If your team has an incompetent leader at its helm, you may be squandering your most precious resource: the talents and drive of your employees.
While the antics of The Office’s Ricky Gervais (or Steve Carell for our friends in the US) make for great TV, having a bad boss in the real world is no laughing matter. Recent research shows that ineffective leadership isn’t just frustrating for employees - it can be financially disastrous for the organisation as a whole. Research by Investors in People (IIP) and the economic analysis consultancy TBR (as outlined in HR Magazine) found that bad leadership costs UK businesses £39 billion a year.
The study, which asked 3,500 UK employees questions related to their workplace satisfaction, returned highly discouraging results. Just over a quarter of respondents reported not feeling “motivated” by their bosses. Shockingly, about one-third of employees from larger businesses (defined as 1,000-plus staff) reported dissatisfaction, while those at small businesses (one to 49 staff members) came in close behind, at 29%. Head of IIP Paul Devoy told HR Magazine that strong leadership is intrinsic to an organisation’s success: “Our research shows that many employees are feeling frustrated in their roles because of poor management. Strong and inspiring leaders are critical in business in order to get the best from your staff.” In short, negative employee experiences lead to unproductivity, and worse, the loss of competent workers.
Data Makes Its Case
A study conducted by a team at LinkedIn delivered further confirmation of the detrimental effects of poor leadership on hiring. The team determined that there are five factors of an employer’s brand (and thus the leadership team that propagates that brand) that can put someone off to the point that they won’t take a job. The factors are: concerns about job security, dysfunctional teams, poor leadership, negative impressions of the company from past and present employees and a company’s poor reputation among its industry peers.
According to the research, more than half of UK professionals would never take a position at an organisation that exhibited the top three negative employer brand factors, regardless of salary - even a 10% wage hike only changed the minds of one-quarter of respondents. Let’s put that into monetary terms: based on the average UK salary of £27,200, an assumed annual employee turnover of 15%, and the requirement of a minimum 10% pay rise as an incentive, the cost of a bad reputation for a company with 10,000 employees could be as much as £4,080,000 per year.
Bringing in New Talent
Along with tainting the public image of your organisation, bad leadership might diminish its future prospects as well. As common knowledge dictates, recruiting the incoming waves of Millennial workers is increasingly important, as the demographic is rapidly en route to becoming the single largest group in the workforce. And they highly value good leadership -74% of Millennials surveyed by a Culture Amp study said that confidence in their leaders is a key driver in job satisfaction and engagement.
By making it clear that your organisation is led by competent professionals, you can avoid any hesitation that may arise on the part of potential candidates (especially those in the coveted Millennial demographic). This begins with crafting a positive candidate experience during the interview process - HR professionals must be sure that their company is represented in the best light every step of the way.