5 Ways Bad Leadership Puts Your Company at Risk

Many talent management challenges, such as low engagement, rising turnover, and burnout, can be attributed to bad leadership. Leaders who negatively impact everyday employee experiences ultimately create a work environment and culture that your most valuable employees are unwilling to tolerate.

However, bad leadership doesn’t just cause you to lose top talent. It creates other legal and business risks that can affect your organization’s bottom line and reputation. To cultivate an employee experience that attracts and retains top talent, it’s essential to identify and address leadership deficiencies at all levels of the organization.

The Risks of Not Addressing Bad Leadership

Unfortunately, bad leadership is everywhere. Nearly everyone has experienced it. A Harris Poll survey found that 71% of people have had at least one manager who exhibited toxic behavior. Thirty-one percent of people currently have one. Common complaints about bad managers include the following behaviors:

  • Micromanagement
  • Insufficient or nonexistent employee recognition
  • Setting unreasonable expectations
  • Delivering inconsistent or imbalance feedback
  • Lack of empathy

Though workplace culture is often difficult to quantify, it has a highly tangible impact on employee mindset and behavior. Just as strong leadership inspires teams to innovate and achieve breakthrough performance, bad leadership can have the opposite effect.

See Also: 6 Biggest Frontline Management Mistakes & How to Avoid Them

Here are the potential risks to your organization if poor leadership goes unchecked:

1. Higher turnover

In the current environment of talent shortages, employees have many options for where they can work. Instead of going to HR or trying to “fix” their manager, many employees will either leave or become disengaged. In a FlexJobs survey, nearly half of employees with a toxic boss (43%) said it made them quit. Another 12% stayed but resorted to “quiet quitting.”

2. Lawsuits & employment claims

Discrimination, harassment, and retaliation can, sadly, happen anywhere. However, when company leaders work to create a culture that facilitates the effective management of these issues, positive outcomes are more likely. Conversely, if managers lack the skills to manage conflict and take appropriate follow-up action, reputation-damaging lawsuits and costly regulatory fines can result. For example, the FDIC recently came under fire after over 500 employees complained of harassment, discrimination, and poor management response.

3. Disengaged employees

Employees who feel undervalued and uninspired by company leaders are less likely to be motivated to do their best work. As a result, individual and team performance suffers. According to a Gallup estimate, the cost of poor management and lost productivity from disengaged employees in the US is between $960 billion and $1.2 trillion per year.

4. Lack of trust

An estimated 23% of employees trust company leadership – a concerning figure given the importance of trust in any relationship. Managers who micromanage and lack transparency in their communications only make it more challenging for trust to develop. Since trust must be earned over time, managers must learn to coach, guide, and partner with employees rather than assign work and supervise.

See Also: How CEOs are Addressing Trust Issues

5. Stressed & burned-out employees

Manager behavior affects employees in and out of the office. In fact, a Workforce Institute study found that managers have a more significant impact on employees’ mental health than doctors or therapists – and about the same impact as a spouse or partner. If managers don’t master skills for listening, showing empathy, and placing trust in their employees, outcomes such as anxiety and burnout will be more likely.

Solve Bad Leadership with Scalable Coaching & Development

Building a culture that facilitates higher employee engagement, retention, and trust requires a multi-pronged approach. This includes effective feedback mechanisms and strong HR partnership. Skilled frontline leaders are also a critical part of the solution because they set the tone for company culture and have more direct interactions with employees.

Too often, frontline leaders are overlooked when it comes to development and training. Budgets are focused on higher levels of leadership. To develop early career managers, organizations typically rely on affordable online learning. While it scales well, by itself, online development may not generate results. That’s because many learners don’t invest the time or stay the course.

In a recent IMPACT Group study, 63% of talent and HR leaders stated that engagement is a problem when it comes to using online learning platforms alone to build leadership competencies.

View the Full Study Here: New Trends in Corporate Online Learning

Solution for Scalable Leader Development: Microcoaching + Online Learning

For organizations that are using or contemplating online learning to develop frontline leaders, IMPACT Group offers an innovative approach that gets better results than using online tools alone. Our budget-friendly program combines LinkedIn Learning® courses with live, microcoaching. We call it Link Learn Coach™.

Each program is an 8-week learning journey to enhance your training for frontline managers. In conjunction with curated LinkedIn Learning® content, participants complete hands-on application activities and receive four one-on-one coaching sessions.

No development? What could go wrong?

If frontline managers don’t understand their role as leaders or how to lead, employees don’t receive the guidance and communication they need to perform. Even worse, toxic managers drive people to leave and can worsen their health. One study found that managers have just as much of an impact on people’s mental health as their spouse.

However, with coach-supported leadership development, you can train leaders at all levels.

There are myriad reasons not to ignore leadership and culture concerns – your employees sure don’t. For more insights on addressing poor leadership and fostering a thriving culture, download our guide: 4 Steps to Creating a Workplace Culture No One Wants to Leave.

Note: LinkedIn Learning® is a registered trademark of LinkedIn Corporation. Link Learn Coach™ is a trademark of IMPACT Group.