You only have to spend a short period of time in an organization to get a feeling for the environment. Is it formal or informal? Are the people who work there happy? Do they seem energetic or lethargic? Are they at ease or tense? Are people empowered to make decisions? Does the organization suffer from general malaise?
If environments are unhealthy, there is often a toxic person contaminating the organization from above.
As noted by Peter Frost, author of Toxic Emotions at Work: How Compassionate Managers Handle Pain and Conflict,”. . .the tone in an organization tends to be set from the top and so toxicity is often a top-down phenomenon. As one HR manager I interviewed observed: “Fish stinks from the head!” The higher up the toxic person is, the more widely spread is the pain. ” (See http://hbswk.hbs.edu/archive/3373.html)
Toxic people in the workplace can reek havoc. If toxic leaders are allowed to remain in place, they can cause an organization to be unproductive because of the culture of fear and tension they create and the energy that they exhaust. If healthy and highly competent people are not buffered from the toxicity, ultimately organizations run the risk of loosing them. Over time, a toxic leader can incapacitate an entire organization.
Leaving a toxic leaders in place is particularly dangerous for any organization with a high level of staff and customer contact or in the case of nonprofits, staff and customer, volunteer or donor interactions, as noxious fumes are difficult to contain.
Managers need to handle or seek help with containing those who are toxic that they supervise. When the dangerous behavior is coming from a CEO or Executive Director, the board must take action. This is yet another reason why it is important for the board to have relationships with staff so there can be channels for communication. Presidents and boards have to be wiling to put on haz-mat suits and deal with toxic leaders before that leader does permanent damage to the organization.