Why are you waiting for the headline?
Why companies need culture reviews to prevent crises…
As well as working at PathLight, which I co-founded to help companies diagnose, understand and fix barriers to inclusion, I’ve spent the last two decades working as an employment lawyer, both at law firms and inside corporates large and small.
During that time, I have seen the same pattern emerge on repeat: A grievance raised by an individual reveals a huge systemic discrimination problem. A dispute reveals a beautifully drafted company policy that no one actually dares to use, in case it marks them out as ‘uncommitted’. A company that is vocal about how it is ‘people first’ can’t see that ‘people first’ at their company actually means ‘people of XYZ demographic’ first.
It’s tempting to treat inclusive culture as a nice-to-have in the good times – after all, investing in people takes money and time, and those can be hard to come by when revenues are down, investors are asking difficult questions, and the only thing you can think about is whether you are going to have to go through a(nother) reduction in force. But after a crisis - an employment claim, a public allegation, a leak – there is a painful realisation: an inclusive culture isn’t just a nice-to-have. If you want to avoid an expensive, reputationally damaging crisis, it’s an essential… and if you want to avoid a crisis repeating, the same applies.
The scale of the risk
In the UK, where PathLight is based, Ministry of Justice data shows employment claims rising sharply year-on-year, and discrimination claims are a healthy chunk of those rising claims. ACAS reports that 29% of early conciliation cases (over 36,000) and 50% of ET1s (over 21,000) involved allegations of discrimination in 2024/25. This clearly shows that the kind of employment claim that could seriously damage your business financially and reputationally is not niche; it is a widespread, material business risk – and behind those case numbers, in many cases, lie culture failures.
What about the cases that don’t become claims? Still time consuming, still expensive (for legal advice, for severance costs, for post crisis clean up). Data shows us that harassment and bullying complaints remain stubbornly prevalent across all sectors. Across large UK workforces, ethnic minority, disabled, LGBTQ+ and female workers consistently report mistreatment in higher numbers than white, straight, non-disabled male peers (which isn’t to say that there is no reporting from this demographic, simply that it’s at lower levels). Reports of sexual harassment to ACAS rose sharply after the legal duty to prevent such harassment took effect in the UK in October last year. It doesn’t take a huge mental leap to understand the likelihood of something like this happening in your business – when power is concentrated, and processes are unclear, unfairly applied or not applied at all, or people are scared to actually use them, poor behaviour becomes normalised and people crises occur.
Let’s focus on finances for a moment. In 2023/4 the UK Health and Safety Executive estimated that 33.7 million working days were lost in the UK due to work-related ill health and injury at a cash cost of £21.6bn. Of course, this covers physical injury, but stress and conflict at work are huge contributors to this, frankly, a gargantuan sum, with 776,000 workers suffering from stress, depression or anxiety related to work in the relevant period. How much of this could have been avoided with a strong, supportive, fair workplace culture? A lot, I would venture.
Are you a regulated firm? Financial Services regulators are also sharpening their focus on non-financial misconduct. The FCA recounts a 60% rise in bullying and discrimination reports and has called for boards to use data better to improve company culture. Culture risk is moving from a more nebulous values requirement to a hard governance measure, and it is not clear that firms are prepared for this shift.
What working as a crisis manager, I mean employment lawyer, has taught me
There are three key lessons that now shape my advisory work.
1. Crises are rarely surprises; they’re symptoms. The ‘last straw’ often follows warning signals – themes in engagement surveys, a policy everyone quietly bypasses, a manager who’s ‘high performing, but difficult to work with’. We see these precursors in voice-of-employee data long before we see them in legal pleadings. Diving into HR data quickly helps us understand some of the reasons for this type of culture, as we start to note biased recruitment and promotion processes and a leadership level that only includes one type of person, with one type of viewpoint.
2. Dealing with the issue at hand helps, but root cause diagnosis and change wins. You can investigate an individual complaint and still miss the system failure. If your hiring, pay, and promotion processes aren’t consistently applied, if bias creeps into your systems, if your culture doesn’t allow for anything other than a cookie cutter prototype, dealing with an individual issue won’t deal with the risk – it will just defer it until the next issue, and the next, and the next.
This raises an important point about cost. When times are hard, the cost of initiatives intended to improve engagement and culture are the first to go, but it’s not difficult to see that that is a false economy. The cost of dealing with individual issues one by one, in management time, in legal costs, in severance costs – if you add those up for one or two cases a year, you would very quickly be spending the same amount of money that it would take to carry out a proactive review of your culture, systems and processes, which could drastically reduce or even remove the risk of future employee relations cases and employment law claims.
3. Trust compounds the benefits of taking a long hard look at your culture. Transparency about what you found, what you’re fixing, and how you’ll measure progress has a huge impact on retention and engagement, and if you are one of those companies that pays vocal lip service to being people first? Well, it means that you will be walking the walk as well as talking the talk – and being found to only talk loudly about how much you value your people without taking action to build an inclusive culture can very rapidly leave company leaders exposed and publicly embarrassed.
Why this matters before as well as after the headline
In a world where we are seeing more absence linked to poor culture, more employee complaints, more legal claims and slower systems of resolution, and a sharp regulatory focus on company culture, prevention of crises by elevating inclusion and fairness isn’t a nice to have, it’s the most robust, cost effective, and reputationally resilient option you have.
What “good” looks like after a crisis
For those of you who don’t take my word for it before you experience a crisis, then let’s talk after the crisis has hit – because after you have dealt with the case in hand, if you want to avoid dealing with something like this again, you have to be prepared to go deep and broad to address the systemic issues that underpin your particular crisis. This means being prepared to be honest about the systemic patterns, properly understand how they have arisen and make a clear plan to change them for the future., so the crisis doesn’t repeat, and the culture that emerges is stronger, fairer and more inclusive than what you had before.
A note on cost–benefit
By the way, leaders often ask: ‘Isn’t this a lot of effort?’. Honestly? Not compared to the alternative. I hope for your sake you never have to make a comparison of the ROI that your competitor made into an inclusive, fair workplace culture whilst you are clawing your way out of a financial, legal and reputational crisis – but if you do, I promise I will try not to say I told you so.