Podcast: How to Rid Your Company of Toxic Employees

These toxic workers might be lying or stealing, or bullies, or just plain incompetent. Regardless, they infect the workplace with their behavior and bring down everyone’s morale.

What’s more, new research from Dylan Minor of the Kellogg School shows that they cost companies a significant amount of money. In fact, when measured against superstars, toxic workers are a bigger drain on a bottom line than superstars are a benefit.

Minor and Kellogg School professor Brenda Ellington Booth discuss the dangers of toxic workers as well as how to avoid bringing them into your organization.

PODCAST TRANSCRIPT

Shawna MEHTA:It was a lot of emotional and mental energy spent on, ok, how am I going to catch this guy, how am I going to catch him in the act?

Kellogg Insight: That’s Shawna Mehta, a director of marketing here at Kellogg. We invited her to talk with us about this month’s topic: toxic workers.

MEHTA:How am I going to take what he says at face value? If he tells me something or if he puts something in front of me and says that it’s based on fact, am I going to believe him? Do I need to double and triple check everything he does because I don’t trust him?

Kellogg Insight:Don’t worry, Shawna’s not talking about someone here at Kellogg. But unfortunately, this kind of toxic behavior can be all too familiar.

Toxic workers are those people who make going into the office downright painful. In the most extreme cases, they lie, or steal, or exhibit other kinds of illegal or unethical behavior. They could be a bully, or incompetent, or just plain clueless about how to get along in an office.

In this month’s podcast, we talk with Kellogg School professors about the surprisingly high cost of toxic workers, as well as how to avoid being saddled with these problem employees in your organization. So stay tuned.

[Music interlude]

Emily STONE: Hello, and welcome to Insight in Person, Kellogg Insight’s monthly podcast, produced by the Kellogg School of Management at Northwestern University. I’m your host, Emily Stone.

Dylan MINOR:The big focus in the past has been on finding the star performer, retaining the star performer, incentivizing them, et cetera. People really haven’t been paying attention to realize to what extent the negative superstar, if you will, can have on the firm.

STONE:That’s Dylan Minor, an assistant professor of managerial economics and decision sciences at the Kellogg School, explaining his interest in studying toxic workers.

Let’s start by having Minor define what a toxic worker is in the context of his research.

MINOR:Those workers that damage or harm the company’s/organization’s workers or property. Examples of that would be those workers that steal or commit fraud. The extreme version would be burn the office down in some movies with that example.

On the personnel side, either engaging in the kinds of behaviors that are clearly bad for the firm’s organization such as sexual harassment, workplace violence, intimidation, all those kinds of things.

STONE:Minor’s research is based on a rich data set with information about nearly 60,000 workers. The data came from a consulting firm that large, brand-name corporations use to screen potential hires.

The data include information on how candidates assessed their own skills, how well they actually performed those skills, and how well they performed at their jobs if they ended up being hired. And it showed that about 5 percent of workers were fired for engaging in toxic behavior.

MINOR:What they’ve been look at so far, the consulting company, is they’ve been only looking at positive productivity outcomes. They hadn’t looked at any negative outcomes. In collaborating with the head data scientist there, we became very interested in the idea of trying to look at, “Okay, can we actually predict, or identify, or maybe at least probabilistically screen out some of these workers that are also creating bad outcomes?”

STONE:In crunching the data, Minor found several interesting predictors of which people were most likely to become toxic.

For example, the pre-employment test asked candidates to rate their skills on tasks like how well they can search the Internet or how many words they can type per minute. The candidates were then tested on those skills.

MINOR:And there’s a whole distribution—some are actually better than they say they are, and of course, some are not as good as they say they are. That group is what I call overconfident. They’re much more likely to engage in these toxic kinds of behaviors.

STONE:The candidate questionnaire also asked, as Minor puts it, how “other-regarding” the job candidates were. And, not surprisingly, the more they said they think about others, the less likely they were to become toxic.

However, another finding was less intuitive. One question asked candidates if they believe rules should always be followed or if sometimes you need to break the rules to get a job done.

It turns out, empirically, that it’s actually those people that say, “You should always follow the rules” that are much more likely to break them and be terminated for these toxic behaviors.

MINOR:I think it’s basically just a very clever test of honesty. Most people, I think, if they were completely honest would agree that, yeah, sometimes, the rules do need to be broken.

STONE:So those are some signs managers can look for to avoid hiring a toxic worker. But what are the consequences of a toxic worker if they slip by your filters and manage to get hired?

One finding gets at one of the biggest challenges of these toxic workers: they often appear to be good at their jobs.

MINOR:I find, in general, that these toxic workers are actually more productive than the average worker, which could explain why they might stick around longer than they should. However, what’s interesting, in my view, is once you quality-adjust what they’re doing, they actually produce below-quality work. In the long run then there’s not as much of a trade-off as you might think.

STONE:Meaning they could be harming your relationship with clients or the strength of your brand. And, it turns out, they can also turn the people around them toxic.

MINOR:Another finding I have is that if you look at what I call “toxic density”—that would be the fraction of workers that over this period of time you’re exposed to that are considered toxic—as that increases, there’s about a 47% increased likelihood that that worker with that increased exposure to toxicity will themselves become toxic.

STONE:Minor also wanted to calculate the cold, hard cash these workers cost companies.

To do this, he looked at the increased turnover of the people who work around toxic employees—because, really, who wants to be stuck interacting with them every day?

MINOR:Fortunately the companies I got the data from keep pretty good records of how much it costs when there’s turnover to get another person, hire them, et cetera. That induces a cost of roughly about $13,000 per annum for a toxic worker.

STONE:Next, he looked at the savings that a star performer—a worker in the top one percent—generates by doing more work than the typical employee can do. Minor calculated that a superstar saves a company $5,000 a year by being super productive.

From there, the math is simple.

MINOR:If we were able to actually replace the average worker with the superstar, we’d be saving about $5,000. If we could replace a toxic worker with an average worker, we’d save about 13,000.

STONE:Got that? He shows that the cost to a company of a toxic worker is more than twice as much as the benefit of a superstar.

MINOR:That was one of my most surprising findings so far. Again, so much of the work and practice in academia have been on the superstars, but realizing the magnitude—being able to actually start putting a cost on these toxic workers and compare that to the benefit of the superstar—was very illuminating.

[Music interlude]

STONE:If toxic workers are costing companies thousands of dollars apiece and infecting those around them with toxic behavior, then managers should be doing all they can to either a) not hire them, b) figure out how to effectively manage them, or c) just send them on their way.

So, what does this look like in practice?

Brenda Ellington BOOTH:My big philosophy is hire slow, fire fast.

STONE:That’s Brenda Ellington Booth. She’s a clinical professor of management and organizations at the Kellogg School. She’s also an executive coach, often helping companies deal with toxic employees.

Booth defines toxic workers more broadly than Minor does in his research. For Booth—and probably for many of us—a toxic worker could be a bully, or someone insecure or incompetent. Basically, someone you just really don’t want to be around.

BOOTH:I think the most serious toxic worker is one that has any kind of power or authority, so a manager. The toxic manager, my favorite phrase is, they tend to kiss up and crap down. The last category I thought of was “the totally clueless.” The, “#8220;I didn’t know you can’t say that to a woman. My dad said it, or my sister takes it.”

STONE:Obviously the best defense with these sorts of workers is a good offense: simply don’t let them through the door to begin with. Hire slow, as Booth says.

BOOTH:I think the first thing is to definitely check references. Ask for references that they don’t give you. Who was your previous employer? Do you mind if I called your own boss? Versus just giving, “Hey, here’s three people you can call.”

STONE:And don’t just focus on the candidate’s skills. Think about the person more broadly.

BOOTH:Of course, you want the superstar. But also, do they fit the culture? Or do they have the values that you want to instill in the workforce? A lot of times, going after just the performers, people forget that.

STONE:And don’t feel like you need to hire immediately when you find a candidate you like.

BOOTH:I always tell people if they have the luxury, hire them on as a consultant initially, and see how they get along. Yes, they’ll be on their best behavior, but usually you’ll see some telltale signs.

STONE:But, let’s say your eagle-eyed hiring process fails every now and then and you end up with a toxic worker on your team. Can they be de-toxified?

BOOTH:It depends on what the root cause is of the bad behavior. Sometimes it’s personality, which is hard to change. Sometimes, they just don’t know any better. Sometimes, they have come up in an environment where that was okay. And in that case, that can be fixed, because it’s just like, “Well, I didn’t know. I just assumed that everyone was like this.” Or, “At my old company, this was okay. But what I’m hearing now, it’s not.”

STONE:If they can’t be reformed, and firing them isn’t practical—because there are many organizations where that’s no easy task—Booth says manage them so as to minimize their impact on coworkers.

BOOTH:In that case, I say, isolate. At least put them in a place where they can do a minimum amount of harm. Put them on special projects. Hopefully, they’ll get the message. Sometimes people never do. But at least don’t have them as a central hub of the organization where there’s a lot of direct reports, or they have to interact with a lot of people in the organization. Because then, one bad apple can spoil the whole bunch.

STONE:Even if you succeed in isolating a toxic worker, there’s still a risk to the company if you keep them around.

BOOTH:What a manager does by allowing that person to stay is implicitly saying that behavior is okay. If a leader is letting someone bully them, in a sense, or allows them to be disrespectful to team members, or even to the leader, it shows weakness. Because everyone knows who that person is. If a leader doesn’t stand up, that leader loses credibility.

STONE:Which brings us to the question of firing that toxic worker. No manager relishes the idea, but sometimes it’s the only good move for your organization. And even though toxic workers are so toxic, it doesn’t make them any easier to fire.

BOOTH:These people are hard to deal with. They’ll give you lots of reasons why not to do it. It’s usually not the poorest performer that’s toxic. That’s easy. If someone has poor performance, you can document it and say, “You know what? This is not working out, your numbers don’t look good,” or, “It’s clear that the client doesn’t like you.” That’s easy. The hardest one is when someone is good to great, and really toxic in terms of their behavior and attitude.

STONE:So Booth encourages her clients to focus on the big picture and what they know is best for the organization in the long run. Here is an example:

BOOTH:I got a call recently of a CEO of an organization, that said, “I need you to coach my CFO.” And I said, “Hm.” There is a whole class of coaching called remediation coaching. Basically, the person needs “fixing.”

I called the CEO on it, and it’s like, “Does this person, in your heart of hearts, do you feel like they belong in the organization?” Well, no, we did all these 360s, and he got all these poor reviews from all over the organization, and we just wanted a coach to really validate our decision. It’s like, “Why do you need me to validate? You already know what to do.”

[Music interlude]

STONE:This program was produced by Jessica Love, Kate Proto, Fred Schmalz, Emily Stone, and Michael Spikes.

Special thanks to Kellogg professors Dylan Minor and Brenda Booth, as well as to Shawna Mehta for sharing her story.

You can stream or download our monthly podcast from iTunes, or from our website, where you can read more about employee relations, toxic workers, bad bosses, and effective leadership. Visit us at insight.kellogg.northwestern.edu. We’ll be back next month with another Insight In Person podcast.