Intuitively, most organizations understand the importance of developing leaders. However, when budgets tighten, other initiatives take priority, or when faced with a crisis, investing in leadership training becomes a difficult sell.
It’s an investment that’s easy to ignore, as the direct correlation between leadership development and impact can be hard to see on a balance sheet. Yet, if you’ve personally experienced lousy leadership, you know how it impacted your productivity, motivation, innovation, and likely, how long you stayed in your role. Imagine that scenario across an entire organization due to a lack of developing leaders across all levels.
If you find yourself trying to make a case for a leadership development program at your company, let these 19 ugly truths shed some light on why an investment in developing leaders is a worthwhile cause.
Employee Engagement Tanks
Without leadership development opportunities, leaders do not have the skills to motivate their direct reports in a way that increases productivity and team performance. As a result, managers account for at least 70% of the variance in employee engagement scores across a company.
In other words, a bad manager = low employee morale and engagement. This is concerning given that disengaged employees cost employers anywhere from $3,400 to $10,000 per person in salary annually due to decreased productivity.
Innovation Is Missing
When leaders lack the skills in strategic thinking and don't know how to motivate and stimulate innovation in their people, organizations become stuck in old ways of thinking.
Unfortunately, many leaders do not feel equipped to lead innovation. In one survey, 65% of leaders said they were “somewhat,” “a little,” or “not at all confident” in their ability to stimulate innovation.
An Empty Leadership Pipeline
In the US, 10,000 baby boomers retire every day. Without succession planning and a bench of ready-now leaders, there will be a gap when someone leaves or retires until there is a candidate to fill the leadership role, putting an organization in jeopardy.
Finding Leadership Talent Is Hard
Recruiting is a real problem, as only 14% of companies have the leadership talent they need to execute their strategies and grow their business. As a result, competition for leadership talent is high, and without homegrown leaders who are prepared to step up to the challenge, growth cannot take place.
It is found that the customer experience is directly linked to the employee experience. If your front-line employees (the ones directly dealing with customers) have a negative employee experience because of poor leadership, your customers and your sales will suffer. When a customer has a negative experience, they take their business elsewhere 60% of the time.
Digital Transformation Is Stagnant
Leaders who have not upskilled their digital capabilities are holding companies back. In fact, companies that have digital-literate leaders financially outperform the average company by 50%.
Digital transformation is a top priority for more than 90% of organizations, and organizations that are not actively developing their leaders are bound to struggle more during the process.
Workplace Safety Incidents Increase
Time and time again research confirms that there is a correlation between a leader’s influences on workplace safety and the culture regarding safety-related attitudes and actions. If you don't have leaders who have the skills and tools to create a culture of safety, you could very well see workplace incidents increase.
When leaders do not have the skills to lead, their direct reports suffer. In fact, the number one reason why employees quit their job is due to their immediate manager.
Lack of Accountability
If your leaders do not have the skills to hold themselves and their team accountable, it will be near impossible for goals to be achieved. Unfortunately, a lack of accountability is a real problem within organizations, as only 31% of respondents in one survey said they were satisfied with the degree of leadership accountability in their organization.
In addition, shockingly only 40% of direct reports surveyed by Gallup strongly agreed their manager holds them accountable for their performance goals. This highlights the importance of developing every leader's accountability skills.
Employee Development Falters
When you are a leader who did not receive any development or coaching from your boss, it will be almost impossible to recognize that you should be developing your employees, let alone how to do it.
Yet, this is what high-potentials, your future leaders desire. In one survey, 30% of respondents considered “the next generation of leaders” said they want more coaching from their manager than what they’re currently receiving.
Lack of Inclusivity
In one study, just 40% of employees agreed that their manager fostered an inclusive environment leaving much room for improvement for most managers.
When leaders do not have the opportunity to develop the knowledge and skills needed to create an inclusive environment, everything from employee engagement, the employee experience, productivity, innovation, retention, and the company brand suffer.
When leaders forgo training, they miss the critical importance of role clarity, which is when an employee understands what they need to do and what is expected of them. Having a team that is unsure of its role and accountabilities is a real problem, as just 2 out of 5 employees strongly agree that their leader has made an effort to define team roles and responsibilities.
From team meetings to one-on-one meetings, large presentations to individual conversations, communication is critical to building relationships with direct reports, providing feedback, answering questions, and inspiring action.
Yet, only 1 in 3 employees feel their direct manager communicates efficiently. Even worse, 75% of employees see effective communication as the number one leadership attribute. Therefore, leaders need access to communication programs to have any chance at being effective.
A Gallup study found that 23% of employees very often or always burnt out at work, with another 44% experiencing burnout from time to time. However, it does not have to be this way, as three out of the five reasons an employee experiences burnout could be rectified if their direct manager knew how to manage workloads, provide role clarity, and give support.
Expectations Of Leaders Are Changing
Without developing current and future leaders, you’ll be left behind as traditional leadership is being replaced. Modern leaders have the skills and abilities to inspire 86% more great work through mentoring, coaching, building relationships, and recognition.
Change Initiatives Fail
Successfully leading change requires more than announcing that something is changing. Leaders who excel at change management have the knowledge and skills to craft a holistic change strategy that engages employees, builds partnerships, encourages buy-in and support, and delivers on the change mandate.
Yet, only 35% of leaders say they are effective at managing change, and a lack of development may be causing the gap.
When an employee’s direct supervisor lacks leadership capabilities, it is the employee who suffers. In a survey by Korn Ferry, it was found that the largest source of stress for employees was their direct boss.
Poor leadership costs an organization roughly 7% of its total sales due to decreased productivity and increased turnover. Yet, organizations investing in training and development only spend 0.5% to 2% of revenue on training. Therefore, if an organization that isn’t investing in training starts developing leaders, they could see an increase of over 5% in profit, if everything else remained constant.
Last but certainly not least, research from Josh Bersin for Deloitte found that an organization’s dedication to developing leaders at all levels has the most significant long-term impact on business performance over anything else.
Conclusion: Developing Leaders Will Have A Positive Impact At Your Company
If you feel like leadership development is lacking at your organization, you’re not alone. More than 77% of companies report experiencing a leadership gap. However, the good news is that Niagara Institute can change the trajectory of your leadership development through our open enrollment and custom programs for all levels of leaders, as well as leadership coaching.