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

When organizations discover a toxic employee, the instinctive response is often swift removal followed by a search for a high-performing replacement. But recent research suggests that this intuition may be misguided. Evidence shows that avoiding toxic workers altogether — or converting them into average performers — is more cost- and performance-effective than hiring superstar employees.

This insight comes from the study Toxic Workers, published by Harvard Business School and co-authored by Dylan Minor of Northwestern University’s Kellogg School of Management and Michael Housman, Chief Analytics Officer at Cornerstone OnDemand. The authors note that while extensive research exists on identifying and developing top performers, far less attention has been paid to understanding employees who actively harm organizational performance.

The study defines toxic behavior as conduct that exposes organizations to legal, financial, or reputational risk — including sexual harassment, workplace violence, fraud, or violations of company policy or law. At the extreme, the authors cite events like JP Morgan’s “London Whale” trading loss, which resulted in billions of dollars in damage. More commonly, toxic behavior manifests through customer loss, declining morale, increased turnover, and erosion of organizational legitimacy.

Toxicity does not arise from a single cause. The research identifies several contributing factors, including poor incentive structures, permissive work environments, and individual characteristics such as overconfidence, weak service orientation, and excessive self-regard. One of the most counterintuitive predictors, however, is an employee’s stated attitude toward rule-following.

According to the authors, individuals who claim that rules should never be broken are actually more likely to engage in toxic conduct. In contrast, employees who acknowledge that rules may occasionally need to be bent for ethical reasons tend to be more honest and less prone to harmful behavior. The implication is that rigid moral signaling can mask a higher risk of misconduct.

The central takeaway is strategic rather than punitive. Organizations gain far more value by identifying and avoiding toxic hires upfront than by chasing exceptional upside performance. Screening for behavioral risk — not just productivity — is a critical lever for protecting culture, reducing turnover, and safeguarding long-term performance.