{"id":7140,"date":"2024-06-07T14:39:37","date_gmt":"2024-06-07T12:39:37","guid":{"rendered":"https:\/\/www.savilleconsulting.dk\/?p=7140"},"modified":"2025-11-26T07:00:46","modified_gmt":"2025-11-26T06:00:46","slug":"what-is-the-true-cost-of-poor-leadership","status":"publish","type":"post","link":"https:\/\/www.savilleconsulting.dk\/en\/what-is-the-true-cost-of-poor-leadership\/","title":{"rendered":"What is the true cost of poor leadership?"},"content":{"rendered":"\n<p><strong>Poor leadership costs businesses up to $550 billion annually, and up to 79% of employees may quit their jobs due to a lack of management appreciation.<\/strong><strong><sup>1<\/sup><\/strong><\/p>\n\n\n\n<p>With figures like this, it\u2019s not difficult to see the importance of getting good leadership in place, as well as the importance of hiring or developing individuals who truly align with your organizational culture and the outcomes that they need to deliver.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"gb-headline gb-headline-8cd91a0a gb-headline-text\"><\/h2>\n\n\n\n<h5 class=\"gb-headline gb-headline-da47d2ed gb-headline-text\"><strong>Let\u2019s take a closer look at some of the wide-ranging implications of poor leadership:<\/strong><\/h5>\n\n\n\n<h3 class=\"wp-block-heading\">Company Culture<\/h3>\n\n\n\n<p>Leaders play a vital role in the promotion of a positive workplace culture. A leader who ensures employees know that their contributions are valued creates a culture of recognition and a leader who encourages team members to recognize each other creates a culture that builds stronger teams.&nbsp;<\/p>\n\n\n\n<p>Conversely, poor leadership can result in a culture where employees lack engagement and settle for mediocre performance.<\/p>\n\n\n\n<p>Research suggests that almost one third of UK workers (28%) have left a job due to a poor workplace culture (CMI),<sup>2<\/sup> which highlights the significance of getting it right.<\/p>\n\n\n\n<h3 class=\"gb-headline gb-headline-1833034a gb-headline-text\">Loss of Productivity &amp; Financial Revenue<\/h3>\n\n\n\n<p>Poor leadership can also drive down profits. Without fostering the right culture and environment, employees are unlikely to be working to their full potential. They won\u2019t be motivated to go \u2018above and beyond\u2019 for the organization; they are likely to simply do the bare minimum to get by, impacting your bottom line.<\/p>\n\n\n\n<p>According to Gallup\u2019s State of the Global Workplace Report:<sup>3<\/sup><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Only 21% of employees are currently engaged at work<\/li>\n\n\n\n<li>Low engagement costs the global economy $7.8 trillion, accounting for 11% of GDP globally<\/li>\n\n\n\n<li>Sub-optimal leadership practices can cost organizations an amount up to 7% of their total annual sales<br><br>Other studies suggest that a single poor leader costs an organization an average of $126,000 in lost revenue each year. <sup>4<\/sup><\/li>\n<\/ul>\n\n\n\n<h3 class=\"gb-headline gb-headline-249e19bd gb-headline-text\">Staff Wellbeing<\/h3>\n\n\n\n<p>Leaders who fail to praise employees for their work and give recognition for their achievements can also have a detrimental effect on morale. Employees are likely to feel deflated if nothing seems to satisfy leadership, or if they feel they are constantly receiving criticism or negative remarks, leading to a lack of confidence and enjoyment in their work.<\/p>\n\n\n\n<p>This can manifest itself in high levels of absenteeism and therefore decreased productivity. Perhaps more worryingly, employees may experience symptoms of anxiety, depression and stress, which can have long-lasting impacts on their physical and mental health, with the effects extending beyond the workplace, affecting employees\u2019 personal lives and relationships.<\/p>\n\n\n\n<h3 class=\"gb-headline gb-headline-2f6229a0 gb-headline-text\">Staff Retention<\/h3>\n\n\n\n<p>It\u2019s very difficult for an organization to retain employees in the long term if leadership is ineffective. A study by DDI suggests that 57% of people have quit roles because of a negative relationship with management and 37% reported that they\u2019ve considered leaving because of their superiors.<\/p>\n\n\n\n<p>Poor leadership or leadership styles are reportedly so common that 65% of employees would rather have a new manager than a pay raise, according to surveys.<sup>5<\/sup><\/p>\n\n\n\n<p>Another study found that as much as 32% of an organization\u2019s voluntary staff turnover can be avoided through better leadership skills, and that 52% of employees leaving their jobs could have been persuaded to stay had they not had poor management (Gallup).<\/p>\n\n\n\n<p>If your organization does not have the right leadership in place, you risk losing top talent that could otherwise thrive and progress \u2013 not to mention the significant time wasted and costs associated with replacing those individuals. Every time a business replaces a salaried employee it costs, on average, six to nine months of their salary and up to 150% of the salary for technical positions.<sup>6&nbsp;<\/sup>&nbsp;<\/p>\n\n\n\n<h3 class=\"gb-headline gb-headline-ba40ca44 gb-headline-text\">Public Image<\/h3>\n\n\n\n<p>Strong leadership can help you avoid potential PR disasters. When poor leadership decisions are made,&nbsp; it can cause a public backlash, resulting in decreased customer loyalty and loss of advertising revenue or investment.<\/p>\n\n\n\n<p>When customer satisfaction and brand reputation are damaged, companies face an uphill battle to gain new customers \u2013 costing them five times as much in marketing and acquisition costs. <sup>8<\/sup><\/p>\n\n\n\n<p>Good leaders, with a good organizational fit, can help drive the right culture and values, with figures suggesting that better leadership can generate 3-4% improvement in customer satisfaction scores, subsequently resulting in a 1.5% increase in revenue growth.<sup>7<\/sup><\/p>\n\n\n\n<h5 class=\"gb-headline gb-headline-331fc156 gb-headline-text\"><strong>The positive effects of good leadership:<\/strong><\/h5>\n\n\n\n<p>Let\u2019s look at the flip side. If negativity surrounds poor leadership, then great leadership has the opposite effect; it accelerates productivity and engagement creates a cohesive effort in workers towards a common cause.<\/p>\n\n\n\n<p>Effective leaders are also able to motivate and inspire employees to think creatively and try new approaches, culminating in increased innovation and the development of new ideas and solutions.<\/p>\n\n\n\n<p>An obvious main benefit of effective leadership is the ability to drive an organization\u2019s revenue. Experienced leaders understand how to change or adjust a company\u2019s structure to generate more money. According to a 2023 McKinsey report, top-performing managers and leaders produce five times more shareholder value than average or below-average managers over a five-year period.<sup>9<\/sup><\/p>\n\n\n\n<p>Research suggests that great leaders drive around 70% of employee engagement, but if an untrained or generally poor manager enters a leadership position, this can cause a massive drop off in employee engagement \u2014 leading to lost productivity, poor morale, and burnout. <sup>10<\/sup><\/p>\n\n\n\n<p>\u201cLeaders set the tone for their team and\/or organization. Positive leadership encourages, empowers and energizes people, whereas negative leadership drains, discourages, depletes and demoralizes employees,\u201d&nbsp; explains Joyce E. A. Russell of Forbes.<sup>11<\/sup><\/p>\n\n\n\n<h5 class=\"gb-headline gb-headline-df4ef101 gb-headline-text\">How can you enhance leadership selection?<\/h5>\n\n\n\n<p>Enhancing leadership selection is one clear way to avoid the ramifications and negative impact of poor leadership.&nbsp; To recruit leaders who are going to be truly successful, you need to understand what constitutes a good leader and to then make selection decisions based on real in-depth data \u2013 not just a candidate\u2019s CV, previous leadership experience, or because they are good at the role they currently do. Their skills and behaviors need to align with your organizational demands.&nbsp;<\/p>\n\n\n\n<p>Approaches commonly used often lack real rigor and objectivity, allowing factors such as similarity bias to creep in, unintentionally reducing DE&amp;I&nbsp; You can find out more about this in our article: <a href=\"https:\/\/www.savilleconsulting.dk\/en\/the-importance-of-inclusive-leadership-and-how-you-can-nurture-it\/\">The Importance of Inclusive Leadership and How You Can Nurture It<\/a><\/p>\n\n\n\n<p>The first step to enhancing leadership hiring is to truly understand what the ultimate drivers of success are for leaders in your organization. However, this can often be hard due to differing opinions on what constitutes a good leader. Using an effective leadership assessment too<a href=\"https:\/\/www.savilleassessment.com\/leadership-and-executive-hiring\/\">l<\/a> can help align potential leadership behaviors with your organizational goals, and where impact is needed, significantly reducing the risks of making a poor hire.&nbsp; &nbsp;&nbsp;<\/p>\n\n\n\n<p>Our <strong><a href=\"https:\/\/www.savilleassessment.com\/leadership-and-executive-hiring\/\" target=\"_blank\" rel=\"noreferrer noopener\">Leadership &amp; Executive Hiring solution<\/a><\/strong> peels back more layers of personality than any other assessment, allowing you to uniquely align leaders against the strategic outcomes they need to deliver.&nbsp; Interactive data from our Wave\u00ae personality questionnaire highlights leadership potential against specific areas of leadership. Users gain insight into the impact of a leader\u2019s behavior, the situational effectiveness of their leadership style, and the risk they may pose to the organization, its culture and themselves; giving you a much more holistic view of leadership.&nbsp;<\/p>\n\n\n\n<p>With the cost of a bad hire at Exec level equating up to 213% of the salary, can your organization really afford to be making mistakes?<sup>12<\/sup><\/p>\n\n\n<div class=\"gb-container gb-container-813643f3\">\n\n<h6 class=\"wp-block-heading\">References<\/h6>\n\n\n\n<ul class=\"wp-block-list sav-no-bullet\">\n<li><a href=\"https:\/\/future-business.org\/warning-signs-that-poor-leadership-is-costing-your-business\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">1. Future Business &#8211; Five Warning Signs that Poor Leadership is Costing Your Business<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.theguardian.com\/business\/2023\/oct\/15\/bad-management-has-prompted-one-in-three-uk-workers-to-quit-survey-finds\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">2. The Guardian &#8211; Bad management has prompted one in three UK workers to quit, survey finds<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.cca-global.com\/content\/latest\/article\/2023\/05\/state-of-the-global-workplace-2022-report-346\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">3. CCA-Global &#8211; State of the Global Workplace Report 2022<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/stevenarmstrong.ca\/uncategorized\/the-high-cost-of-poor-leadership\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">4. Unicorn Labs &#8211; The Cost of Poor Leadership<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/stevenarmstrong.ca\/uncategorized\/the-high-cost-of-poor-leadership\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">5. Unicorn Labs &#8211; The Cost of Poor Leadership<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.peoplekeep.com\/blog\/employee-retention-the-real-cost-of-losing-an-employee\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">6. PeopleKeep &#8211; The Cost of Losing an Employee<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/hbr.org\/2023\/11\/how-leaders-can-create-a-purpose-driven-culture\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">8. Harvard Business Review &#8211; How Leaders Can Create a Purpose-Driven Culture<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/stevenarmstrong.ca\/uncategorized\/the-high-cost-of-poor-leadership\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">9. Steven Armstrong &#8211; The High Cost of Poor Leadership<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/stevenarmstrong.ca\/uncategorized\/the-high-cost-of-poor-leadership\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">10. Unicorn Labs &#8211; The Cost of Poor Leadership<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.forbes.com\/sites\/joyceearussell\/2021\/05\/29\/positive-leadership-it-makes-a-difference\/?sh=740107337d7a\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">11. Forbes &#8211; Positive Leadership &#8211; It Makes a Difference<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/www.linkedin.com\/pulse\/real-cost-hiring-wrong-executive-your-business-alex-rawlings\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">12. LinkedIn &#8211; The Real Cost of Hiring the Wrong Executive<\/a><\/li>\n<\/ul>\n\n<\/div>","protected":false},"excerpt":{"rendered":"<p>We look at the wide-ranging ramifications poor leadership can have on organizational culture and productivity.<\/p>\n","protected":false},"author":1,"featured_media":7141,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[70],"tags":[],"class_list":["post-7140","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is the true cost of poor leadership? | Read article here \u279c<\/title>\n<meta name=\"description\" content=\"Poor leadership drains productivity, increases turnover, and hurts culture. 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