How to spot culture risks at your company early

A headline catches your eye: A company you admire, known for its market performance and strong culture, is embroiled in a massive scandal. It causes reputational harm, profitability tanks, and customers notice. The details feel depressingly familiar—enough to fill books (most recently The Dark Pattern).

With postmortems pointing to “culture problems,” your instinct might be to double-check your own organization’s cultural health. So, you pull up last year’s employee engagement survey: 85% of employees feel comfortable raising concerns, and 90% believe leadership demonstrates ethical behavior. The numbers are reassuring. But the company you’ve read about probably had similar results.

The real question isn’t whether your culture looks good on paper. It’s whether you’re reading the room, catching both the subtle tensions that statistics might miss and the signals for how to enable your people to succeed, which ultimately drives growth.

The annual engagement survey isn’t enough

Most companies wouldn’t run their operations based on annual customer feedback surveys alone. They track pipeline metrics, conversion rates, and customer interactions in real time, often with sophisticated analytics that account for regional and cultural differences in customer behavior.

Yet when it comes to their own people, many leaders still default to annual engagement surveys as their main culture check. A quick look at the culture assessment market shows that the flagship products are still benchmarked survey tools, underscoring this approach as the industry standard. These can be valuable as one source of cultural data, but they tend to capture abstract opinions rather than real workplace experiences and to provide insights months after cultural shifts have taken hold.

These surveys ask employees to rate their agreement with statements like “I feel comfortable raising concerns.” These approaches produce clean year-over-year statistics but suffer from predictable problems. Research shows that on surveys like these, people tend to give answers they think are expected rather than honest responses. Some employees may genuinely believe they would speak up in a hypothetical scenario and respond to the survey accordingly, but they actually stay silent when real situations come up. The result is bad data that leads to organizations believing they have healthy ethics and compliance cultures while missing signs of emerging problems.

This business-as-usual approach to assessing culture can be enormously costly: By some measures, toxic corporate culture was the single best predictor of attrition among for-profit companies during the Great Recession and, according to a pre-pandemic estimate, it cost U.S. employers nearly $50 billion annually due to attrition, stymied innovation, and impacts on employee health and well-being.

Learning to “read the air”

Better approaches combine multiple data sources and ask employees to share real workplace experiences, rather than focusing on abstract opinion gathering. Like “reading the room” in real conversations, effective culture monitoring requires picking up on subtle cues that reveal what’s happening beneath the surface—the tension when certain topics arise, the silence that follows questions about speaking up, the stories people tell when they feel at ease.

In Japanese workplace culture, the concept of “reading the air” (空気を読む, or kuuki o yomu) embodies the nuanced ability to perceive and interpret unspoken social cues, group moods, and implicit expectations. This skill enables individuals to navigate complex interpersonal dynamics and maintain harmony, often without the need for explicit communication.

If you want to know what culture really feels like inside a company, you need stories. That’s why when a scandal breaks, journalists and investigators don’t stop at financial findings or compliance reports—they talk to people inside. It’s an essential part of understanding what pressures employees were under, what signals they picked up on, and how decisions were actually made. The same principle applies to leaders trying to get ahead of cultural risk and contagion before it causes harm.

Interviews and focus groups give people space to describe actual workplace situations: the pressure they felt in a meeting, what happened when they raised a concern, how their manager responded. Those accounts bring out details that are flattened by standardized survey scores, like how people read signals, which trade-offs they face, and what they believe it takes to succeed. They also provide a space for employees to offer their own solutions or surface the informal approaches that are already being developed on the ground to tackle challenges.

This is the organizational equivalent of “reading the air.” Instead of observing body language cues in a conference room, leaders detect patterns across short narratives. Across several domains, qualitative methods are especially good at capturing this mix of context and action, which makes them valuable for understanding where risk lives in daily work.  

This doesn’t mean stories alone are enough. Anonymized administrative data from HR systems and helplines provide behavioral indicators that complement self-report feedback and produce a more rounded picture of the issues at hand. The goal is to develop organizational sensitivity to the imperceptible shifts that signal cultural problems before they become visible crises.

A field guide for “reading the room” of your company’s culture

To make that kind of sensitivity practical, leaders need a way to structure what they’re listening for. One useful framework comes from cultural psychology, which breaks culture down into four interconnected elements: ideas, institutions, interactions, and individuals (the “Four I’s”). These elements are present in every culture. What matters is whether they reinforce each other or send mixed signals.

• Ideas: What really gets praised or promoted? Listen for whether shortcuts are framed as resourcefulness or as ethics that are slowing things down.

• Institutions: How do targets, incentives, and policies shape behavior? Check if systems align with stated values, or if they create pressure to cut corners.

• Interactions: In meetings or reviews, what actually happens when someone speaks up or challenges a decision? Watch who gets heard, who gets shut down.

• Individuals: How do employees describe the choices they’ve had to make under pressure? Look for stories that suggest they felt forced to choose between performance and principles.

Most compliance programs concentrate on two parts of this framework: making sure institutions are in place—policies, trainings, reporting hotlines—and catching individual bad actors. Those pieces matter, but they only cover a fraction of how culture operates. Assessments of toxic corporate cultures show that formal systems were often present. 

What was missing was alignment with the other elements of corporate culture: leaders in practice rewarding results over the ethics they preach in town halls, daily interactions normalizing corner-cutting of carefully laid out procedures, and individuals feeling trapped in impossible trade-offs between organizational values and bonus incentives. This dissonance breeds toxicity and performance failures. The “Four I’s” give leaders a way to avoid blind spots and to then design multiple small initiatives that foster alignment across every layer of the organization’s culture.

Successful organizations recognize that culture isn’t something you build once and maintain with annual training. It’s a living system that requires the same continuous attention companies give to financial performance or operational efficiency. When early warning systems and thoughtful measurement align across the ideas, institutions, interactions, and individuals that make up an organization, something powerful happens: coherence. 

Employees stop having to choose between doing the right thing and doing what gets rewarded. When leaders and organizations adopt tools to “read the room”—listening for real experiences and collecting cues at all levels of the culture cycle—ethical decision-making becomes the natural way to succeed and grow the business, not an obstacle to overcome.