Have you ever been part of a team that has gone through so many changes that it is difficult to imagine how many people have passed through it? More often than not, you only hear the stories once you join. Some people were dismissed, others chose to leave, and over time the organisation is left with a team lacking authenticity, trust, and integrity. The only constant becomes the turnover itself.
This creates a wide range of negative consequences: the cost of replacing employees, the time and effort HR teams spend recruiting, and a damaged reputation that even the strongest employee awareness campaigns struggle to repair. The price is not a single issue, but a collection of many hidden costs, and that is precisely what I want to highlight and shed light on in this blog.
Poor leadership equals large costs
There isn’t quite a mathematical formula to determine the exact cost of poor leadership, but there are certainly ways to measure some of the financial consequences. For example, how much staff turnover has your team experienced since a new leader was appointed? Consequently, how much productivity is lost during the training period while others carry the heavier workload? Have you had to employ additional recruiters to manage the turnover within that specific team? That is certainly one calculation you can make to understand the effects of poor leadership.
There are other indicators as well. If KPIs begin to decline over the course of a year or so, and the timing coincides with the appointment of a new head or leadership team, that often speaks for itself. It is similar to when new owners buy a sports club – you can usually see the style and (the lack of strategy) almost immediately. Often, when people buy clubs without truly understanding them, they should rely on those who do. In practice, however, many believe they can manage it alone, and the results can be catastrophic.
It is not very different when companies merge, businesses are acquired, or new managers are appointed. In a relatively short period of time, you can usually see whether the right strategy is in place. Depending on the size of the company, this can result in massive financial losses. These issues could have been avoided by appointing the right people with the right values and attitude, which is why I always emphasize the power of awareness.
There has to be organisational awareness of the leadership qualities required, and this applies to everyone. However, senior management sets the tone and style for every other level within the organisation, which is why appointing the right people to lead and make decisions is such a serious responsibility. Without sounding overly dramatic, in some cases it can become a life-or-death situation for the organisation. That is the biggest cost for poor leadership.
The story of the running fountain
To show how small things can lead to major costs, I can share an example of a broken tap in a company that nobody seemed willing to address. It was running constantly, resulting in high water bills, while also damaging the bathroom because water was splashing everywhere.
The deeper issue was not simply the broken tap itself, but the fact that nobody cared enough to report it or ensure it was fixed. Regardless of where the fault lay, this is ultimately an example of poor leadership within an organisation. Poor leadership creates indifference, and when people become indifferent, small problems gradually turn into significant costs.
If you notice this type of behaviour within an organisation, you will likely uncover even larger issues once you begin a proper analysis. Unfortunately, poor leadership is more common than many would like to admit, and businesses that operate smoothly in every aspect are rare. That is precisely why organisational support and leadership development are needed more than ever.
Raise the awareness, don’t fire
I have met leaders who, as counterproductive as it may seem, resort to firing people instead of raising awareness and building a circle of trusted leaders who can carry their vision towards success. Rapid firing may feel like a legitimate and instinctive solution, but in reality it often creates yet another problem. If the same cycle keeps repeating, then the core issue has not been solved, or in my language, awareness has not been raised.
It takes courage to admit that things are not working, especially when you are unsure what to do next. The good news is that these challenges are solvable, and they do not have to cost a fortune. By raising awareness through the ACE framework, you begin to see the missing piece, hopefully sooner rather than later. Because the longer these issues remain unresolved, the greater the cost becomes in the form of organisational failure.
If you need support, I would be happy to offer you a free consultation.