Toxic workers affect a company’s bottom line

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Most people have come across someone know as a “toxic worker”, as defined by a research by Harvard Business School just realesed and recalled by the Financial Times.

What is the definition of “toxic worker”?

The authors of the study, Michael Housman and Dylan Minor have studied over 50.000 workers across 11 different firms to document a variety of aspects of workers’ characteristics and circumstances that lead them to engage in what they call “toxic” behavior. They define a toxic worker as “a worker that engages in behavior that is harmful to an organisation, including either its property of people”.

This worker can cost a firm billions dollars (as evidenced by JP Morgan’s “London Whale” incident with Bruno Iksil). But without going to this extreme example, a toxic worker can cause major organisational costs, including customer loss, loss of employee morale, increased turnover and loss of legitimacy among important stakeholders.

The authors say that the best approach to manage toxic workers is to avoid them.

They identified some individual’s characteristics and some features of this typology of workers. Specifically, they found that toxic workers are much more productive than the average worker. They are unethical but the excel in work performance. This is one reason why they are not fired and they are employed. Having said that, the authors conclude, setting aside justice and ethical motivations, that avoiding toxic workers is still better for the firm in terms of profitability. 

Who is the most likely to be a “toxic worker”?

The research shows three key predictors:

  1. a person with a very high level of “self-regard” or selfishness. This people don’t care about others and for this reason their attitude or behavior can affect colleagues.
  2. someone feeling overconfident, which can lead to undue risk-taking.
  3. a person stating emphatically that the rules should always be followed not matter what.“That is kind of counterintuitive. In a simple world, we would just ask someone, ‘Do you always follow the rules?’ And if you do, then of course, you’re not going to ever break them. But I find very strong evidence in my study that those that say ‘Oh no, you should always follow the rules’ — versus those that say ‘Sometimes you have to break the rules to do a good job’ — that the people who say ‘I never break the rules’ are much more likely to be terminated for breaking the rules,” said Minor.

What is the cost of a “toxic worker”

Researchers found that these workers can cost, on average, $12.489 in terms of replacing workers that left because of a toxic colleague. This figure does not include sidestepping litigation, regulatory penalties, or decreased productivity as a result of low morale.

Finally, researchers estimate the value of finding a “superstar,” defined as workers in the top 1% of productivity, versus the value of avoiding a toxic worker. Succeeding in the latter generates returns of nearly two-to-one compared to those generated when firms hire a superstar ($5.303 in cost savings through increased output). This suggests more broadly that “bad” workers may have a stronger effect on the firm than “good” workers.

As researchers suggest in their study, the best approach for a company is to avoid toxic workers. They ultimately have an impact not only on the profit and loss but also on the culture of an organisation:

The culture of any organization is shaped by the worst behavior the leader is willing to tolerate.

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