The business landscape has been significantly transformed in recent years and will continue to change and evolve moving forward. This requires organisations to adapt and transform to stay ahead of the curve and remain relevant within their sector and the broader business environment.
In recent times, though, we have seen an increasing number of high-profile organisations, such as Amazon, Uber, Wells Fargo and Amnesty International hit the front page due to ‘toxic workplace’ cultures.
Additionally, the cost of not delivering a contemporary workplace, where people are psychologically safe, is climbing. New research reveals that the average payout of those impacted by problematic behaviour, such as bullying, harassment or discrimination at work, is now £381,350 (Maher, 2024).
It is estimated that unhealthy workplace cultures, leading to lost productivity, cost employers between £26 billion and £29 billion annually (Hampson, 2024). And with 75% of the UK’s employees saying they have experienced a “toxic workplace culture”, it is not something that we can be complacent about (Oak Engage, 2023).
The major trends impacting businesses
Multiple factors have played a part in the evolving business landscape, requiring a dramatic change in organisations and their leaders.
- The VUCA world, with its volatility, uncertainty, complexity and ambiguity, has been driving change in businesses for over a decade.
- The global pandemic dramatically drove organisations to pivot and change in ways they had never thought possible.
- The pandemic transformed the workplace from office-based to working from home and hybrid working. This has now become the new normal. As a result, employees demand a more flexible lifestyle from their employer.
- Technological change isdriving an ever-increasing pace of change in organisations. As a result organisations can no longer take three years to complete a technology transformation as the platforms they use are outdated by the time the implementation starts.
- Artificial intelligence This will transform the business arena and bring about significant change that many industries and businesses have yet to recognise fully. AI will continue to challenge companies to innovate and eliminate outdated ways of working.
Meanwhile, social media is now a central part of many marketing strategies, and more platforms are continually emerging.
Similarly, Employee Engagement has become a significant driver of workplace change. Global research shows that only 23% of employees are engaged (Gallup 2022). This impacts productivity, retention, attraction and all aspects of business effectiveness.
As digital natives who grew up surrounded by technology, Generation Z, for example, have a unique perspective that influences their approach to work. Seeking a work-life balance, they are demanding quicker career advancement and are less tolerant of old-school command control leadership styles.
In a volatile employment market we are seeing a significant rise in the importance of building Psychologically Safe Workplace Cultures. Research has shown that a toxic organisational culture was 10.4 times more potent than compensation in predicting a company’s attrition rate (MIT Sloan Management Review 2022).
Mental health and well-being is also becoming a high-priority issue that businesses need to respond to. Global research (Dimensions International’s Global Leadership, 2021) reveals that in the context of COVID-19, nearly 60% of leaders reported burnout.
More generally, the NHS (The Guardian, 2022) is projecting that 10 million people will need new or additional support for mental health over the next three to five years.
These factors will continue to pressure organisations and demand a shift in how they operate and the leadership they promote.
What organisations must focus on to deliver a modern workplace that is engaging and psychologically safe
The future of work will be heavily influenced by the aspects we have already discussed. However, some factors will take precedence as organisations navigate the ongoing volatile business environment.
That means Building Healthy Organisational Cultures that are Psychologically Safe. Research shows that unhealthy corporate cultures with disengaged workers have “37% higher absenteeism, 49% more accidents, and 60% more errors and defects.
Organisations with low employee engagement scores experienced 18% lower productivity, 16% lower profitability, 37% lower job growth, and 65% lower share price over time.” (Seppala & Cameron, 2015).
Embracing innovation and creativity is crucial in driving business success in today’s dynamic and rapidly changing world (Charpentier, 2022). They allow businesses to stay ahead of the competition.
Companies can differentiate themselves in the market by constantly seeking new and improved ways of doing things when it comes to creating unique products, services, or processes that attract customers.
Leverage artificial intelligence
Automation and artificial intelligence are transforming the workplace and will continue to drive significant change in the years ahead. Most organisations simply do not respond quickly enough to the opportunities offered by AI. Collaboration between humans and machines will become crucial for productivity.
Capitalise and leverage the generational shift
There has been a noticeable shift in generations dominating the workplace, with Generation Y (Millennials) and Generation Z becoming more prevalent (Pryor, 2019).
Valuing flexibility, work-life balance, and personal growth opportunities, they tend to be tech-savvy and are generally more comfortable with digital tools and online communication platforms. Organisations must respond to the increasing influence of these generations, making the necessary changes to maintain their engagement levels.
Leverage diversity
As Forbes (2020) noted, “Diversity is a key driver of innovation and is a critical component of being successful on a global scale.”Ensuring you are recruiting, promoting, and valuing diversity is crucial to creating an open and vocal culture. This requires work and effort, but when it is effective, it is simply amazing.
Build the capacity for effective conflict handling
Individuals do not always agree or get on with each other, so you must build strategies for handling challenges and differences of opinion. If you want an open culture, building the capacity to handle conflict is crucial. But it remains a challenge in most organisations, as people actively avoid conflict.
Harness the best of remote working
If the COVID-19 pandemic accelerated the adoption of remote working, with many companies now realising its benefits, organisations will still need to address any challenges and ensure they can maintain well-being, engagement and healthy organisational cultures.
Understand and leverage the gig economy and freelancing
More people are embracing freelancing and independent work, motivated by flexibility and career control. Companies also leverage external talent through platforms to tap into a global pool of specialised skills. Organisations must understand the importance of this in their workforce planning. Many high-talent employees may choose to move to the gig economy, leaving employers with gaps in employment.
Green jobs and sustainability
The global focus on addressing climate change will lead to a surge in green jobs. Companies must prioritise sustainability and integrate this into their core business strategies.
The focus for contemporary leadership
Leaders must focus on four critical aspects to support them and their organisations to thrive.
- Build leader resilience Leaders who are not resilient will not be able to successfully navigate the challenges that will continue to impact organisations into the future.
- Invest in building a psychologically safe workplace culture Leaders must be passionate about building an agile and psychologically safe workplace culture.
- Embrace lifelong learningWith technology advancing rapidly, continuous learning and upskilling will be essential to stay relevant in the future job market.
- Demonstrate trustworthiness Finally, trust is critical to developing an open, honest culture that supports people’s speaking up. People who work at high-trust companies show 74% less stress, 50% higher productivity, 13% fewer sick days, and 76% more engagement (Zac, 2017).
