The Impact of Toxic Workplace Environment on Employee Engagement: The Mediating Role of Job Anxiety in ABC Company of Sri Lanka

The Impact of Toxic Workplace Environment on Employee Engagement: The Mediating Role of Job Anxiety in ABC Company of Sri Lanka

Manjula, G.K.T.¹ and Rebecca, E²

¹Department of Human Resource Management, Faculty of Commerce & Management Studies, University of Kelaniya, Sri Lanka

²Senior Lecturer, Department of Human Resource Management, Faculty of Commerce & Management Studies, University of Kelaniya, Sri Lanka.

DOI: https://dx.doi.org/10.47772/IJRISS.2025.906000011

Received: 17 May 2025; Accepted: 23 May 2025; Published: 26 June 2025

ABSTRACT

This research aims to explore the detrimental effects of a toxic work environment on employee engagement, focusing on the role of job anxiety as a mediating factor. This research has done at planning sector company of ABC in Sri Lanka. This research is based on conservation of resources (COR) theory. Researcher used quantitative research, and data was collected from 306 employees employed by ABC company in Sri Lanka. To analyze the proposed relationships of the research, this study used the Statistical Package for the Social Sciences (SPSS). Research found the toxic workplace environment negatively impacts on employee engagement, through mediating the role of job anxiety.  Further, the conclusion of this research confirms that job anxiety is significant and partially mediates the toxic workplace environment and employee engagement. Furthermore, the research finding confirms the relationship between a toxic workplace environment and employee engagement was significant and has had a negative impact. When employees work in a toxic environment, they spread negative feelings towards their coworkers. Harassment, bullying, and ostracism can cause stress, burnout, depression, and anxiety. When workplace toxicity goes unaddressed for an extended period, employees can become disengaged and lose their motivation to engage at their best. The toxic work environment has been shown to reduce employee engagement significantly, often by increasing levels of stress and anxiety. Thus, the impact of toxic workplace environments in organizations reduces overall performance and employee engagement.

Keywords: Toxic workplace environment, Employee engagement, Job anxiety, Harassment, Bullying, Ostracism.

INTRODUCTION

Employee engagement is a critical priority for organizations. It refers to the conditions wherein employees experience a profound emotional and professional connection to their company, colleagues, and work. High levels of employee engagement are associated with increased job satisfaction, enhanced performance, longer tenure with the company, and overall improved work experience. Engaged employees can concentrate their efforts and energy more effectively on their tasks, leading to higher quality work with fewer errors (Bakker, et al., 2009). Numerous studies have explored the psychological processes that foster employee engagement (Abbas, et al., 2014) (Chmiel, et al., 2017). Engaged employees not only contribute more significantly to their organizations, Also, positively impact organizational success (Rich, 2010). Building on Kahn’s (1990) concepts of personal engagement, it is evident that engaged employees are crucial for creating a competitive advantage, particularly in knowledge-based organizations. The toxic work environment has been shown to reduce employee engagement. For instance, (Rasool, et al., 2021) found that toxic environments reduce employee well-being, which leads to anxiety and disengagement. They observed that supportive organizational policies could help alleviate these negative effects by fostering a more supportive work environment engagement significantly, often by increasing levels of stress and anxiety.

The work environment is a critical determinant of employee engagement and motivation. It significantly influences various aspects of employee behavior, including motivation, creativity, efficiency, attendance, and career (management Karatepe, 2021). There are two types of workplace environments previously identified by researchers, a collaborative work environment and a toxic work environment. A collaborative work environment is a friendly place with the right mix of pleasure, involvement, and organizational citizenship behavior (Rasool, et al., 2021). A toxic work environment where there is harassment, bullying, or exclusion hurts employee engagement. It lowers motivation, causes burnout, and creates negative feelings. This kind of environment also reduces engagement indirectly by increasing job anxiety, which leads to more stress and lowers overall morale and productivity.

Human Resource Management (HRM) principles suggest that employee performance is closely linked to the physical conditions of the workplace, which can have either positive or negative effects (Ali, et al., 2019). When workplace toxicity remains unaddressed for extended periods, it adversely affects employees’ physical and psychological health, diminishes their engagement and productivity, and ultimately weakens the organization’s competitive position (Rasool, et al., 2021) (Rew & Taller, 2011). Prior studies have demonstrated that a toxic workplace environment negatively impacts employee engagement, particularly in small and medium-sized enterprises (Anjum, et al., 2019). Further, the consequences of a toxic work environment are severe for organizations. As workplace stress and competition increase, it is essential for companies to understand the causes and effects of a toxic environment and to implement strategies to manage it (Cooper & Hoel, 2001). This understanding is crucial for long-term survival in a competitive market (Gharib & Soqair, 2023). There for this research aims to study, the impact of a toxic workplace environment on employee engagement with the mediating role of job anxiety at ABC company in Sri Lanka

Problem Statement

ABC Company is a prominent entity in the planning sector, its leading industry reputation and supported by a creative and collaborative work culture. However, recent observations indicate a significant decline in team collaboration and innovation. According to the progress of their action plan report, ABC Company failed to meet its physical and budgetary targets for the past three quarters compared to the previse year. Additionally, their 2023 Annual report highlights a rapid increase in employee turnover (Annual Report, 2023).

An analysis of employee attendance reports reveals that the company, while most employees are physically present, exhibit a lack of full engagement in achieving their targets. Previously high-performing employees start making mistakes or missing deadlines due to constant negativity and lack of support make it hard to stay focused. Employees lose interest in their tasks and feel disengaged from their job goals or the company’s vision. There were conflicts created among employees as well as managers and employees.

 Most of the employees complained to the trade union and some complained to the top management of the company. The head of human resources management at ABC Company has identified a critical issue within the workplace environment, which is obstructing the company from achieving its goals and budgetary targets.

Top management is deeply concerned about this issue. Internal feedback and employee surveys have revealed that the primary cause is creating a toxic workplace environment around the ABC company, which is contributing to employee dissatisfaction.

Research objectives

General Objective of this research is to analyze the impact of a toxic workplace environment on employee engagement, with a specific focus on the mediating role of job anxiety, within ABC Company in Sri Lanka.

 Specific Objectives:

• To examine the impact of a toxic workplace environment on employee engagement.
• To examine the impact of a toxic workplace environment on job anxiety.
• To examine the impact of job anxiety on employee engagement.
•  To examine the toxic workplace environment on employee engagement the mediating role of job anxiety within ABC Company.

Significance of Study

Overcoming a toxic workplace environment and enhancing employee engagement are crucial because they foster employee well-being, productivity, retention, innovation, customer satisfaction, and organizational success. When organizations invest in engagement programs, they create workplaces where employees feel appreciated, motivated, and confident in their ability to succeed. Employee engagement involves an emotional investment in their work, team members, and the company.

Engaged employees often exhibit higher productivity, creativity, and dedication to achieving company goals, whereas disengaged employees may perform their tasks without commitment or enthusiasm. The benefits of a healthy work culture extend beyond legal and reputational concerns. A positive work environment enhances employee well-being, increases productivity, improves retention rates, fosters innovation, boosts customer satisfaction, and ultimately drives organizational success.

Therefore, investing in workplace culture and employee engagement is vital for overall organizational prosperity. Addressing toxic work environments and increasing engagement are essential for the success and future development of the company.

Definition of key concepts

Toxic Workplace Environment

A toxic workplace refers to the cruel and unpleasant environment or treatment received at work that may jeopardize employee safety and health (Rasool, 2020) Working in a toxic work environment can lead to varying problems including reduced support, low engagement, and disturbed wellbeing (Rasool, et al., 2021).

According to (Rasool, et al., 2021), there are three of the main components of a toxic workplace which are harassment, bullying and ostracism. Working in a toxic environment is harmful to an employee since it reduces positive work experience which is a detrimental aspect to positive work outcomes and performance (Wang et al., 2020).

Employee engagement

Employee engagement is a major concern for managers worldwide, as it is seen as a key factor in an organization’s effectiveness, innovation, and competitiveness (Bedarkar & Pandita, 2014). Personal engagement is harnessing of organization members’ selves to their work roles in engagement people employ and express themselves physically, cognitively and emotionally during role performance (Kahn, 1990). Employees who feel engaged in their work are positive about the organization and believe in its mandate and values and they eventually provide a crucial competitive advantage for their employers, which includes increased productivity and a decline in employee (Vance, 2006).

Job Anxiety

Job anxiety is defined as an unpleasant emotional state characterized by concerns, fright, distress, and restlessness that is a response to perceived physical or psychological danger and is experienced in a state of threat to valued resources. Furthermore, job anxiety can also be a result of exceeding demand for the job from an employee(Samma & Zhao, 2020). There has been a lot of literature on job anxiety, indicating its relationship with workplace ostracism along with workplace incivility (Einarsen & Nielsen, 2015). The COR theory postulates that anxiety is caused by factors that may lead to an actual or potential threat to valuable resources of the organization (Samma, et al., 2019).

LITERATURE REVIEW

Toxic Workplace Environment

The concept of toxic workplace puts more broader focus by not limiting only harmful behavior, but also the occurrence of indirect counterproductive activity that could be harmful for employees in the organization. Elements of toxic workplace may include issues of leadership, pressing work culture and office politics among others (Anjum & Ming, 2018) (Rasool, et al., 2021). Working in difficult workplace has linked to many adverse consequences such as declining productivity stress  (Anjum & Ming , 2018) (Wang et al., 2020), burnout and retention problem (Rasool, et al., 2021) which are not sustainable for both employees and organization. Further, working in a toxic workplace is detrimental to both employee and business performance (Anjum & Ming, 2018), and due to the huge impact, it may bring to the long-term success of the employee and organization (Rasool, et al., 2021). Work pressures generate counter- productive work behavior at the workplace and ruin the efficiency of the organization (Anjum & Ming, 2018).

Workplace Harassment

Harassment is unwanted conduct, which humiliates an individual, violates an individual’s dignity, or intimidates others (Barmon & Burgess, 2018); (Gruenigen, 2018). Harassment may include unsolicited and explicit speech about race, sex, religion, belief, origin, age, genes, color or ethnicity as a part of a toxic workplace environment [(Adikaram, 2016); (Wright, 2013)]. This concept was introduced by Farley in 1978 (Farley, 1978) and has gained a considerable amount of attention from researchers since the 1980′s as it is a significant source of stress at the workplace.

Workplace Bullying

Bullying includes criticism, blaming, social isolation, humiliation, joking, and excessive monitoring of an employee (Durand & Hughes, 2014); (Knardahl & Nielsen, 2015); (Khan & Sabri, 2016). Bullying is a situational and contextual factor that is not only limited to bosses as it can also be exerted by supervisors, managers, peers, subordinates, colleagues, and anyone in the workplace (Ariza-Montes & Muniz, 2013). It can be entrenched into organizational settings and culture, which create detrimental physical and mental health problems, emotional exhaustion, and job burnout (Gardner & O’Driscoll, 2016).

Workplace Ostracism

Workplace ostracism, defined as “the extent to which an individual perceives that he or she is ignored or excluded by others” in the workplace (Ferris et al., 2008, p. 1348), can have significant consequences for organizations and individuals (Howard et al., 2020). The consequences of workplace ostracism for victims have been widely researched in the management literature [for reviews, see Mao et al. (2018), Williams (2007), and Wu et al. (2011)]. Experiencing isolation in the workplace and having feelings of not being part of the organization because of workplace ostracism (Chung, 2018). leads to workers showing less involvement and interest in their work and to show dissatisfaction with their work (Evans-Lacko & Knapp, 2018). Workplace-ostracism produces counter-productive work behavior (Wei & Yang, 2018)

Employee Engagement

Engaged employees tend to work harder, are more loyal and are more likely to go the extra mile for the organization (Saks, 2006). Companies with disengaged employees suffer from the watering off effort and bleed talent, earn less commitment from the employees, face increased absenteeism and have less customer orientation, less productivity and reduced profit (Markos & Sridevi, 2010). Employee disengagement may lead to increased employee stress, decreased job satisfaction and feelings of social isolation. Consequently, when employees do not feel safe, they may become defensive, fearful, timid and resentful, none of which produces peak performance (Carr-Ruffino, et al., 2012).

Job Anxiety

There has been a lot of literature on job anxiety, indicating its relationship with workplace ostracism along with workplace incivility (Einarsen & Nielsen, 2015). The COR theory postulates that anxiety is caused by factors that may lead to an actual or potential threat to valuable resources of the organization (Samma, et al., 2019). It has been found that it negatively affects intangible and intangible resources such as self-esteem, confidence, and mastery, etc.

COR theory further adds that rude behavior between employees can make them angry, stressed, anxious, and may further lead to reduced job performance (Feldman, 2012) ; (Jex, et al., 2012). Disrespectful behavior toward employees from colleagues and organizations can further lead to depleted energy on the job (Bonn, et al., 2016) and results in the inability to meet their job-related performance expectations (Cortina, et al., 2008); (Cheng, et al., 2016). Hence, if the job anxiety reaches a higher level, it may well be because their colleagues fail to show respectful behavior towards their feelings and dignity.

THEORY OF RESEARCH

Conservation of   Resource (COR)Theory

The Conservation of Resources (COR) theory, developed by Stevan Hobfoll, explains how resource loss and gain affect individual well-being and behavior, providing a useful framework for understanding the impact of a toxic workplace environment on employee engagement. (Hobfoll & Freedy, 1993). Conservation of resource (COR) theory was used in the study to support and substantiate our theoretical predictions. Employees exposed to a destructive workplace environment tend to have a more negative work attitude by showing less interest in the assigned work as compared to a cooperative workplace environment

Conceptual Framework and Methodology

Throughout the chapter, the researcher will explore the onion research framework, which serves as a guide for the study. This chapter delves into discussions on research philosophy and the chosen research approach, and it will present the conceptual framework that examines how a toxic workplace environment impacts employee engagement, with a specific focus on the mediating influence of job anxiety. Further, the chapter will systematically analyze and expound on the hypotheses proposed in relation to these variables.

Development of Hypotheses

• H1: There is an Impact of toxic workplace environment on employee engagement.
• H2: There is an Impact of Toxic work environment on job anxiety.
• H3: There is an Impact of Job anxiety on employee engagement
• H4 Job Anxiety mediates between Toxic Workplace Environment and Employee Engagement

Population, Sample and Sampling Techniques

The target population is the permanent employees of ABC company in Sri Lanka. Every permanent employee in this company is part of this population. The researcher focuses on studying the impact of toxic work environment on the engagement of permanent employees at ABC company in Sri Lanka. There are 1552 permanent employees in ABC company. (HRM report of ABC company 2023). The researcher can use the Morgan table to identify the sample size. According to the Morgan table, the sample size is 306. This research used probability sampling and this study’s data was collected from simple random sampling. In simple random sampling, every element in the population has an equal and known chance of being selected as a subject.

Measurement Scales

The dependent variable: employee engagement was assessed using the measurement scale developed by Saleem and Hanif,(Saleem, et al., 2020).which includes 4 items. All the items are anchored on a seven-point Likert scale where 1 = strongly disagree and 7= strongly agree.

The independent variable: Toxic workplace environment was assessed using the measurement scale developed by Rasool, Maqbool, Zhao and Anjum (Anjum, et al., 2019), which includes 7 items. All the items are anchored on a seven-point Likert scale where 1 = strongly disagree and 7 = strongly agree.  The mediator: job anxiety was assessed using the measurement scale developed by De Clercq & Haq, (2020), which includes 06 items. All the items are anchored on a five-point Likert scale where 1 = disagree and 5 = strongly agree

Data Collection Instrument & Method of Data Analysis

Primary data were collected via a structured, self-administered questionnaire prepared based on the mentioned standard measurement scales. The questionnaire comprises of four sections: section I – demographic data; section II – items relating to the toxic work environment, section III – items relating to employee engagement, section Ⅳ – items relating to job anxiety. All the filled questionnaires received were provided with a reference number. As indicated in methodology, the data analysis includes the analysis of the reliability and validity of the instruments used to collect data. The KMOs value and Cronbach’s Alpha tests were performed to ensure the instrument’s validity and reliability, respectively. As a bivariate analysis, the correlation analysis was made to identify the correlation of the variables is toxic workplace environment and employee engagement, and the regression analysis was made to find out the composite of each independent variable as toxic workplace environment on the dependent variable as employee engagement. Further, these tests were used to perform the hypotheses. Finally, the process macro test was executed to identify the effect of a mediating variable.

DATA ANALYSIS

Sample Composition

For this research indicated 57.9% of the sample size included female   respondents while 40.1% included male respondents among the total respondents as per the analyzed data. Most of the respondents of the sample come under the 41-50-year age category representing 125 employees and it covers 42.95% of the total response. Further, the less frequent age category of the sample is above 50 years category and covers only 8.24% of the total sample sizes. As per the data analyzed, most of the respondents of the sample have no children category and it covers 46.05% of the total response. Furthermore, the less frequent category of the sample has more children and covers only 1.72% of the total sample sizes. As per the marital status distribution data, most of the survey sample respondents are married category, which covers a percentage of 59.79%. Thus, only 40.21% of the respondents are coming under single status category.

Descriptive Analysis

Descriptive statistical data of the study variables have been presented in terms of mean, median, variance, standard deviation, minimum and maximum. Moreover, Skewness and Kurtosis values of the study variables are presented under descriptive analysis.

Table1: Descriptive Statistics

Source: Survey Data, 2024

Hypotheses Testing using correlation analysis

Statistical Results for Pearson’s Correlation of the Variables

The correlation between Toxic Workplace Environment and Employee Engagement was statistically significant and   Pearson correlation coefficient was -.638. There is an acceptable relationship between the above two variables, and it was a negative relationship. Then the correlation between Toxic Workplace Environment and job anxiety was statistically significant and   Pearson correlation coefficient was 593. There is an acceptable relationship between the above two variables, and it was a positive relationship. Then the correlation between employee engagement and job anxiety was statistically significant and   Pearson correlation coefficient was -469. There was an acceptable relationship between the above two variables, and it was a negative relationship.

Table 02 Mediation analysis summery table

Source: Survey data 2024

FINDINGS AND DISCUSSION

Summary of Hypotheses testing

Table 03 Summary Table

Source: Survey data 2024

Implication

The findings and conclusions of this study highlight the impact of a toxic workplace environment on employee engagement, with job anxiety acting as a mediating role. These results have significant implications, particularly for the ABC company in the planning sector. Maintaining employee engagement within organizations is a key outcome. While numerous international studies explore the role of anxiety as a mediator in toxic workplace environments, there is lack of research in this area within the Sri Lankan context, especially in the planning sector. Therefore, this study contributes to the existing body of knowledge by addressing this gap.

Further, this study provides insight to managers in the ABC company to ensure job engagement of employees within the organization. They should mainly focus on creating a supportive environment within the organization. For that, top management should prioritize creating and maintaining a positive workplace culture to mitigate the negative effects of a toxic environment.  To fulfill that gap, the ABC company can offer leadership development programs for their managers to create a healthy and engaging work environment. Train managers to recognize and address signs of workplace toxicity and employee anxiety.

Leaders and managers qualified with that type of training can recognize and address toxic behaviors and establish mechanisms for regular feedback and monitoring of the workplace environment. Further, ensure that type of qualified leaders should practice with their staff, positive behavior and actively discourage toxic practices. And managers should practice supportive, empathetic leadership styles. Encourage transparency and fairness in decision-making. Furthermore, the company can introduce stress management and wellness programs which can help reduce job anxiety among employees. To improve that, the company can provide resources such as introducing counseling services, conducting stress management workshops, and introducing relaxation areas to improve overall well-being and engagement.

In additional the company can offer training programs, such as career advancement paths, and mentoring programs to help employees feel valued and reduce job anxiety. The top management should develop and enforce clear policies and procedures to address workplace toxicity. Then ensure employees have a clear understanding of their responsibilities. So, the management should set realistic, achievable goals to reduce performance pressures. The management can conduct periodic employee engagement surveys to evaluate the work environment. Introducing a reward program, for positive behaviors and the management can conduct team-building activities to strengthen relationships and trust.

Moreover, the top management of the company can Promote policies that support work-life balance, such as flexible working hours and remote work options. Encouraging employees to take regular breaks and vacations. The top management can promote polices regarding delegating some tasks and duties with other employees to reduce the workload of employees. In that situation the top managers of ABC company can practice job enlargement and job enrichment methods. This can reduce job-related stress and anxiety, leading to higher engagement. By implementing these strategies, managers of the planning industry within ABC company, and other sectors, can effectively address the impact of a toxic workplace environment, reduce job anxiety, and enhance employee engagement. ABC Company can create an environment where employees feel valued and supported, leading to higher engagement, improved morale, and better overall performance.

Directions for Future Studies

Future research could explore other mediating factors such as job satisfaction, burnout, or emotional exhaustion to better understand the mechanism between toxic workplace environments and employee engagement. Conduct longitudinal research to capture the impact of a toxic workplace environment on employee engagement and job anxiety, over time, providing insights into causal relationships and long-term consequences. to study the impact across different industries (e.g., healthcare, technology) to determine the findings. To increase the effective rate of responses, future researchers can avoid online research processes. Investigate how demographic factors such as age, gender, or marital state influence the relationship between a toxic workplace, job anxiety, and employee engagement. Examine the influence of technology (e.g., communication tools, monitoring software) on toxic workplace environment and its effects on engagement. Further extend the study to include outcomes like employee turnover intentions, productivity, and overall organizational performance to gain a broader understanding of the organizational impact. In addition, future researchers can study how cultural differences influence the relationship between toxic workplace environments and employee engagement, given that perceptions of toxicity and coping mechanisms may vary across cultural contexts.

CONCLUSION

These findings highlight the critical need for organizations to address toxic workplace environments to impact employee engagement. While job anxiety partially mediates the negative effects of toxicity, a multifaceted approach is necessary to fully mitigate these impacts.

Organizations should implement strategies aimed at reducing workplace toxicity, such as promoting positive leadership, fostering open communication, and providing support resources for employees. Ultimately, creating a healthy and supportive work environment is not only beneficial for employee engagement, but also essential for organizational overall success. By prioritizing these efforts, companies can improve employee engagement, reduce employee turnover, and achieve overall company sustained productivity.

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