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.