How toxic employees can hurt your bottom line

Toxic employees cost more than superstar employees bring in

Toxic employees are more productive than their colleagues, but their selfish and destructive behaviors outweigh any workplace benefits, according to a recent paper from Harvard Business School researchers Michael Housman and Dylan Minor.

The researchers used data on job assessment scores, attrition, and daily performance from more than 58,000 hourly front-line employees at 11 global companies to create the personality profile of a "toxic worker."

The hidden costs of bad hires, and how to avoid them

They chose to focus on the most extreme cases: workers who were fired for their behavior, such as for bullying, sexually harassing their coworkers, or engaging in other workplace violence.

Findings

Housman and Minor used the data to uncover the personality traits most associated with toxic employees. They found that:

  • Employees more confident in their skills were about 15% more likely to be fired for toxic behavior;
  • More selfish employees were 22% more likely to be fired for toxic behavior; and
  • Workers who said rules must always be followed were 25% more likely to be terminated for toxic behavior.

The researchers found that toxic employees were actually more productive than other employees. "There is a potential trade-off," Housman and Minor write. "They are corrupt, but they excel in work performance." But the long-term costs can outweigh any productivity benefits, they warn.

In fact, Housman and Minor estimated that the benefit of hiring a superstar employee—one that can be four times as productive as a regular employee—doesn't offset the cost of a toxic one, only bringing in about $5,300 in cost savings.

By contrast, they estimated that toxic workers can cost a company almost $12,500 in turnover costs—other employees quitting to get away from the bad apple. And that figure does not include other potential costs of a toxic worker, such as potential litigation fees  (Eunjung Cha, "To Your Health," Washington Post, 12/15; De Vita, Financial Times, 12/13; Pazzanese, Harvard Gazette, 11/30; Torres, Harvard Business Review, 12/9).

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