How to recognise and address toxic workplace culture

What is toxic workplace culture?

Toxic workplace culture refers to an environment where negative behaviours, unhealthy norms and poor leadership practices become part of how the business operates, rather than being challenged or corrected. It’s often not defined by a single event or person but by a pattern of issues that slowly erode trust, wellbeing and morale across teams.

In these environments, employees may feel undervalued, unsupported or unable to speak up. This can create a lack of psychological safety that discourages collaboration and reduces motivation. While the symptoms may look different from one organisation to another, the result is often the same: a disengaged workforce and a culture where people struggle to thrive.

Importantly, toxic workplace culture can take root in any organisation, no matter how compelling its mission statement or polished its values. Because ultimately, what defines a workplace is not what it says it stands for, but what it tolerates.

Why understanding toxic workplace culture matters

Understanding workplace culture isn’t just a concern for HR, but it’s a business-critical issue. In today’s hiring climate, culture influences everything from retention and engagement to reputation and long-term growth. For Australian professionals, culture is no longer a "nice to have”. It’s central to how people assess whether a company aligns with their values and wellbeing needs.

Toxic cultures rarely grow overnight. They often grow quietly and gradually. Without conscious effort to identify and address early warning signs, issues can compound until they start affecting performance, employee engagement and leadership credibility.

Leaders who take the time to understand what toxic workplace culture is, and how it shows up, are better positioned to build environments where people feel safe, respected and empowered to contribute. A clear understanding of culture is also key to protecting your employer brand, improving employee satisfaction and attracting top-tier talent in a competitive market.

Recognising the risks is the first step. In the following sections, we’ll explore how to spot the signs of toxic workplace culture, what causes it, how it affects your organisation, and how to take practical steps toward building a healthier, high-performing culture.

Key signs your team may be experiencing toxicity

Toxic workplace culture can be hard to recognise in the day-to-day. Often, it becomes ‘normal’ over time until turnover spikes, engagement drops, or feedback becomes impossible to ignore.

Here are key warning signs to watch out for:

1. Poor leadership

When leadership lacks transparency, consistency, or empathy, it signals that people are not a priority. This often creates confusion, fear, or frustration across teams.

2. Unclear communication

Mixed messages, inconsistent expectations, or a lack of honest feedback quickly undermine trust. A toxic workplace culture often includes one-way communication or conversations that are reactive rather than proactive.

3. No boundaries at work

If working overtime, skipping breaks or replying to emails outside hours is expected, it signals poor boundaries. Work-life balance is essential to long-term performance.

4. High turnover

If your top performers are consistently leaving, look beyond the exit interviews. Toxic workplace culture is one of the most common reasons for voluntary turnover and one of the most preventable.

5. Gossip, cliques, or exclusion

Persistent office gossip, favouritism, or the dominance of ‘in-groups’ can indicate a lack of trust and inclusion. This often leaves others feeling isolated or disengaged.

6. Lack of wellbeing support

When mental health and wellbeing are not embedded into your culture, employees are more likely to burn out. Toxic workplaces often lack access to support systems or flexible working practices.

7. Low morale and engagement

If employees appear consistently demotivated, disinterested, or withdrawn, it may be more than just a stressful week. Low morale often reflects a deeper cultural issue.

Common causes of toxic work environments

Toxic workplace culture doesn’t appear overnight. It often builds over time through repeated behaviours, structural issues or unaddressed leadership gaps. Left unchecked, these issues create a workplace where negativity becomes the norm and poor behaviours are tolerated or even rewarded.

Understanding what drives a toxic workplace culture is the first step towards preventing or addressing it. Some of the most common contributors include:

• Poor leadership practices 

A lack of transparency, inconsistent communication or micromanagement signals a lack of trust. Leaders who avoid accountability or fail to show empathy can damage morale and create a climate of fear or frustration.

• Misaligned values 

When a company’s stated values are not reflected in day-to-day decision-making, it creates confusion and cynicism. Employees quickly pick up on the disconnect between what is said and what is done, which erodes trust and engagement.

• Unchecked stress and pressure 

Unrealistic workloads, tight deadlines or chronic understaffing can normalise burnout. Over time, wellbeing is sidelined, and high stress becomes a part of the culture, driving resentment and reducing long-term performance. 

• Limited diversity and inclusion 

Without diverse representation or inclusive practices, certain voices dominate while others are silenced. This can create cliques, reinforce bias and prevent meaningful collaboration. 

• No feedback culture 

In workplaces where feedback is ignored, discouraged or non-existent, trust breaks down. Without regular, open feedback loops, problems are left to fester, and employees are less likely to raise concerns in the future.

Each of these factors can develop subtly but carry significant consequences over time. Addressing them requires leadership awareness, clear processes, and a commitment to creating a culture that genuinely supports its people.

Explore: Why company culture matters more than ever in recruitment

The business impact of poor workplace culture

Toxic workplace culture carries significant costs that extend beyond unhappy employees. Recognising these impacts makes it clear why culture must be treated as a strategic priority.

High turnover and recruitment costs

When employees feel unsupported or overwhelmed, they won’t stay. Frequent departures break team momentum, delay delivery and increase the cost of recruitment and onboarding.

Increased absenteeism and presenteeism

Burnout and stress lead to more sick days, while employees who feel they cannot take leave may work through illness. Both absenteeism and presenteeism undermine overall productivity and morale.

Reduced productivity and collaboration

Poor communication and low trust lead to confusion, duplicated efforts and conflict resolution. Teams under strain struggle to work together effectively, delaying decisions and hampering business growth.

Decline in innovation and risk-taking

In environments where speaking up or suggesting new ideas is discouraged, creativity dries up. A culture of fear prevents experimentation and makes adapting to change more difficult.

Damage to employer brand

Negative experiences shared on social media and review sites can deter prospective talent. A reputation for a toxic workplace culture makes it harder to attract and retain skilled professionals.

Australian professionals place more value on workplace culture than ever before. If your environment feels unsafe or unsupportive, word spreads quickly and talent will move on to organisations that prioritise wellbeing support, clear boundaries at work and strong leadership.

Steps to rebuild trust and create a healthy team culture

Repairing a toxic workplace culture takes time, but small actions consistently applied can transform the employee experience and rebuild trust.

1. Name the problem

Start by acknowledging what’s not working. Use surveys, 1:1 check-ins, or facilitated discussions to gather honest feedback and demonstrate that change is a priority.

2. Prioritise wellbeing support

Review how your organisation supports mental health and flexible working. Consider offering wellness days, no-meeting blocks, or access to professional support.

3. Lead with empathy and integrity

Leaders must model the behaviours they expect. This includes open communication, accountability, and a commitment to learning from feedback.

4. Hire and promote with culture in mind

When hiring, assess candidates for their contribution to a positive culture, not just their technical fit. Use values-based interview questions to understand how they collaborate, give feedback, or respond to challenges.

5. Embed inclusion in every process

A strong culture values every voice. To truly embed inclusion into your organisation, set measurable ED&I goals, remove bias in recruitment and performance reviews, and create forums for all employees to share ideas.

6. Recognise and reward the right behaviours

Shaping culture means celebrating the moments that reflect it. Call out examples of collaboration, initiative, or leadership in action. Recognition reinforces the values you want to see more of.

Rebuilding culture is not a one-off initiative. It takes ongoing commitment, honest reflection and reinforcement at every level of the organisation. By taking consistent, visible steps to prioritise people, you not only regain trust but also lay the foundations for a healthier, more resilient team culture that can support long-term success.

The culture you create today shapes the performance of tomorrow

Toxic workplace culture can take root quietly, but its impact is far-reaching. Fortunately, with the right leadership and commitment, change is possible.

Start with reflection, listen to your team, and take action that puts people first. A thriving, respectful culture is not only good for employees, but also a competitive advantage for your organisation.

If you want to learn more about building a stronger, healthier organisation, explore our hiring advice and insights.