Summary

Poor leadership at the executive level can lead to significant financial costs due to employee attrition and disengagement.

Abstract

The article titled "The Cost of Poor Leadership" discusses the detrimental impact of ineffective leadership by C-Suite, VP, and Director level executives on employee morale and company culture. It illustrates this through the story of Barry, a new hire with high hopes and experience who becomes disillusioned by the lack of mentorship and dismissal of his contributions. The article emphasizes that despite numerous resources on effective leadership, the cost of bad leadership is often overlooked. It quantifies this cost, citing Dr. Britt Andreatta's research, which suggests that the expense of replacing an employee can range from 50% to 250% of their salary, and the cost of disengagement is about 34% of an employee's salary. The article concludes by challenging aspiring leaders to self-reflect on their motivations and leadership style, suggesting that improving leadership could save companies millions of dollars.

Opinions

The article opines that poor leadership is not an issue of generational differences, lack of experience, or industry specificity but rather a consequence of the actions and attitudes of top-level executives.
It suggests that the most influential group within a company, often the least managed, has the largest impact on the workforce's character and morale.
The author criticizes the current state of leadership, pointing out that despite the abundance of advice on good leadership practices, there is a lack of improvement in leadership quality.
The article implies that the cost of bad leadership is not just a matter of employee turnover but also includes the ongoing cost of maintaining a disengaged workforce.
It challenges current and future leaders to consider the financial implications of their leadership approach and to prioritize the professional fulfillment of their teams over their own career ambitions.

The Cost of Poor Leadership

Loyal, committed, responsible, passionate….. these are the traits every employer looks for in their employees. These are also the traits that either strengthen or dissolve within the first year of employment.

The question is — what makes the difference — one employee to the next? It’s not generational. It’s not experience or professional maturity. And it’s not industry-specific. The answer is — poor leadership. Not front-line managers or supervisors but C-Suite, VP, and Director level “leaders”.

The problem is simple, the least managed group of individuals at a company, with the most influence, has the biggest impact on the character and morale of the entire staff. And yet blogs and professional writing forums are bursting with articles on how to be a good leader, when to leave a bad leader, top leadership qualities, and on and on. But nothing seems to change. Why? Because no one looks at the cost of bad leadership. So, let’s look at it.

The Cost of Employee Attrition and Apathy

Barry’s Story

Barry can’t wait to start his new job. He spent the weekend researching the company’s products and the leadership teams. He’s picked out a couple of senior leaders to watch and learn from, hoping there might be a mentoring opportunity with one of them. But, he’s also excited to bring his experience and expertise to the company and make an impact, hit the ground running. Barry has 15 years’ experience in his field. He’s made mistakes, he’s learned from them, and he believes he can help the company shortcut their way to more effective results.

Fast forward 6 months.

Barry dreads Sunday afternoons. Why? Because he knows in a few short hours he’s going to be back at his desk. He’s going to spend another week watching his ideas be dismissed, his experience ignored, his skills evaporating from lack of use. The two senior leaders he was hoping to learn from can’t be bothered to have any kind of meaningful conversation with him. Their condescending looks and barely veiled contempt for his “intrusion” into their process don’t go unnoticed. ‘He’s only been with the company 6 months — who does he think he is? His experience isn’t relevant here. That’s not how we do things. He doesn’t know this company at all.’ It may not be vocalized, but the message is loud and clear.

But there’s hope! Barry has two phone interviews lined up this week…..

Have you been “Barry”? I have. It sucks.

Real Dollars

So let’s talk dollars. How much does attrition cost your company?? According to Dr. Britt Andreatta, probably somewhere between 50% and 250% of the employee’s salary.

Even worse, how much are you paying the unmotivated staff that hasn’t left yet? Dr. Andreatta estimates the cost at somewhere around 34% of their salaries.

Now let’s do the math.

Employee Salary = $75,000

Attrition Cost = $37,500–$187,500 (Average $112,500)

Apathy Cost = $25,500

15 Employees per Senior Leader

Assume half quit and half stay but are miserable.

Total Attrition Cost = $843,750

Total Apathy Cost = $191,250

Total Cost of Bad Leadership = $1,035,000

That’s over a million dollars. And that’s just one leader. What if you have two or three lemons on your leadership team. Wow.

Challenge to Change

But, there’s a solution. There’s a way to right this ship and do better, be better. It starts with the future leaders working their way up the corporate ladder today.

Ask yourself:

Do I always have to be the one with the answer? Do I prefer to do things “my way” or am I excited to try something new? Do I value (hell, do I even know about) the experience my team acquired before they got here? Do I care more about my own career path and goals than I care about my teams’?

If so, a leadership role might not be for you.

My challenge to you is simple: if you aspire to a leadership position, do some serious soul-searching and be honest about what fulfills you professionally and why you want a leadership position.

Leaders today — consider the financial impact of your leadership style. Becoming a great leader could save your company millions.