How a Philly firm fired a toxic star performer and sales went up

John Shegda, owner and founder of M&S Centerless Grinding, Inc., a precision metal working shop in Hatboro, saw productivity go up by more than a third after firing a productive but toxic worker/supervisor and part of his team. "To me, it's an indicator of how important culture is," Shegda said.

The management books all preach it - one toxic worker can spoil an entire barrel of apples, to mangle a metaphor.

But does that proverb need to be taken on faith?

Not at M&S Centerless Grinding Inc., a precision metal working shop in Hatboro.

"Most of the time you can't measure this," said company owner John Shegda. "But this was at a great time for us, to be able to put some numbers on it."

Getting rid of one bad apple, plus two of his crew, increased productivity by more than a third at M&S Centerless Grinding, even though the one bad apple was the most productive worker/supervisor in the whole factory and led three highly-productive workers.

"To me, it's an indicator of how important culture is," Shegda said. "It impacts us more than we realize."

Human resource professors say amen.

"If one person is severely toxic, that's a common workplace issue," said Oscar Holmes 4th, assistant professor of human resources at Rutgers University in Camden. "Getting rid of one person could be enough to improve the morale" of the entire workplace.

Shegda described what happened at his factory:

He hired the man in the mid 2000s.

"There was always an issue with his level of respect. He had a bullyish attitude," Shegda said. "He'd tell an edgy joke that you weren't sure was a joke, just to get under someone's skin."

Even so, he was a good worker, and so he stayed.

By 2011, Shegda had begun thinking more carefully about company values. The company drafted a pamphlet of values and held weekly meetings to discuss them.

Through the years, Shegda would take the man aside and try to coach him, but it didn't stick.

"If you can't coach them out of the behavior, at some point you have to evaluate whether they are worth having on staff," said Kate Nelson, who teaches human resource management at Temple University's Fox School of Business.

That's particularly the case, she said, if the person is a supervisor and a potential role model.

By the summer of 2014, that point was approaching.

The situation had degenerated so much that a group of workers switched their lunch breaks so they wouldn't have to be in the lunch room at the same time with the high performer and his team.

With 29 workers in 12,000 square feet, it became increasingly obvious to Shegda that the man and the company's values were in conflict, despite his productivity.

So, after months of worrying about it, in October 2014, he gave the man a generous severance and let him go, along with two others. One person on the four-man crew remained, a relatively new hire.

Now for the numbers: Shegda says the company, which grinds metals and polymers to the sub-micron level for such products as bearings in space vehicles and locking pins in cardiovascular valve clippings, measures its productivity in sales shipped per direct labor hour, meaning the hours of people working on the shop floor. The statistic had been running at $85 to $90 an hour.

In November, the next month, sales per hour rose to $123 - that's without three of the factory's most productive workers.

"He and the others were culturally cancerous," Shegda said. "Instantly, the mood of the entire company lifted."

Shegda acknowledges that adrenaline may have kicked in, plus he and another executive quit their offices and went to work on the floor.

In December, sales per hour fell to $115 as the executives spent more time in their offices. By January, sales per direct labor hour settled down to $102 to $104 in January. That's still a 13 percent increase in productivity.

While productivity rose overall, shipments slowed in the product line run by the supervisor who was fired and one customer, on a tight deadline, took one assignment elsewhere.

But Shegda got on the phone with customers and worked to make sure all the needs were met. "It took us three to four months to get to the same numbers" in that department, Shegda said.

Interestingly, productivity most improved in the departments that operated in the closest physical proximity to the man who was fired, Shegda said.

That's not surprising, Holmes said. "Emotions are contagious."

When employees have to expend "emotional labor," he said, reconciling differences in behavior with what appears to be the company culture, they lose productivity.

Or, they may feel they have to adjust their behavior to match that person's, since it appears to them that the toxic person's behavior has been rewarded by the company, Holmes said.