The Cost of Toxic Management: How Bad Bosses Drive Away Good Employees

This article focuses on the employee as a key stakeholder and examines the harmful consequences that arise from ineffective leadership and how the principles practiced in servant leadership can provide insight into potential cures for the problem.

Toxic Leadership

Toxic leadership is one of the most significant detriments of organizational success, yet even in environments that boast talented individuals, toxic leadership can swiftly dismantle everything (Harter et al., 2024). When capable, hardworking employees choose to leave an organization, often the cause isn't workload, benefits, or even the industry itself; it’s poor leadership and bad managers. Toxic leaders not only fail to inspire their teams but also actively contribute to driving high performers away. This article explores how toxic leadership practices lead to employee attrition and what servant leaders can do to prevent it.

Toxic leaders can exhibit a range of harmful behaviors. Some of the most common behaviors include:

• Micromanagement: Rather than trusting employees to handle their responsibilities, toxic managers hover, constantly interfere, and demand superficial updates. This not only undermines trust but also stifles creativity and autonomy.
• Poor Communication: A lack of clear, authentic, and transparent communication from management breeds confusion, mistrust, and disengagement. Employees are left in the dark or, worse, blindsided by changes and expectations they weren’t prepared for. Toxic management will often hoard information as a power play, which is withholding beneficial information from employees to retain a sense of importance or dominance.
• Blame Culture: A toxic manager is quick to assign blame for any failures, even for those not within the control of their team members. This fosters a culture of fear, where employees are more concerned with protecting themselves than contributing creatively to solutions.? This is where the acronym “CYA” was born from!
• Favoritism and Inconsistency: When leaders play favorites, showing leniency to certain employees while being overly strict with others, it erodes team cohesion. Inconsistency in rules and consequences demoralizes those who aren't favored.
• Neglect of Employee Growth: Toxic leaders fail to invest in their team's professional development, specifically team leaders. They view employees as tools to get the job done rather than as individuals with aspirations, skills to grow, and potential to tap into.

The presence of toxic management is exponentially jarring in workplaces that are supposed to be safe from psychological hazards. When the well-being of employees is touted as a key organizational value, it is not only contradictory but also harmful when the behavior of a manager(s) undermines that goal. In environments where values-driven behaviors are a primary focus, toxic leaders can be particularly detrimental for several reasons we can refer to as Psychological Hazards:

• Emotional Exhaustion: Employees working in high-stress environments, such as those dedicated to serving others such as healthcare and law enforcement, are already exposed to emotionally charged situations. Toxic management adds another layer of emotional burden, leaving employees feeling unsupported and drained.

• Compromised Trust: In values-driven organizations, employees are often encouraged to be open about their feelings and mental health challenges. When toxic managers exhibit behaviors like manipulation, blame-shifting, or lack of empathy, it creates a sense of betrayal. Employees may feel that the organization doesn’t practice the values it preaches.
• Increased Risk of Burnout: Healthcare professionals, police, caregivers, etc… already face a higher risk of burnout due to the nature of their work. Toxic leaders who fail to provide an empathetic, supportive, and understanding environment amplify this risk, leading to higher turnover, absenteeism, reduced job satisfaction, and possible reduced patient satisfaction.
• Undermining the Organizational Mission: In a workplace where values-driven behaviors are a primary focus, toxic management isn’t just harmful, it’s hypocritical. The organization’s mission to support and enhance mental well-being is undercut when internal culture fails to reflect those same values.

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A severe consequence of a toxic leadership is Moral Injury, which is similar to post traumatic stress disorder. Moral injury is the employees’ feelings of guilt, despair, shame, and helplessness that result from a violation of one's moral principles. People who experience moral injury will often have intrusive thoughts or flashbacks related to specific events, experience emotional numbness or detachment, avoid situations that trigger reminders of the event(s), have difficulty trusting authority figures, and may have a sense of isolation or feeling of disconnection from a group or community where they once held close relationships. Employees from underrepresented groups, departments, or specializations in healthcare are more likely to experience moral injury due to both micro and macro aggressions (Arquette et al., 2023). The aforementioned psychological hazards that can cause moral injury are typically status quo, daily employee experiences.? There is often no escape aside from leaving the job or a change in leadership.??

The most recent Gallup meta-analysis stated there is a “strong relationship between engagement and wellbeing” and “that a focus on engagement may be critical for addressing these issues”. “A more engaged workforce would likely lead to higher levels of overall wellbeing and lower levels of loneliness” (Harter et al., 2024). A longitudinal study found that changes in positive engagement were associated with changes in cholesterol and triglyceride levels (measured through blood samples), even after accounting for demographics, health history, and medication use (Harter, Canedy, & Stone, 2008). Additionally, differences in momentary affect and cortisol levels were observed when comparing engaged versus disengaged employees (Harter & Stone, 2011).? What this tells me is that toxic leadership can have a negative impact on both mental and physical well-being.?

?Why Good Employees Leave

• Loss of Motivation and Purpose: Talented employees thrive on being challenged professionally, appreciated, and aligned with a larger purpose. Toxic leaders strip away these elements. A 2023 survey by Ernst & Young LLP showed that 86% of respondents believe empathetic leaders boost morale and motivation while 87% stated “empathy is essential to fostering an inclusive environment” (Hemmerdinger, 2023). When employees no longer feel their work is valued or that their contributions are meaningful, disengagement follows.
• Increased Stress and Burnout: Toxic leaders create stressful environments, where employees are constantly walking on eggshells, fearing unfair criticism or punitive actions. This kind of environment can lead to burnout which can be characterized by emotional exhaustion, detachment, and diminished job performance. Talented employees, rather than remain in such an environment, will often choose to seek healthier workplaces.
• Stifled Growth and Development: Dedicated, high-performing employees are driven by professional growth opportunities. When they find themselves under the thumb of a manager who discourages learning, advancement, or even lateral movement within the organization, they will naturally seek those opportunities elsewhere. A failure to recognize, reward, and support the ambitions of top talent is a surefire way to lose them.
• Diminished Morale and Team Dysfunction: A toxic leader impacts not just individual employees but entire teams. Toxic behaviors disrupt team cohesion, creating an atmosphere of mistrust and competition rather than collaboration. High-performing employees, who thrive in positive, cooperative environments, are particularly sensitive to toxic team dynamics and are often quick to leave when morale collapses.

Toxic Management and The Damage from its Waves

Losing good employees is just the tip of the iceberg. When talented individuals exit a toxic environment, it sends waves throughout the organization. Others in the organization may question their own reasons for staying, further increasing turnover. Moreover, recruitment and onboarding costs rise significantly, and the lost productivity that follows a dedicated, high-performing employee's departure can be hard to recover from. Toxic leaders create a revolving door of talent, which can also damage the organization’s reputation in the long term.

What Can Organizational Management Do?

• Invest in Leadership Development: Possibly the most important thing an organization can do is constantly and consistently invest in leadership development. A lack of effective leadership development exists in a vast majority of organizations (Yancy et al., 2013). The fact is, leaders are not born; they are developed. Investing in leadership training programs that emphasize servant leadership, emotional intelligence, and conflict resolution can transform toxic managers into effective, inspiring leaders. A focus on people over processes is key to reducing toxic behavior. A 2022 meta-analysis found significant improvements in manager and employee engagement, along with reductions in turnover rates, when managers participate in curriculum that is aimed at improving employee engagement and performance management through the strengths of each manager (Asplund & Agrawal, 2022).
• Evaluate Management Practices: It’s important for leaders at all levels to evaluate the behaviors and management practices within their organizations. Are managers being trained to lead with emotional intelligence and empathy? Do they receive authentic feedback from their teams? Leaders must be proactive in identifying toxic behavior before it becomes pervasive in themselves and their teams.
• Foster Open Communication: Building an environment where employees feel comfortable speaking up without fear of retaliation is crucial. Encourage anonymous feedback mechanisms and regular check-ins to gauge employee satisfaction and concerns. Employees should feel heard, not silenced, by their leadership.
• Empower Employees: One of the most effective ways to prevent toxic management behaviors from taking hold is to empower employees at all levels. When employees feel trusted and supported, they are more likely to remain engaged and perform at a high level. Empowerment can be achieved through professional development opportunities, regular recognition of achievements, and giving employees more autonomy in their roles.
• Enforce Accountability: Toxic leaders thrive in environments where there is little accountability for their actions or inactions. Leaders must hold their managers accountable for poor behavior, just as employees are held to not achieving performance standards. When toxic behaviors are identified, there must be a clear, consistent path to address and correct those issues.? Furthermore, leaders should also be recognized for good behaviors, those behaviors that create team cohesiveness and value to the organization. ????

Good employees are the backbone of any organization, and their loss due to toxic management is preventable. I remember my first job in healthcare was in a values-driven organization. A high degree of importance as placed on living out the values. In organizations where a high importance is placed on values-driven behaviors, the presence of toxic leaders is not only damaging but counterproductive to the mission of employee well-being. One toxic leader can counteract trust that has been long established. Leaders must create environments where positive management practices are the norm, and toxicity is not tolerated. By focusing on open communication, leadership development, and employee empowerment, organizations can ensure that their best talent stays, thrives, and contributes to long-term success. After all, the cost of toxic management is far too high for any organization to afford.

How Servant Leadership Can Correct the Negative Impacts

Servant leadership, a leadership philosophy that prioritizes the growth, well-being, and development of team members, offers a direct remedy to the harm caused by toxic management. Where toxic managers hoard power, blame others, and disregard employee needs, servant leaders focus on empowering and supporting their teams. Below are ways in which servant leadership can transform the workplace.

Building Trust and Psychological Safety

One of the core principles of servant leadership is the creation of a safe and trusting environment. Servant leaders demonstrate transparency, honesty, and consistent communication, which fosters trust within the team. In contrast to toxic managers, who may withhold information (information hoarding) or blame employees for setbacks, servant leaders share information openly and take responsibility for mistakes. This trust-building approach creates psychological safety, allowing employees to express concerns, seek support, and engage fully without fear of repercussions. Employees feel secure in their roles, knowing that their leader has their back. This security reduces stress and supports the mission of a values-driven organization, particularly in emotionally demanding environments.

?Empowering Employees and Encouraging Autonomy

Toxic managers often engage in micromanagement, stripping employees of autonomy and control over their work. Servant leaders, on the other hand, believe in empowering employees by giving them the autonomy to make decisions, solve problems, and take ownership of their work. By fostering a sense of agency, servant leaders encourage creativity, innovation, and personal growth. When employees feel empowered, they are more engaged and invested in their work. This autonomy reduces the likelihood of burnout, as employees feel they have control over their environment and their contributions are valued.

Prioritizing Employee Development

A hallmark of servant leadership is the commitment to helping employees grow both professionally and personally. Instead of viewing team members as mere tools for achieving business goals, servant leaders invest time and resources into developing their skills, career paths, and personal growth. Regular feedback, mentorship, and opportunities for advancement are key components of this approach. Employees are less likely to leave when they feel that their leader is invested in their success. Growth opportunities foster loyalty, engagement, and satisfaction, turning what was once a revolving door of talent into a stable, high-performing team.

?Cultivating a Collaborative Culture

Servant leaders foster a culture of collaboration rather than competition. In contrast to toxic managers who might play favorites, pit employees against each other, tell employees to “stay in their lane”, servant leaders work to unite teams, encouraging collaboration and collective problem-solving. They value input from every team member and strive to create a sense of community and shared purpose. Collaboration reduces team dysfunction and boosts morale. A collaborative environment where all voices are heard allows employees to feel a stronger sense of belonging, reducing stress and promoting mental well-being.

?Emphasizing Compassion and Empathy

At its core, servant leadership is about empathy, understanding and addressing the needs of others.? An Ernst & Young LLP survey showed that 87% of respondents stated “empathy is essential to fostering an inclusive environment” (Hemmerdinger, 2023). Servant leaders prioritize listening and responding to the concerns of their employees, showing compassion in times of difficulty. They are proactive in checking in on the emotional and mental health of their team members, offering support when needed. In a values-driven organization, this compassionate approach is essential. Employees are more likely to seek help or share challenges with leaders who demonstrate empathy. This reduces the stigma around mental health and creates an environment where well-being is genuinely prioritized.

?Leading by Example and Fostering Accountability

Toxic managers often avoid accountability for their own actions, pushing blame onto their teams, or outright ignoring a problem ever existed. Servant leaders, however; lead by example, taking responsibility for both successes and failures. They set the tone for ethical behavior and personal accountability, modeling the behavior they expect from their team members. When leaders hold themselves accountable, employees feel more confident in the fairness and integrity of the workplace. This transparency helps alleviate the fear and anxiety that comes with toxic managers, leading to a healthier, more productive work environment.

?Servant Leadership as the Antidote to Toxic Management

The negative impacts of toxic managers’ high turnover, burnout, and reduced morale can be reversed through the principles of servant leadership. By prioritizing the growth, well-being, and autonomy of employees, servant leaders create a culture of trust, empowerment, and collaboration. In environments where mental health is central to the mission, servant leadership not only aligns with the organizational values but actively promotes them by ensuring that employee well-being is not just an afterthought, but a genuine daily practice.

Leaders must recognize that the cost of toxic management is too high. Servant leadership offers a pathway to building stronger, healthier, and more resilient teams that are better equipped to thrive in today’s challenging work environments. The transformation begins with leaders who choose to serve rather than command.

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References:

Arquette, C., Peicher, V., Ajayi, A., Alvarez, D., Mao, A., Nguyen, T., Sawyer, A., Sears, C., Carragee, E., Floyd, B., Mahanay, B., & Blankenburg, R. (2023). Moral Injury: How It Affects Us and Tools to Combat It. MedEdPORTAL : the Journal of Teaching and Learning Resources, 19. https://doi.org/10.15766/mep_2374-8265.11357 .

Asplund, J. & Agarwal, S. (2022). Meta-analysis of the relationship between Gallup’s management development programs and organizational outcomes. Omaha, NE: Gallup.

Harter, J. K., Tatel, C. E., Agrawal, S., Blue, A., Plowman, S. K., Asplund, J., Yu, S., & Kemp, A. (2024). The relationship between engagement at work and organizational outcomes: Q12 meta-analysis (11th ed.). Gallup, Inc.

Harter, J. K., & Stone, A. A. (2011). Engaging and disengaging work conditions, momentary experiences, and cortisol response. Motivation and Emotion, 36(2), 104–113.

Harter, J. K., Canedy, J., & Stone, A. (2008). A longitudinal study of engagement at work and physiologic indicators of health. Presented at Work, Stress, & Health Conference. Washington, D.C.

Hemmerdinger, J. (2023). New EY US Consulting study: employees overwhelmingly expect empathy in the workplace, but many say it feels disingenuous [Review of New EY US Consulting study: employees overwhelmingly expect empathy in the workplace, but many say it feels disingenuous]. Ernst & Young LLP. https://www.ey.com/en_us/newsroom/2023/03/new-ey-us-consulting-study

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