August 9, 2022

The Varied Costs of Bad Leadership

A good leader doesn’t guarantee that a company will be successful, but bad leadership is sure to cause problems. Whether it’s a C-suite executive or a team manager, poor leadership can have significant consequences. Just about everyone in a leadership role can benefit from coaching and mentoring, even those who seem to be born with leadership savvy. Let’s talk about the costs of failing to develop and hone leadership skills.

Cost: Staff Turnover

A bad leadership can cause high turnover in several ways. If they fail to respect employees and recognize success, there can be a revolving door. Based on 30 years of research, Dr. Jack Wiley (2012) concludes that a lack of respect is the number one reason employees leave a company. Leaders also may drop the ball when it comes to recognizing an employee’s career potential or offering their team professional development opportunities. Poor listening skills can contribute to all these issues.

Failure to accept responsibility for mistakes can create tension that causes people to resign. A leader who holds the reins too tightly is likely to cause turnover. People want to be empowered and trusted, and without a strong sense of ownership, they are likely to move on. Leaders with negative attitudes, including focusing on problems rather than solutions, can contribute to a culture that scares good people off. In fact, positivity is so important that, in my book The Power of Company Culture (Dyer, 2018), I treat it as one of the seven pillars of company success.

Cost: No Decisions

Bad leadership can cause decision-making to grind to a halt, and that can cost the business money and clients. Sometimes staff can’t act because the leader is in the way. I learned this the hard way when I took PeopleG2 fully remote in 2009. My employees were coming to me with just about every decision. The solution was to empower people and provide clear guidelines around decision-making authority.

When a leader blames or even attacks employees for making mistakes, people can become hesitant to make decisions out of fear. In our book Remote Work, my co-author Kim Shepherd and I recommend celebrating mistakes as opportunities to learn. On the other hand, a leader who avoids conflict may also avoid making controversial decisions. Fear of taking on conflict also sets a poor example and can tarnish employees’ respect for the leader.

Cost: Poor Decisions

Poor decisions can result in lost revenue or even unexpected costs for the company. If a leader is reluctant to make the tough calls, decision-making can suffer. In many decisions some people will gain an advantage while others may be disadvantaged. A strong leader will accept that and work with all parties to find compromises. A lack of flexibility on the part of a leader can also contribute to poor decisions. Leaders who send mixed signals, rather than clear messaging, can create environments that hamper good decision-making.

Cost: Lack of Innovation

Stagnation in fast-paced, competitive markets is almost guaranteed to dull your company’s competitive edge. Leaders can discourage innovation by relying heavily on authority and heavy structure, rather than influence and motivation. Innovation requires that people feel safe about sharing ideas and challenging the ideas of others. Structure and process are valuable, but it’s up to the leaders to ensure that neither one gets in the way of the free exchange of ideas.

Cost: Lost Clients

A bad leadership can cause existing clients to leave and prospective clients to look elsewhere. Leadership weakness in a number of areas can be to blame. For example, if a leader has poor time management skills or is weak in delegating responsibility, teams may be faced with rushing deliverables at the last minute. This can result in low quality or missed deadlines.

Other leadership weaknesses that can drive away clients include:

  • Narrow vision can impede strategic thinking and undermine a leader’s ability to anticipate potential outcomes.
  • A lack of customer focus can lead to your company falling short of customer expectations or missing opportunities to expand your relationships with clients.
  • Failure to understand and communicate the company’s unique value proposition can make clients see your company as just another face in the competitive crowd.
  • Poor communication skills can cause a leader to inadvertently create ambiguity around deliverables, timelines and responsibilities. Dropping the ball in any of these areas is sure to displease a client.

Fortunately, there are many options available to help leaders develop the skills and insight they need to avoid all these scenarios. There is a wealth of books about leadership, and online resources include both self-led courses and formal programs that can lead to certification. If you admire a particular leader, follow them on social media. You also can engage a leadership coach, interacting with them in person, via video chat or over the phone. Mentors can be a huge help; see my recent posting on the differences between coaches and mentors for more.

References

Wiley, J & Kowske, B (2012) RESPECT: Delivering results by giving employees what they want most. Jossey-Bass, San Francisco.

Dyer, C (2018) The Power of Company Culture: How any business can build a culture that improves productivity, performance and profits. Kogan Page, London.

Dyer, C and Shepherd, K (2021) Remote Work: Redesign processes, practices and strategies to engage a remote workforce. Kogan Page, London.