Toxic Leaders: Is Your Business Legally Liable for Your Insensitive Manager?

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You have a growing business and Max is your top performing manager.  His book of business is growing exponentially, and you are getting the “good” numbers showing in your books: sales are going through the roof!  You are very happy with Max.

Max supervises a team of fifteen, with different backgrounds and circumstances. Max’s team seems to be performing great, but your overall business’ capacity is dropping. You can’t pinpoint where is it coming from.

You saw that Max’s team calls in sick more often than the others, and in the past year, two of Max’s employees applied for stress related short-term disability leaves (‘STD’).  About five of them, were prescribed with medication to control anxiety at work.  The other teams have neither absenteeism - pattern of absence from work without good reason - nor have they applied for STD.

You dug in.

It turns out that Max’s team reduced its headcount by 40% in the last five years.  In the last two years, Max hired three people to cover for the departing employees, but Max is like a revolving door.  As soon as the new employees know Max’s management style, they leave to never return.  Half of Max’s team have talked over lunch about crossing the street and go to the competition.

You’ve also heard that but for Max’s most reliable employee, who acts and looks like him, the rest of them feel exhausted, and they can’t even look at Max or listen to him talking in the hallway, without getting sick.

Is it a problem when Max’s numbers and productivity seem so high?  You could say that Max’s loses are part of the costs of doing business.  Whatever his team makes, would cover all expenses associated with Max’s high-risk performance (including turnover rates, disability claims and reputation) and that you would still get a healthy revenue.

Think again.

A Harvard Business School study (conducted by M. Housman and D. Minor) found that a Max would costs the business twice as much as what the business thinks it is receiving from that Max. They also found that in the long run, toxic workers, like Max, are unlikely to improve overall organizational performance.

You would agree with me that when you start seeing the words turnover rates, training, disability claims, and business reputation, and you think about your balance sheet, in your mind you start drawing an imaginary costs line going up and up … and up.  All right, Max costs money, but, on top of this, would your business have to spend more money rebuilding its reputation and defending claims in courts, tribunals and boards because of Max?  

Would Toxic Trigger Legal Liability?  

Max thinks that lying, bullying, not wasting time listening to/giving feedback, promoting himself constantly and satisfying his own interests as opposed to his team’s, rewarding closest friends at work and letting go their shortcomings, and supporting a club culture among the people who looks like him, would be good for everyone’s business.

Unfortunately, Max seems to be promoting a work climate that feeds potential legal liability if left unattended, which is usually the case. This is like leaving a leaking container full of gas near a growing fire without a living soul around it to control it.

See, anti-harassment laws don’t focus on Max’s “good” intentions to produce revenue, but on how Max’s comments or acts are perceived or received by his employees. What for Max is an innocent comment with the sole intention to push for performance, and “motivating” his team, can come across his employees as bullying that becomes the source of claims.

Legal liability would likely punch you right in the nose, when the earlier characterized as “aggressive management style” at some point became a source of - for example - your employees feeling sick on a regular basis, which is also common in a Max’s work climate.  Your employees are trying to weather the climate but it’s too much to handle.  And they are likely debilitated by months or years of toxicity and they are about to explode ... BOOM!

You start receiving employees’ harassment complaints against Max.  Max wants revenge and punishes the complainants.  You don’t have a process or system in place to manage these complaints and reprisals.  Now your business entered an out-of-control downwards spiral, and you can only see it crashing in the ground, hard.      

I didn’t know, what should I do?

You would like to keep Max’s financial performance, but you would like to get rid of Max’s toxic behaviour.  It is doable … challenging, but doable.

From the legal front, all businesses need a robust workplace legal infrastructure in place that can control Max’s high-risk performance.  An infrastructure that welcomes and processes complaints about harassment, violence or discrimination.  An infrastructure prepared to conducting investigations and take action.  An infrastructure that preserves clear, consistent and compliant records about your employees.  An infrastructure that prevents punishment against those employees who dared to speak up.  And, keep your legal tools updated, and your managers and employees trained and educated.

Legal liability is already creeping in without you even knowing, and if you don’t have a workplace legal infrastructure in place when a complaint against Max comes your way, you will be ill-prepared to handle it.  Now, on top of turnover rates, training, disability claims, and business reputation, you have to add to your costs: regaining reputation and defending to lawsuits or complaints before courts tribunals and boards.

If you started to notice that you have a Max or several Maxs in your team(s), see some of the things you could do to fix it.

Antonio F. Urdaneta is a marathon runner, a workplace lawyer, investigator, compliance coach, and thought leader at Workplace Legal.  He uses coaching skills and tools to inform, advice and represent workplaces in digital and physical legal challenges and endeavours.  He writes his own posts.