KEY CONCEPT

While organizations are focused on acquiring star performers, new research shows that avoiding toxic workers is even more profitable. Watching in job interviews for the red flags of potentially toxic workers — self-regarding, overconfidence, stating that rules should always be followed — can prevent expensive hiring mistakes. 

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IDEA SUMMARY

There is much research and much human resources emphasis in recent years on finding, hiring and retaining star performers. New research involving nearly 60,000 workers in 11 firms reveals that a company will save twice as much money by exchanging a toxic worker for an average performer, than changing an average performer for a superstar.

The research was conducted by Michael Houseman of consultancy Cornerstone OnDemand and Dylan Minor of Northwestern University’s Kellogg School of Management. Houseman and Minor used a dataset from a vendor of job testing software for large companies. Accumulating and analysing information from 11 of the vendor’s clients, covering nearly 60,000 employees, the researchers acquired three kinds of data:

• Job-testing data: Houseman and Minor collected responses to specific questions on job applicants’ fit with the organization to which they were applying. These responses would enable the researchers to draw a profile of potential toxic workers.
• Attrition data: This data concerned information on hiring dates, termination dates (if applicable), reason for termination, job title and supervisors of the employees.
• Performance data: For a subset of the 60,000 employees covered, Houseman and Minor collected performance statistics, such as transaction time and customer satisfaction scores.

The combination of these three sets of data allowed the researchers to compare employee job interview answers with the eventual toxicity of the respondents (as measured by their termination for such transgressions as sexual harassment, bullying, falsifying documents, embezzlement, etc.) They were also able to analyse the correlations between performance and toxicity, enabling conclusions on both the costs and the productivity of toxic workers.

The results of the analyses of this data revealed three antecedents that indicate the potential for toxicity:

• Self-regarding. ‘Other-regardingness’ refers to people’s concerns with how their actions will impact others. Self-regarding people, on the other hand, don’t care about the impact of their actions on others — and as a result, are more likely to be toxic workers.
• Overconfidence. People who are overconfident overestimate their own abilities, and overestimate more specifically the likelihood that what they do will lead to a positive (for them) outcome. This overconfidence leads them to engage in misconduct, confident that they will succeed in their aims.
• Declaration of following the rules. This antecedent is counterintuitive. It would seem that people who declare that rules should be followed would be less likely to break them. However, the evidence from the study shows that a solemn declaration that rules should never be broken proves to be a Machiavellian statement, intending to portray pure integrity; job applicants who acknowledged that, sometimes, rules need to be broken were being more honest — and less likely to become toxic workers down the road.

The data available on the nearly 60,000 employees also allowed Houseman and Minor to measure the value and costs associated with toxic workers, average workers, and superstars. According to calculations based on the value of superstars (in terms of additional hours from other workers if the superstars had not been hired) and costs of toxic workers (notably in costs of replacing workers who leave because of the presence of a toxic worker), Houseman and Minor determined that a company saves twice as much money if it replaces a toxic worker with an average worker as opposed to replacing an average worker with a superstar. Superstars may add value, but any additional value is more than lost if toxic workers are allowed to stay.

The costs associated with toxic workers must also be kept in mind because, with no small irony, toxic workers can be more productive than average workers. However, that slight increase in productivity (mostly as a result of their confidence) is vastly offset by the expensive damage they inflict on the organization. 

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BUSINESS APPLICATION

The three antecedents identified by the researchers offer some red flags for which job interviewers should be watching. Does the applicant have evidence of showing concern for others, or does it seem that they consistently act in their self-interests even at the expense of others? Do applicants display or betray overconfidence? And counterintuitively, do they solemnly swear that rules should be followed at all times?

As noted above, the damage of toxic workers might be attenuated by their productivity. However, accepting their presence to preserve their productivity is a losing proposition.

The other important lesson of the study is to take out the bad before going after the great. Superstars shine a bright light, but the bottom line is about the overall profitability of the enterprise, including the results from all employees. The brightest superstars cannot undo the damage of toxic workers. Avoiding or eliminating toxic workers must be the human resource priority.

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REFERENCES

Toxic Workers. Michael Housman & Dylan Minor. Harvard Business School Strategy Unit Working Paper (November 2015). 

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