Most businesses set a few core values that define their company culture. Organizational culture includes the shared beliefs and behaviors shaping how employees interact, make decisions, and approach work. These values are reflected in KPIs, strategic planning, and onboarding, supporting the company’s mission and vision.
However, insecure or untrained managers often allow hidden subcultures to form within departments. These subcultures, shaped by team dynamics and leadership styles, may differ from the company’s broader culture and are often concealed from upper management. Managers sometimes shield these subcultures through exclusive cliques, rewarding those who conform and marginalizing those who do not, which can lead to unfair treatment and workplace turmoil.
I have observed culture misalignment in many industries, often resulting from leaders failing to establish clear goals and employing ineffective hiring practices. For example, a Director at a retirement community was so disorganized that her office was overflowing with paperwork, unpaid bills, and unanswered correspondence. She rarely held staff meetings, provided vague or contradictory instructions, and failed to clearly define roles and expectations for team members.
As a result, employees were often confused and unprepared for their tasks. Her favoritism was evident—certain employees were consistently shielded from accountability and given preferential treatment, such as easier schedules or more desirable assignments. Meanwhile, others were routinely ignored or blamed for problems beyond their control. This inequity fueled resentment and distrust among staff. The lack of structure, transparency, and fairness drove talented employees to leave, resulting in constant turnover, low morale, and a workplace culture marked by anxiety and disengagement.
I once worked with a call center director in telecommunications whose self-serving leadership created a disconnect between her team and company values. On the surface, she was friendly and approachable, but behind closed doors, she consistently gave choice shifts and recognition to a select group of supervisors.
Those outside her inner circle were left out of important meetings and professional development opportunities, leading to resentment and distrust. Her lack of transparency about departmental changes fueled rumors, and employees often learned about new policies through office gossip rather than official communication. This favoritism and poor communication made it nearly impossible for the team to feel united or invested in the organization’s culture.
Both of these ineffective leaders relied on rushed interviews and superficial criteria when hiring, often prioritizing personal connections or convenience over organizational fit. For instance, one manager hired friends and acquaintances without considering their alignment with company values, while the other overlooked red flags in candidates’ backgrounds. HR offered structured interview guides and clear job profiles, but these resources were routinely ignored. As a result, new hires often struggled to adapt, disrupted established teams, and contributed to ongoing conflict.
As the saying goes, “People don’t quit jobs; they quit managers.” At both organizations, high turnover and burnout became the norm. Employees who felt unsupported or at odds with the company’s values grew disengaged and left, while those who remained often experienced mounting stress and a sense of futility. Ultimately, these hiring missteps eroded morale, productivity, and any sense of shared purpose within the workplace.
Hidden organizational cultures often go unnoticed by HR and upper management until legal issues arise. High-profile lawsuits at companies like Amazon, Nike, McDonald’s, and Tesla show how unhealthy cultures can lead to serious problems and costly consequences.
How can businesses prevent hidden organizational cultures? Upper management should engage directly with employees and promote open, safe ways to share concerns, such as anonymous surveys and clear reporting protocols. Leaders should regularly observe workplace dynamics, address issues impartially, and recognize employees who speak up, building trust and transparency.
Upper management should hire and promote managers with proven leadership skills, not just technical expertise or tenure. Use assessments and feedback to find leaders who reflect company values and can guide diverse teams. Support their growth with mentorship, workshops, and targeted training.
Promoting employees based only on technical skills risks unhealthy subcultures. Leadership training should cover ethics, inclusion, coaching, and emotional intelligence. Without it, new managers may struggle to lead, build trust, or motivate teams. Ongoing education and mentorship help managers adapt and grow.
Organizations should offer leadership development for all management levels, using training, mentoring, and cross-department projects. Regular audits and surveys can reveal early signs of toxic subcultures. Leadership initiatives should be tied to measurable results for accountability.
By moving beyond the traditional “Management Paradigm” and focusing on effective leadership, businesses foster transparency and trust. Open communication and ethical role models help employees feel valued and discourage the development of hidden subcultures.