Updated: May 1
According to a report by the Society for Human Resource Management (SHRM) it costs employers an average of $4,129 and 42 days to fill a typical wage earner’s position. This number increases exponentially as the duration of the search expands to meet the demands for higher levels of expertise[i].
ATD determined that an employer can also expect to pay approximately $1,296 to train each new employee,[ii] and the actualized costs to replace midrange employees can approach 20% of their annual salary[iii]. This number increases up to 213% of an annual salary when replacing executive level employees[iv].
A seldom discussed, hidden cost of employee turnover is the loss of productivity during the search, onboarding, and training process. Research shows that new employees only function at 25% productivity during training, and the training process can take up to 26 weeks to get new hires functioning at expected performance levels[v].
These are just some of the costs involved in the onboarding process. What’s even more sobering, is these numbers are pre-“great resignation” figures. The data for that phenomenon has yet to be compiled.
As I speak with employers, I am astounded at their resignation to the idea that this is the new norm. It seems we have given over to the idea that people in America just don’t want to work anymore. I think a true assessment of what is actually taking place in this country is that people are tired of being abused by psychotic leadership.
What do I mean by that phrase? Psychotic leadership is leadership that has lost touch with reality. It pulls the employee in many different directions through multiple voices (various leaders in the same organization) who apply their leadership utilizing opposing styles. People who work in these types of environments feel abused. Corporate communication feels nonsensical. Organizational behavior seems inappropriate, the employee feels trapped in someone else’s psychotic episode.
What makes psychotic leadership so damaging is the affected organization’s inability to self-diagnose the problem. For years we have taught leadership as “soft-skills,” and not as a true science that is affected by many variables. I once had a leader from a respected institution tell me that leadership development trainers are “a dime a dozen.” He valued quantitative data over qualitative approaches. He valued technological advancements and practical applications over what he deemed “ethereal approaches.” Sadly, that is the mindset that drives psychotic leadership. Devaluing the qualitative glue that holds everything together will lead to quantified failure.
Good leadership brings consistency to an organization, but good leadership is never found in a single individual. Good leadership replicates itself in everyone around it. A multiplicity of leadership stylings in a single organization is akin to hearing voices in a psychotic mind. It is tormenting to the employee. Diagnosing this problem is difficult because we have adopted the mind-set that leadership development training is a “dime a dozen.” We flood our companies with the latest trends and books. Our leadership training initiatives look more like a river of confusion than a sea of knowledge. Our leaders only grasp what floats past them while they are standing on the bank. What our leaders glean from our training initiatives depends entirely on when they were standing by the riverbank. Some leaders adopt certain approaches while others adopt opposing approaches. This is even further compounded when we take into consideration that most of our leaders gained their knowledge at an entirely different river than the one into which we are dropping information.
How do we overcome psychotic leadership and the costs associated with it? I have listed six steps that we at The Kannenberg Group believe are essential to this process.
1. Get past the mindset that leadership training is secondary to technical and practical training. In fact, leadership training should be primary in everything you do.
2. Invest in a cultural assessment analysis of your organization to determine your company’s true reality. Be sure to include floor-level employees in this assessment as that is your best avenue to connect with reality.
3. Perform an organizational dynamic assessment to determine the strengths and weaknesses of the interpersonal relationships of your organization.
4. Identify and clarify your organizational structure to gain an understanding of its flows of authority and accountability and make any corrections necessary.
5. Identify and develop a unique leadership styling that best suits your corporate vision, values, and purpose statements.
6. Build a leadership development program that delivers quality training, periodically follows up to ensure that training is properly applied, onboards new leaders by equipping them to function in that leadership brand, and offers continual recertifications to ensure the brand perpetuates without losing sight of its intentional design.
Should you desire any help implementing these steps, we are here to advise. Feel free to contact us at any time.
[i] https://www.adp.com/spark/articles/2019/07/calculating-the-true-cost-to-hire-employees.aspx [ii] https://www.td.org/research-reports/2018-state-of-the-industry [iii] https://www.accountsandlegal.co.uk/small-business-advice/average-employee-cost-smes-12-000-to-replace [iv] https://whatfix.com/blog/cost-of-onboarding/ [v] https://sloanreview.mit.edu/article/getting-new-hires-up-to-speed-quickly/