According to a Harvard Business School study, an employer’s decision to avoid employing a toxic employee may prove to be more than twice as profitable as the decision to hire a superstar.
The study analyzed data concerning over 50,000 employees at 11 companies to quantify the costs of employing toxic employees vs. the benefits of employing superstar employees. The study defined “toxic employee” to include “a worker that engages in behavior that is harmful to an organization, including either its property or people” – for example, behavior that causes customer loss, loss of employee morale, increased turnover, or loss of legitimacy among important external stakeholders. A “superstar,” on the other hand, was defined as a worker in the top 1% of productivity.
The study concluded that the average cost of employing a “toxic employee” was approximately $12,489 while the benefit of employing a “superstar” was approximately $5,303 on average. The costs attributed to the toxic employee included the expense of replacing additional workers who quit their employment due to the presence of the toxic employee, but it did not include additional costs, such as litigation, regulatory penalties, or reduced employee morale – so it was likely an underestimate. As a result, the decision to replace a toxic employee with merely an average employee, as opposed to a superstar, should still be an overall benefit to an employer.
Takeaway: The decision to avoid hiring or to terminate a toxic employee may be up to twice as beneficial for an employer as hiring a superstar employee.