At a time of unprecedented access to information, there still seems to be something missing. Despite all of the available data related to business leadership, a skills gap looms large. Perhaps the most concerning skill left off the table in the modern business world is leadership. In their book Leading People, authors Rosen and Brown compiled findings from more than a dozen leadership studies. They found that current American leadership is costing companies more than half of their human potential.
Poor leadership costs
Poor leadership costs are in many performance metrics, from lost productivity to increased turnover rates to low engagement levels. Research done by the Blanchard company demonstrates that poor leadership cost the typical organization an amount equal to as much as 7% of their total annual sales.
A productive workforce is an essential element of a successful organization. Research repeatedly demonstrates that productivity levels have a positive correlation with the quality of the leadership this person receives. The better the leadership, the more productive the employee. Building teams of productive employees should be a top motivation for any type of business. Productivity is tied to lower operational costs, greater profitability and increased innovation. The Blanchard Company determined that the majority of organizations are operating with a 5-10% “productivity drag”, which better quality leadership practices could turn around.
Retention costs
It’s a well-established fact that most employees leave managers, not jobs. And, as the cost of replacing the average employee typically ranges from 40% to 50% of the person’s salary, the loss of a top performer can amount to even more- sometimes as much as 213%! And these are just the hard, direct costs of losing the employee. These numbers do not account for other areas where the loss may be felt, such as productivity, engagement levels, and profitability. Stronger leadership can alleviate many of these costs. According to the Blanchard Company, as much as 32% of an organization’s voluntary turnover can be avoided through better leadership skills.
Disengagement costs
Engaged workforces are productive, innovative workforces. In Gallup’s 2017 report on the State of the American Workplace, the introduction makes a powerful claim: “managers from hell” are costing the US economy roughly $500 billion annually. Leadership and engagement have consistently shown to be strongly correlated. Some of the most telling engagement markers linked directly to healthy management practices such as feedback and development.
American workers “not engaged” are reportedly more than 70%. The longitudinal study tracked metrics of engagement alongside nine other organizational performance metrics, such as profitability, turnover, customer ratings, safety incidents and even product quality.
Transforming poorly performing managers into exceptional team leaders requires preparation, training and development. But, it can be done. And it must be done for businesses to get the most out of their human potential. Equipping the next generation of managers with the tools to effectively lead, is the strongest differentiation in today’s market.
About LTC
LTC Language Solutions is a full-service language company providing state-of-the-art language solutions for local and national companies, organizations, government agencies, and individuals since 1993. LTC provides language training, cross cultural training, interpretation, translation, repatriation, language assessments, interpreter and people skills training. They have gained a reputation for high-quality, customized services provided through long-term relationships. Some clients have been LTC for over 25 years.
-Tony Wise, Marketing Director
