Shop owners often underestimate how much a toxic employee really costs. Keith Katz learned it the hard way. For almost a year, he kept an employee whose behavior damaged his business, hurt his health, and drove away several valuable team members. In episode 48 of Maximum Octane, he shares the full story with Kim Hickey.
Keith has worked in the industry since 1981 and has owned Quality Service Center in York, Pennsylvania, since 1998. He explains why he hired the employee, the red flags he ignored, how the situation affected him, what he heard from his team after letting the person go, and the friendship that helped him through it.
What You Will Learn
- How did the story of Keith and his toxic employee start
- The toxic environment’s first victim. Keith loses a tenured internal customer
- How to spot a toxic employee before it is too late
- When toxic employees hold an entire organization hostage
- Why some shop owners maintain a toxic employee
- When we start hating going to work in our own shop
- As shop owners, sometimes we have to remember who makes the rules
- Sometimes, a friend’s hug is all we need
How the Story Started
Keith begins by explaining how he came to hire the employee in the first place. Like many owners, he needed help and saw qualities that seemed promising. The problems did not show up all at once. They built over time, which made them easier to excuse.
Many toxic employee situations begin the same way: an owner needs help, a candidate shows skill or confidence, and red flags are overlooked or explained away. Once hired, the employee’s behavior may be tolerated because they produce work or because replacing them seems difficult. Recognizing this pattern is the first step to avoiding it in the future.
The First Victim: A Tenured Employee
Around the 6 minute mark, Keith describes how the toxic environment claimed its first victim: a tenured member of his team who left. This is one of the most common and painful costs of a toxic employee. Good people do not want to work in a negative environment, and they have options. They leave quietly, and the owner may not realize why until much later.
ATI’s 4 Signs of a Toxic Workplace and How to Overcome It describes warning signs to watch for.
Losing tenured employees is especially damaging because they carry institutional knowledge, customer relationships, and cultural influence. When they leave because of a toxic coworker, the remaining team notices and may begin to question their own future at the shop. Exit interviews or honest conversations with departing employees can reveal whether a toxic dynamic is driving people away.
How to Spot a Toxic Employee Early
Keith shares the red flags he ignored and will never ignore again. While every situation is different, common signs include:
- Constant complaining or negativity about coworkers, customers, or management.
- Undermining leadership decisions behind the owner’s back.
- Creating conflict or cliques within the team.
- Refusing to accept feedback or take responsibility.
- Coworkers avoiding the person or asking to work elsewhere.
ATI’s How to Keep a Bad Attitude From Impacting Your Shop offers more guidance.
Research on workplace behavior has found that toxic employees can cost businesses more than they contribute, even when they are highly productive, because of their effect on coworkers’ morale, turnover, and performance. A single toxic person can reduce the productivity of an entire team. That makes early identification and action important.
When One Person Holds the Shop Hostage
Around the 12 minute mark, Keith explains how toxic employees can hold an entire organization hostage. Often, the toxic person is highly skilled or productive, which makes the owner afraid to lose them. That fear gives the employee leverage. Meanwhile, the rest of the team watches and wonders why the owner tolerates the behavior.
Breaking free from this situation often requires preparing for the worst case. That might mean cross-training others in the toxic employee’s skills, recruiting replacements quietly, or accepting a temporary dip in production. Once the owner is no longer dependent on one person, it becomes much easier to address the behavior or make a change.
Why Owners Keep Toxic Employees
Keith discusses why some owners hold onto toxic employees. Fear of losing production, the difficulty of hiring, and hope that things will improve are common reasons. But as Andrew Neitlich says in Regaining Control and Blowing the Smokescreens Away, leaders get what they tolerate.
Owners also keep toxic employees because confrontation is uncomfortable. Many owners avoid conflict and hope problems will resolve themselves. Unfortunately, toxic behavior rarely improves without clear consequences. Addressing it early, with documented conversations and clear expectations, gives the employee a chance to change and protects the owner if termination becomes necessary.
When You Hate Going to Your Own Shop
One of the most honest moments of the episode comes around the 24 minute mark, when Keith describes reaching the point where he hated going to work at his own shop. The stress affected his health and his outlook. Many owners will recognize that feeling, and Keith’s openness about it is a reminder that they are not alone.
Dreading your own business is a serious warning sign. It affects health, relationships, and decision-making. Owners who reach this point should take it seriously and seek support, whether from a coach, peer group, counselor, or trusted friend. Often, the source of the dread can be identified and addressed, restoring the satisfaction that led them to start the business.
Remember Who Makes the Rules
Keith reminds owners that they make the rules. It is the owner’s responsibility to protect the team, the culture, and the business, even when it means a difficult decision. Handling terminations properly, with documentation and appropriate legal guidance, protects everyone. ATI’s 10 Actionable Tips for Mastering Tough Conversations With an Employee can help.
Owners have both the authority and the responsibility to protect their teams. Allowing toxic behavior to continue sends a message that the owner values one person’s output over everyone else’s well-being. Taking action, even when difficult, shows the team that standards matter and that their well-being is a priority.
Because employment rules vary by state and situation, many owners talk with an employment attorney or HR professional before a termination, especially when an employee has been with the shop a long time. That conversation can confirm that documentation is adequate and the process is fair.
The Power of a Friend’s Hug
Keith closes with a moving message about friendship. Sometimes, what a struggling owner needs most is someone in their corner. Having peers who understand the pressures of running a shop can make all the difference. ATI’s Peer Networking Groups give owners that kind of support.
Running a business can be lonely. Owners often carry burdens they cannot share with employees or even family. Friends and peers who understand the pressures of ownership provide support that is hard to find elsewhere. Keith’s story is a reminder to build those relationships before you need them, and to be that friend for others when they are struggling.
Preventing Toxic Hires
Preventing toxic hires starts with a thorough hiring process. Behavioral interview questions that ask candidates to describe how they handled conflict, feedback, or mistakes can reveal attitudes. Reference checks, especially conversations with former supervisors, provide valuable insight. Trial periods or working interviews allow both sides to see whether the fit is right before a long-term commitment.
It also helps to involve the team in hiring decisions. Current employees often pick up on red flags that owners miss, and their buy-in makes new hires more likely to succeed.
Rebuilding the Team After a Toxic Employee Leaves
Letting a toxic employee go is a relief, but it is also the start of a recovery period. The remaining team may have been carrying extra stress for months, and some may wonder why it took so long. A short, honest team conversation helps. Owners do not need to share private details, but they can acknowledge that the environment was not what it should have been, thank the team for their patience, and describe what will be different going forward.
The next steps focus on stability and trust. Redistribute work thoughtfully so no one is overloaded while the position is filled. Check in individually with team members, especially those who worked most closely with the departed employee, and ask what they need. Review whether any processes, customer relationships, or records were affected. Then take time to hire the right replacement rather than rushing. Many owners find that once a toxic presence is gone, the existing team becomes more productive and more willing to speak up, which is a sign the culture is healing.
Questions to Ask If You Suspect a Toxic Employee
- Has anyone left, or talked about leaving, because of this person?
- Would you hire this person again knowing what you know now?
- What is the team learning from how you handle this behavior?
- Who can you talk to for an outside perspective?
For more on changing your team when needed, listen to If Your People Can’t Change, You Have to Change Your People. Lee Anderson discusses mental health and team support in Fixing the Unseen.
Frequently Asked Questions
What are the signs of a toxic employee?
Common signs include constant negativity about coworkers, customers, or management, undermining decisions behind the leader’s back, gossip, creating cliques or conflict, refusing feedback, and blaming others for mistakes. Another strong signal is how others respond: coworkers avoiding the person, asking to work different shifts, or leaving the company. A toxic employee may be highly skilled, which can make the behavior easier to excuse. Watching the effect on the rest of the team gives a clearer picture than looking at individual output alone.
How much does a toxic employee cost a business?
The cost is often much larger than it appears. Toxic behavior can drive good employees to leave, lower team morale and productivity, increase mistakes, and damage customer relationships. Replacing departed employees takes time and money for recruiting and training. The owner’s own stress and distraction also carry a cost. Because many of these effects are indirect, owners frequently underestimate them until the employee is gone and the team’s performance and mood improve noticeably.
How should a shop owner deal with a toxic employee?
Address the behavior early and directly. Describe specific actions and their effect on the team, set clear expectations, and explain the consequences if things do not change. Document each conversation. Follow up consistently and apply the same standards you would to anyone else. At the same time, reduce the shop’s dependence on that person by cross-training others. If the behavior continues, be prepared to make a change, and consult an employment attorney or HR professional to make sure the process is handled properly.
Why do business owners keep toxic employees too long?
Common reasons include fear of losing a skilled or productive person, worry about how hard it will be to replace them, discomfort with confrontation, loyalty, and hope that the behavior will improve. Sometimes the owner simply does not see the full effect because the team hides it. Recognizing these reasons helps owners make clearer decisions. Asking “would I hire this person again knowing what I know now?” often cuts through the uncertainty quickly.
How can I avoid hiring a toxic employee?
Use a structured hiring process. Ask behavioral questions about how candidates handled conflict, feedback, and mistakes, and listen for whether they take responsibility or blame others. Check references with former supervisors, not only personal contacts. Involve team members in interviews, since they often notice warning signs. Consider a working interview or trial period. Most importantly, do not let urgency override judgment. Hiring the wrong person quickly is usually more costly than taking a little longer to find the right one.
Resources and Links From This Episode
- Quality Service Center’s website
Connect With the Guests
- Keith: LinkedIn
