Toxic bosses are a canon event for most employees. Here’s what they cost organizations

Toxic leaders are a widespread issue plaguing employees and organizations across various industries. A 2023 survey found that 87 per cent of professionals have had at least one toxic boss during their careers, with 30 per cent encountering more than one. Another survey found that 24 per cent of employees are currently working under the worst boss they’ve ever had.

These individuals can be found at all levels of leadership, from first-time supervisors to CEOs.

While they are often referred to as “toxic leaders,” the term “toxic bosses” is a more appropriate term. Leadership implies guiding and fostering growth in others — qualities that toxic individuals lack. Instead, I prefer to call them “toxic bosses” because they exert power and control in ways that harm, rather than help, their teams.

A toxic boss typically demonstrates leadership patterns that are narcissistic, authoritarian, self-promoting, abusive and unpredictable. Research has found their behaviours negatively impact both individual and organizational performance.

Our ongoing research, which is being conducted through the University of Calgary, continues to explore toxic leadership in today’s organizations. In our initial study, we conducted in-depth interviews with 20 employees across industries in North America on the behaviours and impacts of toxic leaders.

Our findings revealed additional toxic leadership behaviours, including dishonesty, gaslighting, extreme control and micromanagement, and unethical behaviour and corruption. We have expanded past definitions of toxic leadership to include ongoing covert or overt behaviours that harm employees’ engagement, productivity and well-being.

Impacts on employees

There is no doubt toxic bosses are harmful to employees. A study in Italy, for instance, found that toxic leadership is strongly linked to all dimensions of burnout, including emotional exhaustion.

Similarly, research in Pakistan revealed that toxic bosses have a significant negative impact on psychological well-being, while a 2022 study in Indonesia found that toxic leadership significantly affects job satisfaction and motivation.

Our ongoing research indicates that employees under toxic bosses experience decreased confidence, self-esteem, motivation and engagement. They feel stuck, helpless, detached, disengaged, lose passion and commitment to their work, and dread going to the office.

These employees also report reduced performance, productivity and negative impacts on their team dynamics and relationships, which leads to a diminished sense of belonging and increased feelings of isolation and distrust toward their workplace. As one of our research participants, a legal assistant in a Canadian law firm, stated:

“You deserve to work for employers who value your time and passion. I feel like if you’re belittled consistently in your position, it’s not only really demeaning to your work abilities, but also to your confidence and your judgement of yourself. And I feel like it’s not worth it.”

“You deserve to work for employers who value your time and passion. I feel like if you’re belittled consistently in your position, it’s not only really demeaning to your work abilities, but also to your confidence and your judgement of yourself. And I feel like it’s not worth it.”

When it comes to mental health, stress and burnout were frequently reported impacts, along with anxiety, fear, sadness, depression and anger. Many of the employees also experienced physical symptoms like muscle pain, stomach cramps, headaches and nausea. Other research has linked working in a mistrustful work environment to a higher risk of cardiovascular disease.

We also found that sleep disturbances, such as having “workmares” (nightmares about work), are common. Behavioural changes like disordered eating, increased alcohol consumption and binge watching as a distraction also occur, which often cause strains on employees’ personal lives and relationships.

The costs to organizations

The costs organizations incur due to toxic bosses are shocking. Our research has found that this type of leadership leads to high employee turnover, low morale, increased stress, a fear-based culture, and decreased individual and organizational performance.

Other studies conducted internationally have also found that toxic leader behaviours significantly decrease organizational trust and employee morale.

Organizations that do not address toxic leadership risk losing talent. For example, a survey of 400 employees by global staffing firm Robert Half found that two out of five Canadians have resigned over a bad boss. Performance also can suffer, as shown by one study that found nurses who experience working under a toxic manager reported an increased frequency of adverse events and poorer quality of care in the unit.

Bad bosses cost companies billions in stress-related health expenses, productivity losses, and costs associated with high employee turnover rates.

The costs of mental health impacts stemming from toxic bosses are also significant. The 2016 Mental Health Commission of Canada revealed that psychological health issues cost the Canadian economy around $51 billion annually, with nearly half linked to work-related causes like toxic bosses.

Dealing with toxic bosses

Toxic bosses inflict significant harm, and organizations must be more vigilant in their hiring, performance management and promotion practices.

To do this, companies should consider using behavioural assessments for hiring and promotion decisions, collecting upward feedback annually as part of performance and compensation decisions, and conducting objective, third-party investigations when toxic leadership is suspected.

If you’re dealing with a toxic boss, there are some strategies you can follow to help you cope. Seek guidance from a mentor, coach, counsellor or trusted colleague. Where possible, limit direct interaction with your boss and make sure to keep detailed records of problematic behaviour, in case you decide to file a formal complaint in the future.

While some toxic bosses may be referred to as “brilliant jerks,” their brilliance comes at a steep cost to people, productivity and profit.

Organizations need to collect annual data on leadership, and act swiftly when toxic bosses emerge. Organizations that tolerate or turn a blind eye to such behaviour risk not only losing talent, but also damaging their overall performance and reputation. Addressing toxic leadership is not just about protecting employees; it’s also about safeguarding the future of the organization.

Renee Pi, a psychology undergraduate student and research assistant from the University of Calgary, co-authored this article.

Laura Hambley is an adjunct assistant professor at the Department of Psychology at University of Calgary.

This article is republished from The Conversation under a Creative Commons license. Read the original article.