Blanchard LeaderChat

A new white paper from The Ken Blanchard Companies shows that poor leadership is costing the average company an amount equal to 7% of their annual revenue. That’s over a million dollars a year for any organization with $15 million dollars or more in annual sales.

 The three big culprits? 

1. Employee turnover.  Poor leadership is responsible for up to 30% of the reasons why people leave their organizations according to exit interviews conducted by The Saratoga Institute.
2. Customer turnover. Poor leadership negatively impacts employee satisfaction, which in turn negatively impacts customer satisfaction and retention. Research published in Harvard Business Review calculated that every 5 point change in employee satisfaction scores caused a 1.3 point change in customer satisfaction scores.
3. Employee productivity.  Poor leadership leads to poor employee productivity.  Research from Blanchard shows that direct report productivity can be improved 5-12% through better management practices. 

Most senior executives instinctively know that leadership impacts the bottom line, but quantifying that impact has been a challenge in the past.  This new white paper (and the free online calculator that the information is drawn from) is a great way for leaders to put some facts behind their suspicions. 

You can download a copy of this new white paper, Making the Business Case for Leadership Development: The 7% Differential here.  If you are interested in calculating what poor leadership practices might be costing your organization, also check out Blanchard’s free online Cost of Doing Nothing Calculator.  This is the same free online calculator used by survey respondents in the white paper.

There’s a good reason why more people don’t run and jog to improve their cardiovascular health.  It hurts—especially when you’re just starting out.  For me it occurs at about the 3:00 minute mark.  That’s when the early burst of excitement (and caffeine) burns off and now my heart and lungs are laboring to catch-up with the demands my legs are putting on my body.

It’s a time each morning when I really want to quit—and in a lot of cases I did, because it seems like it was getting worse and worse with no improvement in sight.  But an interesting thing happens if I just stay with it a little while longer.  At about the 6:00 minute mark, my heart and lungs do catch up, my breathing is heavy but measured, and I realize that the worst is over.  I can do this!

The same thing happens at work when people face a new difficult task or role.  There is a moment, after the excitement of trying something new wears off, when we realize that this is going to be more difficult than we thought. 

Seth Godin writes about this phenomenon is his book, “The Dip” and it has important insight for any manager looking to improve growth and retention in their organization.  That’s because “the dip” is a prime time when many employees quit a task or a role because it seems too hard with no improvement in sight.

Do you have any employees who are at or near their “dipping point” on a task or role?  What are you, as a manager, doing to help them get through it?  Here are three tips that can help.

1. Identify where each employee is at with a specific task or role.  Are they an enthusiastic beginner, or has disillusionment set in?
2. If they are an enthusiastic beginner, channel that excitement by having them work on the right tasks, in the right order, to get the job done.
3. If disillusionment has set in, add a strong coaching component into the mix.  In addition to clear direction, you are going to have to provide them with a lot of support while they work through “the dip.” Encourage them on progress (even when they can’t see it), remind them of the goal, and make time to be there with training and other resources.

Don’t let “the dip” scuttle your plans.  With a little bit of help, people can power through to success.

“Hoping all your consequences are happy ones.” That was Bob Barker’s signature sign-off phrase when he hosted the 1960’s TV game show Truth or Consequences. The premise of the show was that contestants were presented with a question of “truth” (trivia or a bad joke), that if they didn’t answer correctly, would lead to a consequence that was usually some sort of zany or embarrassing stunt.

As I reviewed Deloitte’s recent Trust in the Workplace – 2010 Ethics & Workplace Survey, I was reminded of the dire consequences faced by organizational leaders who don’t get the right answer when it comes to understanding and appreciating the critical importance of trust in today’s workplace. Read more…

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.

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.