The Cost of Mediocre Managers (Infographic)

the-cost-of-bad-managersHere’s an alarming statistic: Every mediocre manager (ones who don’t use good fundamental management skills) loses your organization an average of $33 per day. We all know that having strong managers is important. But by tying proper management techniques to a direct cost, the criticality of these skills become much more tangible.

 

In this blog, we’ll discuss the primary factors that contribute to the $33 per day cost, including employee turnover, employee engagement, and employee errors. In conjunction, we will discuss clear steps your organization can take to reduce and eliminate these avoidable losses.

 

The Cost of Employee Turnover

The true cost of employee turnover is higher than most business leaders realize. The costs of recruiting, hiring, onboarding, and catching a new employee up to speed are the obvious expenses, but factors such as loss of institutional knowledge, loss in productivity from delegating out the old employee’s duties, and the time it takes to find the right candidate all come into play as well. For this reason, it can cost up to 150% of an employee’s yearly salary to find a replacement when they leave.

 

For our purposes, however, we’ll conservatively say that a company is only losing 50% of that employee’s salary from turnover. If you take into consideration that the average annual turnover rate across organizations is 15%, and that US median employee salary is $40,000, then an organization of 100 employees loses $822 per day. Narrowing this down to the cost per day per manager from failing to use good fundamental skills, we get to $12.87.

 

Fortunately, reducing employee turnover is a fairly straightforward task when managers are armed with the right tools. Some keys to retaining employees are:

  • Knowing how to hire the right people
  • Developing managers properly
  • Learning from past retention issues
  • Creating a culture of retention

Employee Retention Whitepaper

These four things can be done through effective management training, and careful succession planning. Taking steps to reducing turnover provides a great return on investment, and can be done with minimal capital investment. Keeping people around, however is just the first step in making sure you have an engaged workforce.

 

The Cost of Low Employee Engagement

Since 70% of employee engagement is based on management quality, it’s crucial to make sure yours are doing all that they can to keep your workforce on track. High engagement is crucial to business success, and can be achieved by having properly trained managers.

 

Employees who aren’t fully engaged in their work are costing their company time, money, and are undermining the expectations of the organization. Disengaged employees cost the US about $500 billion a year. On a per manager basis related to good management skills, this equates to $12.21 per day.Working Hard-8.jpg

 

By not committing to the goals and objectives of the company, disengaged employees do little to help growth. Some common signs of low employee engagement include:

  • Team members fail to speak up when issues arise
  • Complaints are more common than finding solutions and taking action
  • Employees show disinterest in new objectives and programs

 

These issues can all be mitigated by training managers to be more effective in their role. Here are what good quality managers do to keep an engaged workforce:

  • Giving employees an understanding how they contribute to the broader mission
  • Listening to team members and giving honest, open feedback
  • Outwardly recognizing the hard work and achievements of their staff
  • Empowering employees by giving them any tools they need to succeed

 

By choosing a management training program that teaches concepts like job coaching, providing feedback and developing goals, leaders can help engage their workforce, and ensure that employees are committed.

 

The Cost of Communication Errors

One skill that every manager should have is the ability to communicate effectively. Almost every task that a manager completes daily involves communication in some way, shape, or form. Fortunately, communication errors are easy to spot, and can be avoided with the right preparation and process.

 

Since a company of 100 employees loses an average of $450,000 per year due to communication issues, and managers are responsible for an estimated 15% of all communication errors, companies lose about $7.29 per day for each poorly communicating manager in their organization.

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Some common communication errors that managers make are:

  • Not communicating clearly and concisely in a format that’s well understood by employees
  • Failing to make non-verbal and verbal communication congruent
  • Having a one-way conversation versus checking for alignment and listening

 

Managers who are effective communicators can help their organization tremendously, as many common workplace errors are caused by miscommunication. Being able to have honest and open conversations with employees can also help increase trust throughout the workforce, and reduces stress and tension between coworkers.

 

The good news is that communication skills can be developed over time and continually perfected. With the right fundamentals, any manager can become an effective communicator. Giving your managers the right tools to make sure they’re ready for any communication issue that might arise is the first step in eliminating these errors.

 

Bad Managers are Costing Your Organization

Mediocre managers have a direct cost to the organization. This cost, on average, is $33 a day, $231 a week, $990 a month, and $12,045 a year. Since each organization is unique, these numbers do vary, but the pitfalls of mediocre managers can be seen in even the most high-performing companies.

 

The best way to avoid these common issues is through comprehensive management training that gives the leaders in your organization the confidence they need to be effective in their role. How much can your company save if you stop the effects of marginal managers? Contact us today and find out.

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