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Interview
Professor of economics
Study of Toxic Bosses: “Bad Leadership Costs Money”
Toxic leadership behavior hurts companies enormously, according to a new study.
© Getty Images
How common is harmful leadership behavior and what are the consequences? Here’s what business administration professor Christina Hoon researched. In an interview, she reports on the toxic effects that massively harm companies.
Ms. Hoon, you examined around 40,000 entries on Kununu’s employer rating platform to find out how common toxic leadership is. How much do workers suffer from the poison of their bosses?
Overall, we found good leadership behavior in the data. Only one in five employees rate the leadership behavior of their bosses negatively. However, a large number of companies are still affected: We examined the reviews of 148 employers, 85 percent of them showed negative management behavior.
What is bad leadership behavior in this context?
We speak of negative leadership behavior when someone describes their supervisor as destructive, abusive, or aggressive. It mainly has to do with yelling or other types of pressure. The scientific term is “abusive supervision”, in German we usually just mean bad or destructive leadership behavior.
Christina HoonThe 48-year-old is Professor of Economics at Bielefeld University. He is the holder of the endowed chair of business administration, in particular the management of family businesses.
© Stefan Sättele
What are the consequences of destructive leadership behavior?
We can show very clearly that bad leadership behavior has negative effects. Even if there are only a few bad managers in an organization, there is a statistically significant probability that the level of satisfaction will be lower. Our data also shows that companies in which the satisfaction climate falls are also less efficient than companies with good management. From this it can be deduced: bad leadership costs money.
What else did you observe?
That bad leadership is toxic. If employees rate leadership performance in top management poorly, it is very likely that they rate the leadership behavior of their line managers as poor. Therefore, the negative effect that bad leadership has at the top of a company is much stronger than previously believed. Because not only the direct employees of the head of the company are affected, but this toxic effect leaks out to ordinary employees.
Fish stinks from the head.
I agree. You could also call it that.
Therefore, poor leadership often leads to poor company performance. However, this is not always the case. It has also found spectacular exceptions.
It’s really exciting. Because we have seen: if the leadership is too soft, it is not good for the company either. A hug class can also lead to low satisfaction and poor performance.
And then there’s the other extreme that you call “Hell’s Kitchen.” What’s it all about?
That was about 16 percent of the companies. There was a toxic management atmosphere there, and yet the employees were satisfied and made sure the company ran well. This shows that there are definitely companies for which a tougher management style can be good.
What type of companies are they, is it typical of certain industries?
Unfortunately, our study does not show whether this is typical for certain industries. But perhaps you can imagine a kitchen with a Michelin star where the tone is a little rougher and the results are still very good. That’s why we call this type of company “Hell’s Kitchen”. Also in the hospital setting, we know from other research that tougher relationships are often maintained there and that teams still work together very successfully.
He also analyzed whether family businesses have a better management culture than other companies. Which it was the result?
It is often said of family businesses that there is a factor of special concern. Our study now shows that the scope of “abusive supervision” is similar there. In family businesses, per se, there is no better management climate. But: Interestingly, bad leadership does less damage to these companies. Despite bad bosses, employee satisfaction doesn’t decrease that much.
Why is that?
We can only speculate. Perhaps it’s long-term family work relationships, a greater sense of responsibility for employees, or the values of the entrepreneurial family. In any case, there seems to be a certain buffer effect that ensures that poor leadership in family businesses has a lesser impact on employee satisfaction and company performance.
What should companies get out of their study?
That bad leadership costs money, and so you have to do something about it. I often hear things like “Yes, that’s right” or “We can take it” from companies. But ignoring or enduring is wrong. Companies should also react to individual cases of toxic leadership, otherwise they would set the whole cabin on fire.
