How to break a toxic organisational culture

When was the last time your boardroom discussions turned to the heartbeat of your organisation – its culture? Do you know the true cost of an uncaring workplace? Beyond financials, are you attuned to the invisible risks – disengagement, burnout or reputational damage – that fester when toxic cultures go unchecked? 

In today’s world, where employees and communities demand authenticity, empathy and purpose, workplace culture is no longer a soft issue; it’s a strategic imperative. Toxic cultures erode trust, stifle innovation and drive talent away, costing billions annually. 

A 2022 MIT Sloan study found toxic culture was 10 times more predictive of turnover than compensation. Yet, many boards remain distant from these risks, assuming Human Resources will handle it. Why does this matter now? It matters because there is a strong correlation between leadership, culture and performance. 

A Cautionary Tale

Consider the case of New Zealand media company MediaWorks, which faced a cultural reckoning in 2021. An independent review exposed a toxic workplace marked by bullying, sexism, harassment and a ‘boys’ club’ mentality. 

Employees reported inappropriate relationships, illegal drug use and a pervasive fear of speaking out. The review’s 32 recommendations underscored a failure of leadership and governance to address systemic issues. Staff felt silenced. 

Understanding the implication of toxic culture is critical. A multi-year study conducted with HR students found that nearly half had witnessed or experienced harassment but feared reporting it, believing it would harm their careers. 

The fallout of MediaWorks was striking: high turnover, damaged morale and a tarnished reputation. MediaWorks’ board had to confront how its oversight had enabled a culture of fear. This wasn’t just an HR issue – it was a governance failure. The key lesson is that boards must proactively govern culture, or hidden risks will surface with devastating consequences.

Decoding TOXIC and embracing CARE

A toxic culture isn’t just unpleasant – it’s a structural failure. We unpack TOXIC as an acronym to explore its roots:

T – Tyrannical: Leaders who rule through fear, shutting down dissent. The Human Rights Commission (HRC) reported 20% of New Zealand workers experienced frequent bullying behaviours, including persistent criticism, exclusion or being set up to fail in a role.

O – Oppressive: Systems that prioritise results over wellbeing, fostering burnout and resentment. HRC found 30% experienced at least one harassment behaviour at the workplace. 

X – Xenophobic: Cultures that exclude or marginalise, ignoring diversity and inclusion. As found in the same HRC report, a further 39% of New Zealand workers experienced racial harassment, including racial jokes, mocking and discrimination. 

I – Imbalanced: Workplaces where power dynamics or workloads crush fairness, leaving employees disengaged. The impact is stark – New Zealand lost around 7.3 million working days to absence in 2020. 

C – Cold: Environments lacking empathy, where people at the bottom are experiencing corrosive pressures, leading to ‘quiet quitting’.

Legal frameworks have long addressed bad behaviours, but regulation alone cannot govern culture – and may worsen power imbalances by relying too much on control, punishment and fear.

One of the alternatives and more sustainable ways to reverse a toxic work environment is contrast this with a culture of care. We define this with the acronym CARE to create a structure for practices:

C – Consciousness: Awareness of workforce’ struggles and strengths from psychosocial safety perspective.

A – Action: Proactive step – strategies, policies, training and routines – to embed empathy and kindness through feedback, presence and active listening.

R – Reciprocity: Mutual respect where leaders model care, and employees feel valued, boosting engagement and ultimately trust and empowerment.

E – Equilibrium: Balancing results with wellbeing, ensuring sustainable performance without burnout.

A culture of care is not soft; it is strategic and creates long-term benefits. It reverses the spiral of fear-based cultures, replacing cold compliance with warm connection. It is about leading with heart, where empathy drives innovation and kindness that fuels loyalty and trust.

Practical steps for boards to govern with care

Boards cannot delegate culture – they must champion it. Here are three actionable steps:

1.     Embed a culture of care in governance frameworks
Make culture a regular agenda item with reports on engagement, turnover and psychological safety. Assign a board member to oversee culture and ensure single point accountability. Implement anonymous surveys to gauge leadership trust and empathy – showing culture is a priority and spotting risks early.

2.     Model and reward caring leadership
Boards sets the tone by championing compassionate leaders. Review the executive incentives to include culture metrics such as employee retention or inclusion. Provide empathy coaching, drawing on models that balance self-care and team care. Recognise leaders who foster care. 

3.     Build systems for open dialogue
Create safe channels for employees to report concerns without fear. Mandate whistleblower protections and confidential reporting. Use town halls or focus groups to hear staff directly, keeping the board aware and balanced.

As the board, you hold the power to break toxic cycles and build workplaces where empathy thrives. The risks of inaction are clear: MediaWorks paid a heavy price. By governing with consciousness, action, reciprocity and equilibrium, you can create organisations that do not just succeed but inspire. 

Ask yourself: What legacy can your board leave? One of fear or one of care? The choice is yours.

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Dr Siew Fang Law is a social psychologist and peace psychology expert, passionate about fostering systemic care in individuals, organisations, and communities. She was on the board of Victoria University, Australia, and Initiatives for Change. Hannes van Rensburg is a leadership coach and former senior executive, dedicated to cultivating caring, connected leadership to inspire positive change.