Editorial
I recently spoke with a friend about why employee experience has had such an impact. One of his offhand comments stayed with me: “It’s funny how some of the best-performing companies are also the most toxic.”
He's not entirely wrong. Many of the world’s most renowned organizations demonstrate extraordinary market success yet they (proudly) carry a reputation for challenging, at times cutthroat, work environments. I know from my own experience in investment banking that these cultures can thrive, but also leave people absolutely drained.
My friend's comment stayed with me because it goes against so many of the proof points we in the Experience Management space share with leaders. How do these companies thrive financially when many employees find their cultures toxic? Is success linked to their demanding work cultures, or are other factors at play? If EX is the key to organizational growth, to what can we attribute the success of these toxic cultures?
Why Do People Seek Employment in Toxic Workplaces?
Amazon and Tesla are two companies celebrated for their financial dominance but often listed among the worst workplaces. Both have been the subjects of public exposés, with criticisms over their work-life imbalance, high employee turnover and demanding cultures. Yet, these same organizations are global leaders in their respective fields. They have powerful brands and are huge talent magnets. Their continued success, despite their reputations, suggests a much more complex interplay between culture and business outcomes.
Ironically the success of these companies are based on standard EX principles: they have a relentless focus on Customer Experience, they appeal to a specific persona type, have leaders who define a clear and strong mission and they understand that a “marquis brand” on a resume can yield significant returns down the career road.
Both Amazon and Tesla prioritize customer satisfaction above all else. Amazon's mission is to be the most customer-centric company in the world, which drives its innovation and operational strategies. This focus on exceptional value for customers helps maintain high sales and market dominance and attracts employees who want to be part of that growth.
Other companies (like investment banking) appeal to certain behavior and personality types. A job at these high pressure companies appeals to individuals who look for the validation of a brand name on their resume, and who are themselves high-driving, high performing individuals. They want that network and that environment, as it feeds who they are.
Additionally, companies like Amazon, Tesla and others are focused on innovation, where employees work on industry leading edge and groundbreaking projects. Employees can build their skill base, adapt quickly and develop resilience — qualities that can accelerate personal and professional growth.
Many employees also see their employment at these organizations as a foundation, a kick-off point for their future careers. Early-career professionals may join toxic companies for short stints, hoping to leverage the experience for future roles. They may also look to prioritize immediate compensation, experience or recognition over long-term well-being to meet personal goals.
However, even the most resilient employees can struggle after some time in a highly toxic environment:
- High Pressure and Expectations: Top-performing companies often demand exceptional results, both long term and short term — their ambitious goals create stress and lead to burnout.
- Work-Life Imbalance: At Amazon, grueling schedules in the warehouses leave little room for personal fulfillment, which makes balance a luxury rather than a given.
- Toxic Work Cultures: In environments where competition overrides collaboration, employees can feel undervalued and unsupported.
- Weak Leadership Practices: Inadequate management exacerbates dissatisfaction, further harming morale.
Related Article: Why 'Brilliant Jerks' Hurt Your Bottom Line and What to Do
Can Toxic Cultures Drive Results?
Companies with toxic environments can achieve results through high performance standards and relentless pressure in the short-term. However, these gains often come at a significant cost. While toxic work environments may yield quick wins, high turnover and burnout create instability. Disengaged employees reduce productivity, and replacing staff incurs financial and operational costs.
Toxic companies, while highly successful externally, are not always stable. The U.S. Bureau of Labor Statistics reports the average annual turnover rate across all industries is about 12%–15% for full-time employees. By comparison, Tesla’s executive turnover rate is particularly high, with an estimated 44% annualized rate for executives who report to Elon Musk. The average for tech company executives is around 9%. The turnover rate in Amazon's warehouses has been reported at 150% annually. This means the workforce is replaced more than once a year — a staggering and far above average figure. High turnover rates in these companies can lead to increased recruitment, training and operational costs, which create sustainability challenges over time.
Toxic cultures also take a toll on employees’ mental and physical well-being, diminishing creativity and innovation — both essential for staying competitive. Even for those individuals who thrive temporarily, long-term success in toxic environments is rare. Burnout and dissatisfaction typically catch up with even the most resilient employees, at which point they seek healthier workplaces. The constant turnover of peers and lack of trust in leadership can also make sustained engagement challenging.
Related Podcast: Melissa Daimler on How to Intentionally Design Corporate Culture
The Connection Between Employee Experience and Performance
So yes, you can find connections between successful companies and toxic workplaces. But research continues to underscore the positive correlation between strong employee experience and long-term business performance. Investment in your workforce delivers rewards such as enhanced productivity, higher customer satisfaction and improved financial results.
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Michael Hinshaw shared six reasons to invest in employee experience:
- Reduced Turnover: Companies with strong EX programs see significantly lower turnover rates. Employees are more likely to stay with a company that values their well-being and provides a positive work environment.
- Increased Productivity: Happy and engaged employees are more productive. Studies show that employees who feel valued and supported are more likely to put in extra effort and perform at higher levels.
- Higher Revenue and Profits: Companies with high employee engagement tend to be more profitable. Engaged employees contribute to better customer service, innovation and overall business performance.
- Better Customer Experience: There's a strong link between employee experience and customer satisfaction. Employees who are satisfied with their work environment are more likely to provide better service to customers.
- Enhanced Innovation: A positive work environment fosters creativity and innovation. Companies that invest in EX are more likely to develop new products and services, staying ahead of the competition.
- Employee Engagement: Companies with high engagement report 22% greater profitability.
The Road Ahead: Striking the Balance
High-performing companies can no longer afford to disregard the employee experience, especially as workforce expectations evolve. Ultimately, the companies that thrive in the 21st century will not be those that merely extract productivity, but those that cultivate it over the long-term through engaged, empowered and supported teams. These organizations have teams that challenge each other, and ensure the product is always at its best, because they are focused on the result, not their own political power.
Yes, toxic cultures can succeed and attract talent. But there is higher risk, higher instability and higher operating costs to maintain that toxicity. In short, you don’t have to be a jerk to win.
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