Career Advice
December 22, 2015

A Toxic Worker Could Cost Your Business $12,489

A Toxic Worker Could Cost Your Business $12,489

A bad hire can cost a business thousands of dollars, according to a new study. The study from Harvard Business School describes a “toxic worker” and looks at the toll they can take on a business.

Profile of a "toxic worker"

The study, by Michael Housman and Dylan Minor, used data from 50,000 employees at 11 companies to create a detailed description of a toxic worker. In the study, they focused on workers so toxic that their behaviour got them fired. Those that bullied their colleagues or stole from the business, for example.

They found that toxic workers:

  1. Are more productive than average.
  2. Have high regard for themselves but low regard for others, i.e. selfish.
  3. Are overconfident in their own abilities and take unreasonable risks because of this.
  4. Claim that rules should be followed without exception but are most likely to be fired for breaking rules.

While the fact that they are more productive than average may seem surprising, it is important to remember that these are not simply “bad” employees but “toxic” ones.

Rogue traders

According to the study, this higher productivity “could explain why toxic workers are selected and are able to remain in an organization for as long as they do. For example, an investment bank with a rogue trader who is making the firm millions in profits might be tempted to look the other way when the trader is found to be overstepping the legal boundaries."

However, they also found that “although toxic workers are quicker than the average worker, they are not necessarily more productive in a quality-adjusted sense.”

The true cost of a bad hire

In addition to making those around them miserable, toxic workers actually cost a business money (despite their high productivity), according to the study. Replacing employees who leave due to their behaviour can cost a company $12,489. To put that in context, it’s more than double the extra $5,303 generated by a superstar worker in the top 1% for productivity.

Avoiding toxic workers

Because of this, Housman and Minor write, “avoiding a toxic worker (or converting him to an average worker) enhances performance to a much greater extent than replacing an average worker with a superstar worker.” They also found that toxic workers can turn others around them into toxic workers.

This gives a stark illustration of just how important it is for a company to avoid “toxic” hires. In addition to screening during the hiring process, managers should seek to rid their organization of toxic workers. The study’s authors write that “such a policy - one that removes the ‘big shots’ and ’tyrants’ - seems to be one that would lead to more productive organizations in general, despite terminating such a productive worker.”

Image: Flickr

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