Data speaks to leadership now. The Ken Blanchard Companies studied the effects of poor leadership on your business. You’re probably looking at your year-end numbers right about now and thinking…what?
Here’s a disturbing finding on the effects of poor leadership:
Doing nothing about poor leadership costs the typical organization an amount equal to approximately 7% of their annual sales.
If your company did $10 Million in sales this year, poor leadership cost you $700,000. Now what if you provided some targeted leadership training for two or three of your sales managers or regional managers this time last year? Let’s assume you hired someone qualified and they had some impact. Do you think the person or people you hired to have the leadership impact would cost you $700,000? Not likely.
Maybe you fired one or two managers who just weren’t cutting it. It shocked you because you hired from within and s/he was a great sales person, but s/he couldn’t cut it as a manager. Or, you hired from outside, and his/her resume looked great! You can’t figure out how you botched that hire! Now consider the cost of covering the vacant position, finding a replacement, and getting that new person up to speed. Here’s another finding:
It takes about 30% of an annual salary to replace a low skilled or entry level worker and up to 250% of an annual salary to replace highly specialized or difficult to replace positions.
So, let’s be conservative and say it costs you about 125% of an annual salary to replace a mid to high-level leadership position. But now imagine instead of firing that employee, you got that person some training and all they had to do was fix one or two small behaviors to become effective leaders. Often times that’s all it takes, one or two adjustments. And for arguments sake, let’s assume it cost you about 50% of the leader’s salary to hire someone to provide this training.
Does the ROI work out in your favor?
As an aside, imagine you provided some professional development and leadership training for future leaders in your company (like the sales person you promoted) and you now have confidence that the person you are hiring, from within, has had exposure to leadership principles.
Take these two scenarios and imagine you invested this time last year in some leadership training. How do your year-end numbers look now? If you are looking to disrupt the status quo stop investing in what every other one of your competitors is investing in. Start thinking on the fringe, where great things happen, and invest…REALLY invest, IN YOUR PEOPLE and let the numbers work in your favor!
Errol Doebler is the founder of Ice Cold Leader, a leadership consulting firm. After successful careers as a Navy SEAL Platoon Commander and FBI Special Agent, Errol founded Ice Cold Leader to realize his passion of empowering great leaders and better human beings. Ice Cold Leader provides executive coaching, keynote speaking, and corporate retreats to individuals and teams across the world.
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