The cost of toxic leadership in the workplace – and how to avoid it

You will probably recognise toxic leaders when you encounter them. They are the ones whose presence shifts the atmosphere, whose emails create unease, or whose behaviour limits the thinking of others. They often interrupt, frequently overlook contributions and hamper other people’s growth. While this behaviour is often seen as unfortunate but acceptable, the impact on employee wellbeing is corrosive.

Leadership^[1] shapes not only what people do, but how they experience their work and how they see themselves. In other words, leaders are responsible for the psychological environments they create. Research has highlighted leadership as a central influence^[2] on employee wellbeing.

Unfortunately, most employees report having experienced at least one toxic manager^[3] at some point. Even well-intentioned leaders may, at times, engage in toxic behaviour that diminishes others.

Our new research^[4] shows consistent declines across all dimensions of the wellbeing of employees who report to toxic leaders. Results from 273 employees highlighted negative impacts on emotions, engagement, relationships, meaning and accomplishment. The most pronounced effects showed up in their mindset and physical health, and affected employees said they experienced less enjoyment in their work and less sense of purpose.

From a psychological perspective, our findings are concerning. Positive emotions, engagement, healthy relationships, meaning and accomplishment are central to humans’ ability to thrive^[5]. Without these, work becomes something to endure rather than a context for growth.

These experiences rarely remain confined to the workplace; they tend to influence broader aspects of life. The happiness of employees^[6] has been found to have an impact on an employer’s bottom line – employees who experienced joy at work achieved 25% higher sales per hour, according to one analysis.

In fact, research has found^[7] that having emotional needs met, feeling valued and doing meaningful work could even be stronger predictors of performance than pay.

Leaders contribute to the energy of a workplace through their everyday interactions in what is known as “emotional contagion”^[8]. This is the process by which emotions and moods transfer between people through everyday interaction. When that energy is toxic, it can spread through teams and organisations, shaping how people feel and relate to one another.

The good news is that emotional contagion works both ways. Our research also looked at something known as “positively energising leadership” (PEL). This offers a way of understanding leadership as a force that enhances the capacity of others. Positively energising leaders are capable of producing extraordinary results and can drive positive outcomes in the workplace.

These leaders can be defined by two dimensions. The first is relational energy^[9] – the kind of energy that arises through interaction. For example, a manager who greets team members by asking about their weekend, listens to the answers and remembers them the next week can generate more relational energy in three minutes than a leader who sends dozens of emails over the course of a day.

Unlike physical energy, relational energy can be created and shared through attention, connection and presence.