The Harvard Business Review reports a single “toxic” employee can cause financial damage to a company that can produce both financial loss and a reduction in morale.

Researchers investigated the impact of the toxic employees--individuals who exhibit highly productive, talented traits but engage in damaging behaviors that end up negatively infecting an organization. These employees are narcissistic, over-confident workers who are also rule-followers, something that surprised researchers.

“It could be the case that 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,” researchers Michael Housman and Dylan Minor reported in their paper. “There is strong evidence that Machiavellianism leads to deviant behavior.”

To exhibit the financial impact, Housman and Minor used comparative data to determine that simply avoiding the toxic employee hire could save a company approximately $12,500. CareerBuilder, an online job search resource, crunched the numbers during a 2012 survey and found 41% of the 2,700 employer respondents believed a bad hire could cost $25,000, meanwhile 25% of the respondents thought a toxic employee could cost $50,000 or more.

Superstar Employee Search Can Result in the Toxic Hire

The Harvard Business Review report stressed many employers are so focused on seeking that “superstar” employee, they may not make avoiding the toxic employee a priority.

Ladan Nikravan, career advisor for CareerBuilder, says employers looking for a superstar employee should also try to pick up cues of toxicity.

“While superstars can boost a company’s profits and bring energy to a team, bad apples distract and drag down everyone, and their damaging behaviors can be contagious," Nikravan said. "That’s why it’s crucial for leaders to screen out bad employees before they’re hired and make every effort to correct for negative influences.”

Nikravan adds if an employee isn’t well-suited for the job, has a bad attitude or is simply incompetent, the time they spend not working could significantly impact your bottom line. “The cost varies depending on the industry and organization, but here are a few things to consider: the loss of employee morale, the additional supervision that employee needs, productivity loss for the organization, revenue that’s not being generated and client relationships that could be turning sour as a result of bad impression,” Nikravan said.

When it came to hiring  a new employee, Leslie Lessnau, a former Ritz-Carlton concierge supervisor, says she stressed guest service and cooperation during interviews and training. “My goal was to always maintain an upbeat, positive environment with my employees, so our guests would consistently have an ideal experience,” she says. “I know every employee can’t be a superstar, but in order to avoid hiring or even keeping a toxic employee, I would always be checking in with my employees, making sure they knew their concerns were important to me and strive for a fair, but also fun workplace.”

Lessnau adds she made sure positive and productive employee behavior was consistently rewarded and that other employees would know their contributive actions would be recognized. “When employees know you are on their side and have their back, they tend to perform better because, especially in my industry, negative or toxic behavior that impacts the guests’ experience is simply not tolerated,” she said.

How Can Employers Beat Toxicity in the Workplace?

Many managers agree that being present with staff members can help revise workplace toxicity or allow the manager to quickly identify behavior that must be addressed.

“One extremely harmful behavior is when an employee is constantly complaining,” says Barb Ellerbrook, former CEO and expert from business resource, SCORE. “Often, employee complaints may be unrelated to work, but when the employee brings his or her negativity to the workplace, it can have a damaging impact throughout your organization.”

Ellerbrook says getting to the root of the problem as soon as possible is vital for damage control. “Find a private place to discuss what is troubling the employee first," she says. "Sometimes the complaints may be valid with regard to work and can be addressed and resolved. Other times, when dealing with issues beyond the workplace, it may not be a quick fix and close monitoring, not micromanaging, is going to be vital in order to avoid allowing the negative behavior to permeate organization-wide.”

Nikravan has three important steps for employers who aim to find that right hire:

  • Be specific: Before posting a job opening, determine exactly what skills you need your new hire to have. Make sure your posting outlines the job duties and skills needed to perform those duties. 
  • Screen, screen, screen: Be sure to do your homework on a candidate, and remember references aren’t your only source of candidate information anymore. Social media and search tools are making it easier than ever before to find out more about a candidate before extending an offer. 
  • Use your team: Work with a recruiter, hiring manager and other workers or leaders in the department to make sure you’re making the right decision and making sure the candidate is the right fit from multiple points of views. Also, consider conducting pre-employment tests. These tests can range from hard and soft skill tests or personality tests to the actual work that pertains to the individual employee.

Ellerbrook laughs about how the show Undercover Boss, where a manager goes undercover to see how his or her company is functioning, may be a great way to uncover or identify toxic behaviors. “Sometimes you may miss what is really going on during day to day operations when you are in management,” she says. “Whether its toxic behavior or processes and procedures that could be made better, finding a way to connect and observe from the ground floor is extremely important for any manager in order to maintain a healthy organization.”