What returns on are you getting on your leadership?

With the challenging times we are all facing during the COVID pandemic - many of us have seen investments going on an unsettling roller coaster ride.  And regardless if we are new to investing or been at it for a while, one thing is for sure, it is the returns that matter.

And when I think about returns during these times, I also think about how we lead and the returns we want from our leadership.

About 3 years ago a former client reached out to me to design and deliver a leadership program for the senior leaders in his automotive distribution company.  My contact knew my work from when we had partnered together in a previous organization, but other members on his current team wanted insight into the leadership framework, competency development  plan, learning phases, fees, etc.

A week later I am in the client’s main boardroom to present and walk the working group through the leadership proposal.  Their initial feedback was positive and it looked like we were all moving in the right direction, but then they said there was one issue that they were not prepared for - the price.  They had brought in a consultant before to do some training and some of them had gone on a few seminars and workshops recently - but in comparison to those fees, what I was proposing was way more than what they expected. They wanted to work with me, but could I work on reducing my fee by 50% - because they felt that the cost was much more than they were willing to pay.  

Now this was not the first time that I had been asked to negotiate a project, but given the business and employee challenges and the direction they wanted to move the organization - it seemed clear that an investment would need to be made. Their request though, showed me that they only saw it as a cost. On the surface, they were well aware that they had to put time an obviously money into this initiative. But deep down, the group think was about price - this is a cost of doing business - an expense. Not an investment, that what bring value to the organization and the likelihood of a great return.  There focus in short was on now (cost) and not tomorrow (value).

As as I thought about how I would reply to this request, I realized what I really needed to do was educate. Even though they were in leadership roles, they did not know or had forgotten the ripple-effect price that we all pay – when dealing with, witnessing or experiencing poor leadership. Effective leadership like most challenging things in life – takes time, takes a commitment to be invested in.

As we all face the challenge of providing  great employee experiences – at all levels, there are 3 key areas where ineffective leadership thinking and behaviours are and will directly impact a company’s bottom line: retention, production and innovation.

RETENTION: Employee retention is an organization’s ability to keep its employees. There is a lot of research into what the true costs of losing staff is ranging from 16% of salary for hourly employees, up 213% for executive leaders. Costs of course, are varied because they include many different aspects from onboarding, training, knowledge transfer, etc.

Intentional leadership practices throughout an organization is the only way to drive these number 16% and 213% numbers down.  Leadership practices focused on open communication and coaching directly impact retention and subsequently the bottom line.  Given that the number one reason that people leave companies is due to the behaviours of their direct manager – retention costs are directly attributed to poor leadership. People leave bad bosses - not companies.

PRODUCTION: Obviously not everyone will be an ideal fit for every organization and vice versa. So when you  have employees who are a good fit,  leadership must keep this simple production formula in mind: engaged employees = better productivity.

According to a Deloitte Global Trends Report for 2020, the numbers continue to trend in the same direction since 2018 - the majority of employees are disengaged.  According to the report, this disengagement is resulting in approximately $600 billion in lost revenue per year.

If leaders are focused on productivity, then they should equally be focused on engagement.  We constantly hear that people are our most important assets, yet the above numbers show that the idea is not fully implemented or optimized. Better leadership leads to better engagement, better engagement leads to more productive staff, and more satisfied customers.

INNOVATION: Organizations across all industries, typically have one thing in common - driving or maintaining growth. And we have all seen over the past 20 years how growth has come in all walks of life. Innovations in the way of 3D printing to all the new flavours of Oreos have shown us that there will always be new ways of doing things.

And to harness these opportunities and new ways of thinking, leaders must support the creative gene in all of us and provide environments that allow for risk and reward.  

The costs for not driving innovation are clear as you could easily go the way of Brother Electric typewriters or RIM’s Blackberry. The returns for promoting and allowing for innovation to happen – in both a small and large scale are priceless. 

Leadership is mandatory to keep an organization growing and responding to changes in the marketplace – promoting innovating thinking that can deliver the desired results and benefits that are both professional and personal.

Poor leadership is obviously expensive and the associated costs that come with it are too high to even comprehend.  Leaders and leadership development are central to keeping costs down and maximize a return on all investments – beyond simply learning and development.

In the end I did not offer the 50% discount, but after sharing the critical stats and hidden costs of poor leadership - they realized that although my fee was not what they were planning for – they were getting a lot more than I had proposed. The returns - with the commitment to stay the course and do the work - were going to be more, than they invested.

Let me know what other hidden costs of poor leadership that you have seen lately.

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Corey Atkinson, VP of Strategic Learning & Development, [email protected]. As an experienced organizational development speaker, consultant, master facilitator, coach, and author - his focuses on delivering meaningful and measurable strategies for organizations to create insightful leaders and harness team potential.