When Stars are Toxic, Costs Outweigh Gains

A bottle of green poison with a death's head labelOne of the great mysteries from my 35 years of working life is why workers who “everyone knows” is trouble not only keep their jobs, but sometimes get promoted. Their bad behavior is talked about all the time by line workers and other managers, yet they stay employed. I wrote years ago about one answer. A well-designed study in a mental health facility showed that workplace bullies got away with their behavior because they got things done, and had good social skills they selectively used to hide from their managers how they accomplished those things (by abusing other workers).

A Harvard Business School paper shows the extra productivity is outweighed by the extra costs. Michael Housman and Dylan Minor analyzed people who were fired for major policy violations like “sexual harassment, workplace violence, falsifying documents, fraud, and general workplace misconduct.” These the report dubbed “toxic workers.” The researchers used the database of a company that provided job-candidate testing for 11 companies in different industries, in turn serving 184 client firms. The data covered almost 60,000 workers in 3,000 work groups. About 4.5% of these workers had been fired as toxic workers.

All workers were hourly and customer-facing, so the database had performance metrics like daily transaction rates and customer satisfaction ratings, as well as the results of the worker’s candidate assessments when they applied for their jobs. This allowed the scientists to link pre-hire assessments to both performance and toxic behavior.

Three traits in the assessments increased the odds of toxic behavior. The candidate:

  • Cared more about themselves than others (according to questions created by an industrial/organizational psychologist);
  • Were overconfident about their ability to use a computer, compared to skills test results; and
  • Were more likely to claim it is important to follow the rules.

That last one is intriguing. The researchers speculate, “it could (be) those who claim the rules should be followed are more Machiavellian in nature, purporting to embrace whatever rules, characteristics, or beliefs that they believe are most likely to obtain them a job.”

A one standard-deviation difference in the rule-following claim increased the chances of a worker being fired as toxic by 25%; 22% if they were selfish; and 15% if over-confident. In statistics, “standard deviation” (SD) shows how different the person is from the average for all people in the sample.

I have often warned that a correlation between two data points does not tell you which one caused the other (if either). In this case, the time lag—assessments were done before hiring, and the person was fired sometime after—suggests those traits at least contributed to the toxic behaviors.

On average, toxic workers were faster on “time-per-unit” measures, enough to outweigh the fact they also made more mistakes. The researchers were able to calculate how much extra money that speed was worth, by comparing the extra output to the worker’s pay. Then they compared that figure to the cost of firing and replacing a worker, calculated to be $12,489. “In comparing the two costs, even if a firm could replace an average worker with one who performs in the top 1% (but is toxic), it would still be better off by replacing a toxic worker with an average worker by more than two-to-one.” And that is without including other costs a toxic worker creates, like the cost of fixing their quality mistakes; the loss in productivity while a new worker is found and trained; or lawsuits over the worker’s behavior.

Work groups with a toxic worker did not outperform groups without one. And toxicity is a poison that can spread: People fired for toxic behavior were more likely to come from groups where there was another toxic worker (46% per a 1-SD change).

The bottom line is, it does not pay to keep a toxic worker just because of higher productivity. Leaving aside the headline-grabbing extremes of workplace killings and major ethical lapses, “relatively modest levels of toxic behavior can cause major organizational cost, including customer loss, loss of employee morale, increased turnover, and loss of legitimacy among important external stakeholders,” the study says. Those costs means you are better off firing a superstar unwilling to change their toxic behavior, even if you only find an average replacement.

Source: Housman, Michael, and Dylan Minor, Toxic Workers (Working Paper 16-057, Harvard Business School, Working Draft, 2015).


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