Direction for a Healthy Corporate Culture: Top Warning Signs to Fix

Most Companies and Employees Want a Clear Direction for a Healthy Corporate Culture
Setting a deliberate direction for corporate culture is essential. Culture exists either by design or by default. Every organization has a way of operating — for better or for worse. At best, employees arrive with a sense of purpose and strive to deliver their best work for the right reasons. At worst, a toxic culture can create a downward spiral that ultimately undermines performance and sustainability.

Where does your organization fall on the spectrum between healthy and toxic culture?

An Example of an Unhealthy Corporate Culture
General Motors illustrates how a culture can deteriorate from within. The defective ignition switch scandal, which ultimately caused up to 300 fatalities, took more than eleven years to address.

Despite GM’s stated values — integrity, safety, accountability, quality, and customer focus — the organization fostered a culture of avoiding accountability, suppressing bad news, and prioritizing cost over safety. This case, like many project postmortems, shows how clearly stated values mean little if they are not actively monitored, reinforced, and lived by leaders.

Five Warning Signs of an Unhealthy Culture
In our two plus decades of assessing corporate cultures, we have come up with a list of warning signs that can lead to a failing corporate culture.

1. Unstated or Unclear Values
   When expectations aren’t clearly defined and reinforced, performance becomes inconsistent. Leaders often display core values superficially without embedding them in daily operations, which leaves the default culture unchecked.

   In GM’s case, while the values seem to have been clearly stated, they do not appear to have been monitored or reinforced.

2. Weak Leadership
   If leaders fail to model the behaviors they expect, the desired culture cannot cascade. At GM, employees feared raising issues that might delay launches or increase costs — a clear sign that leadership failed to practice what it preached.

   At GM, the US Attorney identified a consistent unwillingness to raise problems for fear that it may delay the launch of a vehicle, cause reprisals or increase costs.

3. Lack of Accountability
   Tolerating underperformance demoralizes high performers and erodes standards. Consistent enforcement of behavioral and performance expectations is critical to sustaining a high performance culture.
4. Closed Communications
   Limited or delayed information flow fosters back-channeling, mistrust, and siloed work. Organizations with high office politics are often unwittingly cultivating a toxic environment.

   At GM, the US Attorney identified a culture that did not encourage constructive debate, but one that created a consistent unwillingness to raise problems for fear that it may delay the launch of a vehicle, cause reprisals or increase costs.

5. Overwork and Excessive Stress
   When work-life balance is off, pressure is relentless and the payoff seems insufficient, engagement drops, decision-making suffers, and errors increase. Employees must believe the effort is meaningful for sustained high performance.

An Example of a Healthy Corporate Culture
Zappos provides a compelling counterpoint. Customer service wasn’t just a slogan — it was empowered at every level. Employees knew their expectations, and leaders actively modeled behaviors that ensured every customer interaction reflected the company’s values. Clarity, empowerment, and accountability drove Zappos’ cultural success.

What You Can Do to Create a Healthy Corporate Culture

• Clarify and Communicate Values
  Define how people should think, behave, and work, and reinforce these expectations consistently.
• Model Behavior at the Top
  Hold leaders accountable for demonstrating the culture they wish to instill.
• Promote Collaboration
  Reward team achievements alongside individual performance.
• Focus on Long-Term Success
  Avoid sacrificing sustainability for short-term gains.

The Bottom Line
Our organizational alignment research shows that corporate culture accounts for 40% of the difference between high- and low-performing organizations. Culture is not just a soft asset — it drives organizational health, engagement, and sustainable performance.

To learn more about setting the direction for a healthy corporate culture, download: Latest Research: The 3 Most Levels of a High Performance Culture that leaders Must Get Right