Study: The Extreme Cost of Hiring a Toxic Employee

Harmful or toxic employees can have consequences that extend far beyond their own behavior. According to research conducted by Cornerstone OnDemand, the presence of just one toxic individual on a team can dramatically increase the likelihood that high-performing employees will leave.

An analysis of data from approximately 63,000 hired employees found that between 3 and 5 percent of workers were terminated for toxic behaviors such as misconduct, workplace violence, substance abuse, sexual harassment, or fraud.

One of the most striking findings is the effect toxic employees have on their coworkers’ retention. When the ratio of toxic to non-toxic employees on a team reaches just 1 in 20, good employees become 54 percent more likely to quit.

Financially, the impact is substantial. Hiring a single toxic employee onto a 20-person team costs an organization approximately $12,800. This figure reflects not only onboarding costs, but also the downstream expense of replacing productive employees who leave as a result of toxic behavior. By comparison, hiring a non-toxic employee costs roughly $4,000.

Interestingly, the study found that toxic employees have little measurable impact on their coworkers’ day-to-day productivity. Instead, their influence appears to manifest primarily through increased stress, burnout, and disengagement—factors that ultimately drive turnover rather than immediate performance decline.

The research also identified early warning signs of toxic behavior. Poor attendance, low dependability, and an unwillingness to help others were among the strongest predictors. In addition, toxic employees tended to respond differently to assessment questions.

“They were significantly more overconfident than your typical job applicant,” said Michael Housman, Chief Analytics Officer at Cornerstone OnDemand.

In fact, applicants who were extremely overconfident about their technical qualifications were found to be 43 percent more likely to exhibit toxic behavior once hired.

For organizations already dealing with toxic employees, Cornerstone advises careful intervention. In some cases, a documented performance-improvement plan may help repair behavior. However, leaders must also actively support employees who were negatively affected.

“When dealing with an issue, managers should be as transparent as possible,” said Kimberly Cassady, Vice President of Talent at Cornerstone OnDemand. “Transparency from the start can make a huge difference in how employees react.”

The broader takeaway is clear: toxic employees impose costs that far exceed their individual output. Identifying and addressing toxic behavior early—ideally before hiring—can protect team morale, improve retention, and significantly reduce hidden financial losses.