Toxic Employees in the Workplace: Hidden Costs and How to Spot Them

In this original Cornerstone OnDemand research, we examine whether one bad apple can truly spoil the whole bunch when it comes to toxic employees in the workplace.

Leveraging econometric analysis of a large-scale dataset of approximately 250,000 hired employees, the report evaluates not only the measurable, direct costs of toxic behavior—such as sexual harassment, theft, and fraud—but also the less visible yet often more damaging indirect costs.

These indirect costs are analyzed in depth, with particular attention paid to the toll toxic employees take on their co-workers. The findings indicate that these spillover effects impose an even greater financial burden on organizations than the direct consequences of misconduct.

Key findings from the report include:

• High-performing employees are 54 percent more likely to quit when they work alongside a toxic employee, even when the proportion of toxic employees on a team increases by as little as one in twenty.
• Because toxic employees significantly increase voluntary turnover among their peers, replacement costs rise sharply. Hiring a single toxic employee into a team of twenty workers costs an organization approximately $12,800, compared to an average cost of $4,000 for a non-toxic hire.
• Toxic employees have a relatively negligible effect on the day-to-day performance of their co-workers, suggesting their primary impact is driven by increased stress, burnout, and disengagement rather than reduced task completion.

This leads to a critical question: can employers identify toxic employees before they join the organization and prevent the damage before it occurs?

The ability to flag and avoid candidates who exhibit a high likelihood of toxic behavior is extraordinarily valuable. The report highlights several early warning signs, including strong links between toxic behavior and low scores on measures of dependability and customer service orientation.

Read Cornerstone’s latest research report to gain a deeper understanding of the true cost that toxic employees impose on organizations—and to learn how data-driven hiring practices can help mitigate these risks before they take root.