research? Because it was done by the accounting firm, Ernst & Young. No one would accuse them of being soft.

Hal Weitzman: Okay, so the leaders, it sounds like today's managers have seen, maybe they've seen bad examples themselves and they've experienced them. So perhaps they know what not to do, and maybe that's making them better leaders, but they are themselves facing a whole new generation, which has different expectations, has different requirements, and has grown up in this world where they've been some cases onboarded online and have never really had the experience of working in an office at all. So how has that affected workplace culture? I mean, has it made this toxic problem worse? Is it more toxic now?

Lucia Annunzio: It's made it worse. It just hadn't made it any better. I mean, I think the biggest myth happening today, and I think people believe the myth and that is that people for the most part, don't want to go back to work because they like being in their jogging clothes and they like doing their laundry. I think that gets old no matter how introverted you are. I think when they got away from work for two years and they didn't have to go into that toxic environment where they couldn't breathe, on some level, whether it was conscious or not, they don't want to go back. It's like when somebody quits a job at a toxic environment and they get a job they really love, that person has often asked things like, "Did you lose weight? Did you go on a vacation? Did you get haircut?" Well, no, they just changed jobs.

One of the leaders that I helped quit a job, he was in the C-suite, took some time off, and I saw him about five months later at an airport, and I hardly recognized him. And he lost weight, and his skin tone was back and he looked more athletic. And I said, "What happened?" He said, "I didn't realize how unhappy I was until I left." And I think that's what happened to people in Covid. I get my coffee in Chicago from a coffee shop with baristas, and they're in the district that has lots of office buildings. And I said to her, "Since the remote workplace, are you getting less business?" She says, "Kind of." And I said, "Well, in what ways?" She said, "Well, Mondays and Fridays are slower. People tend to take off Mondays and Fridays. She said but what's interesting is that people go to work on nice days."

Now you would think if people loved being home, they'd want to be in their backyard. But no, they go to work. Why? Because they can go outside, because they can go out to lunch with their friends, because they can walk around and see other people. They can go shopping. I believe people need social connection. If you look at all the research on the blue zones, all the different countries, the one thing-

Hal Weitzman: You're talking there about why people live-

Lucia Annunzio: Yeah, why people live to be a hundred

Hal Weitzman: ... long in some places.

Lucia Annunzio: To be a hundred. And the only thing that all of those people have in common are close social connections. People with close social connections-

Hal Weitzman: You mean from work or from social life? Either one?

Lucia Annunzio: Both. And many of us, I mean, we work more than we're at home. Many of our friendships are developed at work. So you're a new employee going to work, not going to work, and you've just missed two years of school in social connection. Maybe you missing some social skills, maybe your ability to make that social connection has gone down, whether you realize it or not. And by being at home, are we really doing that person a service, whether they're more physically comfortable or not?

Hal Weitzman: So a lot of managers have spent the past few years worrying about hybrid work and what's the right, is it Tuesday, Wednesday, Thursday? What is the right mix of having people come in and forcing people to come in when they don't really want to come in? On the one hand, it sounds like what you're saying that's not really the issue. The issue is the culture that brings people in.

Lucia Annunzio: Well, I think it's some of the issue, but not all of it. And I've been teaching this before, but the New York Crain's Business at the end of 2022 did a story about how they did research on it and why the great resignation happened. And the majority of people, it was they didn't want to go back to toxic work cultures. Now I didn't know that, but I intuitively knew it from all the focus groups that I've run.

I think I mentioned on the telephone, I interviewed this young person for a CEO job. She was pretty much right out of college, real bright. I read a paper that she wrote in the university, fabulous critical thinker, well-thought-out, and I don't remember the reason, but the CEO wanted me to interview this person. And the whole time we were on Zoom, she was looking at her phone. She was having difficulty conversing with me. You can't have eye contact on Zoom, but she clearly wasn't even looking at the camera. She was looking down, and I thought, this could be a bad hire. I mean, there's something wrong. But she was really smart. I said to the CEO, well, just keep an eye open. I don't want to judge her. And I asked her, what were her last two years of college? Or she missed her last two years of college and had been depressed.

Hal Weitzman: 'Cause it was online, you mean?

Lucia Annunzio: It was online. She didn't have the last two years of college. And she regretted that and missed it. Well, three months later, I had to talk to her about something else, and she had gone to their office and there was a team and she made some friendship. And when I was talking to her, she was this extroverted person who had no trouble having conversation. She just forgot how to do it. And she was in an environment where she felt her brain was respected, where she said, I love the collaboration. We do a lot of whiteboarding. The team is fun. We have good experiences together. So I have to ask myself, do people really not want to come back to work, or do they really want to go back to boring, stifling environments? And I also don't believe there's a one-size-fits-all. I think there are some jobs and some people that are perfectly okay to have remote work, but I think there are some things where you need to come to work. But I think before you make that decision, you better have the real facts about why people aren't coming to work.

Hal Weitzman: It sounds like if you're managing a unit or a division where people are resistant to coming in, you should ask yourself, why is that? Not just assume, ah, because they're a younger generation doesn't used to coming into the office, so they don't want to.

Lucia Annunzio: Exactly. All the research shows that Gen Z, counter intuitively because they are the digital natives of digital natives, they want to go back to work. They want direct feedback, they want mentoring, sponsorship, and they don't feel they're getting it online. And guess what? They're not.

Hal Weitzman: Okay. So give us some advice. If you're a manager who is listening to this podcast thinking, what have I done? I have created a toxic environment, or I work in a toxic environment other people have created, what can we do to fight back and course correct and get back into a healthy culture?

Lucia Annunzio: Every leader has people that are their trusted colleagues that no matter how good or bad they are, they know there's something good about them and they're willing to put up with whatever foibles they have. Everyone's got about four or five of those people in their lives. Ask them to go talk to people 'cause they're not going to tell the boss the truth. Ask them what's going on. What are the rumors? What are people saying about the culture? What did they, what do they not do? An online survey? Ask people. To make this a place you want to go to work every day what do we have to stop doing? What do we have to start doing? What do we have to keep doing?

Collect the open-ended data. Do a theme analysis, form a committee of people, not leaders but workers, and give them a budget and say, here's the data. What can we do to improve this culture? Come up with some ideas. You are in charge. You need to run your ideas by me because there may be some things you don't know about policies, whatever, but this is your job. Let's do it together. Let's be a team.

Good cultures are leader-driven and employee-led. There's double-loop communication. Leaders tell, employees ask, leaders give it back to the employees and they collaborate. That's called double-loop communication.

Hal Weitzman: Okay. So that's sort of the process. What about the substance? What about when you are working with executives and they recognize they're working in a toxic culture? What are the sort of traditional things? For example, you talked about micromanaging. Obviously it's easy to say, don't micromanage. What does that actually mean?

Lucia Annunzio: Most executives don't know they're micromanaging. If you think about it, many executives were first experts. They were a technician, a finance person, an engineer. And what made them successful was knowing and telling. They knew the answer. They told it, they got permission. That's a very bad habit break because when you leave expert and go to leader, you have to ask, listen, and ask. And many people don't even... If you were to say, "Well, as a leader, shouldn't you listen and ask?" Oh, yeah, yeah. But they're so used to doing it the other way. They're not consciously aware of what they're doing.

So one of the CEOs I coached, I was walking around with him and he went into the Salesforce department, and he was the CEO who grew up in this company and made it through the ranks. And he goes up to the salespeople and he starts, he's big guy, six feet five, big booming voice. And he would be standing over people and he'd go, "Hey, what you doing? How are your numbers? How are you going to get them up?" And he'd actually do this. And sometimes he'd punch people just in a playful way, but people would be stunned, and he didn't even notice.

So later that day, we went to the office and I said, "Can I play a game with you?" And he said, "Sure." I said, "Well, how about I be you and you be one of the salespeople? I said, "'Cause it seems like you have this technique." He said, "What?" I said, "You ask people a lot of questions and you're kind of in their face." And he goes, "Oh yeah, I love these guys and I really want them to make more money, not for the company, but because I really love them and I figure I'm going to get them to think." I said, "Okay. So your goal is to get them to think. Is that correct? Okay." So then I really go for it more than I did on this podcast.

And about 30 seconds into it, he's turning white. And he says, "Stop." I said, "What? Why?" He said, "I feel awful. Do I make other people feel that bad?" I said, "What do you think?" He says, "I must." I said, "Yeah. What do you got to do differently?" He says, "I know. I get it." And he did. He never did it again.

Hal Weitzman: So it sounds like a manager can make sure that they're self-aware by setting up these kind of mirrors around them, because in this case, you were the mirror.

Lucia Annunzio: Right. And he can just go to his team and he could say, "I have this bad habit. I have a big booming voice. I want you to catch me. And let's make it funny." I had a leader once where he wanted to have people tell him ideas, and they were always afraid of him. And he was so mad at them because he said, "I love idea generation." And they were so afraid that he was going to shoot them down that they wouldn't give their ideas. And they were shocked that he really truly wanted them, and he was shocked that they didn't give them. So we created this thing where one of the team members was sucking up to him, and they would make a suck up noise with their hand, and everybody'd start laughing. People would stop doing it, and it became a ritual that worked.

So how do you make it fun? Bad behavior, well, we're all imperfect human. I've worked with great leaders in five different continents. I've never met a perfect person. I've never met a perfect leader. We're all imperfect. The more consciously we are aware of our imperfections and we explain them to people or we delegate them, if there's something you can't do, delegate. So one leader I had, empathy was just so hard for him, and they were going through a lot of change, and there was somebody on his team that was super good at it. So that person would walk around and do the empathy thing. However, he said, "Sometimes they're going to need it from me. So I want you to tell me who the person is and coach me and help me be the leader they need me to be." And it worked.

Now, when we can be honest as human beings, that we're all imperfect and we stop trying to be perfect, better stuff happens, better results, better workforces, better environments.

Hal Weitzman: Okay, imperfect but not toxic sounds.

Lucia Annunzio: Yes.

Hal Weitzman: Sounds like a good watchword. All right. Lucia is so fun to have you on the podcast. Thanks for joining us.

Lucia Annunzio: Thank you.

Hal Weitzman: That's it for this episode of the Chicago Booth Review Podcast, part of the University of Chicago Podcast Network. For more research, analysis, and insights, visit our website at chicagobooth.edu/review. When you're there, sign up for our weekly newsletter so you never miss the latest in business-focused academic research. This episode was produced by Josh Stunkel. If you enjoyed it, please subscribe, and please do leave us a five-star review. Until next time, I'm Hal Weitzman. Thanks for listening.