We’ve all seen a LinkedIn post or business review article explaining how ’culture eats strategy for breakfast’. Although some of us might get tired of hearing it, the claim seems to be truer than ever, as latest research out of MIT’s Sloan School of Management suggests.

Around Easter last year more than 40% of all employees played with the thought of quitting their current job. As the year progressed, workers around the world actually went through with this in never seen before numbers. In the summer of 2021, 24 million Americans left their employer – an all-time high. This retention of workers has been coined the Great Resignation. Today still, business leaders are struggling to grasp the reasons behind this mass exodus. But even more desperately needed are ways and strategies on how to hold on to valued talent, and what to avoid.

When the media covered the Great Resignation, the focus mostly laid on employees being unhappy with compensation – research by MIT senior lecturer Donald Sull, however, provides support for the fact that corporate culture is a tremendously more important factor.

Sull’s team wanted to better understand the sources of employees leaving and to help leaders respond effectively. Using artificial intelligence, the economists analyzed 34 million online employee profiles to identify American workers who left their current organisation for any reason in the summer of 2021. Their data analysis was massive – almost one-quarter of the private-sector workforce in the United States was included. Additionally, free text of more than 1.4 million Glassdoor reviews were run through the algorithm.

Their aim: identifying the top predictors of employee turnover. ‘Winning’ by a mile, toxic corporate culture was a much more reliable predictor of industry-adjusted attrition than compensation. Culture was found to be a staggering 10.4 times more powerful than compensation in predicting a company’s attrition rate compared with its industry.

The researchers’ analysis found that the leading elements contributing to toxic cultures include failure to promote diversity, equity, and inclusion; workers feeling disrespected; and unethical behavior.

Coming in second were high levels of innovation. Staying at the cutting edge of innovation typically requires sacrifices: Long hours and fast paced work are the norm.Other factors include job insecurity and reorganizations; a failure to recognize performance; and a poor response to COVID-19.

To conclude: corporate culture is a better predictor of employee turnover than experiencing burnout or bad compensation. Furthermore, A toxic corporate culture is the single best predictor of which companies suffer from high attrition. Not appreciating your high performers, be it through formal or informal praise, is yet another element of culture that predicts leaving. This is not to argue that compensation and burnout don’t influence decisions, as they most certainly do. The fact of the matter is that other aspects appear to simply matter more.

It is a common phenomenon in sports: After the best athletes retire, they are in a belief that they can transition to a coaching career seamlessly – only to fail miserably right away.

Same thing goes with managerial positions. Managers mostly do not make managers by actually managing people, but by being the most promising employee in the firm. There is of course no rule dictating every high rising star made manager is destined to fail, but Carter Cast, Professor at the Kellogg School of Management, argues that the stellar employee pond might not be the only one to fish from when it comes to promoting people.

It can be difficult to know who will stand out in a position of leadership, since the skills making someone a great individual contributor do not always translate to being great at team leadership.  Prof Cast, who also formerly operated as CEO of Walmart.com, knows a thing or two about the good, the bad and the ugly when it comes to managers in action.

When interviewing future managers, you should look for the following three skills:

Self-awareness: How realistic and honest can they be about their abilities? Do they know what they’re good at and where they have to improve? Do they know their very own trigger points and stuff that brings them over the edge? To assess this skill in an interview, Cast suggests asking the following: “Give me an honest assessment of your strengths and weaknesses and vulnerabilities. And tell me how you make adaptations at work accordingly.” Also, “tell me about a time that you failed and tell me what you learned about it from a personal standpoint.”

Trust in others: When you are in charge and responsible for a team, it can be hard at first to give up some control. Trust in your team members has to be learnt for some. If you cannot let go, Cast predicts, you most certainly will end up micromanaging your team members. “ They never teach their subordinates how to fish. They try to fish for them.” Cast says. What you need are people who know when to step back and let the team flourish, do their thing, but at the same time know when a worker truly needs help and guidance, and then step in to offer a helping hand. Good managers are mentoring managers.

Listening skills: Good managers are also listening managers, who ensure that their employees feel heard. As a safe way to assess this in interviews, Cast recommends letting the interview handle a hypothetical scenario where one of their employees has refused to get on board with a team project. How would they react? Listening managers would say something like: “Tell me more about why you can't support this. I want to understand this better,” Cast says. You want to hear “clarifying questions that summarize what the employee is telling them and then the manager tries to solve it. What you don’t want to hear is that “they immediately get defensive and say, ‘well, you have to support us, it's in the budget!’”