The Staggering Cost of Bad Bosses

July 14, 2017

Why Managers Are the Most Important Factor in Employee Engagement

Management Decisions are Key to Organizational Success

Choosing the right individuals within your organization to promote into management (or recruiting the best outside talent) is the cornerstone to your company’s future success. Gallup CEO Jim Clifton once wrote, “The single biggest decision you make in your job — bigger than all of the rest — is who you name manager. When you name the right people to manage your company’s workplace, everything goes well. People love their jobs, your customers are engaged, and life is great. When you name the wrong person manager, nothing fixes that bad decision. Not compensation, not benefits — nothing.”

In spite of the importance of choosing the best managers, Gallup’s research indicates that most companies get management decisions wrong. In fact, 82% of the time, organizations fail to choose a manager with the right leadership qualities.

The Staggering Cost of Bad Bosses

According to large-scale studies conducted by Gallup, Dale Carnegie, and Towers Watson, truly engaged employees make up roughly 30% of the workforce. That leaves about 70% of your employees working less intensely and effectively than their capabilities allow. Estimates vary about the cost of employee disengagement to businesses, but there’s broad agreement it is many, many billions of dollars each year.

The single biggest contributor to employee disengagement? Poor managers. According to Gallup, the quality of managers account for 70% of the variance in employee engagement scores across business units.

Stress at work contributes to poorer health and wellbeing. Anyone who had ever had a bad boss knows how the stress of it grinds away at both professional and personal happiness. That is probably why teams with good managers have lower healthcare costs and 41% less absences.

Bad managers increase employee turnover on their teams. According to Victor Lipman, management expert and author of The Type B Manager: Leading Successfully in a Type A World, people leave managers, not companies. “A good boss can make a bad job good, but a bad boss can make a good job a misery.” It can cost up to twice an employee’s salary to recruit and train their replacement, and when one member of a team leaves, it often inspires others to follow.  Put simply, turnover due to bad management is an unproductive expense for any organization.

You may think managers are only an internal problem, but in reality, bad managers can damage your brand. Unfortunately social media and apps like Glassdoor and Indeed make it all too easy for disgruntled, disengaged employees who have suffered under bad bosses to paint your company in a negative light when writing reviews your applicants may read. And negative managerial attitudes can even be transmitted to customers through your call center employees.

3 Tips to Help Managers Improve Engagement

  1. Step up performance reviews. Managers need formal training about effective goal setting, so they can help employees improve and succeed. Engaged employees are more likely to say their manager helps them set priorities and goals and then holds them accountable for their performance.
  2. Focus on good communication. Great managers are good at motivating people. That starts by building a relationship and practicing open communication. Managers need to make each employee feel confident they can approach the manager with questions or problems.
  3. Build up instead of tearing down. Good managers focus on employee strengths instead of harping on weaknesses. A Gallup study found that 67% of employees who say their manager focuses on their positive strengths are also engaged in their work.

Give Managers the Tools to Succeed

Human Resources should take an active role in creating better managers, never assuming a talented employee already has what it takes to manage people. Implement training programs for new managers, and give them the technology solutions to set better employee performance goals and boost engagement. Learn more about how Asure Software’s Performance Management system can help you review strategic organizational goals, improve employee performance, and plan for succession in one single system.