The Cost of Poor Leadership (and 3 Ways Willing Organizations Can Turn the Tide)



LeadershipBy Julie Davis, AEM Senior Director of Workforce and Industry Initiatives, SHRM-CP — 

“Do you think it could be a leadership issue?”

It’s almost always one of the last questions companies are willing to ask themselves when experiencing challenges with workforce retention. Unfortunately, the answer that often follows is “Yes.”

It doesn’t take being an expert in researching workforce trends or best practices to recognize the importance of good leadership to retaining employees. Anyone who has spent a decade or more in the workforce can provide examples of both good and bad leaders they’ve associated with at points in their respective careers.

And it's been said “People don’t leave bad companies. They leave bad managers.” It's no surprise why. According to a Hogan assessment, the base rate for incompetent leadership is staggering. As much as 75% of U.S. workers say the worst and most stressful aspect of their life – not just their job – is their immediate boss.

Organizational culture, problem solving, communication, conflict resolution, diversity, collaboration… It all starts with a company’s leadership. How leaders behave between themselves sets the tone for the entire organization, because their words and actions are seen and heard by the entire organization. And it's critically important to recognize that, while this is happening, employees are formulating some answers to some very important questions:

“Can we trust our leaders?

“Do we feel safe under their leadership?”

“Do they have best interests in mind as they are making decisions?”

“Are they in it to win it for themselves?”

It’s fairly easy to see why companies don’t ask if it could be a leadership issue early on in conversations about workforce retention. Because if the answer is “Yes,” the efforts necessary to change things for the better can be challenging. The rewards from recognizing the issue and beginning to address it, however, are definitely worth it. Something as simple as letting employees know a longtime challenge or issue is being acknowledged, prioritized and addressed can inspire hope for change.

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When it comes to workforce shortages, retention is key. High turnover doesn’t just impact production capacity. It also plays out in outside the four walls of an organization by adversely impacting its reputation in the surrounding community. And, since recruitment is tied to perception of a company’s culture, it goes without saying potential hires are often looking – and, more importantly, finding – clues that speak to where things stand.

Although the question of leadership is often the one last asked, being proactive in addressing the issue can create significant opportunity. Continuing to ignore it, however, can create significant risk. According to a recently published article regarding the cost of poor leadership, research shows:

  • 35% of Americans say they have left a job they otherwise loved because of a boss they didn’t like.
  • 9% of workers admit they are currently looking for a new job because they dislike their boss.
  • It would take a lot to convince a worker to stay at a job they loved if they disliked their boss. About 25% said there was no amount of money a company could offer them to get them to stay in that situation, while about 22% would stay for 25% more pay. About 19% would stay for double the pay, according to the survey.
  • The 2022 Workplace Belonging Study by Ipsos shows almost half of Americans are thinking about leaving their current jobs. Those who are considering the switch are less likely to feel a sense of belonging in the workplace. And workers largely agree that a sense of belonging leads to higher productivity at work.
  • Productivity from people who don’t quit goes down when they have a bad boss, because they are not going to do extra work for someone they don’t like.
  • Data from the Society of Human Resource Management found that employers often must spend the equivalent of six to nine months of an employee's salary on finding and training their replacement.
  • The recruitment and retention firm Built In said it cost about $1,500 per worker to replace an hourly employee, about 100% to 150% of someone’s salary for technical positions and up to 213% of someone's salary for C-suite positions.

So, if the answer is “Yes, it’s a leadership problem,” here’s what can be done to begin to turn the tide:

1. Get buy-in at the highest level possible. – Ideally, leadership challenges are acknowledged and start to be addressed from the top down. Since the model for behavior begins with organizational leaders, therefore, that is where some of the most significant change can take place.

Not every executive team is ready to commit to change, though. Don’t disengage. Start by getting buy-in at the highest level. There are more mid-level leaders than executive leaders in most organizations, so the opportunity for significant impact and improvement still exists.

A team can transform if the team leader is willing. A department can transform if a department head is willing. An organization can transform if a president is willing. If certain leaders above aren’t yet convinced to put in the work, influence as much as possible and then demonstrate results to convince others to follow suite. After all, true leaders exert influence in many directions.

2. Introduce skills and tactics. It’s important to recognize the possibility that an organization’s leaders haven’t been onboarded with resources, skills and strategies to help them become better leaders. If such measures aren’t taking place, bring someone in, find resources online and share tactics associated with management, communication, prioritization, conflict resolution and delegation.

People in leadership positions don’t inherit a toolbox of tips, tactics and resources with their promotions. Skills can be taught and shared. Level-set by training leaders so they are sharing positive and effective common strategies, resources and approaches.

3. Look inward. The last step is the most difficult to achieve. However, it’s by far the most impactful one. Leaders must take a long, honest look at themselves. After all, developing leadership strategies and engaging in tactics to drive organizational improvement is a lot easier than asking oneself, “What is preventing me from being a better leader?”

Sometimes it’s about learning new strategies to direct stress, frustration and anger, as well as respond differently. It’s not easy work, but it pays dividends over time. This where executive mentoring, coaching or other opportunities for feedback become essential.

Also, as part of the self-examination process, organizational leaders should ask (and honestly answer) the following questions:

“What is the voice in my head saying that prevents me from fully engaging and trusting my team?

“Is it because of my own self-doubt?”

“Where are my personal blind spots that I don’t recognize?”

“It is because no one has respected me enough to give me constructive feedback?”

“What personal bias that I carry are being experienced by those around me?”

Great leadership takes both courage and vulnerability. It takes a willingness to ask for and accept help and feedback. It also takes becoming more human in front of people (and less the unapproachable, all-knowing dignitary).

Be real. Trust employees to do the work. Build better trust and communication. All of this is worth some personal discomfort to increase productivity, improve organizational ROI and, of course, retain talent in the long run.

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