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Log In / Register | Jul 22, 2018

The Cost of Toxic Employees

What is the cost of hiring a toxic employee?  A recent study by the Harvard Business School looked at the cost to companies of hiring otherwise skilled employees who engaged in toxic behavior. It compared those costs to the benefits of hiring so-called “superstar high-performers.[3] 

According to the study “avoiding a toxic employee could save a company $12,500 in turnover costs, while bringing in a superstar only added about $5,300 to a company’s bottom line.”[4]

Other business sources are more pessimistic about the cost of such bad hires.  A 2012 survey by CareerBuilder found that taking into factors such as potential litigation, costs of recruiting and hiring replacement workers, lower employee morale and negatively affected customers, the actual cost for each bad hire can range from $25,000 up to $50,000. [5]

Toxic employees also have a significant negative impact on their co-workers.  These include:

  • Higher Employee Turnover Rates.  In a recent report by the employee training software company Cornerstone, “good employees are 54 percent more likely to quit when they work with a toxic employee, if the proportion of toxic employees on their team grows by as little as a 1:20 ratio.” [6]
  • Workplace Stress/Health Problems.  In addition to being unpleasant, working with a toxic co-worker can be bad for both your physical and mental health.  According to a study by researchers at the Harvard Business School and Stanford University, such workplace stress is as bad for your health as secondhand smoke.[7]  Research shows that work stress increases the chance of a heart attack by 23%.[8]
  • Lawsuits/EEOC Charges.  Frequently the conduct of toxic employees toward their co-workers can result in EEOC Charges of Discrimination and lawsuits for harassment based on protected categories, such as race, gender, sexual orientation or ethnicity, or on the basis of a hostile work environment.
  • Low Morale/Loss of Commitment.  A toxic employee’s lack of enthusiasm or negative attitude can result in other employees having to pick up the slack, and they are sometimes referred to as “energy vampires” because the suck the life out of their co-workers.[9]  Having a toxic employee in the workplace can also result in employees losing their respect for the company for hiring the toxic employee or for failing to address the toxic behavior.  A recent survey shows four out of five employees believe management does not do enough to combat toxic employees, and are somewhat or extremely tolerant of such individuals.[10]

Compounding all of these problems is some recent bad news for employers regarding the new generation of employees.  A 2016 Gallup survey of the “millennial workforce”, those born between 1980 and 1996, or ages 20 through 36, show a majority are “checked out” and not engaged at work, and a significant percentage of this 73-million member generational group would qualify as toxic employees.[11]  The survey looked at whether such young employees are engaged at work, with “engaged” being defined as “emotionally and behaviorally connected to their job and company.”[12] 

The results are as follows:

  • Only 29 % of millennials are engaged at work (The lowest in decades)
  • 55% of millennials are not engaged at work (Indifferent about work and just show up and put in their hours)
  • 16% of millennials are actively disengaged at work (More or less out to do damage to the company)

Read the first part of this series:

Coming next: Fix the problem or fire the employee?


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About Mark Fijman

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Mark Fijman specializes in labor and employment issues relating to the restaurant and hospitality industry, including Fair Labor Standards Act ("FLSA") compliance. He is an attorney in the Labor and Employment Section of law firm Phelps Dunbar, LLP’s Jackson, Mississippi office. He can be contacted at (601) 360-9716 or FijmanM@Phelps.com.

Fijman represents and advises employers regarding federal and state employment laws dealing with race, age, disability, gender, national origin and religious discrimination and in administrative proceedings before the Equal Employment Opportunity Commission. His practice includes representing employers seeking to enforce non-competition/non-solicitation agreements and pursuing injunctive relief for improper use of proprietary information.He routinely counsels on issues ranging from overtime questions to discipline and termination decisions. Direct phone: (601) 360-9716.  Phelps Dunbar, LLP has offices in New Orleans, LA, Baton Rouge, LA, Houston, TX, Tampa, FL, Mobile, AL, Raleigh, NC, Jackson, MS, Gulfport, MS, Tupelo, MS and London, England.

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