The Naughty Employee Costing Your Company More Than $12,000

Toxic coworkers are more than an everyday annoyance — they represent a substantial financial drain on organizations. New research from Harvard Business School shows that avoiding a single toxic hire can save companies more than $12,500, more than double the value created by hiring a so-called superstar employee.

The study analyzed employment data from approximately 60,000 workers across 11 companies, focusing specifically on toxic behavior severe enough to result in termination. Toxic employees were defined as individuals whose hostile, manipulative, or unethical behavior degraded the work environment, while “superstars” represented the top 1 percent of performers.

The findings challenge conventional talent strategies. While superstar employees generate an estimated $5,300 in value through increased productivity, the cost savings from avoiding a toxic worker are significantly higher. As the study notes:

“Avoiding a toxic worker (or converting them to an average worker) provides more benefit than finding and retaining a superstar.”

Toxic employees impose these costs primarily by increasing turnover. Their behavior drives capable colleagues to quit, forcing companies to incur repeated recruiting, onboarding, and training expenses. In addition, frustration and stress caused by toxic coworkers can quietly erode team productivity.

In extreme cases, the damage extends beyond morale and performance. Toxic workers can expose firms to substantial legal, regulatory, and reputational risk, creating liabilities that far exceed their apparent contribution.

One of the most troubling insights is that toxic employees often appear productive, at least on the surface. This perceived performance can cause managers to overlook or tolerate harmful behavior longer than they should. However, the study’s authors — Michael Housman of Cornerstone OnDemand and Dylan Minor of Harvard and Northwestern — argue that removing such employees is still the optimal choice.

The broader implication is clear: organizations may achieve greater returns by investing in mechanisms that prevent negative behavior than by focusing exclusively on maximizing individual upside. In talent strategy, eliminating harm often creates more value than chasing excellence.