Have you ever worked in an organization with ineffective leaders? Maybe you’ve had a disorganized, egotistical, or disrespectful boss. When leaders lack skills like communication, change management, or employee recruiting and retention, the entire organization suffers. Poor leadership causes lower employee engagement, high turnover rates, and reduced productivity. The costs of ineffective leadership can really add up!
The Cost of Ineffective Leadership by the Numbers
- Only 21% of employees are engaged at work — (Gallup State of the Global Workplace: 2022 Report)
- Gallup estimates that low engagement costs the global economy $7.8 trillion, accounting for 11% of GDP globally! (Gallup, 2022)
- An individual organization with a turnover rate of 20% before the pandemic could face a turnover rate as high as 24% in 2022 and beyond. That means a workforce of 25,000 could expect 1,000 voluntary departures! (Gartner, 2022)
- Employee turnover has cost industries in the U.S. more than $630 billion. (Work Institute, 2020)
- A Canadian survey on employee turnover reported that the cost of replacing an employee could be between 75% and 200% of the worker’s annual pay. (Monster)
- Companies with high employee engagement are 22% more profitable. ( Haiilo.com )
- Disengaged workers had 37% higher absenteeism, 49% more accidents, and 60% more errors and defects. ( HBR.org, 2015 )
- Ineffective managers cause increased workplace stress, leading to major health issues resulting in $190 Billion in healthcare costs in the U.S. each year. ( BBC.com, 2018)
- In the U.K., the Health and Safety Executive reported5 million working days were lost from work-related stress, depression or anxiety in 2016-2017. (BBC.com, 2018)
The Good News About Ineffective Leadership
The bad news is that the cost of ineffective leadership is clearly very high. The good news is that leadership skills can be developed and improved! If your organization struggles with ineffective leadership, investing in development and training may be the best course of action. A study by Harvard University and the Ross School of Business at the University of Michigan revealed that training in skills like interpersonal communication and problem-solving produces a 256% return on investment, based on an average rate of 12% higher team productivity and retention. When leaders develop the skills needed to engage employees, it will boost morale, decrease turnover and increase profits! What could leadership training do for your organization?