Five Hard Choices for Addressing Critical, but Toxic Employees

by | Mar 27, 2021 | People

The scenario: The toxic but critical employee

Jason is a product engineer, and he’s been with the company for 20 years.  He was instrumental in designing many of your products, and he knows all of its nuances and idiosyncrasies. However, he keeps all of the information in his head, and if he wasn’t around, you might not be able to produce or support your products.  In theory, you could grind to a halt for a long time.

Unfortunately, Jason isn’t a very good person, and most people don’t like working with him because he’s a jerk.  You know Jason doesn’t fit your core values, but he’s critical for running the business.  What should you do?

Note 1: I apologize to all decent people named Jason for disparaging your name.

Note 2: I used engineering, but Jason could just as easily be in sales, IT, maintenance, production, or accounting.

You’re over a barrel right now, but commit to change

Your heart wants to just fire Jason and be done with it, but your head tells you that that isn’t smart.  It could put the business in a very tough spot for a considerable time.

The first thing that you must do as a leader is to commit to solving the problem – one way or another.  Either Jason will change his behavior, or you’ll fire him.  Period.  It may not happen tomorrow, next week, or next month, but you will NOT be talking about the same problem employee a year from now.

Five options for dealing with the toxic but critical employee:
Option #1: Conversation

An open and honest conversation with the employee is always a good starting point.  You may be pleasantly surprised to find that the employee was completely unaware of his impact on people.  With the newfound insight into his behavior, he may make a steady and continued effort to do better.  You may also find that the employee is deeply unhappy or stressed – due to factors inside or outside of the company – and a change of responsibilities or role would ease the situation.

It doesn’t happen often, but it never hurts to start here.

I recommend avoiding threats and consequences right now unless you have your backup plan ready.  At this stage, the discussion is an appeal for team unity and harmony.

Option #2: External Coach

If the person seems open to change but doesn’t seem to be able to get there on his own, then a professional coach may be an answer.  Great coaches have tools and techniques that help people change themselves.  They are far more skilled than the typical business leader at helping people through these changes.

Coaches aren’t cheap, but if you can salvage the critical employee, it will be money well spent.

It’s a gamble, and there are no guarantees.  The question that you must wrestle with is, “Does the person want to change, and can they?”

Option #3: Proactive Backfill

This approach assumes that the employee can’t, or won’t, change his stripes, and you need to get a backup in place.  This costs some money in the form of an extra salary, and it may take a year to execute, but it’ll give you some insurance for when the day comes that you let the toxic employee go.

One of the biggest barriers to this approach can be the uncooperativeness of the toxic employee.  Hoarding knowledge is a defense mechanism that has worked for them.  You’ll need to get creative about finding ways to impart the knowledge to the new employee.

The toxic employee is likely to read this for what it is.   I think that’s OK.  Everybody gets to dance with the discomfort for a while.

Option #4: Ultimatum

With the ultimatum, we lay out the impacts of not changing behaviors.  Personally, I think the only consequence of not changing is termination.  Demotions or moving the person to another area don’t remove the toxin from the company.

This wake-up call may change them.  They may suddenly realize that they aren’t quite as marketable or as irreplaceable as they felt.

Only do this if you mean it.  There can be no false threats.

Option #5: Terminate them

The final approach is to rip off the bandage and terminate them.  I’m not suggesting that you bypass good HR practices relative to performance management. Instead, I’m offering a warning that it’s natural to catastrophize the impact of the loss of an employee, which can scare you into inaction.

I’ve used this approach a few times in my career, and in every case, the recovery time was far shorter than anyone imagined.  Plus, the organization was so relieved to have the person gone that they rallied behind the effort to fill the vacuum left by their departure.


Many small and mid-size organizations find themselves with critical employees that don’t fit their core values.  Smaller companies, by their nature, just can’t have backfills for every position, which makes some people critically important.

However, core values must win the day.  Your people are watching to see if the core values are real.  You are being judged by whether you are serious about your core values, or are they merely guidelines that you apply when it’s convenient and safe.

Commit and take action.  Your organization will thank you.