Leadership is an easy topic for us to talk about. Everyone seems to know a lot about it and we all know it’s important for organizational success.
But when it gets right down to brass tacks, making the case to actually invest in leadership becomes much more difficult.
Part of the reason is that there is no line on the balance sheet for leadership. That said, there is no doubt that there is a “Return on Leadership” that underlies everything on that same balance sheet.
By digging into the leadership literature and research, it is in fact possible to assign costs to failed leadership. This infographic captures just a few of those costs.
If you are a leader who does not pay much attention to the quality of your leadership and that of your team, perhaps this evidence will convince you to invest wisely in it so that you ensure that you have the indispensable foundation in place to increase your “Return on Leadership.”
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Infographic Transcript
Did you know up to 50% of new leaders fail on the job?
The hidden costs of leader failure equals big money.
- 250% of Annual Pay Turnover Costs
- $2,600 Absenteeism Costs Per Salaried Employee
- $3,600 Absenteeism Costs Per Hourly Employee
Poor leadership turns away good employees. Sub-par employees turn away good customers. The cost of finding a new customer is five times that of keeping a current customer.
Strong leadership minimizes costs…
- 37% lower absenteeism
- 25% less turnover
- 48% fewer safety incidents
- 41% quality issues
…and Improves Performance.
- 21% higher productivity
- 22% higher profits
- 10% higher customer metrics
The path to great leaderships…
- Invest in leadership and leaders,
- Use pre-boarding and on-boarding,
- Employ leadership coaches,
- Implement formal development programs,
- Define Clear Performance Expectations,
- Deliver Structured Feedback,
- And measure outcomes.
Sources
Burroughs, M (2011). Before Onboarding: how to integrate new leaders for quick and sustained results
Bradt, G. B., Check, J. A., & Pedraza, J. E. (2011). The new leader’s 100-day action plan: how to take charge, build your team, and get immediate results. John Wiley & Sons
Cornell University Center for Advanced Human Resource Studies (2010). Paving the path to performance: inclusive leadership reduces turnover in diverse work groups
Zhu, W., Chew, I., and Spangler, W., 2005. “CEO transformational leadership and organizational outcomes: The mediating role of human-capital-enhancing human resource management, The Leadership Quarterly, Vol. 16, pp.39-52
Richardson, H.A., & Vandenberg, R.J. 2005. Integrating managerial perceptions and transformational leadership into a work-unit level model of employee involvement. Journal of Organizational Behavior, (26):561-589
Walker, A. G., Smither, J. W., & Waldman, D. A. (2008). A longitudinal examination of concomitant changes in team leadership and customer satisfaction. Personnel psychology, 61(3), 547-577
MacKenzie, S. B., Podsakoff, P. M., & Rich, G. A. (2001). Transformational and transactional leadership and salesperson performance. Journal of the academy of Marketing Science, 29(2), 115-134
Attridge, M. (2009). Measuring and managing employee work engagement: A review of the research and business literature. Journal of Workplace Behavioral Health, 24(4), 383-398
Sorenson, S. (2013). How employee engagement drives growth. Gallup Business Journal