Toxic Work Environment: How It Kills Performance & How to Protect Your Team

by Manto Antoniotti Solares in — October 2023
A toxic work environment is the most common reason for resignations, and according to a study, it is even ten times more influential than salary. But what does "toxic" mean in a professional context? How can you recognize a "toxic" workplace? And what can you do about it? Workplace psychologist Christine Hoffmann and epunkt CEO Daniel Marwan share their experiences and provide the best tips for a healthy work atmosphere.
Blog 2023 Talentor International Toxic Work Environment

1. 5 Signs of a Toxic Work Environment

A toxic workplace is often easy to recognize, both from the inside and outside. (One didn't have to read interviews, statistics, or be a profiler to sense that the White House was a toxic work environment during Trump's administration.) Such a work environment is reported as the most common reason for resignations and a driver of the Great Resignation.

Signs of a toxic work environment include:

  • High turnover rate
  • Increased absenteeism
  • Violations of labor laws, such as unpaid overtime or denied vacation days
  • Unethical behavior, disrespectful treatment, and bullying, including shouting, excessive pressure, inappropriate or offensive remarks, and sexual harassment
  • Poor or lack of communication, minimal interactive exchange, and silo mentality among departments

Toxic behavior can occur overtly or covertly

"Toxic behavior can be openly displayed (e.g., shouting) or occur covertly (e.g., spreading rumors). A toxic climate can be structurally ingrained or originate from individual individuals. Often, one leads to the other, creating a toxic cocktail. Even if individual actions are considered 'not so bad,' their cumulative effect can be harmful. Regular exposure to even small doses of poison can have severe health consequences. Employees desire leaders who trust them and provide autonomy. Toxic work cultures often involve violations of labor laws," explains workplace psychologist Christine Hoffmann.

Good employees are attracted by a company's reputation but stay because of exciting tasks- and leave due to poor leadership.

Bekanntes Bonmot

Google's "Project Aristotle" which investigated the factors of team effectiveness, found that psychological safety is crucial. In summary, it means creating a work environment where team members can admit mistakes, ask questions, seek help, and provide dissenting opinions without fearing negative consequences.

2. The fish stinks from the head: When leaders poison the atmosphere

"Let that sink in": Elon Musk walked into the Twitter headquarters in San Francisco with a sink, signaling to the gathered staff that he had acquired the social media platform. He presented himself as unconventional just briefly. There was much to do: firing the company's top leadership, as well as half of the 7,500 permanent employees and 80% of freelancers. The latter group didn't even receive a formal termination email; they discovered that their accounts were blocked. The remaining employees were given an ultimatum by Musk: "be extremely hardcore" or be fired.

The richest man in the world on his first day after acquiring Twitter. Prior to the mass layoffs via email.

High-performing individuals cannot tolerate such bosses for long. Toxic leadership behavior, as exemplified by Musk's extreme case, leads to employee dissatisfaction, stress, demotivation, reduced performance (quiet quitting), weak commitment to the company, and, in the worst cases, severe health consequences. For employers, it also means that poor leadership costs a significant amount of money. University professor Christina Hoon's study, conducted with kununu, revealed that destructive leadership behavior significantly damages the work atmosphere and company performance.

The more satisfied employees are with leadership quality, the better a company performs in terms of performance. Author Shawn Achor, an expert in positive psychology, states, "It turns out our brains are literally hardwired to perform at their best not when they are negative or even neutral, but when they are positive." Gallup research shows that highly engaged business units are 17% more productive. Christina Hoon emphasizes the need for companies to actively work on their leadership culture. Ultimately, it is an investment that benefits not only the work environment but also the company's financial success.

The cost of a single toxic employee due to voluntary resignations alone amounts to approximately $8,808.

Cornerstone Study

Workplace psychologist Christine Hoffmann advises seeking professional support during the team development process: "Invest in the inclusive leadership skills of your managers, conduct social skills training, and create opportunities for everyone to connect beyond work pressure to establish new ways of interaction."

What about the situation from the perspective of top management? We wanted to find out:

Daniel Marwan, CEO of epunkt: "As an owner, I must unfortunately say that if I'm in a toxic work environment, it's probably my fault. Apart from that, we have had situations where we perceived the behavior of individual employees as toxic. It is important to take action, first by clarifying in a one-on-one conversation that we cannot accept or tolerate such behavior. If nothing changes, the only solution is termination. Unfortunately, I, or rather we, have had to do this several times in the past 22 years. In hindsight, I realize that we often watched for too long, hoping that the problem would resolve itself—but it never does."

  • How important is intuition in personnel decisions? Intuition always plays an important role. I would say it accounts for 51%.
  • What makes a "healthy" work environment succeed or fail? The fish starts to stink from the head. It is crucial to have transparent values and trust, as well as clearly communicated and implemented boundaries.
  • What defines good leadership? Difficult question: trust, the ability to have goals and visions and communicate them clearly, clarity, and leading by example—being a role model.

3. Mirror, mirror on the wall, who is the most toxic in the office land?

Please excuse the disrespectful title of the video! Bestselling author and business consultant Simon Sinek answers the question of what he learned from the Navy Seals about the connection between trust and performance.

How does the Navy recruit its elite unit, Seal Team 6? Bestselling author Simon Sinek explains.:

4. Why do companies tolerate toxic rock stars?

A head of sales who delivers results but stifles the company's spirit. A department head who achieves top results but overwhelms their employees with tasks. In an environment where short-term successes count, CEOs struggle with their socially more or less competent high performers: they deliver what is desired, but they also destroy the team. What to do?

Thermometer: What does the corporate culture tolerate and what doesn't it?

"Yes, that's just the way they are", "They don't mean it that way," or "We can handle it":
Because toxic individuals are often very good at what they do and deliver results, companies often find it difficult to part ways with them. Ignoring, enduring, hoping, waiting? Bad idea. When the high performer in the team burns the ground, things get complicated.

Epunkt CEO Daniel Marwan:
It's not fun to tell someone that their behavior is unacceptable, but it's part of the leadership role. Clear communication is required: This is our code of conduct, and if you decide to behave differently, we'll have to let you go. If an entire team goes to work every day with a stomachache because of one person, something needs to change quickly." How quickly? A study shows that a single toxic person reduces the team's overall performance by 30-40%. -> Which is the easier decision and the better choice here?

Good employees are 54% more likely to resign if they work alongside toxic colleagues, and this is true even if only one toxic colleague is part of a team of 20 people.

Cornerstone Study

5. How can you recognize toxic personalities?

Toxic individuals possess characteristics of the "dark triad," which include:

  • Narcissism
  • Machiavellianism
  • Psychopathy

According to Christine Hoffmann, toxic leadership behavior often manifests as extreme favoritism or unequal treatment, where some employees are praised while others are belittled, exposed, and publicly humiliated. Such behaviors are driven by the twisted logic of the "perpetrators" and a strong sense of power. At the same time, toxic leadership behavior can also result from a deficit in emotional intelligence, which impairs the self-reflection and self-regulation abilities of leaders. Many leaders who appear toxic are under significant pressure themselves, which may lead to unrealistic performance expectations and blame when those expectations are not met.

Can you identify a toxic personality during the job interview? "In job interviews, (almost) everyone wants to present their best selves. In normal conversational situations, the formal facade rarely cracks. However, during assessments where candidates have to solve tasks in interaction with others under time pressure, conclusions can be drawn about their social skills and possible toxic behavior patterns", explains Christine Hoffmann.

5 Tips: What You Can Do About a Toxic Work Atmosphere

The authors of a specialized book on the topic concluded that an ethical corporate culture characterized by values, appreciation, team and employee orientation is an effective way to prevent toxic behavior. This, of course, does not happen overnight.

If you notice signs of a toxic work environment, it doesn't mean it's too late. Here's how you can respond:

  • Clearly set expectations: Proactively give feedback to the team member, stating, "I observed this behavior, which deviates from how we work and interact in this company. I expect the following behavior in the future."
  • No-tolerance policy: Don't let a team suffer daily because of one person. If nothing changes, termination is the only solution.
  • Lead by example: Don't sweep conflicts under the rug; instead, communicate openly and maintain a trusting dialogue. Feel free to share how the situation affects you. Leaders often underestimate the impact of "small" gestures and offering conversations.
  • Ask the right questions: What does your team need to feel comfortable and be productive?
  • To CEOs: Stop promoting toxic rock stars. Yes, they deliver results today and probably tomorrow. However, in the long run, you benefit from employees you can trust, who share your values, and prioritize good teamwork.

Original article "Toxisches Arbeitsumfeld: Wie es die Performance killt & wie Sie Ihr Team davor beschützen" by Eva Helfrich/ epunkt:

Talentor International Team Manto Antoniotti 2

Manto Antoniotti Solares

Marketing Consultant