The Cost Of Bad Leadership
Three (3) trillion US dollars.
That’s number three followed by 12 zeroes.
US Student loans are around $1.5 trillion*. If you take UK and Belgium’s National Debt ($2.480bn and $513bn, respectively), you get about the same number, $3 trillion.
So what does cost $3 trillion?
Answer: Excess bureaucracy in the US Economy **.
As corporates have grown bigger, their organizations are more complex and bureaucratic than ever. In 2014, there was alone in USA 23.8 million managers in public and private sectors, not including IT. That means one (1) manager (plus admin person) per 4.7 employees. Obviously that is not a good ratio. As HBR article illustrates, improving that ratio from 4.7:1 to 10:1 would “free up 12.5 million individuals for other work that is more creative and productive”. This does not even take into account the psychological, which would be affecting even a greater group. More accountability, trust, positive culture, peer support are only few examples that could be grown from this gain.
And while the example is from USA, other countries don’t do any better. There are two additional reasons to this besides bigger, more bureaucratic corporations. First, more people are being promoted to manager than steered to path to become true specialist. Secondly, cultural foundations may lay groundwork for expectations and norms on e.g. age and seniority.
Bureaucracy is considered as a negative term and a side result of organizational development — no companies, private or public build it knowingly. “Government by bureaus,” especially “tyrannical officialdom,” excessive multiplication of administrative bureaus and concentration of power in them, it has strong negative connotation for obvious reasons. But while it perhaps is born out of uncontrolled organizational growth, weak leadership or simply an attempt to manage big corporations, it still boils down to one thing — human.
( A interesting study by McKinsey lays out an alternative type of organization, agile organization, which is based on empowered small teams — squads, tribes and chapters, and how manager’s role is different in such organizations)
https://www.mckinsey.com/business-functions/organization/our-insights/the-agile-manager
We all have seen, perhaps even experienced bad leadership. It creates uncomfortable, fear-ridden culture, where mistakes are punished, expectations are unrealistic, no trust is given and vision for better future or contribution to company’s success is limited.
Bad leadership (and management) costs actually more than $3 trillion. The cost of psychological strain manifests itself as increased health costs, whether the challenges are psychological or physical. Thus, in order to to grow business further, the first step is not to look outside but to look inside and inefficient management, unnecessary tasks and lack of accountability in key roles.
Being a leader or manager is not job for everyone, and that’s actually good, we need more speacialists and content experts than managers. Managers are sometimes results of promotion when nothing else is available for individual in the organization, but individual is so important that company wants to keep him or her. Yet, it might be, and actually quite often is true, being fit as manager is not a self-evident. To be a good manager, you need to care about the team more than yourself: listen, speak, share, motivate, and value team members every single day. As manager, you are not entitled to have bad day with the team. You cannot shout at them, or aim your frustration to them, under no circumstances. You must always be able to tell the truth, and also admit if you don’t know. You don’t claim achievements to yourself, and you don’t necessarily get to enjoy the success in a way that feels personal. But that’s what the people are expecting from manager and this is actually quite cross-cultural, global phenomenon.
In 2010 , a study was published in the Journal of Research and Personality titled “The Search of the Successful Psychopath” which examined what separates psychopaths who become criminals from psychopaths who succeed in business. Study found that successful psychopaths share the same features, regardless of business or criminal area — they are arrogant, dishonest and callous. While 1% of population maybe be psychopaths, about 3% of business leaders might be too (that number rises to 15% among prison inmates).
Researchers concluded that successful psychopaths share the same core features as other psychopaths. They’re arrogant, dishonest, and callous. They experience little remorse, minimize self-blame, exploit people, and exhibit shallow affect. And rarely they see these features in themselves.
Amount of sociopaths is bit higher, 4% according to a research, https://www.psychologytoday.com/us/blog/digital-leaders/201309/are-you-working-sociopath
Humans have through centuries been able to adapt to most demanding changes and conditions, and the same applies to work. People are very flexible and durable in finding the way to deal with bad leadership and often for a good cause — e.g. bills and mortgage need to be paid, but at the same time they may form a behaviour and belief that bad leadership and how it manifests itself is a norm. This is the most dangerous and perhaps also the highest price of all, personal stagnation.
I have been in different management positions and actually quite often found that it must be the most non-glamorous, ungrateful role. The higher the role, the more stakeholders and thus, less freedom. Being a decision-maker adds just more to already hard role, because power at work is having the responsibility and accountability over matter — unit, business, and team. Thus, seeking for power at the office is useless; it’s people working with people, and this part is what I find most thankful: you learn to work better, both alone and with people, and seek new levels of growth as an individual. This personal growth is a prize that it beats any other prizes.
So, while there is a huge cost to be saved ($3tr), more efficiency to be found and better ways to work in organization, it all boils down to a personal level. Leadership should inspire, challenge, and support every member in the organization equally. Much easier said than done, but there is one “secret” here, which usually works and shows if you have what it takes to be a good leader:
Be yourself, genuinely.
You don’t need to act, and you don’t need to play a role. People in organization will value you whoever you are when you are honest, open, respectful and show that you truly care about business and people. And doing these is easier when you are…you.
Start exploring.
(A great list of skills for manager, but which 90% managers lack: https://www.forbes.com/sites/lizryan/2018/02/11/ten-skills-every-manager-needs-but-90-of-them-lack/#601a4ed01614)
*=https://qz.com/1367412/1-5-trillion-of-us-student-loan-debt-has-transformed-the-american-dream/
