Impact of Toxic Leadership on Employee Performance

Introduction

To accomplish corporate objectives, individuals typically collaborate with one another. When there are more than two people working in the same space, there needs to be some kind of management system in place in order to get the job done. During this phase of the process, the manager or leader directs and controls the personnel in order to accomplish the desired goals of the company. Because leadership plays such a crucial role in determining whether a business will be successful or not, it is imperative that leaders possess the skills necessary to guide and inspire their people. However, some leadership approaches have a detrimental impact on employees and the work environment.¹ In point of fact, over the course of the past few years, there has been a rise in the prevalence of toxic leadership styles in businesses.²

Toxic leadership phenomena will lead to moral crises such as the recent one, employee abuse at Amazon, mishandling and monetization of personal user data by Facebook and unrepentant discrimination at Uber.³ This is in conjunction with the findings of a recent poll conducted by Life Meets Work Consulting, which revealed that as many as 56% of employees presently work for a toxic CEO whose behavior fosters an unhealthy work environment. In point of fact, around one third of all leaders are capable of exhibiting this unhealthy form of leadership.² Therefore, a number of employees have been put in situations where they have been exposed to leaders and managers whose behavior displays a toxic style.

Toxic leaders may be highly competent and effective in their work, but they contribute to creating an unhealthy environment among their subordinates and peers, with the consequences of their actions reaching more than just a few individuals. This was one of the early findings from research conducted on the topic.² Toxic leadership can occur for a number of reasons, one of which is when the leader’s own personal agenda is prioritized above the organization’s long-term success.⁴ Reduced productivity as a result of increased absenteeism and illness; decreased employee performance as a result of a lack of commitment and dissatisfaction in their work. In addition, organizations lack the experience and ability to counteract the effects of toxic leadership. The impact on organizations has to pay for the hidden costs incurred by the dysfunctional behavior of toxic leaders. These costs include: reduced productivity; decreased employee performance; and decreased employee performance. work, legal fees, and other expenses.⁵

The phenomenon of toxic leadership is becoming more and more widespread in the management literature, and it has intrigued a great deal of scholars in recent years.⁶ Recent studies have looked into the negative aspects of leadership and the effects that toxic leadership has on the mental health of employees and the success of businesses.⁷ A lack of effective leadership is not the only definition of toxic leadership; rather, it appears that toxic leadership is a leadership style in its own right.² For the purposes of this investigation, we made use of toxic leadership constructs. Toxic leadership is a major component of shadowy leadership, and it is similar to a poison in that it can spread covertly and unnoticed. Toxic leadership not only taints individuals, but it also has an effect on groups, and ultimately, the entire organization.⁸

According to the research that has been conducted, toxic leadership is one of the potential antecedents of increased turnover intention, employee dissatisfaction, lack of commitment, and psychological stresses such as anxiety, burnout, depression, disengagement, low self-esteem, emotional exhaustion, and employee silence. According to academics, leaders’ displays of toxic behavior have a significant and profoundly negative impact on the organizational learning and performance of their organizations.⁹ It is equally interesting to note that toxic leaders never regard their behavior as being negative, and they always believe that their behavior is socially acceptable. This is an interesting fact since it explains why toxic leaders continue to engage in such activity.^8,10

The purpose of this study is to provide a deeper understanding of the influence that toxic leadership has on the levels of happiness, motivation, and performance experienced by employees. A more in-depth examination of toxic leadership from an academic standpoint involves limited empirical investigation of the relationship between toxic leadership and work-related outcomes.² This is essential as an essential input for the resolution of general and individual issues pertaining to learning and performance. An research of this kind into toxic leadership is required since, to this day, no studies in Indonesia have sought to assess the impacts of toxic leadership on organizational leaders. This makes it imperative that such an inquiry take place.

When designing appropriate interventions to facilitate effective leadership and developing relevant policies to reduce the emergence of toxic behavior in organizations, it can be helpful to have knowledge of the various factors that cause toxic leadership behavior in managers. For example, knowing the various factors that cause toxic leadership behavior in managers can help. Because of this, the investigation of this characteristic will assist businesses in evaluating toxic leadership in the sector, and it will also contribute to the scant body of research that is presently accessible on the subject.

Literature Review

Toxic Leadership

A damaging form of leadership that may have a detrimental effect on both organizations and individuals is referred to as toxic leadership. However, the phrase is not defined in any specific manner in the relevant literature, and there is as of yet no general agreement on how to answer the topic of whether leadership actions are seen as unsuitable, damaging, and toxic to companies.¹⁰ A leadership style that is toxic to its followers and, as a result, to the organization they work for is called toxic leadership.¹¹ Toxic leadership can be defined as a pattern of behaviors that are not only harmful but also encourage leaders to pursue their own personal objectives and benefits at the expense of the interests of their team members and the organization as a whole. The damaging behavior of leaders in the workplace has the potential to trickle down to lower-level personnel in the organization.⁹

Scholars have defined toxic leadership as “a type of leadership characterized by abusive behavior used to bully or manipulate people.”¹² This type of leadership is also referred to as destructive leadership, dark leadership, or, more simply, poor leadership. Implicit behavior has a significant impact not only on individuals on a psychological, emotional, and economic level, but also on the organization itself – in the form of high staff turnover, increased cynicism, reduced loyalty to the organization, and counterproductive work behavior by employees.¹²

Armitage defines toxic leaders as “managers that intimidate, threaten, shout, and whose mood swings define the office ambiance on any given workday, leading staff to talk in cubicles and halls; slandering, disparaging bosses,” among other characteristics.¹³ To put it another way, when leaders cause significant harm to individuals as well as organizations, we call them toxic.¹⁴ Adem describes the three basic elements of toxic leadership as “lack of concern for subordinates’ well-being, personality or interpersonal techniques that negatively affect organizational climate and subordinates’ belief that leaders are motivated primarily by self-interest”.¹¹ There are specific patterns of conduct that are exclusive to the idea of toxic leadership. For instance, presenting a toxic agenda as a noble vision, pitting in-group members against out-group members, and ostracizing/disarming employees are behavioral characteristics that are only associated with toxic leadership. On the other hand, demeaning/marginalizing, or demeaning, mocking/mocking, blaming others on the fault of the leader, and blaming others on the fault of the leader are behavioral characteristics that are associated with healthy leadership.^11,15 As a result, drawing the conclusion that toxic leadership practices create an environment in which unfavorable organizational behavior can flourish might not be an entirely incorrect assumption. It’s possible that bullying other employees will be easier to do in a hostile work atmosphere. This is due to the fact that a poisonous environment may tacitly allow for such behavior, despite the fact that it is undesirable.¹⁰

Work Motivation

The level of motivation to work is the second factor. A circumstance or action that stimulates someone to accomplish a job or activity as much as possible to do, produce, work hard, and enthusiastically reach ideal results is referred to as work motivation.^16,17 Motivation is all the conditions of hard work from within, known as hopes, desires, drives and drives. Second, motivation is a combination of forces that directly initiate and sustain behavior toward goals. The performance component has a direct connection to the motivational factor, and if employees have a high level of motivation, it can also improve their level of high performance. Furthermore, the findings of his study indicate that the level of employee performance is influenced by the degree to which workers are motivated in their jobs.^17–19 However, toxic leaders reduce follower motivation and performance.¹⁰ The research conducted by Indradevi demonstrates that toxic leadership can have repercussions at the individual level as well. Some of these repercussions include a loss of motivation, sexual harassment, and decreased job satisfaction. In addition, employees whose self-esteem is ignored show low self-confidence, which causes a drop in individual performance. This is a result of the employee’s lack of motivation.²⁰

Job Satisfaction

Job satisfaction is the third variable under consideration in this study. Job satisfaction is a mental state determined by the degree to which individuals perceive their work-related needs to be met.²¹ When people talk about employees’ work attitudes, they refer to their job satisfaction.²² The nature of the work, the level of supervision, the perks, the contingent rewards, the operating procedures, and the people one works with are some of the components that can be categorized as factors that contribute to job satisfaction.²³ Job-related satisfaction has become a robust research variable in organizational behavior because of its wide prevalence in individual employees’ personal and professional lives. Job satisfaction is more than just an attitude that explains a person’s internal state, both qualitatively and quantitatively, according to the findings of several studies that have been conducted by a variety of researchers who have emphasized the significance of job satisfaction and the factors that led up to it.²³ The emotional connection that an employee has towards his or her work is referred to as job satisfaction. One way to look at it is as an overarching sentiment regarding one’s job, while another is as a constellation of interconnected points of view regarding different facets of one’s job.²⁴ Satisfaction is a stepping stone to engagement; therefore, the organization needs to match the work’s goals with the employee’s individual goals to feel comfortable with his work.²⁵

Toxic leadership, on the other hand, has a detrimental effect on low levels of commitment and satisfaction (Croft 2016). Furthermore, toxic leadership has a negative impact on turnover, job dissatisfaction, and organizational commitment.²⁶ Paltu and Brouwers² showed that there is a statistically significant inverse association between toxic leadership and work satisfaction. On the other side, a person’s level of contentment in their job is the single most critical element in determining the motivation, efficacy, retention, and performance of their workforce.

Employee Performance

The performance of the employees is the fourth variable in our investigation. The extent to which an employee contributes to the success of their employer and the responsibilities that have been delegated to them both factor into their performance as employees.^27,28 Assessing an employee’s performance is determining whether or not they are effectively carrying out their duties within their organization. Additionally, it is a rating system that is utilized by the majority of businesses in order to ascertain and assess the capabilities of an individual.²⁹ Extensive literature reviews suggest that toxic behavior results in counter-productive work behavior. Previous research has found that toxic leadership behaviors lead to turnover intention, decreased satisfaction, lack of commitment, and low performance¹¹ and psychological stresses such as anxiety, depression, fatigue and detachment. Additionally, as a result of the abusive behavior of the leadership, employees exhibited signs of emotional tiredness and silence.⁹ When their feelings of self-worth are attacked, employees’ self-confidence as well as their individual performance will decrease, is another study that supports our work in which the sub-dimensions of toxic leadership namely unappreciativeness, self-esteem and self-seeking have a negative correlation with job satisfaction and employee performance.²⁶

Hypothesis

H1: Toxic leadership affects job satisfaction

H2: Toxic leadership affects work motivation

H3: Toxic leadership affects employee performance

H4: Job satisfaction affects work motivation

H5: Job satisfaction affects employee performance

H6: Work motivation affects employee performance

Figure 1.Research Model

Methods

The investigation was carried out in Indonesia. Indonesia is the fourth largest country in terms of population. The investigation was carried out between April and August of 2022. This research employs a quantitative methodology, utilizing questionnaires and structural equation modeling (Structural Equation Modeling). Due to the constraints imposed by the Indonesian government as a result of the COVID-19 outbreak, which hindered in-person interviews, we collected data using research instruments by delivering questionnaires to employees using Google Forms. After that, the application Lisrel 8.5 was utilized to get the desired results. The participants in this study are people working in the private sector in Jakarta. The researchers chose to employ a nonprobability sampling strategy in conjunction with a purposive sampling approach for the sampling technique. 400 samples were utilized in this study. The author divides 400 respondents into 8 locations in Indonesia.

The items were evaluated using a Likert scale with five points, with one representing strong disagreement and five representing strong agreement.³⁰ According to the recommendations made by Hair et al.³¹ and Yamin and Kurniawan,³² the null hypothesis H0 would be rejected if the t-value was higher than 1.96, but it would not be rejected if the t-value was lower than 1.96.

The questionnaire for this investigation had 32 questions, each of which was answered and returned by one of the study’s 400 participants. The university’s study ethics office gave its stamp of approval to the ethical requirements that were followed for this study on July 31st, 2022. This division is responsible for ensuring that the permission form adequately describes the goal of the study, encourages participants to participate voluntarily, and protects the confidentiality of their responses. Table 1 presents the sample statistics in a descriptive format for your perusal.

Results

Respondents

This section describes the distribution of respondents in terms of their social status and demographic profile.

Table 2 shows the distribution of respondents based on social status and demographic profile. Of the 400 respondents, 260 (65%) are male, and about 140 (35%) are female. Furthermore, 266 (67%) of the respondents are married, about 134 (33%) respondents are single.

Likewise, 69 (17%) respondents’ age range was <26 years, about 109 (27%) 26-30 years, while 199 (50%) 31-35 years, then 23 (6%) were 36 -40 years. Furthermore, 86 (22%) reported having completed education up to high school, as many as 3 (1%) completed up to Diploma, while 310 (77%) to Under Graduate, then 1 (0%) completed up to Graduate.

Data Validity and Reliability Testing

The Convergent validity of each variable in terms of a t-value and standardized solution is displayed in Table 3.

Twenty of the 32 statements in Table 3 are invalid and must be eliminated because their loading factors exceed the crucial value 1.96 and have a standardized factor loading (SLF) of 0.5.^31,32,35

These are: statement 1: "Denies responsibility for mistakes made in his unit " (t-value: 5.80; SLF: 0.31), statement 8: “Is inflexible when it comes to organizational policies, even in special circumstances” (t-value: 7.04; SLF: 0.37), statement 10: “I was given adequate rest time by the company for 1 hour” (t-value: -6.69; SLF: -0.59), statement 11: “I have good health insurance” (t-value: 0.25; SLF: 0.02), statement 13: "My boss always gives encouragement and solutions to me in completing work " (t-value: -5.18; SLF: -0.37), statement 14: “I enjoy working with co-workers” (t-value: 0.37; SLF: 0.02), statement 15: “Bosses give praise to employees who perform well” (t-value: 5.06; SLF: 0.36), statement 16: “The company gives awards to outstanding employees” (t-value: -3.58; SLF: -0.24), statement 17: “The company gave me the opportunity to be creative at work” (t-value: 2.55; SLF: 0.16), statement 18: “The company provides opportunities for employees to participate in training to improve work results” (t-value: 0.20; SLF: 0.01), statement 20: “Those workers who perform admirably in their jobs have a good opportunity to advance in the company” (t-value: -9.47; SLF: -0.75), statement 21: “I like my boss” (t-value: 1.35; SLF: 0.08), statement 23: “My boss is a reasonably competent worker when it comes to completing his or her job” (t-value: -5.92; SLF: -0.37), statement 24: "My job is enjoyable " (t-value: -0.94; SLF: -0.05), statement 25: “I take pleasure in the responsibilities that come with my job” (t-value: 5.07; SLF: 0.31), statement 26: “The benefits package that they offer is fair to all employees” (t-value: -2.26; SLF: -0.13), statement 27: “There are advantages that are not available to us that we ought to have” (t-value: -0.36; SLF: -0.02), statement 29: “I receive significant recognition for a job well done” (t-value: -8.28; SLF: -0.90), statement 30: “I meet the formal performance requirements of the job” (t-value: 4.47; SLF: 0.26), statement 32: “I take the initiative in doing my job” (t-value: -5.80; SLF: -0.35).

Table 4 demonstrates that the construct reliability values for all variables are satisfactory because the projected CR value is better than 0.7 and the AVE value is greater than 0.5^31,32,35 which are toxic leadership (CR: 1; AVE: 0.99), work motivation (CR: 0.76 ; AVE: 0.99), job satisfaction (CR: 0.91 ; AVE: 0.99), and employee performance (CR: 0.82; AVE: 1).

Hypothesis Testing

Table 5 shows that the goodness of fit value is acceptable as follows: P-Value for RMSEA (0.000), Parsimonious Normed Fit Index (0.57), Comparative Fit Index (0.70), Incremental Fit Index (0.70).

Table 6 shows the results of the study that in hypothesis 1, toxic leadership have effect on job satisfaction (p > 0.00), hypothesis 2 shows that toxic leadership have effect on work motivation (p > 0.00), hypothesis 3 shows that toxic leadership have no effect on employee performance (p < 0.00), hypothesis 4 shows that job satisfaction have effect on work motivation (p > 0.00), hypothesis 5 shows that job satisfaction have effect on employee performance (p > 0.00), hypothesis 6 shows that work motivation have no effect on employee performance (p < 0.00)

Discussion

This study aimed to determine whether there is a correlation between toxic leadership, work satisfaction, motivation, and employee performance inside the organization. According to the findings of the first and second studies, toxic leadership has an impact on job satisfaction and work motivation. This is in line with Indradevi’s research²⁰ who revealed that toxic leadership reduces employee job satisfaction and motivation. Such as abusive supervisory factors and extrinsic work factors.² Toxic leadership can play a role in fostering the growth of toxic organizational culture, which in turn has the potential to pave the way for the emergence of other toxic leaders in the future. For individual workers, the experience of toxic leadership behaviors in the workplace is associated with unfavorable job outcomes such as decreased job satisfaction, decreased job involvement, job withdrawal, decreased attendance, decreased work motivation, low morale, and negligent behavior. —such as intention to leave the company and absenteeism. Working for a company that is led by toxic individuals almost always results in problems with quality, a terrible working environment, and a low degree of safety within the organization.⁶

Even in military field studies, toxic leaders create contexts in which service members are less civilized to one another, which in turn will result in lower job satisfaction and organizational commitment. Toxic leaders create contexts in which toxic leaders create contexts in which service members are less civilized to one another.³⁶ Those who are negatively impacted by toxic leadership may also pass this negative effect on to their family, friends, and significant others in the form of attacking others and/or a lack of communication. This is the larger impact that toxic leadership has.³⁷ When looked at from another perspective, often the underlying principle of toxic leadership is that it is “viewed as a detractor of the motivation, alignment, and commitment to organizational goals that serve as hallmarks of good leadership”.³⁸ This will have an impact on justifying the actions of the toxic leader.⁶ Numerous studies have shown that whatever the short-term benefits that toxic leaders bring to any organization, in the long run the hidden costs of their behavior are incomparable, leading to dysfunction and even destruction.⁵ Therefore, employees who work with toxic leaders have only two choices: to fit in or leave.

According to the findings of the third study, toxic leadership has no influence on employee performance. This result contradicts previous research where toxic leadership affects employee performance.³⁷ Toxic leaders are those who aim to exert their influence over their followers by a variety of strategies and to exert control over them, which in turn impedes their job activities and decreases their performance.¹⁰ Research done in the past has demonstrated a connection between toxic leadership and low morale among staff members, which in turn leads to lower levels of productivity. This process is similar to a slow-acting poison that slowly destroys its surroundings. Barriers to work performance along with helplessness and frustration isolate employees from one another, leading them to believe they are powerless.³⁹

However, research on the contrary suggests that toxic leadership is a good thing and follows voluntarily. This employee will probably be groomed to become the next generation of toxic leader.⁴ Supporting this logic, toxic leaders are more likely to be described as creative and courageous than non-toxic leaders.³⁶ The authors argue that toxic leadership does not appear to affect their performance because employees try to neutralize the leader’s harmful effects through solutions and more importantly by learning. This is corroborated by the statement of Dobbs & Do³⁸ that followers can fight toxic environments by questioning suspicious dynamics, challenging accepted assumptions, and confronting the behavior of others.

The results of the fourth study and fifth study explain that job satisfaction have effect on work motivation and employee performance. Research conducted by Al Mehrzi⁴⁰ which states that satisfied employees will have good performance. Employees who are satisfied with their organization from such aspects of constant supervision and guidance can contribute to employee motivation and work performance.² While the opposite result is stated in the eighth hypothesis which shows that work commitment has no effect on employee performance. This result contradicts research conducted by Chandani²⁵ which states that employees who are committed to the company will have good performance. This may happen if the employee is already in a comfort zone, does not want to develop and try new challenges, it will not affect the employee’s performance.

Conclusion

The results of this study indicate that toxic leadership has an effect on job satisfaction and motivation. Similarly, job satisfaction influences employee motivation and performance. On the contrary, toxic leadership has little impact on staff performance. Similarly, work engagement has no bearing on employee performance. The results of the study have relevant implications for organizations that early detection and anticipation related to toxic leadership must be considered by organizations. There are several strategies that can be carried out by the organization. First, the process of screening and selection of leaders. The employee search and selection committee charged with recruiting, choosing, and promoting personnel must be able to recognize potentially dangerous applicants. Second, the establishment of ethical ideals and a toxic-behavior-free workplace culture. Promote healthy interactions and two-way communication through promoting collective decision-making and open communication between staff and bosses. Fourth, discretion in the process of evaluating performance and awarding leaders; if something goes wrong, it could result in the selection of the next toxin-producing leader. Fifth, build an anonymous channel for whistleblowing so that subordinates can report the toxic leader’s errors. Create stress management and self-resilience training to help employees regulate their emotions in a healthy manner and improve their defenses so that they can effectively avoid exhibiting toxic behavior.

Research Limitations and Future Research

This study only examines one area. Future research is expected to explore more areas with a larger sample. Then it can be investigated using other variables outside of this study to add to the treasures of knowledge.

 

 

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The datasets generated and analysed in this study are available from the corresponding author on reasonable request.