When a manager consistently misses targets, their promotion prospects evaporate. But when a high-performing manager drives results while burning through talent, the story often ends differently. These are toxic managers, leaders who achieve results at the expense of their people, eroding trust, morale, and retention.
Across industries, organizations are rewarding output while overlooking the damage caused by toxic leadership. Short-term gains often mask long-term losses.
Research from MIT Sloan Management Review found that a toxic corporate culture is more than 10 times more predictive of attrition than compensation. Turnover, disengagement, and reputation costs compound quietly while the high-performing manager keeps rising. Yet a Harvard Business School study examining more than 50,000 employees found that “toxic workers” often appear more productive than their peers. The researchers concluded that avoiding just one toxic hire can save a company twice the value of hiring a top performer. It’s a productivity paradox: strong output conceals destructive leadership. That dynamic is perpetuated by how organizations evaluate and determine advancement tracks.
Why Toxic Managers Still Get Promoted
The Journal of Applied Psychology found in a 2023 study that managers were significantly less likely to penalize unethical behavior when it came from high performers. Researchers called this “motivated moral reasoning”: when leaders rationalize or excuse harmful actions coming from employees who deliver results. That bias helps explain why some toxic managers continue to advance despite the damage they cause.
Similarly, a meta-analysis published in Psychological Bulletin found that narcissism is positively correlated with leader emergence, the likelihood of being promoted, but unrelated to leadership effectiveness. In short, self-confidence and self-promotion can propel people upward even when those same traits later erode trust, collaboration, and team performance once they’re in the role.
Taken together, these findings reveal a consistent pattern: organizations that prioritize short-term results over people often reward visible performance today while overlooking the hidden and compounding costs, attrition, lost knowledge, and cultural erosion that surface tomorrow.
How Leading Companies Are Redefining Leadership
To address this issue, some organizations are starting to change how they define and measure performance. Microsoft’s Viva Insights platform now includes a “Manager Effectiveness Report” that tracks behaviors such as coaching, empowering, and connecting teams, not just hitting performance goals.
And LinkedIn’s 2024 research shows that employees promoted internally within three years have a 40% higher retention rate and a 79% increase in leadership promotions, highlighting the link between development, mobility, and strong management.
The metrics companies prioritize will shape the leaders they produce. Cultures that reward short-term results and bottom-line mentality tend to promote the very traits that allow toxic managers to thrive: competition over collaboration, control over coaching, and results at any cost. But when organizations measure how effectively leaders develop and advance others, the equation changes. Managers who rely on fear or extraction stand out quickly, while those who build trust, grow talent, and retain their teams rise faster.
These people-centered measures don’t just prevent toxicity, they build leadership capacity across the organization. Development, reskilling, and mobility ensure growth compounds through people, not despite them.
How To Use AI To Gain A New Competitive Advantage
Employee retention and engagement aren’t just HR concerns; they’re strategic indicators of organizational health. As AI and automation absorb routine work, what differentiates companies won’t be speed or efficiency, but human capability: empathy, mentorship, collaboration, and psychological safety, the very skills in which toxic managers have long underperformed.
Effective leadership in the age of AI will depend on building human capabilities, not just technical ones. Managers who feel empowered to focus more on coaching and collaboration, using AI tools to reduce the time spent on routine reports, will improve team performance.
For companies, that shift isn’t just ethical, it’s strategic. Measuring how well leaders grow, retain, and empower their people provides an early safeguard against promoting high-output but low-trust performers. In an AI-accelerated workplace, organizations that thrive will be those that invest in human leadership, the one advantage machines cannot reproduce.