No matter the industry, two areas of scarcity keep organizational leaders up at night: not enough time in the day, and not enough funds in the budget. Due to this, leadership development is often low on the list of priorities.
According to a recent survey conducted by Training magazine and Wilson Learning Worldwide Inc., money spent on training and development per employee has been trending upward. Development for leaders, however, is not following suit. Nearly half of respondents reported significantly cutting down on their leadership training investment, primarily due to challenges surrounding the COVID-19 pandemic. But in diagnosing the situation today, are they being shortsighted about tomorrow?
In “saving” these development dollars, costly, long-term issues will likely take up residence instead. The following examples explain why leadership development is a smarter investment than you may think.
The Cost of Replacing Talent
According to Gallup’s State of the American Manager report, one in two workers leave their jobs due to having a difficult relationship with their manager. Additionally, a survey conducted by Forrester and Human Resource Executive magazine reports that replacing this unhappy employee can cost an average of 50%--and up to 200%--of their salary. In addition to this financial hit, an even bigger threat exists: dissatisfied co-workers of the former employee also opting to leave--a term called “turnover contagion”, or contagious quitting—which creates a compound effect on the costs of recruiting.
Should your HR managers succeed in hiring new and capable employees, the right steps must be taken to retain them, starting with an effective onboarding process. According to research by the Brandon Hall Group, solid onboarding not only increases retention of new hires by 82%, it can boost their productivity by over 70%. The estimated cost of onboarding according to a SHRM study? $4,100 per employee. Additionally, it can take up to six months for the employee to find their rhythm, making good on their company’s investment.
The Cost of Quiet Quitting
The phrase “quiet quitting” is a bit misleading; it’s not referring to your employees silently packing up their belongings and walking out. It may actually be worse--describing workers who opt to stay, but have “lost their mojo” when it comes to their jobs. According to an analysis by Zenger Folkman, the origins of quiet quitting stem not from an employee’s unwillingness or inability to work harder, but from the lack of a productive relationship with their manager. Add up the dollars lost per hour, per week when just one team member underperforms due to feeling disrespected, unappreciated, and misunderstood, and the financial costs can be staggering.
The Cost of Miscommunication
Communication issues stemming from generational differences, the demand for emotional intelligence, and heightened priorities on diversity and inclusion demand soft skills that may not be in the toolkits of your best executives.
According to the 2023 State of Essential Workplace Communications report by Axios HQ, the costs of miscommunication add up to $15,000 yearly per employee; a staggering $2 trillion per year nationwide. Couple this with the hybrid workforce model and prolonged and ongoing uncertainty, and it’s clear that your leaders need training like never before.
Your Leaders are Worth It
It’s no surprise that LinkedIn’s 2023 Workplace Learning Report states that 83% of organizations are seeking to build a more people-centric culture, with 81% of those organizations using Learning and Development to do so. While it’s obvious that companies want to keep their employees satisfied, it may not be as clear just how many dollars are lost when they aren’t. Investing in leadership training for your top executives will not only keep their skills honed and relevant, it will prevent your business from leaking unnecessary cash.
If you’re ready to amplify the effectiveness of your own leadership team, download this infographic and book a complimentary discovery call today.