Canadian Lawyer

46 M A R C H 2 0 1 6 w w w . C A N A D I A N L a w y e r m a g . c o m While there is much academic research on how to improve performance among workers, the two wanted to look at the "opposite side of the spectrum," workers who are harmful to organizational per- formance. So they studied a database of 50,000 employees covering 11 companies, scanning for the characteristics and cir- cumstances that cause workers to engage in toxic behaviour. They defined a toxic worker as one who engages in behaviour that is "harmful to an organization, includ- ing either its property or people." The study notes that toxic workers man- ifest themselves in many ways. Extreme cases include sexual harassment, work- place violence, or unlawful and unethical conduct. However, the researchers note that "even relatively modest levels of toxic behavior can cause major organization- al cost, including customer loss, loss of employee morale, increased turnover, and loss of legitimacy among important exter- nal stakeholders." Indeed, the costs of toxic conduct in the corporate world can be staggering. A 1988 study of Fortune 500 compa- nies found that sexual harassment cost each company US$6.7 million in low pro- ductivity, low morale, absenteeism, and employee turnover. That didn't include legal fees. But sexual misconduct isn't the only problem. Cheating and illicit conduct are as well. Take the 2008 financial melt- down, the costs of which are still being tallied. According to Reuters, as of last spring, 20 global banks paid more than US$235 billion in fines and compensation stemming from their "litany of misdeeds" and breaches of financial regulation. It included everything from improper trad- ing to market manipulation — you name it, bankers seemed to engage in it. In the legal world, one doesn't have to look far to see lawyers in trouble with their firms over conduct; just read the Law Soci- ety of Upper Canada complaint files. One of the most infamous examples involved Torys LLP in its 1999 merger with U.S. firm Haythe & Curley. Things went awry at the boozy celebratory merg- er dinner, and the next day, Thomas Hay- the resigned over his conduct and the firm dropped his name. Bob Donaldson, the former Bay Street lawyer, got into trou- ble over his client expense billings. Then there are high-profile cases involving law- yers sleeping with clients and embezzling funds, which can rip apart partnerships and ruin reputations, providing law firms with a big impetus to root out toxic part- ners, even if they are rainmakers. No one should be bigger than the firm. How bad is the problem and what are the telltale signs of trouble? Using the database, Housman and Minor examined terminations. They con- cluded that about five per cent of workers were terminated for toxic behaviour, such as falsifying documents, sexual harass- ment, and bullying. Specifically, they found that "workers who are overconfi- dent, self-regarding and profess to follow the rules are much more likely to be ter- minated for toxic behavior." They also found, however, that toxic workers are "much more productive than the average worker," which partially explains why they are tolerated in a work- force. However, their work isn't necessar- ily better; rather, toxic workers produced less quality work than their counterparts — though the difference was not statisti- cally significant. They also compared the value of find- ing a "superstar" — the worker who falls in the top one per cent of productivity — versus avoiding a toxic hire. Interestingly, firms that avoided hiring the toxic worker generated returns that were more than two times greater than those that success- fully hired a superstar, leading them to suggest that "bad" workers have a bigger impact on firms than "good" workers. For example, hiring someone who ranks as a superstar in the one-per-cent category adds US$5,303 in value to the company. However, if you get it wrong, the turnover cost of replacing a toxic worker is US$12,489. That does not include the costs of litigation or regulatory fines, nor lower morale or productivity. So law firms looking to get ahead, take note. You're better off to avoid hiring toxic partners altogether or turning them into just an average worker than you are putting up with their nonsense. Sure, they might bring in money, but as law firms adopt a more corporate model of operation, can your firm really afford the reputational and operational risk that they bring to the table? Probably not. Maybe it's time to flush those toxic part- ners, even if they are rainmakers, down the toilet before they foul the firm more than they probably already have. Jim Middlemiss is a legal writer and prin- cipal at WebNewsManagement.com. B A C K PA G E O P I N I O N @JimMiddlemiss By Jim Middlemiss very law firm has one — a toxic partner whose mere presence disrupts the workplace. They might be rude, abusive, or bullies. Maybe they make suggestive comments or engage in inappropriate sexual banter. Usually, they are overconfident and self-regarding. At the same time, they are often productive, good at bringing in clients, and big billers, so law firm manage- ment will look the other way and tolerate their inappropriate antics. We have all seen it. However, are toxic superstars really worth the pain? Not according to a Harvard Business School working paper, entitled "Toxic Employees." Researchers Michael Housman and Dylan Minor found that toxic employees do more harm to the workplace than good. Flushing toxic partners E

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