Toxic Employees: How One Person Can Drag Down the Team—And How Leadership at Every Level Can Fix It
We’ve all heard the phrase: one bad apple spoils the bunch. In a business context, that “bad apple” is often a toxic employee—someone whose behaviour doesn’t just affect their own performance but gradually chips away at team morale, culture, and output.
But here's the key: it’s rarely just about one person. When toxic behaviours persist, it often signals a failure at multiple levels—from unclear policies to untrained managers, and from inconsistent leadership responses to cultural blind spots.
Looking at the performance bell curve, teams generally fall into three groups:
- Top 20% (High Performers = The Models) – Consistent, proactive, high-value contributors.
- Middle 60% (Core Contributors = The Not Yets) – Steady workers who are deeply influenced by leadership, workplace culture, and peer behaviour.
- Bottom 20% (Chronic Underperformers = The Nevers) – Frequently resistant to feedback, disengaged, or disruptive.
The most overlooked dynamic? How businesses handle the bottom 20% directly impacts the middle 60%. And this middle group—the biggest portion of any team—represents both the greatest opportunity and the greatest risk.
In Australia, where only 20% of employees are actively engaged (Gallup), the need for clear leadership, well-trained managers, and strong HR infrastructure has never been more critical.
Examples of What Can Go Wrong
1. The Silent Saboteur
A regional logistics company had a long-serving employee who quietly undermined team leaders by mocking new procedures, gossiping, and encouraging others to “go slow” when unhappy. They never breached policy outright, so they slipped under the radar. Within a year, staff turnover doubled, customer complaints spiked, and productivity fell by 30%.
What went wrong? There were no documented behavioural expectations (Code of Conduct) and no early intervention—just avoidance.
2. The Chronic Underperformer
In a marketing firm, a junior employee failed to meet deadlines repeatedly, despite coaching and support. Other team members began picking up the slack, which led to burnout. One top performer eventually resigned, citing unfair workload distribution.
What went wrong? The manager lacked a consistent process to manage performance and was unsure how to escalate without formal procedures in place.
3. Playing Favourites
A well-known retail chain had a store manager who consistently gave prime shifts and promotion opportunities to a select few team members—not based on performance or flexibility, but on personal friendships. Meanwhile, others were micromanaged, overlooked, or excluded.
The result? Deep division and growing resentment within the team. Engagement scores dropped by 40%, customer complaints surged, and sales took a noticeable dip.
What went wrong? The business had no clear internal guidelines around fairness, equity, or unconscious bias. Managers had never been trained in equitable leadership practices—and the lack of structure cost them in culture, performance, and profit.
4. Inconsistent Discipline = Disengagement
An medium sized manufacturer had no formal disciplinary process. One employee was repeatedly disrespectful to colleagues with no consequences, while another received a written warning for one late start. The inconsistency undermined trust. Once-committed team members checked out.
What went wrong? A lack of policy, structure, and training led to inconsistent handling of behaviour—eroding the team's faith in leadership.
5. Burnout of Top Performers
Sometimes your best people suffer the most. A manager noticed one team member consistently arriving early, skipping breaks, and not taking annual leave. The manager didn’t intervene and encourage breaks or to take some annual leave. The employee was seen as the dependable one—until she went on extended stress leave due to burnout.
What went wrong? There were no systems to flag overwork, and leadership was so focused on managing the underperformers, they overlooked the silent strain on their top 20%.
Why Leadership Consistency and Training Matters
n Australian SMEs, leaders often juggle multiple hats, and performance management can become inconsistent, reactive, or avoided entirely. But Fair Work obligations don’t allow for “too busy” as an excuse.
The real issue? Many managers simply aren’t equipped. They’ve been promoted based on technical skills—not leadership capacity—and have never been trained in coaching, conflict resolution, or team dynamics.
Policies and procedures aren’t red tape—they’re enablers. They give leaders the confidence to act early and fairly, support a positive culture, and help keep everyone aligned.
Key Takeaways and What Businesses Should Implement
Managing toxic employees—and supporting high performers—comes down to clarity, consistency, and capacity.
1. Build a Strong Frameworks and Guidelines
- Develop clear, easy-to-use policies and procedures on performance management, discipline, and behaviour expectations.
- Ensure these are accessible, communicated, and regularly reviewed—not just filed and forgotten.
2. Invest in Leadership Training
- Train managers in emotional intelligence, coaching, and feedback delivery.
- Include tools for recognising burnout, addressing conflict, and supporting both The Nevers and The Models.
3. Formalise Performance Frameworks
- Use structured Performance Improvement Plans (PIPs) with clear milestones and review dates.
- Don’t confuse performance issues with conduct. Each needs a different process.
4. Protect Your Top 20%
- Monitor early warning signs of burnout: skipping breaks, never taking leave, or working long hours.
- Encourage time off, reward contribution, and check in regularly—don’t wait for a crisis.
5. Watch and Lead the Middle 60%
- These “Not Yets” are your culture’s swing voters. They’ll follow where leadership points them.
- Remove barriers to performance, recognise effort, and guide them toward the top tier.
6. Act Early, Not Emotionally
- Use policy and procedures, not gut instinct, to guide decisions. Following your procedures will enhance consistency in managing issues and show fairness across your team.
- Early, fair, and well-documented intervention shows staff that standards matter and that the business genuinely cares.
Final Word
Letting a toxic employee operate unchecked isn’t just a personnel issue—it’s a culture killer. But blaming individual managers when they haven’t been trained, supported, or equipped is equally unfair.
The solution lies in building strong foundations: clear expectations, consistent processes, confident leadership, and a workplace culture where every team member—whether a Model, Not Yet, or Never—knows where they stand and what’s expected.
Equip your leaders. Back your top performers. Set standards and stick to them. Because managing people well isn’t just about performance—it’s about protecting your business, your team, and your culture.
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