Blanchard LeaderChat

One of the biggest challenges HR professionals face when they propose new leadership development initiatives is convincing CEOs of the financial impact of the proposed initiative.  Without a clear sense of the positive financial impact, it’s easy to write-off a new proposal as too expensive, or that now is not the right time.  The lack of urgency to improve performance is based on the idea that that the current level of leadership skill in the organization is good enough.  But is it?  A look at most companies has shown that the typical organization is leaving millions of dollars in untapped potential lying on the table through less-than-optimal leadership practices. 

If you’re looking for some help in making the business case for a leadership development initiative in your organization, here are three resources that can help. Just click on the heading and you can access the information right away.

1. Whitepaper–The Leadership-Profit Chain 

In 2006, researchers from The Ken Blanchard Companies conducted a year-long study to identify the connections between leadership effectiveness, employee passion, customer devotion, and overall organizational vitality.  This resulting whitepaper identifies several correlations: 

• Effective operational leadership directly predicts positive employee passion
• Positive employee passion directly predicts customer devotion
• Customer devotion directly predicts organizational vitality 

2. Whitepaper–The High Cost of Doing Nothing 

In this white paper you’ll see why “good isn’t good enough” when it comes to the impact that leadership practices have on employee turnover, customer satisfaction, and employee productivity.  You’ll discover what your cost-of-doing nothing is in today’s dollars.  More importantly, you’ll learn a couple of ideas for identifying ways to recoup some of that untapped potential in your organization. 

3. Online Cost-of-Doing-Nothing Calculator 

This online calculator uses a couple of pieces of information—number of employees, annual sales, current turnover rate, and combines it with desired targets for customer satisfaction and employee productivity to generate a “cost of doing nothing” dollar amount.  It’s a great tool for identifying the impact of better leadership in an organization and also making the business case for a training initiative—especially leadership development.

Most executives instinctively know that strong leadership is essential for overall organizational success. However, in most organizations, there is a lack of urgency to improve leadership skills driven by a belief that an organization’s current leadership capacity—and subsequent performance—is good enough. 

But is it? 

A new white paper entitled The High Cost of Doing Nothing: Quantifying the Impact of Leadership, shows that this is a misguided assumption.  According to Blanchard research, most organizations are operating with a million dollar drag on performance that better leadership can resolve.  As organizations look for ways to improve engagement, productivity, and satisfaction, it is important to remember the pivotal role that day-to-day leadership plays. 

Here are the three areas that the paper looks at along with some initial ideas on what managers can do to improve the situation. Think about your own organization as you review the three areas identified in the new white paper. 

Employee Productivity—Consistently identified as the largest financial drain in most organizations, poor leadership costs the average company 5-10% of potential performance. When employees do not receive the direction and support they need to accomplish their key tasks successfully, the result is wasted time, substandard results, and costly rework. 

Leaders can make the situation better by asking questions.  Does the employee understand the goal and have a clear plan for accomplishing it?  Do they have the knowledge and skill set to be able to perform this task without a lot of supervision or direction?  What is their motivation to work on this?  If managers ask the right questions up front, they can find out very quickly what a direct report needs. 

Customer Satisfaction—Even with all of the recent emphasis on having a customer focus, most organizations still only achieve a 75% satisfaction rating according to national customer service indexes. This translates into hundreds of thousands of dollars in lost revenue growth for the typical company.  How does leadership impact customer service?  By making sure that everyone in the organization is focused in the right direction—towards the customer.  In too many organizations, employees are looking up the organizational chart instead of in the direction of the customer.  Leaders can redirect this attention toward the customer by asking, “What can I do to help you in your job so that you, in turn, can better serve our customers?” 

Employee Retention—A third area where organizations typically see a drain on performance is through the loss of high potential employees. While today’s economic slowdown has dramatically reduced voluntary turnover in most organizations, it’s important that organizations not become complacent. Just because people can’t switch jobs right now doesn’t mean you can neglect people—especially high performers. Good people are always in demand, and you want your best people to know that you value them and want them to work for you.  Leaders can reduce unwanted turnover by 10-30% by checking in with high performers on a regular basis, expressing appreciation, and providing growth opportunities. 

Leadership makes a difference. In the average organization, this translates into over $1 million dollars of bottom-line impact on an annual basis.  As you look for ways to improve performance in your own company, don’t underestimate the impact that day-to-day leadership has on productivity, customer satisfaction, and retention. 

To access a copy of the complete paper, click here. 

If you’d like to try the calculator that the paper is based on, it is also available online at www.costofdoingnothing.com  It’s free, it only takes a few minutes to complete, and you get access to a complete personalized report immediately.

Join The Ken Blanchard Companies’ Kathy Cuff and David Witt for a live, online chat today at 10:05 a.m. Pacific Time. Cuff and Witt will be answering questions immediately after their webinar on The High Cost of Doing Nothing: Quantifying the Impact of Leadership on the Bottom Line.  Cuff and Witt will be exploring how leadership impacts employee productivity, turnover, and customer satisfaction levels. The webinar is free and is a part of The Ken Blanchard Companies monthly webinar series co-sponsored with Cisco Webex.

To participate in the online discussion, stop by www.leaderchat.org  beginning at 10:05 a.m. Pacific Time.

Instructions for Participating in the Online Chat

If you have a question that you would like to ask Kathy Cuff or David Witt, just click on the COMMENTS link above.  Then post your question and push SUBMIT COMMENT.  Kathy and Dave will answer as many questions as possible during the 30-minute online Q&A.  (Be sure to press F5 to refresh your screen occasionally to see the latest responses.)

If you can’t stay for the entire 30-minute chat, but would like to see all of the questions and responses, you can always stop by later.  You can also click on the RSS FEED button in the right-hand column to receive updates automatically through email.

In an online article entitled Sink or Swim, Human Resource Executive’s Scott Westcott reports that first-time managers are often promoted into positions without the know-how, tools or training to successfully lead a team. His conclusions are based on survey results compiled by Institute for Corporate Productivity, a workforce-productivity research firm that found only 25 percent of respondents judged their organizations to be “good” when it comes to helping managers make the transition from individual contributor to manager.

To improve new manager training, Westcott identifies a couple of key focus areas including comprehensive upfront screening, more practice dealing with sensitive employee issues, and better overall training. The challenge for HR, according to Westcott, is convincing senior leaders of the importance of investing in new manager training. To address that Westcott suggests quantifying the impact of poor management on turnover rates, employee satisfaction, productivity, safety incidents, etc..

If this is a challenge you’re facing in your organization, one tool that can help you measure the impact of poorly trained new managers is a Cost-of-Doing-Nothing Calculator we’ve recently posted on the Blanchard website. It’s free, easy-to-use, and it will help you quantify the impact of leadership in three key areas—voluntary turnover, employee productivity, and customer satisfaction. If you would like to explore some of the other challenges new managers face (along with some advice of how to overcome them) also take a look at the free webinar recording of Survival Skills for New Managers.

An in-progress, online survey by Sean Silverthorne of Harvard Business School’s Working Knowledge newsletter shows that 82% of respondents indicate that “Yes, the crisis is sapping my enthusiasm.” (Econ Crisis Making Middle Managers Miserable) 

Silverthorne also reports that 27% of middle managers find their current roles less meaningful and exciting than before the economic crisis, according to a recent McKinsey poll.  The main reasons according to Silverthorne? 

• Job Insecurity. Middle managers don’t have the job security they need to perform at a high level.
• Kill the Messenger. When there are layoffs to be done, middle managers more than any other supervisor class are the ones who deliver the message to those being let go.
• Career Interrupted. Middle managers now have fewer opportunities at work to be promoted.
• Pay Squeeze. At home, middle managers are under mounting financial pressure as their employers scale back on pay raises.

These situations can take an emotional toll on your managers.  Job security, maintaining a connection with people, and growth opportunities are important needs that all employees have.  (To see other needs, check out Eight Employee Needs You Must Address to Create Passion at Work).

How are your managers holding up?  This might be a good time to check in with them.

The research showing the connection between leadership and the bottom line continues to strengthen. Most recently, researchers Jack Zenger, Joe Folkman and Scott K. Edinger analyzed a database of 300,000 feedback reports on approximately 30,000 managers to answer six questions: 

• How does leadership drive profit?
• How do organizations and leaders maximize, if not double, profit opportunity?
• How do we capitalize on leadership as a means to profit and growth?
• What issues can leaders impact that will most effectively drive profit?
• What data supports the claim that extraordinary leaders double profits?
• How do we identify and develop extraordinary leaders?

Publishing their results in an article entitled How Extraordinary Leaders Double Profits, the authors identified concrete performance metrics that allowed them to compare measurable business results with leadership effectiveness. Using the data they were able to show the performance difference between business units with good leaders versus those identified as having poor leaders and to also identify the leadership behaviors that separated the two groups. 

Be sure to check out this article to learn more about the ways that leaders impact performance. 

If you would like to explore some of the ways that leader behavior is impacting performance specifically in your own organization and what the costs or ignoring it are, take a look at a Cost of Doing Nothing Calculator on The Ken Blanchard Companies web site.  It uses some of the same source material referenced by the authors of this article to help you calculate the impact of better leadership in your own organization.

Maintaining the status quo costs more than you think.  In fact, in the average organization it costs over $1,000,000 dollars a year according to The Ken Blanchard Companies new Cost of Doing Nothing Calculator.  The calculator which was just released on the company’s web site identifies three potential drains on performance—employee turnover, customer satisfaction, and employee productivity.   

Using formulas based on independent research the calculator helps executives identify what excessive employee turnover costs a company when good people with developed skills leave an organization, what dissatisfied customers cost a company, and how less than optimal employee productivity numbers translate into bottom line impact.   

The overall result?  A shocking $1,000, 000 dollars or more in most cases.   

Interested in finding out what your Cost of Doing Nothing might be?  You can check out the Cost of Doing Nothing Calculator for free at www.costofdoingnothing.com or by clicking here to access The Ken Blanchard Companies web site.

What is the gap between current and desired performance, costing your organization on an annual basis?   A lot more than you might think going by the results of people who got a sneak peek of The Ken Blanchard Companies’ new Cost of Doing Nothing Calculator at the ASTD International Conference last week in Washington, DC.

In most cases, the size of this gap was over $1 million dollars in companies with 200 or more employees.

The Cost of Doing Nothing Calculator uses a couple of pieces of information—number of employees, annual sales, current turnover rate, and combines it with desired targets for customer satisfaction and employee productivity to generate a “cost of doing nothing” dollar amount.  It’s a great tool for identifying the impact of better leadership in an organization and also making the business case for a training initiative—especially leadership development.

Are you interested in calculating what your current cost of doing nothing is?  Just click here and follow the easy 3-step process.  It’s free, it only takes minutes to complete, and you get access to a complete personalized report immediately.