Managing Toxic Employees Without Undermining Your Top Talent

Managing a team means dealing with a wide range of personalities, work ethics, and communication styles. However, every now and then, employers encounter a more serious challenge—toxic employees whose behavior threatens team morale, productivity, and even the retention of top performers. It can be difficult to manage these situations while trying to maintain a healthy work environment, or restore it to a place that everyone enjoys coming to work everyday.

It can be stressful when managing a toxic environment to also mitigate the stress of the other members of your team. Threats of employees quitting or transferring as a result of a toxic entity can further perpetuate stress on you as a manager. Here’s how employers can identify toxic employee traits, address harmful behavior, and cultivate a workplace that retains and uplifts their best talent.

Understanding Toxic Employees and Their Impact on the Work Environment

A toxic employee is not simply someone who struggles occasionally with performance or has a bad day. Rather, it’s someone who consistently disrupts team dynamics, spreads negativity, and diminishes workplace culture. These individuals often operate in ways that are damaging not only to coworkers but also to leadership and the company’s long-term success. The way they conduct their work- or refuse to do so- effects more than just their output, but the entirety of the team can suffer long term repercussions of negative behavior.

Left unaddressed, toxic work environments can emerge, marked by low morale, high turnover, distrust, and lost productivity. For employers, this can quickly snowball into an employment crisis, driving away valued employees and diminishing your company’s reputation.

Common Signs of a Toxic Employee

Identifying toxic behavior early can prevent greater damage down the line. Here are some red flags that indicate a toxic employee might be undermining your team:

Incompetence – Some employees may lack the skills necessary for their role. While training can often address gaps, persistent incompetence despite support is a sign of a deeper issue—especially if the employee resists feedback or fails to improve.

Chronic Slacking– Toxic employees often avoid responsibility, frequently miss deadlines, or rely heavily on coworkers to pick up their slack. This behavior can breed resentment among high-performing employees who feel the workload isn’t distributed fairly.

Gossip and Drama– Office gossip might seem harmless at first, but it can quickly lead to fractured teams, mistrust, and hostility. Toxic employees who thrive on drama or spread rumors damage team cohesion and workplace integrity.

Egotism and Entitlement– A toxic employee may consistently believe they are above the rules, disregard others’ ideas, or seek credit for team accomplishments. This attitude not only stifles collaboration but also demoralizes team members who feel undervalued.

Professional Approaches to Managing Toxic Employees

Recognizing that change needs to occur can be a large portion of the battle. And tackling a toxic work environment requires consistency, empathy, and clarity. Employers can take the following steps to manage difficult employees while keeping the rest of their team engaged and respected:

1. Don’t Take Toxic Behavior Personally

Toxic behavior is often rooted in the individual’s own challenges—not a reflection of your leadership. By maintaining professionalism and objectivity, you can focus on solutions rather than getting drawn into drama or conflict. Do not take what they may say or do to heart.

2. Encourage Honest Employee Feedback

Create an open-door policy where employees feel safe to report concerns. Take their feedback seriously—if several team members raise issues about a specific coworker, it’s worth investigating. Regular check-ins and surveys can help capture sentiments early, and encourage a more honest dialogue between you and your team.

3. Identify the Root Cause

Not all toxicity stems from one person. Sometimes, systemic issues or team dynamics are to blame. Look at performance trends, communication breakdowns, or workload imbalances. Is the behavior a result of poor leadership, unclear expectations, or personal issues?

4. Address Bad Behavior Directly

Confronting toxic behavior early is key. Schedule one-on-one conversations to discuss concerns. Avoid generalizing or assigning blame to the entire team—every individual should be held accountable for their own actions. Employees that are lumped into a generalized statement about an issue or overall attitude tend to resent others when they are blamed for others’ wrongdoings.

5. Provide Honest, Constructive Feedback

Sugarcoating only prolongs the problem. Deliver direct, actionable feedback and set measurable expectations for change. Make it clear that the current behavior cannot continue and explain what steps are required to improve. Keeping direction vague can lead to further issues and misunderstandings down the line.

6. Document Everything

From positive performance to problematic behavior, keeping detailed records ensures you have a fair and factual basis for any future employment decisions. This also protects your company in the event of legal action, as well as gives you a trail of dates and times to reflect back on for future reviews.

7. Set Firm Rules and Boundaries

Toxic employees often test limits. Employers should establish clear policies, communicate them consistently, and enforce consequences. Employees should know that there is potential for their actions to be punished, and that they were previously warned of this potential response. Letting infractions slide sends a message that poor behavior is tolerated.

8. Allow Anonymous Reporting

Give employees the option to report concerns confidentially. These forms allow for a more truthful indication to how the work environment currently sits. This encourages open communication, especially in environments where people may fear retaliation from toxic colleagues.

9. Reinforce the Value of Great Employees

Let your top talent know their hard work is recognized. Celebrate wins, give credit where it’s due, and ensure that your most engaged employees feel appreciated and supported—even during difficult transitions. It’s easy for their high quality work to be overshadowed by the downturn of others’, and it’s important for them to be acknowledged for their positive impact as well.

10. Promote a Positive Workplace Culture

Invest in team-building, professional development, and a collaborative environment. A positive and productive culture helps neutralize the influence of toxic employees and makes it harder for negativity to spread. Issues tend to arise from the top down, and if you are able to manage with a positive outlook, there is a higher likelihood that your direct reports will work with the same perspective.

Pitfalls to Avoid When Addressing a Toxic Work Environment

How you handle a toxic situation can influence how your top employees perceive leadership. Avoid these common mistakes to ensure your approach remains professional and effective:

Never Fire Without Cause or Context – While it might feel easier to “cut out” the problem, never terminate an employee without gathering facts and hearing all sides. Doing so can create legal issues—and shake trust among remaining employees.

Avoid Group Confrontations – Bringing up individual issues in a team setting often causes embarrassment, resentment, and defensiveness. Address concerns privately to preserve dignity and encourage honest dialogue.

Maintain Respect and Professionalism – No matter how challenging someone may be, employers should never stoop to disrespectful or retaliatory behavior. Professionalism sets the standard for how others are expected to behave—and how they feel treated in return.

Retaining Top Talent While Addressing Toxicity

One of the greatest risks in managing toxic employees is the potential loss of your best people. High performers are quick to recognize when a work environment is no longer healthy or fair—and often have the most opportunity to leave.

To keep your top talent:

• Keep them in the loop about changes you’re making to improve the team dynamic.

• Continue offering growth opportunities and recognition.

• Shield them from unnecessary conflict while reaffirming their importance to the organization.

Above all, act swiftly. Great employees will not wait forever for leadership to step in.

Partner With Professional Alternatives to Build a Healthier Team

Dealing with toxic employees is never easy, but you don’t have to manage it alone. Whether you need help restructuring your team, replacing a problematic hire, or adding top-tier talent to rebuild your culture, Professional Alternatives is here to help.

Our recruiters specialize in matching employers with candidates who bring not just the right skills—but the right mindset. Let us support you in creating a workplace where every employee can thrive.

Ready to take action? Contact us today to connect with one of our expert recruiters and start building the high-performing, positive team your company deserves. Start hiring today!