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Why Your Toxic Employee Could Be Costing You Millions


Thu Mar 23 2017

Why Your Toxic Employee Could Be Costing You Millions
Why Your Toxic Employee Could Be Costing You Millions-10574ce0d881ca16ca4729f7f0dfef0498940f07ddb98ed2f30f056682d08ac4

Have you heard of the 80:20 rule? Eighty percent of your energy is spent on 20 percent of your relationships. Most often this energy is wasted in drama. Then there are toxic employees, who epitomize the 99:1 rule; 99 percent of the negative energy in the workplace is caused by 1 percent of the people. Toxic employees consistently seeking drama by playing one or more of these three roles: victim, persecutor, or rescuer. Victims over-adapt, feel hurt, act needy, and invite others to cover for them. Persecutors attack, blame, or manipulate to get what they want and create environments of fear and intimidation. Rescuers engage in nonconsensual helping, continually offering unsolicited advice to boost their own ego and invite dependence from victims. The most toxic employees switch between the roles to keep people guessing and avoid accountability. When toxic employees are productive or have long tenure with a company, this poses a dilemma for leadership.

I get a lot of satisfaction from helping leaders get rid of toxic employees. That said, I get no joy from firing someone, and no pleasure in discovering the widespread damage the toxic employee has caused once he is gone. What is rewarding is the courage and self-awareness I see develop among leadership, the unity that follows, the gratitude that emerges, and the incredible new amounts of positive energy available to the organization. The most satisfying part, though, is the realization that leaders set the tone, and unless they change how they lead, nothing around them will change.


Toxic employees exist because leadership allows and encourages them to. But it’s extremely expensive. A study commissioned by CPP global estimated the annual cost of workplace conflict in the United States to be $359 billion in terms of lost productivity and time spent dealing with conflict. Add to this the psychological, physical, and emotional toll, and the drag on our economy is colossal.

Harvard researchers Dylan Minor and Michael Housman calculated that toxic employees cost companies more than [twice as much](http://www.hbs.edu/faculty/Publication Files/16-057_d45c0b4f-fa19-49de-8f1b-4b12fe054fea.pdf) as the contribution of a star performer. Specifically, avoiding a toxic worker was worth about $12,500 in turnover costs, but even the top 1 percent of superstar employees added only about $5,300 to the bottom line. They argue that the actual difference could be even bigger, if you factor in other potential costs such as litigation, fines, lower employee morale, turnover, and upset customers.

A 2012 Career Builder survey found that 69 percent of employers reported that their companies have been adversely affected by a bad hire that year, with 41 percent of those businesses estimating the cost to be more $25,000. Twenty-four percent reported that toxic employees had cost them more than $50,000. 

Who Is Likely to Be Toxic? 

Harvard Business School’s study also discovered that toxic workers were more likely to have certain personality and behavioral traits. They were overconfident, self-centered, productive, and rule-following. Interestingly, workers who said that “rules must always be followed” had a 25 percent greater chance of being terminated for actually breaking the rules. They also found that people exposed to other toxic workers on their teams had a 46 percent increased likelihood of being fired for misconduct. Toxic employees breed toxic environments.

Here are four additional—and expensive—consequences of toxic employees:

  1. Driving good people away. Talented employees who want to work in a healthy environment won’t tolerate toxic people for long. Life is too short to work for an organization like this. 

  2. Tolerate unhealthy behavior. Other employees see what’s going on and lose faith that the organization means what it says. 

  3. Making excuses and cleaning up messes. Energy spent doing damage control is energy that’s not available for other things. 

  4. Builds us vs. them culture. Drama-based alliances infect a culture like a noxious weed, choking out trust and healthy communication.

Toxic employees were hired by somebody in the organization. This somebody probably feels badly about how things have turned out. She feels guilty for having missed the signs, tired from trying to clean up the messes, hypocritical for continuing to defend or make excuses for them, and helpless about all the failed efforts to fix things.

Why Do We Keep Toxic Employees?

  • They’re productive. The worst kind of toxic employees are the highly productive ones, because while you don’t like their behavior, you really want their performance.

  • Guilt. You feel guilty for hiring them in the first place, so you keep them around to avoid having to admit your mistake.

  • Sunk costs. You can’t let go of the sunk energy and time you’ve spent trying to make it work out. You rationalize that you’ve invested so much in them that you can’t stop now.

  • Savior complex. You keep believing you can fix them. You know deep down that you can’t, but you keep trying in hopes of salvaging your ego.

  • Cultures of drama. Toxic employees thrive in drama-based cultures where people avoid responsibility for their behavior, misuse conflict in destructive ways, and don’t directly confront bad behavior. Often their direct supervisors are part of the problem because they play into the drama.

  • Fear of consequences. Most toxic employees are bullies. They prey on anyone who is willing to be afraid and intimidated. They’ve likely manipulated and bullied their boss, who is afraid to take action for fear of recrimination. Toxic employees are good at triangulating and creating negative drama, so they can wreak havoc for a leader by stoking negativity, making accusations, going public with sensitive information, or trying to build alliances with board members. It’s a double-edged sword because the longer they’re allowed to act like this, the more damage they can do whenever they are held accountable.

How Can You Deal With Toxic Employees?

Here’s how to deal with toxic employees using compassionate accountability, which is the process of using conflict to create instead of destroy. It leverages the skills of openness, resourcefulness, and persistence in specific, researched, and proven ways to increase accountability while preserving the dignity of all involved.

Step 1: Get honest about your feelings and what you want. Whether it’s you or your whole team, come clean about how you are experiencing this toxic employee. Are you angry? Frustrated? At your wits’ end? Afraid? Embarrassed? Share it with your team or trusted mentors. Are you willing to share how you feel with the toxic person? This step is a critical foundation to be sure you are addressing the real issues. In the context of steps 2-4, it can be very powerful.

Step 2: Get the support of your leadership team and your board of directors. All key players must be on the same page before addressing the toxic employee.

Step 3: Define the toxic behavior. What, exactly, is this person doing that’s causing problems? Write it down and be specific. Share it with the toxic employee. Avoid any assumptions about motives; focus only on observable behaviors.


Step 4: Outline negotiable options for change. What are you willing to do to help the behavior change? What resources are you willing to offer? Be clear about the difference between a change in behavior (nonnegotiable) and how this is accomplished (negotiable).

Step 5: Ask for a commitment to discontinue old behavior and adopt new behavior. If you don’t get a commitment, it’s over. If you do, then continue to steps 6 and 7.

Step 6: Define exactly what the new behavior will look like, and the consequences for not changing. This is not negotiable, so don’t allow any conversation around the details. If you’ve already decided to fire the person, you can skip steps 3-5.

Step 7: If you are trying to work with the employee to change, check in regularly with him, assess progress, and follow through on consequences if behavior goals are not met. Check in regularly with your team and board to give them progress updates and maintain their support, especially if the toxic employee escalates his behavior.

Repeat steps 1-7 as many times as necessary.

Toxic employees are more costly than anyone realizes, but they can be dealt with effectively to preserve a healthy work culture and focus energy on performance rather than drama.

Want to learn more? Join me at ATD 2017 Conference & Exposition for the session Conflict Without Casualties: Building Cultures of Compassionate Accountability.

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