This is a transcript of the Third Sector Podcast episode: Combatting toxic workplace culture and understanding new charity merger trends
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Andy Ricketts: Hello and welcome to the Third Sector Podcast. I'm Andy Ricketts
Lucinda Rouse: And I'm Lucinda Rouse. Each week we bring you half an hour of discussion and debate about the important goings-on in the charity world.
This week we'll be speaking to an organisational psychologist about toxic workplace cultures. She'll explain some of the triggers and longer term causes of toxicity, from problematic colleagues to squeezed budgets, and give her tips for addressing them, with an emphasis on being true to one's organisational values.
But first, we're going to take a quick look at a new piece of research that's come out this week.
Andy: Yes, that's right, Lucinda. The consultancy Eastside People produce an annual piece of research that they call The Good Merger Index. This is the tenth year that they've produced this piece of research that looks at the number of mergers that are going on among UK charities, although it does focus predominantly on those in England and Wales.
Lucinda: So it's an annual report, an annual piece of research. What have the key findings been from this year?
Andy: The latest information that they have refers to the financial year that ends at the end of April 2023. So it does lag a little bit behind what's actually happening now.
But it shows the lowest level of mergers between charities since Eastside started doing this report for the year 2013/14, which is probably quite surprising based on the financial pressure that a lot of charities faced during the pandemic.
Last year's figures were low: there were an estimated 55 mergers between charities in 2021/22. They only found 48 mergers involving charities in the following year, which is the lowest since Eastside started producing the report.
Lucinda: Very interesting. I guess that shows that mergers are not seen as the solution to woebegotten charities, particularly when you think that by April 2023 the effects of the cost-of-living crisis were already very much there for charities.
Andy: Very much so. Eastside say in the report that they think this shows that despite the amount of financial pressure that charities faced during the pandemic, they weathered that storm much better than people thought they would beforehand.
Certainly when the pandemic started, there were all these awful predictions of doom around what was going to happen to the voluntary sector. Obviously, this doesn't take into account charities that have closed, of which we know there have been a lot.
But they think the government schemes that were put in place around the pandemic, the furlough scheme, that kind of stuff, and the support that the sector got from funders; we know that a lot of foundations really dug deep to help charities through the pandemic.
And the result of that was that the financial stress that charities faced was largely well-managed, to use Eastside’s words, and didn't create the pressure, at least in the short term, for charities to merge.
Another factor that they point to is that Covid was a crazy time for a lot of people, a lot of organisations and a lot of charities were facing a lot of pressure. They were very busy.
And maybe that meant that the leaders of these organisations didn't have the headspace or the time to think more strategically in the long term and start considering things like merger activities.
Another interesting thing is that over the course of the year that the report refers to, of the 48 mergers that they identified, only four of them were mergers of so-called equals, i.e. charities of similar size coming together.
The vast majority of them, and this is the case most years, but even more so this year. The majority are what you might call a takeover where you have a big organisation subsuming a smaller charity, and they become part of that larger organisation. Which you can understand in terms of it gives them the financial sheltering that they might be looking for.
Lucinda: So then looking at the findings from this year compared to previous years, what's your take, Andy, on what we might be seeing in years to come?
Andy: Well we have to bear in mind that Eastside are a consultancy that deal with mergers, so they are very pro-merger and want to encourage merger activity. But that health warning aside, they say that they've seen, over the past year, an increase in the number of enquiries from charities looking at mergers and collaborations.
And actually what might happen now is obviously we're well into this cost-of-living crisis. We all know that charities are facing significant pressure. And I think we are seeing more examples of organisations looking to collaborate and work together as a way to work through that pressure.
So Eastside themselves say that although it's very difficult to predict, they think that there will be an increase in mergers and partnerships in the coming year as more charities look to work together to weather the storms of the cost-of-living crisis.
It's quite interesting because mergers are something that gets talked about quite a lot and people seem to use quite a lot of headspace thinking about mergers and talking about it.
But when you consider there's about 170,000 charities on the England and Wales register, there were only 48 mergers involving 96 organisations in the course of an entire year. So the actual activity is way smaller than the time and effort that is spent talking about this sort of activity.
Lucinda: Moving on to this week's main feature, have you ever worked in a toxic workplace? If you have, you'll no doubt agree that it can cause a great deal of damage to both the organisation and the people in it.
But as we're about to hear, the risk of toxicity creeping in goes up significantly when an organisation is under stress, largely because of a lack of resources.
Dr Susan Hetrick is an organisational psychologist and an expert in workplace cultures. She's held senior HR positions in multinational organisations, including several years at the World Bank, and recently published a book called ‘Toxic Organizational Cultures and Leadership: How to Build and Sustain a Healthy Workplace’.
Susan, hello, it's great to have you with us, and I wondered if you could start by giving us your definition of a toxic workplace.
Susan Hetrick: Thank you. And it's great to be here as well.
A definition of a toxic workplace is one that causes harm over a sustained period. And that harm can be physical, it can be mental. In my research for the book, I found that toxic cultures actually kill people.
The word ‘toxic’ comes from the Greek word ‘toxicus’, which is actually the poison that soldiers put on the ends of their arrows. And they would fire those arrows across to the enemy.
And I think that's really important because it is a sustained threat that's constant. And it's not just a few bad apples or one toxic leader. It can actually be over a long period of time.
And what I found in my research was exactly what you said that unreasonable performance pressures trigger these stages of toxicity and toxic cultures.
Andy: And in terms of that toxicity, Susan, how do you gauge as a worker where a workplace crosses the line from simply being a bad place to work to actually being toxic? What kind of things and signs should people be looking out for?
Susan: That's a great question. I'd say there's four stages to a toxic culture, and there's two main drivers. So the four stages are where unacceptable behaviours become tolerated in an organisation.
So people shouting or a boss shouting or elements of bullying. And If there's not zero tolerance on those behaviours, it can then drive to the next stage and those stages start to get embedded.
So, who you recruit, who you bring into the organisation, what training you provide and who you promote as well are all critical elements to toxicity.
So the two drivers for a toxic culture, the first one is what's called normalisation of deviance. And it came from a sociologist who was researching why the Nasa spacecraft crashed, the first one, and killed all seven astronauts on board.
And it was this sense that what was seen as a risk, which were these tiny little o-rings that prevented blowback from the thruster engines, but in freezing temperatures, they became not malleable anymore. That was the reason why there was this fatal accident.
But over time, when I talk about unacceptable behaviour, that normalisation, that risk, which was unacceptable, became accepted. It was like, can it be that bad? It's only a very small thing. So that's one element to it.
The second driver is what's called cognitive dissonance, which is when what the organisation says it does on the tin is not what's going on inside.
And I think that really has resonance for many people working in organisations, particularly of doing good, may not be what they're actually experiencing inside the organisation.
So externally the organisation is saying that we're doing good in whatever charity that they're working for, and it's very important. But inside they may be experiencing very long hours, relentless pressure, which is not necessarily what the organisation is out there saying.
And cognitive dissonance comes from research in psychology that says, as human beings, we can hold almost two contradictory beliefs. And the best illustration of that is if I take a private sector organisation, VW, that many listeners will be familiar with, who for a number of years went out and were role-modelling saying that their cars were as far as possible reducing carbon emissions and they’d found a way to have clean diesel.
But behind that, the set of engineers right through to the top were actually fooling the regulators in California. And they’d fitted these cheat devices in the cars that would show that the emissions were lower than they were actually.
In fact the company at one point recalled all the cars in the States and fitted a more sophisticated version of this cheat device. So it was saying one thing: we're role modelling, selling all these cars. But what it was doing was really the antithesis of what it was stating.
So that's cognitive dissonance. And once you start to have in an organisation a difference between what it feels or what the values are saying to the outside world, inside, that is a key driver to a toxic culture.
Lucinda: And thinking about one of our listeners, a charity manager, a charity chief exec seeing that there are potential signs of toxicity creeping into their organisation, how can it be nipped in the bud before it gets too much?
Susan: I'm a great believer in running anonymous surveys to ask people what they are experiencing. Many organisations will put in place whistleblowing.
But if you've got an element of distrust in an organisation, then people won't use those resources. They will be quite scared, naturally, that it will come back and there will be some form of reprisal.
So ensuring that there is a sense of measurement in the organisation, listening to what is actually being said in the organisation and role-modelling the right behaviours.
For charities particularly, and for CEOs, and I work as a non-exec director for one charity, I'm really looking at the CEOs’ role-modelling of that behaviour.
And I know one organisation that seven years ago had enormous pressures put on it. And I see this in the charity sector, this sense of more and more demands on revenue and performance.
And as a consequence there was a huge number of grievances. The then-CEO had to resign and left. And there was quite a lot of picking up the pieces, particularly on financial management, that the organisation needed to go through.
And I'd say after seven years, there's still a sense of trauma from people who worked in that situation. So for CEOs to be constantly thinking about the culture of the organisation, what the values are.
It’s everything in terms of the values, the processes, do they support what the organisation wants to be? So you may say, we're about collaboration and excellence and respect. Do you actually measure that people in your organisation have the skills and capability to do that particular value?
Do they see it role-modelled in their leaders? And do the policies and processes actually support that? Or do they contradict that?
So I always find it very interesting in organisations when they say, look, we've got these real challenges. We're having individuals competing with each other and it's very gossipy and there's all this going on.
And then you find that they've got a performance management which is very individually focused or, particularly in the private sector where there may be bonuses on that, of course it becomes an organisation of very sharp elbows of people trying to look the best in terms of what they're doing.
So it's looking at those types of areas, the policies and processes, do I have the skills? Do I see a role model?
Andy: And do you find that it tends to be found in certain types of workplace above any other? Might there be certain charities that are more prone to experiencing this kind of behaviour in their organisation, or can it be across the board?
Susan: Unfortunately it's across the board. There is not one organisation, and having been in HR for 35 years, I'd say all organisations, every CEO should be conscious that there will be elements of toxicity.
It may be unreasonable demands. It may be constant and relentless pressures. So being very mindful of those areas and creating a balance. We all have stress. We all have pressures, but it's when it becomes unreasonable and people are not being listened to.
So from my own research, and many sectors have asked me that; in education, in the NHS, in charities, I think every organisation has a susceptibility to it. We're becoming far more conscious of what that looks like, so it is across the board.
Lucinda: I was wondering what your thoughts were on the relationship between charity management and the board, because that is often a big sticking point when it comes to delivering a charity’s services and making sure that it's effectively run. How can charities avoid toxicity between their management and their board?
Susan: Two things that charities can pay attention to. One is involving the board in looking at strategy overall, looking at the challenges, particularly of funding rounds, the long process of how that would work and being transparent about some of those challenges so that we are all on the same journey, the board and the management team.
I don't think the board should get involved on those day-to-day operational decisions unless it needs to, but the board has a duty to look at culture and what is going on and look at measures. So one of the areas I'm working on with the charity sector is a survey to look at culture and engagement.
I think what has become very stark, particularly for people listening here on the podcast, is the lack of resources or the lack of money they’re able to put into training and development.
And I think that is a real challenge because if we start to look at culture and toxic cultures, one of the key elements that I would recommend is to really focus on management development.
What does it mean to be a manager? How do you behave? And what we're seeing, and again, this is in the private sector, some research that was done recently said 80 per cent of people that were put into managerial positions had no experience and no training in how to become a manager. So that in itself is a real challenge.
The pieces around that are what you sometimes see in charities, and you don't have to look very far to see CEOs behaving very much around their own agenda as opposed to the agenda of the organisation. And that's very important for the board to be really aware of: ensuring that the values of the CEO really fully align with the mission of the organisation.
Andy: I wonder if you're able to give some top tips on how to address a toxic charity workplace. You have touched on this a little bit already, Susan, but it would be useful to give listeners some practical ideas of what kind of things can we do if we feel like we're getting into a problem here.
How can we go about fixing it, particularly for those smaller charities that don't have much money to spend on management consultants to come in and help the organisation. What can organisations do?
Susan: I think addressing what the root is. We haven't talked about whether the root is around just the external pressures or whether there's certain individual behaviour going on that’s unacceptable. So trying to understand where those issues are.
There are no quick fixes, but there are sustainable areas over a period of time, which don't always have to cost money. There’s plenty of material on YouTube about effective management and what does it mean to be a leader, etc. So there's a lot around in that area.
I think open dialogue, being willing to listen, to have structured team meetings, to be able to call out toxic behaviours is really important. To have those more difficult conversations with individuals to say, this is not the way that we work here. This is not part of our values.
There's no doubt that's challenging across all sectors. And being a leader, that's some of the challenging pieces.
But also being the leader that you want to be led by. So role-modelling the right type of behaviours. We all get under pressure, but remaining calm, being that role model, being the leader that you wish you had. That to me is a really key part to it.
And something that I think is important as a leader is constantly reflecting back at the end of each day, what did I do? What could I have done better? What would I do differently next time? Those types of self-learning and self-reflection.
Andy: And Susan, if we look a little bit forward, I think people are becoming more aware of toxic workplaces. What's your hope and expectation in terms of how things will move forward with workplaces? Are you seeing an improvement? And if so, what can we expect to happen in the future?
Susan: I think it's such a critical issue that we're only at the start of really addressing toxic workplace cultures and leadership. And I think, particularly in the charity world, looking at recruitment, retention, training, development, the challenges that we've got on resourcing and getting the right skillsets is really important.
My hope would be that we really address this at a national level, around what do we think a good organisation should do, what measures are in place to prevent workplace bullying and harassment; be very open about what we expect.
I think we have a potential crisis on our hands around toxic cultures across many organisations. And so being able to report on our culture, report on values across sectors will be very powerful and being really open to really improving the workplace.
My call to leaders would be to say, it's not only about creating a healthy and positive workplace culture, but it's also recognising that you are saving lives, really improving the health and quality of the people that are engaged in your organisation.
Lucinda: Quite a sobering note to end on, but very useful to have some clear pointers in how charities can work to improve their culture. Susan Hetrick, thank you so much for joining us today.
Susan: Thank you very much. Thank you.
Lucinda: That's it for this week. Next week we'll be taking you behind the scenes at JustGiving to find out how charities can get the most out of their online fundraising, based on the latest trends they've been tracking.
But for now, thanks very much to our guest, Susan Hetrick, and our producers Inga Marsden and Nav Pal.