Although finding and retaining top workers is important, getting rid of problematic ones is even more critical, new research finds.
The harm that these "toxic workers" — those who often appear to be great employees while actually undermining a company’s reputation by engaging in unethical or illegal behavior — bring to a company outweigh the benefits top performers offer, according to a study by Dylan Minor, an assistant professor of managerial economics and decision sciences at Northwestern University's Kellogg School of Management, and Michael Housman, an executive with talent management software firm Cornerstone OnDemand.
Minor said the research shows that it might be better for businesses to focus more time on trying to weed out toxic employees than on finding the superstars.
"There's lots of work on high performers, the superstars, but we need to understand the other end of the spectrum," Minor said in a recent interview with Kellogg Insight, the school's online magazine.
The study revealed that toxic employees are difficult to identify because they often are the ones who are finishing their work faster than their peers. Ultimately, though, these difficult employees produce lower-quality work and diminish customer happiness.
"In the short term, it looks like they're doing well, but the poor quality of their work can damage the firm's reputation." Minor said.
For the study, researchers analyzed data from Cornerstone, a consulting firm that provides companies with tests to assess job candidates and employees, that showed how employees self-assessed their skills, how good their skills actually were when tested on them, how they performed if they were hired and whether they were fired.
"The trove of data allowed us to follow workers over time and observe the predictors and consequences of toxicity," Minor said.
The data revealed that there is about a 5 percent chance that an employee will engage in toxic behavior, such as fraud or sexual harassment.
In addition to damaging a business's reputation, problematic workers are likely to spread their unethical behavior to their co-workers, the study found. When an employee is working alongside a high density of toxic workers, there is a 47 percent chance they, too, will become toxic, Minor said.
"It's a damaging form of 'ethical spillover,'" Minor said. "We can think of the behavior as a sort of virus, making the 'toxic worker' an apt label."
The researchers found that replacing a toxic worker generated almost four times the value of hiring a top performer, which for this study were considered mutually exclusive of one another. Specifically a superstar, an employee considered in the top 1 percent of all workers, brings an extra $5,300 in value by doing more work than the average employee. That increased value drops to $1,951 for workers in the top 25 percent of all employees. However, replacing a toxic employee with an average one produces nearly $13,000 in cost savings. These costs include both the average cost of replacing the worker, as well as increased voluntary turnover in worker teams with a such a worker, according to the study.
"That doesn't even take into account the spillover, legal and reputational effects of toxic workers," Minor said. "So I think it is a conservative estimate."
Based on the research, there are several traits businesses can look for when trying to identify whether an employee or job candidate might be toxic:
- They're overconfident. Minor said that, from an economic standpoint, overconfidence could include underestimating the likelihood of getting caught for something unethical. For example, workers who were overly confident about their spreadsheet skills might also have overestimated their ability to get away with coming in late or or cheating on time sheets.
- They don't care about others. The more willing job candidates or employees are to ease their co-workers' concerns, the less likely they are to become toxic.
- They think rules must always be followed. Those who boast that they always follow the rules are the ones more likely to break them. "Most people understand that there are times when it may not make sense to follow the rules," Minor said.
- They're a bad fit for the job. Employees working in positions that don't mesh with their talents are more likely to become toxic.
Weeding out potentially toxic workers is only one way of handling the problem, Minor said.
"Toxicity probably emerges from a combination of nature and nurture," Minor said. "So, while there may be a predisposition to these behaviors, we need to provide the right kind of nurturance to prevent them — just like putting all criminals in prison will certainly reduce crime, but reform can be a better approach for some of them."