Toxic' Workers May Be More Cost-Effective Than Superstar Workers, One Study Finds

Imagine yourself as a senior manager at a company that has become aware of a “toxic” worker in your organization. This behavior can put your organization in legal and regulatory risk, and your first instinct will probably be to fire them and find a replacement. The replacement you want, ideally, is a superstar in their field and will lead your organization to unparalleled lengths. One recent study, however, determines that it is actually more cost and performance-effective to avoid hiring a toxic worker altogether (or converting a toxic worker to an average one) than hiring a superstar from the beginning.

There are many publications and research that address how to find and develop top-performing workers, but there is comparatively little in regards to how to manage workers who are detrimental to organizational performance. This is the opening observation in Toxic Workers, a recent study published by the Harvard Business School, authored by Dr. Dylan Minor, Assistant Professor of Managerial Economics & Decision Sciences at the Kellogg School of Management of Northwestern University, and Dr. Michael Housman, Chief Analytics Officer at Cornerstone OnDemand, Inc.

Toxic workers and behaviors can vary. “At their most harmless,” according to the study, “these workers could simply be a bad fit, leading to premature termination and a costly search for and training of a new worker.” What Minor and Housman truly consider toxic behavior are, for example, sexual harassment, workplace violence, fraud or a breach of company policy or governmental law. The researchers cite JP Morgan’s 2012 trading loss with Bruno Iksil, nicknamed the “London Whale” incident, in which they lost $2 billion as one of the most extreme examples. More moderate examples of toxic behavior include, “customer loss, loss of employee morale, increased turnover, and loss of legitimacy among important external stakeholders.”

Detrimental work behaviors can be caused by numerous factors. Poor incentives for an employee to not be detrimental, a poor work environment in which there is increased exposure to misconduct, or a worker’s personal characteristics, including, “overconfidence, poor service-orientation, and a vision of themselves as rule followers,” ironically, can come into play as factors as to why an employee behaves the way he or she does.

The authors’ reasoning for the rule-following factor is that a rule occasionally may need to be broken, being the “right thing” to do from an ethical standpoint. People who admit that rules should be broken on certain occasions are likely to be more honest than those who maintain that rules should never be broken. Thus, people who are more honest are less likely to behave in a toxic manner, and, “those claiming rules should always be followed are actually more likely to break the rules via toxic conduct.” Being able to identify these qualities in a potential new hire is vital in avoiding toxic workers entirely, which the study claims is, of course, one approach to managing these employees.

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