Are You Paying Someone to Kill Your Company? How to Spot and Deal With Toxic Employees and Toxic Leadership

Posted by Bray Dohrwardt | Apr 25, 2024 | 0 Comments

I have previously written about building a culture of compliance and how to determine whether compliance is a part of your DNA. But what should you do if your assessment of your culture exposes an even deeper problem? What if you discover one or more toxic employees on your payroll? How do you set a tone from the top if a team member undermines your efforts? Let's discuss the high cost of toxic employees and what to do about them. Contact the Dohrwardt Law Firm if you would like to discuss your company's culture and how to deal with a toxic workplace.

A toxic culture caused by just one employee, group, or leader can significantly impact your organization. Some scholars have conducted significant studies that show the high cost of toxic behavior. For example, a still relevant study from Harvard Business School provides empirical data showing substantial costs associated with toxic employees. These costs include hiring, litigation, regulatory penalties, low employee morale, and resulting turnover. Regardless of where you find it, an infected culture will continue to grow, affecting many other team members and, eventually, your ability to succeed. Your bottom line can be impacted. Identifying and addressing toxic employees is essential to maintaining a healthy and productive work environment.

Identifying a Toxic Employee

There are several signs of a toxic employee. They may frequently complain, gossip, or spread rumors. They may also engage in passive-aggressive behavior, such as withholding information or refusing to communicate with coworkers. Toxic employees may be argumentative, defensive, or refuse to take responsibility for their actions. They may also resist change and be unwilling to adapt to new processes or procedures.

How Should a Business Manage a Toxic Employee?

As a business owner, you must create a safe and healthy workplace for your employees. A toxic workplace can harm productivity, employee morale, and even your bottom line. If you're dealing with a toxic workplace, here are some steps you can take to fix it: 

Identify the problem: The first step to fixing a poisonous workplace is to identify the problem. This might involve conducting surveys, holding focus groups, or having one-on-one conversations with your employees. Find out what's causing the toxicity and how it's impacting your employees. 

Address the problem: Once you've identified it, it's time to address it head-on. This might involve having difficult conversations with employees or terminating toxic employees if necessary. Remember, poisonous behavior should never be tolerated in the workplace. 

Foster a positive culture: To create a healthy workplace, you must foster a positive culture. This might involve creating a mission statement, setting clear expectations, and recognizing and rewarding positive behavior. Make sure your employees feel valued and appreciated. 

Provide support: Your employees need support to thrive. This might involve providing training and development opportunities, offering mental health resources, or implementing flexible work arrangements. Make sure your employees have the tools they need to succeed. 

Lead by example: It's essential to lead by example. As a business owner, you set the tone for the workplace. Make sure your behavior aligns with the culture you're trying to create. Hold yourself accountable and be open to feedback from your employees. 

How Should an Owner or Board Deal with Toxic Leadership?

What if your toxic culture lies within your leadership team? Toxic leadership exists in many forms. It can cause significant damage to employees, productivity, and even profits. In its most blatant form, toxic leaders use their power to belittle, intimidate, and manipulate others, creating a hostile work environment that can lead to high turnover rates, low morale, and poor performance. However, toxic leadership can also be tricky to spot. Many times, poisonous behavior can drive results. And many companies and their boards celebrate these results and reward the leadership. However, results that come from fear are not sustainable. When cracks start to show, many boards assume it is due to other factors rather than leadership.  

Boards often look to strategy, competitive pressure, and other commercial issues. After all, toxic leadership frequently results in missed objectives, poor execution, and impacted profits. Boards often need to realize that these missed results are due to employees who feel unsupported, undervalued, or mistreated. These employees are likelier to disengage from work, resulting in lower productivity and higher absenteeism. This, in turn, can lead to decreased profits and a damaged reputation. 

Furthermore, toxic leadership can lead to legal and financial risks for companies. Mistreated employees may be more likely to file lawsuits, which can result in costly settlements and legal fees. Additionally, companies with a reputation for toxic leadership may need help attracting and retaining top talent, which can impact their bottom line. Organizations must prioritize creating a positive and supportive work environment to combat toxic leadership and its impact on profits. This can include implementing policies that promote fairness, respect, and transparency, providing opportunities for employee feedback, and ensuring that leaders are held accountable for their behavior. Ultimately, organizations prioritizing their employees' well-being and happiness are more likely to see higher profits, as engaged and motivated employees are more productive, innovative, and invested in the company's success.

Remember, fixing a toxic workplace takes time and effort. It requires a commitment to creating a safe and healthy environment for your employees. However, by taking the steps outlined above, you can make a positive workplace culture that benefits everyone involved. Contact the Dohrwardt Law Firm if you would like to discuss your company's culture and how to deal with a toxic workplace.

The information provided is only for general information and is not meant to be legal advice. Information on this website, including third-party links, may be less up-to-date, so you should contact your attorney to discuss your situation. Third-party links are provided for convenience only and are not an endorsement by the Dohrwardt Law Firm.

About the Author

Bray Dohrwardt

As an accomplished attorney with over 22 years of experience, Bray Dohrwardt has built an impressive career, enabling business growth and commercial success for many companies from start-ups to large corporations and nonprofits. He focuses his practice on business law and energy law.


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Bray Dohrwardt is licensed to practice law in Minnesota and Texas. Please contact the Dohrwardt Law Firm to discuss how the firm can help you get business done.