Table of Contents
Prologue
Corporate culture is easy to define in the good times. Companies can easily espouse diversity, team spirit, innovation, and people-centric values and put them on their careers page. The real test, however, occurs when deadlines are moved, budgets cut, priorities reallocated, and some unpleasant personnel decisions need to be made.
Working in the software development industry for more than 20 years and spending the last several years in project and engineering leadership, I came to understand that company culture is best defined by actions rather than aspirations. Therefore, I find it important to ask myself and others questions like these: How does the leadership act in stressful situations? Do they keep their promises? Are they fair-minded in judgment and personnel decisions? Do they openly discuss the challenges the company is facing? And, most importantly, do they recognize employees’ contributions when cost-cutting measures have to be implemented?
The above considerations led me to formulate five key questions about the corporate culture in which I choose to operate. They’re not meant to be an exhaustive list, but rather a set of red flags that may signal a company’s inability to deliver on its public promises.
I have previously written about toxic workplace cultures on LinkedIn. This article is part of a series dealing with the leadership-practice aspects of the issue.
🚩 5 Corporate Culture Red Flags to Watch
The success of a firm critically depends on how its leadership treats its employees. If the authorities do the following things in this article, they undermine the company’s culture and make the people feel like they are dispensable.
1. When Workload Exceeds Sustainable Capacity – The Erosion of Well-being
For software teams, it can manifest as overtime, after-hours communication, impossible deadlines, numerous meetings, emergency sprints, and even the expectation that you deliver because you are a high performer.
The culture of fixing planning problems by simply pushing more hours from the employees is not healthy, as it shifts the risk management burden on the staff.
💔 Impact: Sustained overload can contribute to disengagement, higher turnover risk, stress, and reduced effectiveness – particularly when context switching and urgent work become the normal operating model.
🔑 The Way Forward: The fix is to respect time-bound work and plan around it. Where possible, build flexibility into the process, and make sure people take their entitled leave.
2. The Credibility Trap: The Illusion of Certainty
A company is not obliged to provide its employees with a lifetime warranty. However, it should be able to fulfill the reasonable expectations of its staff in order to establish the trust of the said employees.
Workers will benefit from having managers they can rely on and who, even if they are unable to provide all the answers, will always share the ones they have and admit when they do not know something.
💔 Impact: Loss of credibility, which results in employee cynicism and challenges with talent retention and attraction.
🔑 The Way Forward: Make no unsubstantiated promises and remain transparent about changing circumstances.
3. The Fairness Deficit: When Decisions Stop Looking Fair
It is not a matter of accusing any particular organization of playing favorites, but rather one of perception: promotions, recognition, workload, opportunities, performance evaluations, and who gets the benefit of the doubt.
One practical test is to try to explain the decision to the whole team without embarrassing the group that made the choice.
💔 Impact: Not only will it damage the morale of the talented people who were passed over, but it will lead to poor decision-making all around.
🔑 The Way Forward: Opening up roles to a wider pool of candidates gives everyone a fairer chance and helps ensure that the best candidate gets the opportunity.
4. The Blind Spot: Underestimating Devotion
Now I want to address another blind spot regarding the subject of skilled and experienced workers, as well as institutional knowledge, without drifting into undue romanticism about devotion as bottomless commitment to the post.
Experienced employees should not be treated as an organization’s emergency backup. They often carry institutional memory that takes years to build and can be difficult to replace quickly.
💔 Impact: When hard work goes unnoticed and unrewarded, even a committed employee can start feeling like they’re just watching the clock.
🔑 The Way Forward: Create systems of acknowledgment and reward both formal and informal which recognize demonstrated impact.
5. The Money Mindset: Downsizing as the Easy Way Out
When financial pressure hits, reducing headcount can appear to be one of the fastest ways to reduce costs. Salaries are significant line items in most businesses, so the accounting effect can be immediate. But the accounting result is only one part of the story. Now, culture is not found in T accounts. At the same time, a workforce reduction can create significant psychological and organizational consequences for the people who remain.
That is why the phrase “cost adjustment” is due for a second conversation. Sometimes it really is necessary. But a reduction in force always asks the employees who stay for a reassessment of the company, its leadership, and their future there. What alternatives were considered? How were they evaluated? Why these jobs? What will happen to the workload? How will they be supported? What does the leadership expect them to believe?
The company can handle a financially necessary decision poorly, or it can handle a difficult one beautifully. Cost containment is one matter, but workplace culture is something else.
Reduction in force may be a financial decision, but managing it is a cultural one.
Questions leaders should be able to answer:
| Question | Why it matters |
|---|---|
| What business problem are we solving? | People will fill in the gaps with speculation, especially if context is missing |
| What alternatives were considered? | Shows that workforce reduction was considered alongside other possible responses rather than treated as the automatic first option |
| What criteria were used? | Prevents accusations of nepotism and favoritism |
| How will the work change for remaining employees? | Prevents “we’re going to expect more out of fewer people” from becoming an unofficial policy |
| What support is offered to departing employees? | Shows whether people are being treated with dignity |
| What will leadership do next? | Gives those who remain a sense of stability |
This doesn’t entail revealing any private or confidential details that the leaders had no authority to provide. The concept of transparency here simply means providing clear explanations of what can be said on the issue. In this case, the recent SHRM reports on layoffs and their impacts on employee trust are a precise example.
This doesn’t mean that every remaining employee will react in the same way. After layoffs, however, employees may experience a mixture of grief, guilt, relief, anxiety about their own job security, and distrust toward leadership. These reactions are often discussed under the term “survivor syndrome.” The practical issue for leaders is not the label itself, but what happens next: workload, communication, trust, and the ability of managers to stabilize the team.
💔 Impact: Survivor guilt, higher voluntary turnover, and loss of knowledge and expertise, which creates a burden on those who remain.
🔑 The Way Forward: Do not resort to layoffs at the first sign of trouble; find ways to invest in the remaining workforce.
The People Who Remain
A layoff is not an event that ends when the laid-off people leave the building. The people who remain are put on alert. They continue to watch how things unfold, paying close attention to decisions, communication, changes in workload, recognition, or the lack of it, and what the layoffs could mean for them in the long run. They ask themselves if the priorities and values of their leadership have changed. They assess if the promises made to them before the restructuring are still being honored.
This does not mean that every person retained during the layoff expects to be laid off themselves. Many employees understand that businesses sometimes have to make painful decisions to remain viable. But managers and other experienced professionals may feel particularly let down if they’ve been made to feel that their continued employment is a foregone conclusion, their expertise and institutional knowledge are no longer a priority, and that management is making unilateral, uncaring decisions without regard to long-term impacts.
Layoffs also have an impact on the teams and products that remain. When experienced engineering and product-management professionals leave, particularly in areas such as architecture, program management, QA leadership, engineering management, and technical program management, the organization may also lose institutional knowledge, mentoring capacity, and critical relationships.
If the workload for the remaining teams stays the same, the company could face a significant short-term loss of capability, with consequences that may continue to affect the business in the long run.
The Culture Under Pressure Test
Five questions I’d ask if I was considering working at an organization:
👉 When the spreadsheet turns red, do the leadership team members return and answer the phone calls, or do they quietly vanish?
👉 When the workload increases, does the organization reassess its priorities, or does it simply expect employees to work harder?
👉 When promotions or layoffs are being considered, can the organization clearly explain how those decisions are made?
👉 When the experienced professionals leave, does the leadership team take the appropriate steps to mitigate the knowledge and delivery risk?
👉 When a brutal decision needs to be made, does your organization protect the dignity of the individuals impacted in the same way that it protects the bottom line?
The reality is that you can’t understand an organization’s culture by simply reading the value statements on their website. You need to see how they’re going to act under pressure.
A Path Forward: Leading With Sustainable Values
- Make values visible.
‘People first’ needs to be visible in how decisions get made about workload, communication, recognition, development, and managing the transition, not just on the careers page. - Explain the decisions you make.
Share the business reasoning and decision-making process to the extent that it can be shared. - Decouple performance from politics.
Have objective criteria for promotion, recognition, assignment of work, and restructuring. - Protect the people left behind.
Re-prioritize workloads and reset expectations explicitly for those who stay, rather than implicitly assuming that they have the capacity to take on the work of those who have left. - Keep promises (or explain clearly why you can’t keep them).
Where commitments have to be withdrawn, acknowledge this explicitly, rather than acting as if they never existed. - Learn about culture from behaviours (and not just statements).
Retention, internal mobility, manager engagement, delivery tempo, and willingness to raise risks are all indicators.
Conclusion: Culture Is Tested When It Costs Something
A company’s culture is not defined by its proclamations during good times, but rather by its actions when its leadership has to make hard choices about people’s lives, careers, financial gains, and overall stability.
An organization’s culture is frequently put to the test during periods of stagnation or decline, when leaders have to make unpopular decisions in order to improve the company’s financial performance. Downsizing, restructuring, and cutting costs are not desirable activities for any business leader.
What it can do is determine how those choices are made.
Are the criteria understandable?
Are people treated with dignity?
Are the remaining employees supported?
Are workloads reconsidered?
Are leaders willing to explain what they can and cannot explain?
Employees may not remember every quarterly target or management presentation. They are much more likely to remember how leadership behaved when things became difficult.
That is where corporate culture stops being a statement and becomes a reality.
Frequently Asked Questions (FAQ)
What is corporate culture in practice?
The qualities, behaviors, values, and attitudes that shape how people in an organization interact, work, and make decisions every day. Leadership shapes it, but everyday team practices reinforce it. Its formation is encouraged by leaders, through which it is designed, developed, and implemented via the collective behavior of the workforce.
Is it possible to have a good company culture after massive layoffs?
A large-scale workforce reduction can happen for many reasons, including financial pressure, restructuring, changes in business strategy, or shifts in required capabilities. The fact that a reduction has a legitimate business rationale does not by itself determine whether the process strengthens or damages trust.
How do layoffs affect the remaining workers’ motivation?
They are likely to experience anxiety and uncertainty about their future with the company, as well as additional concerns depending on the nature of the changes and their impact on the work. These effects have been confirmed by the Society for Human Resource Management (2023) in their article “Managing the Transition for Remaining Employees After Layoffs.”
How can a leader rebuild trust with employees after downsizing?
By communicating openly, acknowledging what happened and addressing employees’ concerns, setting clear priorities and expectations, supporting managers, being transparent about decisions, and following up consistently.
Is it possible for a project manager or engineering manager to shape the company culture from within?
Yes, but it is important to understand that for most managerial positions, the ability to control and organize processes depends only on their superior and the extent of autonomy. A PM or EM can influence the team’s attitude towards risk, plan changes, and treatment of different stakeholders but not make any direct decisions for the entire company.
What should companies do with the workload after a layoff?
Leaders should clearly explain which processes will continue, which ones can be dropped, and which responsibilities need to be reassigned. Simply spreading the workload of laid-off employees across the remaining staff can create more stress and undermine trust. The Society for Human Resource Management (SHRM) recommends reviewing and redesigning processes and removing non-essential work rather than assuming that the remaining employees can simply absorb the extra workload.
Does a layoff automatically mean a company has a bad culture?
No. There might be financial reasons for reducing the workforce. A more relevant cultural question is how the organization decides, announces, treats, supports, and adapts its operating model after the reduction.
What should managers do after a workforce reduction?
Managers should share what they know, listen to their teams, clarify priorities, reassess workloads, and raise risks when necessary. Pretending that nothing has changed will only make the situation harder to manage. They still need support from senior leadership, as they are the ones who bear the most responsibility for reductions.
Related Reading
- Developer Well-being: 4 Pillars of Sustained Engineering Success
- 9 Slides Every Weekly Status Report Needs to Impress Founders and Product Owners
Sources
- What Layoffs Do to Trust Inside Organizations — 2026
- Mitigate “Survivor Syndrome”: How to Support Workers After Layoffs — 2025
- How to Limit “The Sinking Ship Syndrome” During Redundancies
- APA Monitor — Helping Federal Workers Manage the Uncertainty of a Chaotic Work Environment
