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Why Toxic Employees Can Cost Your Company More Than $12,000

Your business will actually save more money by not hiring a toxic person than by hiring an extremely talented one, according to new research from Harvard Business School.

BY MILLIE DENT

This story first appeared on The Fiscal Times

We all have those colleagues who criticize you to co-workers behind your back, make rude remarks about your outfit or demand extra work from everyone but themselves. These toxic behaviors might be annoying and unpleasant, but they’re also extremely costly to companies, according to new research.

A Harvard Business School study has found that avoiding hiring a “toxic worker” saves companies around $12,500 or more, while hiring a superstar employee only saves about $5,300 for the company.

The researchers used employment data from around 60,000 workers at 11 companies, focusing only on the toxic behavior that resulted in a firing. For the purposes of the study, toxic employees were identified as those whose hostile style or manipulative actions could turn the workplace into a lousy environment. Meanwhile, a superstar employee was defined as one most productive 1 percent of workers.

Related: Federal Employees: Can’t Hire the Best, Can’t Fire the Worst

“Avoiding a toxic worker (or converting them to an average worker) provides more benefit than finding and retaining a superstar,” the study says. As a result, “it may be that spending more time limiting negative impacts on an organization might improve everyone’s outcome to a greater extent than only focusing on increasing positive impacts,” the study concludes.

Toxic employees are so costly because their behavior drives out other workers, forcing companies to spend more money training replacement hires. The bad apples also make frustrated co-workers less productive. “In extreme cases, aside from hurting performance, such workers can generate enormous regulatory and legal fees and liabilities for the firm,” the study says.

Removing toxic workers isn’t always easy--especially because, according to the study, they may seem to be more productive than their colleagues, at least in terms of quantity if not quality. If they seem to be a good employee, a manager is less likely to want to let them go and might look the other way in terms of their negative behavior. But authors Michael Housman of Cornerstone OnDemand, a talent management software company, and Dylan Minor, a professor at Harvard and Northwestern, say ditching those workers is still the best way to go.

“We find evidence that such a policy--one that removes the ‘big shots’ and ‘tyrants’ seems to be one that would lead to more productive organizations in general, despite terminating such a productive worker,” they write.

To access the full-length article, click here.


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