cost of bad managersChances are you have experienced a bad manger or leader. And there is an excellent chance your organization is harboring one or more of them now. Have you ever stopped to think what the cost of bad managers is to an organization?

The Costs

Studies have found the cost of bad managers in the US to be at least $960 billion and $8.1 trillion globally (source). Even if some of the costs listed here can’t be tracked by the finance department directly, they still have real impact. And it doesn’t take much imagination to see how each can lead to real dollar costs.

  • The number one reason people voluntarily leave a job is that they fire their boss. Even when they cite other reasons (like pay), they would be less likely to be looking if they had a great relationship with their immediate leader.
  • Reduced engagement. Seen by many organizations as the solution to organizational problems, employee engagement won’t be solved solely by EAP programs, job and work flexibility, great facilities, or even top quartile pay. Most people will be immediately more engaged in and committed to their work with they have a skilled and effective manager.
  • Reduced productivity. Productivity typically tracks engagement. But when people have a bad boss, people may be less focused on the work, take more sick days, and generally be laxer about their job responsibilities.
  • Increased health care costs. Beyond more “sick days” (whether actually sick or not), one real cost of bad managers is an increase in stress-related health care costs.
  • Poor decisions. Even if the manager is brilliant, if they make decisions with little or no input from team members, they will have less perspective and may make poorer decisions – or at least make decisions that have less commitment from the team to implement.
  • No decisions. Some of the bad bosses you’ve encountered may make no decisions or take no action on issues brought to them. This is equally ineffective and may lead to missed opportunities and broken trust.

This is just a short list.  Your experience with a bad boss might give you other examples and issues. Ultimately, they will likely roll up to the big three – increased turnover, reduced engagement, and reduced productivity.

A Cost Reduction Plan

If you want to reduce the cost of bad managers, you need better managers.

There are three major ways to improve the overall skill and effectiveness of leaders in your organization:

  • Fire and replace.
  • Have better selection and hiring processes.
  • Develop the managers already in place.

The most egregious examples might warrant immediate replacement or reassignment. If you simply replace one bad boss with another, you didn’t really improve anything (but you did further lower the morale and hope of the team). Certainly, you can work on your hiring and selection practices (for both internal and external candidates), but that doesn’t give much immediate help.

The single best way to reduce the cost of bad managers is to help them develop into good managers. That happens with feedback, coaching, and training. Many organizations have reduced their focus and investment in leadership development during the turbulence of the past couple of years. That turbulence has made the job of a leader/manager even more complex. The mix of a harder role with less support is a recipe for more bad bosses.

It is time to look carefully at the skills and results of our managers and provide them with the support they need to grow and improve. Doing this will create positive ripples beyond what you might imagine and cut operating costs at the same time.

Good managers and leaders are magnets for talent – they keep the best talent and attract the new talent they need. You can learn more from our Remarkable Master Class – Helping Leaders Become Talent Magnets. Learn more and get a sample of this powerful learning opportunity here.

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