In a recent study of restaurant servers, INSEAD’s Serguei Netessine and Tom Tan of Southern Methodist University explored how the presence of high performers influenced the work of their less competent colleagues. What they found is that competence is indeed “contagious,” at least to an extent:
With algorithmic assistance, it is possible to quantify an individual employee’s innate ability as well as his or her sales performance; but, crucially, stats pertaining to individuals don’t necessarily tell you much about what will be in the till at the end of the night. The critical factor is team performance, which can often be more, or less, than the sum of the parts. …
Having established a baseline skill level for each server, we found that the servers’ sales performance during a given shift would rise or fall depending on who happened to be working with them. Low-skilled servers seemed capable of punching above their weight when the overall skill level of the team was higher. Importantly, this contagion can be charted in an inverted U-shape, meaning that when a shift was stacked too thickly with superstars, the other servers performed below their capacity.
Scientists have taught us the theory of loss aversion and why we humans fear pain more than we enjoy gain. Now several new studies of employees are building off of this insight and quantifying just how badly bad employees affect their employers relative to the gains high performers create. The first study comes to us from Harvard Business School, via Amy X. Wang of Quartz. It shows that firing (or avoiding hiring) “toxic” employees saves companies more than they gain from carefully hiring superstars—a lot more. The study, which looked at 50,000 employees at 11 companies, concluded that while a star performer can boost earnings by over $5,300, avoiding a toxic hire generally saved over $12,000:
Researchers compared estimated savings from firing (or avoiding) a toxic employee to the expected earnings boost produced by an excellent new employee who performs in the top 1% of his or her job. These “savings” don’t take into account the cost of potential regulatory penalties, litigation costs, or productivity drains that might be caused by the problem worker, according to the study, but rather “induced turnover cost”—the expense of replacing good workers who quit because of a toxic colleague. ..For the purpose of the study, the term “toxic” was defined to describe any employee who damages company property (through theft or fraud, for example) or fellow employees (through bullying, sexual harassment, or workplace violence).
At Forbes, Professor Paul Harvey of the University of New Hampshire discusses some of his own recent research, which finds that self-serving, entitled employees are more likely to judge their boss as abusive: