by Julie Tuggle-Nguyen
It’s performance appraisal season again — a time when leaders reflect on the past year, set goals, and reward top-performing employees. But what if one of your highest performers is also one of your most damaging influences?
When performance clashes with culture, there is no quick fix. This is one of the most complex and consequential leadership challenges a business owner can face.
Why Keeping a Toxic High Performer Is So Costly
A “toxic” employee is someone whose consistently negative, disruptive, or harmful behavior undermines team morale, productivity, and trust. When this employee is a high performer, leaders often hesitate to dismiss them because the risk feels immediate: lost revenue, client relationships, or institutional knowledge. But the long-term damage of inaction is often far greater.
Research consistently shows that toxic high performers do more harm than good. A Harvard Business School study found that a single toxic employee can cost an organization more than $12,000 in avoidable turnover, and that replacing them is often more profitable than retaining even a superstar performer. Other studies show toxic behavior is one of the top drivers of voluntary turnover, disengagement, and loss of trust in leadership.
When you retain someone whose behavior violates your values, you send a clear message: results matter more than respect. Culture isn’t just defined by what you say; it’s also defined by what you tolerate.
Before You Confront the Employee: Do the Work
Before addressing the situation directly, preparation is critical to protect your company and ensure fairness.
1. Know your documents. Review employment agreements carefully. Has the employee signed a non-solicitation agreement preventing them from recruiting coworkers if they leave? Is there a non-compete or client non-piracy clause? Clear documentation protects your business and gives you options.
2. Document behavior, not opinions. Be factual and consistent. Record specific incidents, patterns, and impacts on the team. Avoid labeling the employee as “toxic”; instead, document behaviors that violate company expectations.
3. Assess your risks. Ask yourself honestly: What happens if this person leaves? Will clients follow them? Will sales drop? Understanding the risk allows you to plan for it — and mitigate it — rather than being paralyzed by fear.
4. Know your levers. In some cases, a severance agreement can be a strategic tool that protects the company while allowing both sides to move on. In others, candid feedback — especially for ego-driven high performers — may prompt a voluntary exit.
Be Proactive: Reduce Risk Through Strategic Planning
Situations like this often reveal weaknesses in your broader business strategy. If your success hinges too heavily on one individual, your organization is more vulnerable than you may realize.
1. Invest in succession planning. Identify successors early, cross-train, and document key responsibilities. If necessary, bring in talent or elevate someone internally as a short-term cost to reduce long-term risk.
2. Avoid single points of failure. Don’t put all your talent “eggs” in one basket.
I once worked at a large organization where one employee controlled all automated systems. Leadership tolerated years of clashes with this person because no one else had the knowledge. No single employee should control all mission-critical systems. No single salesperson should hold all key clients. Distribute knowledge and responsibility.
3. Define culture clearly and reinforce it daily.
Culture should be observable and measurable. Performance evaluations should assess how results are achieved, not just whether they are achieved. When expectations are clear, misalignment becomes easier to identify and address before it becomes a crisis.
When It’s Time to Act
If you’ve intentionally built a meaningful culture, you don’t abandon it because someone resists it. You own the business. You set the tone.
Address the behavior directly, calmly, and professionally. Be specific about expectations and consequences. Give the employee an opportunity to change, but be honest with yourself about whether change is realistic. If behavior doesn’t improve, follow through.
Every time leadership avoids action, trust erodes. High performers who do live your values begin to question why they should bother. And that’s when you lose the people you most want to keep.
The Bottom Line
Strong cultures aren’t built by avoiding hard conversations. They’re built by consistency, courage, and clarity.
Stay connected to your people. Pay attention to what feels off. Remember: protecting your culture is protecting your business.
Julie Tuggle-Nguyen is Chief Human Resources Officer at Midwest BankCentre.