The connection between leadership practices and employee productivity is well documented and presents the largest opportunity for most organizations today.
In this context, let’s consider voluntary turnover. This is a type of turnover that occurs when employees willingly choose to leave their positions. Employees might choose to vacate their jobs for a variety of reasons, however, this article is focused on poor leadership and lack of continued training within the workplace.
As a result, voluntary turnover can be very expensive for an organization because of the costs associated with recruiting and hiring a new employee.
In a 1995 study of nearly 1,000 firms, Mark Huselid of Rutgers University in the US, found a statistically significant correlation between high-performance work practices and intermediate employee outcomes such as turnover, productivity and overall corporate financial performance.
Additionally, according to David Witt, a senior researcher and program director at The Ken Blanchard Companies, poor leadership practices can cost companies hundreds of thousands of pounds in lost revenue each year by negatively impacting employee retention, customer satisfaction and overall employee productivity.
Witt goes on to say:
· Less-than-optimal leadership practices cost the typical organization an amount equal to as much as 7% of their total annual sales.
· As much as 32% of an organization's voluntary turnover can be avoided through better leadership skills.
· Better leadership can generate a 3% to 4% improvement in customer satisfaction scores.
· Most organizations are operating with a 5% to 10% productivity drag that better leadership practices could eliminate.
If you’re concerned about the cost of doing nothing, call Jim Gibbons on 07885-286077 at Strategic Growth Solutions. I can support you in developing a leadership and management culture that will grow your revenue stream and have positive outcomes in staff retention.