Running a small business means your team is your greatest asset, but when a toxic team member appears, they can quickly become your biggest liability. In this article, we’ll unpack how to identify toxic behaviour, the real costs to your business, and practical steps to protect your culture and your bottom line.
Why Toxic Team Members Are So Dangerous
Every small business owner knows the saying, “One bad apple spoils the bunch.” A toxic employee doesn’t just bring down morale; they spread negativity, lower productivity, and push your best people out the door.
According to Fair Work Australia , bullying and unreasonable behaviour at work can pose real risks to employee health and safety. But even before it reaches that stage, poor behaviour eats away at trust and teamwork.
In my years advising small businesses, I’ve seen it firsthand: one consistently negative employee who constantly criticises co-workers can unravel an entire team dynamic within weeks.
Spotting the Signs of Toxic Behaviour
Before you can manage it, you have to recognise it. Toxic team members often show subtle but consistent signs:
- Undermining others: spreading gossip or dismissing ideas in meetings.
- Blaming instead of solving: constantly finding fault with others’ work.
- Resistance to feedback: becoming defensive or combative when coached.
- Poor attitude: negativity that affects the mood of others.
Tip: Use your regular performance catch-ups to ask, “How do you think your actions impact the team?” Sometimes, toxic employees lack self-awareness until it’s highlighted.
The Hidden Costs of a Toxic Employee
A toxic team member doesn’t just create emotional strain, they cost real money.
A 2023 analysis by Scale Suite Australia found that one toxic employee can reduce team productivity by up to 40% and increase turnover costs by tens of thousands of dollars per year. For small trades and professional firms, that’s a hit few can afford.
Toxic behaviour can also lead to:
- Increased absenteeism
- Lost clients due to poor service
- Legal risks if bullying complaints escalate.
How to Manage a Toxic Team Member
Managing toxic behaviour requires a firm but fair approach.
1. Address it early
The longer you ignore poor behaviour, the harder it becomes to fix. Raise issues promptly in a private, professional setting. Stick to observable behaviours, not personalities.
Example: “In the last two meetings, you’ve interrupted others several times. That’s affecting team collaboration. Let’s talk about how to change that.”
2. Follow a clear process
Document all discussions, as recommended by the Small Business Fair Work guide (2024). This protects both you and your employee if things escalate.
Consider these steps:
- Provide written feedback outlining specific behaviours.
- Set measurable improvement goals.
- Review progress regularly.
3. Offer support and coaching
Sometimes, toxic behaviour stems from stress, miscommunication, or lack of role clarity. Offer mentoring or professional development where appropriate.
If the issue persists, escalate through a formal performance management process; but always stay within the Fair Work guidelines. (Small Business Fair Work – Managing Performance)
Building a Positive Culture to Prevent Toxicity
The best defence is a great culture. Create an environment where poor behaviour simply doesn’t fit in.
Hire for attitude
Skills can be taught, but attitude can’t. During recruitment, ask values-based questions like, “Tell me about a time you disagreed with a team decision. How did you handle it?”
Lead by example
Your team mirrors your behaviour. Model respect, accountability, and optimism.
Encourage open feedback
When your employees feel safe to speak up, they’ll raise issues early, before toxicity takes root.
When It’s Time to Let Go
Despite your best efforts, not every situation can be saved. If the toxic employee refuses to change, you may need to consider termination, but do it the right way.
Consult an HR advisor or employment lawyer before taking action to ensure compliance with Fair Work laws. You can also find guidance with The HR People.
Ending a toxic relationship is hard, but remember, keeping them can cost more. Protecting your culture protects everyone else on your team.
Real Story: The Apprentice Who Brought Down Morale
One of our clients, a plumbing business in regional Queensland, had an apprentice who constantly criticised others and ignored directions. The business owner hesitated to act, thinking, “He’s just young; he’ll grow out of it.”
Six months later, two senior tradesmen resigned. The owner finally stepped in, managed the issue properly with documented meetings, and eventually let the apprentice go. Within weeks, morale lifted and productivity soared.
This story isn’t unusual. It’s a reminder that leadership sometimes means making the tough calls.
Conclusion: Strong Culture, Strong Business
Toxic team members can do more damage than you realise, but you’re not powerless.
By identifying poor behaviour early, following fair processes, and fostering a culture of respect and accountability, you can protect your team and your business.
If you’d like expert support managing tricky HR or behavioural issues in your business, Accountants 2 Business can help.
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