Insubordinate employees can have a significant impact on your business. They can incite dissent among colleagues, underperform their duties and impair customer relationships. Employees who refuse to follow directives can also lower morale in the workplace and create an inequity in the distribution of the business’s workload. This can be especially damaging to a smaller operation in which every position is crucial to the business's overall success and earning power. Employees who consistently fail to perform up to your expectations should be dealt with promptly to minimize damage.

Lower Productivity

Employees who refuse to play by the rules often lower their own productivity, as well as that of their colleagues. This is especially true if an insubordinate employee refuses to meet deadlines, is habitually late, fails to follow protocol or disregards corporate policy and procedures. Lost productivity can, in turn, have a serious impact on your small business earnings.

Poor Morale

An insubordinate employee can make everyone around him miserable, lowering the overall morale of the workplace. Employees who have to make up work not performed by their insubordinate colleague may become angry, resentful and frustrated. Employees may also feel that your rules only apply to "good" workers and that the problem colleague is getting special or favorable treatment.

Degradation of Management Reputation

If an employee is being insubordinate with you, it has the potential to lower others’ opinion of you as an effective leader. Other employees may begin to think they can exhibit the same bad behaviors with little or no repercussions. In this sense, one insubordinate employee can alter the workplace dynamic to such a degree that numerous employees take on the same attitude.

Workplace Stress

Insubordination can result in increased stress and anxiety for you and for your other employees. Workers may feel they are overburdened and unappreciated. You too can experience distress by being able to rein in poorly performing employees, which can negatively impact your ability to be an effective manager. If you answer to a board or investors, ongoing insubordination may impact how higher-ups view your business approach, and they could lose confidence in your abilities.

Customer Problems

Depending on the nature of insubordination, problem employees have the potential to have a negative impact on customer relations. For example, a surly employee who insults customers or fails to deliver on company promises risks losing business for your company, and an employee who doesn’t follow safety rules and regulations puts your business in a position of significant liability risk. Insubordination should be addressed and corrected early on to avoid long-term negative business repercussions.