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CORPORATE ADVISE: How Much Is Poor Leadership Costing Your Company?

CORPORATE ADVISE: How Much Is Poor Leadership Costing Your Company?
July 18
09:34 2015

Companies around the world are losing millions of dollars in lost productivity every year due to poor leadership and the majority of these companies don’t even realise that it is happening.
The National Bureau of Economic Research in the United States released a study entitled “The Value of Bosses” by Edward Lazear, Kathryn Shaw and Christopher Stanton.
In a study of 23,878 employees and 1940 Managers, they found that there was a direct link between a manager’s leadership skills and productivity.
The top quality performing individuals were led by managers who had leadership skills. These individuals were 10% more productive than those whose Managers were ranked at the bottom.
The difference was just over 10% in productivity. The better quality Managers also had higher retention rates of employees which in turn reduced the cost of replacing employees.
When you take into account recruitment costs, time for recruitment and lost productivity during training, the cost of replacing an employee is estimated to be around 1.5 times with the departing employees salary depending on their role within the company.

Survey results
How would your company look if all your employees were 10% more productive?
You may well be thinking this is all good but it doesn’t apply to my company, well you will be surprised.
A recent survey showed that 26% of employees rated their immediate Manager as a poor leader and the interesting fact is that the majority of these poor leaders are viewed as hardworking and trustworthy, it’s just that their communication and motivation skills are poor.
In the same survey employees said that 58% of Managers were considered to be extremely hardworking with only 2% who were considered not at all hardworking.
In regard to trustworthiness 68% of Mangers were viewed as quite or extremely trustworthy with 10% perceived as untrustworthy.
The issue is not with a Manager’s work ethic, the issue is with their ability to create an environment that inspires and motivates.
This is the area where many workplaces are failing their employees and as a result the employees suffer due to lack of motivation and the company suffers due to lack of productivity and eventually the customers suffer with not having the quality service and/or products they want.
The good news is that it can be fixed.

Solution
If you want to know the solution to all this lost productivity then just ask the employees. 65% of employees believe their Manager would benefit from receiving leadership training.
In most cases Managers have received little or no leadership training.
It’s becoming an all too common occurrence that a Manager is hired based on their technical expertise and work ethic, both essential qualities for success but very little attention is given to their leadership skills, and when they start it’s no better.
Management positions are one of the few roles within companies that get very little training when they start and what training they receive is very rarely leadership based.
It is equally management based with a focus on polices and self productivity skills such as time management.
There is very little training on understanding human behaviour or the drivers for motivation all of which could make an impact to the satisfaction that employees have at work and their productivity.
Companies are losing money every year due to the lack of leadership skills among their managers.
It’s time to recognise this lost opportunity. What companies need to do is to invest in their employees welfare by investing in the people skills of the managers who they report to.
These Managers have the biggest influence over the happiness and productivity of their employees.
Mark Wager will be in Fiji from August 21 to 28 and will be available to meet with businesses or individuals who want to succeed in business. For this rare opportunity to meet one of the world’s leading leadership experts email mark@eliteld.co.nz

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