When A Leader Is The Toxic Employee

Jay Korpi, Founder of Piqued Solutions. Finance leader guiding capital strategy, growth, and risk; podcast host of The Beard & The Bowtie.

We fire toxic employees to protect culture, but what happens when the toxicity is coming from the top?

“Cut the cancer quickly.” That’s the conventional wisdom when it comes to toxic employees. And to be fair, it’s not wrong. We’ve all seen how one person with a bad attitude, unchecked ego or manipulative tendencies can demoralize an entire team. Left alone, their behavior metastasizes, undermining trust, blocking collaboration and driving good people out the door.

But there’s a dangerous blind spot in this advice.

What happens when the toxicity isn’t festering in the break room but emanating from the boardroom?

What if the person eroding your company’s culture, driving out top performers and quietly bleeding your bottom line is in leadership?

When Leaders Create Churn

We don’t talk enough about toxic leadership, probably because it’s uncomfortable to acknowledge, especially when the person in question controls the budget, the narrative and the org chart.

But if a toxic employee can cost a company tens of thousands in lost productivity, what does it cost when the person responsible for hiring, mentoring and scaling teams is the problem?

It’s far worse.

Toxic leaders don’t just drive people away; they drive the best people away. The ones who won’t tolerate dysfunction. The ones who won’t stay silent when things are broken. The ones who see red flags early and have options elsewhere—even if it means starting their own business.

The Real Cost Of Leadership-Driven Turnover

Let’s talk dollars and sense.

According to SHRM, replacing an employee can cost 50% to 250% of their annual salary. That’s just the financial side. You’re also losing tribal knowledge, customer rapport and momentum. Each departure creates an operational vacuum. Someone else has to pick up the slack. Projects stall. Deadlines slip. The burden gets heavier, not lighter. High churn rates in teams with consistent leadership? That doesn’t go unnoticed by clients, investors or potential recruits. The good folks who decide to stay? They’re carrying more weight, questioning leadership and often on their way out, too. Silent attrition becomes the next crisis.

I’ve seen contracts lost or cancelled because clients got tired of being reintroduced to a new point of contact every few months. I’ve seen brilliant engineers walk because their creativity was smothered by micromanagement. I’ve seen culture-killing behavior dismissed because “that’s just how [insert exec name] is,” and people have to accept that reality. Why don’t we typically hold leadership to the same expectations as employees when it comes to toxicity? Is it because we’ve invested so much time and money into them, or perhaps because we can’t look like we made a mistake, so we say, “We can fix them, train them, mentor them …”

We tell ourselves: “We can’t afford to lose that leader.” But the truth is: We can’t afford to keep them.

What Does Toxic Leadership Look Like?

It’s not always overt abuse. Sometimes it’s more insidious:

• Public praise, private sabotage

• Leading through fear instead of inspiration

• Insecurity masked as control

• Taking credit, dodging blame

• Favoritism disguised as “high standards”

And let’s be real, sometimes the toxicity doesn’t come from a middle manager. It comes from the founder, the CEO, the person who started it all. These leaders may be brilliant visionaries, but vision without emotional intelligence is a dangerous mix. When accountability doesn’t scale with power, what you end up with isn’t leadership; it’s dysfunction in a crown.

The tricky part? Toxic leaders often don’t know they’re toxic. They’ve risen through the ranks. They’ve hit their numbers. They were delusional with the idea that they could do it better than anyone else, even though their only experience was skating through four jobs at a junior level. Somewhere along the way, they stopped being coachable or they never were.

Leadership: Shouldn’t Be Immune To Accountability

If we’re serious about building healthy, high-performing organizations, we need to stop exempting leadership from the same scrutiny we apply to employees.

Founder-led companies are especially vulnerable. Employees often feel trapped; either they toe the line or risk being seen as “not aligned with the mission.” Investors might hesitate to challenge a toxic CEO if the business is still growing on paper. But ignoring the problem doesn’t make it go away. It makes it metastasize. Accountability must be built into the structure, not just the roles.

So where do we start?

360-Degree Feedback

Let your team evaluate their managers anonymously. True leaders welcome feedback, even when it’s uncomfortable. And it needs to truly be anonymous.

Cultural Health Checks

Don’t just survey for “engagement.” Dig deeper. Are people staying because they believe in the mission, or because they fear retribution?

Leadership Coaching (Not Just For The Willing)

Sometimes, leaders need help recognizing the ripple effects of their actions. Offer coaching, but make clear it’s not optional when patterns emerge.

Exit Interview Trends

If multiple high performers leave under the same leader, that’s not coincidence, it’s correlation. Investigate it.

Tying Leadership Bonuses To Retention

If employee churn impacts revenue (it does), make it impact leadership incentives too.

When The Emperor Has No EQ

If you wouldn’t tolerate a toxic engineer poisoning team morale, why tolerate a VP or CEO doing it at scale?

Culture isn’t built by ping pong tables or all-hands hashtags. It’s built or broken by the way people feel about their leaders. And when leadership is the source of toxicity, it’s not just a people problem; it’s a business risk.

Companies hemorrhage talent and cash every day because no one wants to admit the emperor has no emotional intelligence.

It’s time we asked the hard question: If toxic employees are a threat to your bottom line, what happens when the toxic employee is the bottom line?

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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