Businessolver, an independently owned benefits technology company, has released its 2026 State of Workplace Empathy study — and the findings paint a deeply unsettling picture of modern workplaces. Now in its 11th consecutive year and drawing on responses from over 26,000 employees since 2005, this year's report reveals that toxic cultures aren't just spreading — they're being actively rewarded with short-term financial gains.

Conducted through research partner Edelman Data & Intelligence, the study surveyed 300 CXOs — including CEOs, CHROs, CTOs, and CFOs — and 1,000 employees across six industries. The headline finding is stark: 40% of employees now say their workplace is toxic, a remarkable 18 percentage point jump year-over-year. Among CEOs, that figure climbed to 33%, up 25 points from the prior year.

What makes this year's data especially striking is the disconnect between culture and performance. CXOs in toxic cultures are delivering significant financial growth at nearly 2 times the rate of their peers in non-toxic environments. In other words, companies with the worst cultures are, for now, winning in the market. Businessolver calls this the "empathy paradox" — leaders who view themselves as empathetic are simultaneously making decisions that systematically undermine empathy at every level of the organization.

The Numbers Behind the Toxicity Surge

The data reveals a workplace environment increasingly defined by fear and intimidation. 33% of employees and 34% of CXOs report experiencing coworker intimidation — a figure that spikes to 73% among CXOs operating inside toxic cultures. Meanwhile, psychological safety — the cornerstone of innovative, high-performing teams — is continuing its steep decline.

Despite these alarming trends, trust in leadership has not yet fully collapsed. An overall 66% of employees say they trust their leaders — but paradoxically, that figure rises to 80% inside organizations employees simultaneously describe as both empathetic and toxic. This combination of high trust alongside worsening culture is precisely what concerns researchers most: risk is building quietly beneath the surface, invisible until it erupts in attrition, burnout, or reputational damage.

The cost-cutting behaviors observed in toxic organizations further amplify these risks. CXOs in toxic cultures are 2.6 times more likely to report layoffs and 2 times more likely to cut employee benefits — decisions that directly erode the employee experience and signal to workers that their wellbeing is secondary to financial performance. The AI investment trend adds another layer: nearly 30% of CEOs say their primary motivation for AI investment is cost savings through headcount reduction, further deepening the cultural divide.

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The Long Game: Why Culture Can't Be Outrun

While the short-term financials may appear to justify aggressive, culture-deprioritizing strategies, Businessolver's longitudinal research tells a different story over time. The 2025 State of Workplace Empathy study estimated that unempathetic organizations risk $180 billion annually in attrition costs alone — driven by the fact that employees at these organizations are 1.5 times more likely to change jobs within the next six months.

The compounding effects are equally alarming. Employees at organizations perceived as unempathetic report 3 times higher toxicity rates and 1.3 times more mental health issues, contributing to lower productivity, increased absenteeism, and damaged employer brand reputation. They are also 2 times more likely to feel disconnected from leadership and 4 times less connected to their CEO — a recipe for organizational fragility in moments of crisis or change.

Perhaps most powerfully, the data on employee sacrifice underscores just how deeply workplace culture matters to today's workforce. Two-thirds of employees say they would accept a pay cut to work somewhere more empathetic. In an era where compensation is often assumed to be the primary driver of retention, this finding reframes the conversation entirely: culture is not a soft benefit — it is a core competitive advantage with quantifiable, dollar-value stakes on the line.

As Businessolver's research enters its second decade of tracking these trends, the pattern is clear. Organizations that treat empathy as a "nice to have" — as 59% of CEOs now do, up 12 points year-over-year — are trading long-term resilience for short-term gains. The bill, as Shanahan warns, always comes due. It just shows up in people before it shows up in profits.