Toxic work cultures don’t happen overnight — they creep in gradually and can lead to high employee turnover and decreased productivity. According to a new Society for Human Resource Management (SHRM) report on workplace culture, one in five Americans has left a job in the past five years due to bad company culture, costing companies an estimated $223 billion. 

As HR professionals, how should you tackle this? One of the most powerful tools in your HR toolkit is cultural competency

Cultural competency is a critical skill for building a workplace where differences are valued. It’s about understanding, respecting and leveraging the unique perspectives your employees bring to the table. And when it’s missing, misunderstandings and microaggressions can flourish, eroding trust and leading to toxicity. 

By promoting appreciation of diverse perspectives, cultural competency reduces microaggressions and unconscious biases, and helps leaders and employees navigate cultural differences in communication styles and more effectively understand the cultural contexts that may influence conflicts. When employees see that their identities and experiences are valued, it leads to greater trust companywide.  

Five ways HR can use cultural competency to prevent a toxic workplace 

At the heart of a healthy workplace is psychological safety — the feeling that it’s okay to speak up, make mistakes and be yourself without fear of ridicule or retribution. When employees feel safe, they’re more engaged and productive. Cultural competency supports this by ensuring that everyone feels seen and respected, regardless of their background. 

HR Challenge: Creating this safety while navigating differences in communication styles, workplace norms and values. 

Tip: Offer training that equips managers with practical tools to navigate cross-cultural communication and handle conflicts sensitively. Encourage team discussions about assumptions and biases in a way that feels open and nonjudgmental.  

2. Address toxic behaviors head-on 

Cultural misunderstandings can sometimes manifest as toxic behaviors like exclusion, passive-aggressiveness or cliques. Left unchecked, these behaviors can spiral into a full-blown toxic culture. 

HR Challenge: Balancing the need to address bad behavior with maintaining morale and avoiding defensiveness. 

Tip: Incorporate cultural competency into your policies and interventions. For example, when handling complaints, ask: “Is this behavior rooted in cultural misalignment or intentional harm?” Train leaders to recognize the difference and respond appropriately.  

3. Build bridges, not walls 

A culturally competent workplace isn’t one where everyone must agree — it’s one where differences are embraced as strengths. Encourage cross-cultural collaboration by fostering curiosity and empathy.  

HR Challenge: Overcoming resistance to change or discomfort with “getting it wrong.” 

Tip: Normalize the idea that cultural competency is a journey, not a destination. Encourage employees to share their experiences and listen actively. Create moments — whether through team-building activities or storytelling — that build mutual understanding.  

4. Equip leaders to set the tone 

Cultural competency begins at the top. If your leadership team isn’t modeling inclusive and respectful behavior, it’s nearly impossible to create a ripple effect throughout the organization. 

HR Challenge: Engaging leaders who are stretched thin or unsure of how to integrate cultural awareness into their leadership style. 

Tip: Tie cultural competency to business outcomes. For example, culturally diverse workforces are 35% more likely to see higher financial returns and 70% more likely to capture markets compared to their non-diverse counterparts, according to McKinsey & Company.  Offer bite-sized, actionable training to fit into leaders’ busy schedules to show them how building stronger relationships across cultural lines improves team dynamics, retention and innovation. 

5. Measure progress, not perfection 

Make cultural competency an ongoing conversation — not a one-time initiative. Regularly assess your workplace culture to identify blind spots and celebrate wins. 

HR Challenge: Balancing metrics with the intangible aspects of workplace culture. 

Tip: Use employee surveys and feedback tools to measure psychological safety, inclusion and cultural understanding. Share progress openly to reinforce accountability and celebrate areas of growth.  

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