It’s not a secret that pushy, aggressive, and inappropriate people in an office—also known as toxic employees—are a drain on both a company’s resources and its morale.
How much so? Behold the exact cost of a toxic employee, according to a Nov. 16 working paper from Harvard Business School. The paper, which took a close look at the organizational performance of over 50,000 employees at 11 companies, concluded that rooting out a toxic employee can save twice as much money as making a stellar new hire.
Researchers compared estimated savings from firing (or avoiding) a toxic employee to the expected earnings boost produced by an excellent new employee who performs in the top 1% of his or her job. These “savings” don’t take into account the cost of potential regulatory penalties, litigation costs, or productivity drains that might be caused by the problem worker, according to the study, but rather “induced turnover cost”—the expense of replacing good workers who quit because of a toxic colleague.
For the purpose of the study, the term “toxic” was defined to describe any employee who damages company property (through theft or fraud, for example) or fellow employees (through bullying, sexual harassment, or workplace violence).
Literature on business management tends to focus on the benefits of recruiting top-tier talent, so the paper’s authors set out to examine the reverse. “Most of the work in organization design and human resource management has been focused on what I would say are ‘positive outliers’—the really top performers,” said Dylan Minor, a visiting business administration professor and co-author of the study, to the Harvard Gazette. “[But] we’ve all had personal experiences where we have a worker on the other side of the distribution.”
Bosses and managers everywhere would do well to keep a vigilant eye.