by Janine Davis

Poor leadership splinters society. We have copious modern-day examples which don’t need to be spelled out. Companies are microcosms of society at large. The scale might be different, but the effects of poor leadership within companies are the same. Splintered companies perform poorly in the long term, if they survive at all.

While there is a growing awareness of the importance of good leadership on a company’s success, there are still many that view leadership, culture, and employee engagement as ‘woo woo’ stuff that can be ignored or is a waste of time and money and doesn’t impact anything ‘legitimate’ (such as revenue). It’s time for us, especially as a society of capitalists, to take our heads out of the sand. The results of forming a conscious culture and leadership approach certainly have some “softer” benefits, such as happy, engaged employees. But even those — the financial implications of happy, engaged employees — are now quantifiable and can be tied directly to the bottom line.

You want stats, I give you stats. Lots of them.

Gallup, in their State of the American Workplace report, found that over 51% of employees are actively disengaged. “An actively disengaged worker (is) someone who is “unhappy and unproductive at work and liable to spread negativity to coworkers.” In other words, they are people who don’t like their job and aren’t afraid to let others know about it.”
Gallup also found that an actively disengaged employee costs their organization $3,400 for every $10,000 of salary, or 34 percent. That means an actively disengaged employee who makes $60,000 a year costs their company $20,400 a year!
You do the math — 51% of your employee base multiplied by the cost of a single actively disengaged employee = a lot. I was a math major. Trust me.

If that’s not enough, here are some more stats:

According to research by the Dale Carnegie Institute, 80 percent of employees who aren’t happy with their supervisors claim that they’re disengaged and ultimately, less productive.
A study by Leadership IQ points out that 46% of new hires quit or are fired in the first year and a half on the job. 89% of those leave because they are not a good cultural fit.
The Society for Human Resource Management (SHRM) estimates that turnover costs can be as high as 100–300 percent of the departed employee’s base salary (!).

To turn the stats towards the positive side of the coin:

SHRM reports that engaged employees (i.e., they like their leader(s) and they are a good cultural fit) perform an average of 20 percent better than their dissatisfied counterparts. They are also 87 percent less likely to change companies.
The Dale Carnegie Institute has found that companies with engaged, satisfied employees may outperform their competitors by as much as 202 percent.
The Harvard Business Review provides stats that contented employees have 31 percent higher productivity, generate 37 percent more sales, and are three times more creative than their disengaged counterparts.

If you prefer your stats in picture form, I have you covered.

Here’s some more insight into why it’s critical that leaders attend to the emotional well-being of their employees. The following infographic was published by Good.co, a San-Francisco-based workplace personality assessment company (this is a portion of the full infographic)

Hopefully, you’re statt-ed out enough now to realize that culture and leadership development are critical factors to financial success. So, what do you do to ensure you’re maxing out employee engagement? You take active steps to ensure your culture and leadership are functioning at peak performance.

There should be a line item in your yearly budget for Leadership & Culture Development, right alongside your Marketing and Operations budget line items. It’s not a luxury, it’s a necessity.
Geoff Graber, Co-Founder of Evolution, states that a good rule of thumb is to allocate 3% of revenue towards Leadership Development, which can come in the form of:
Executive Coaching
Leadership Training
Leadership Offsites
Culture Initiatives

Strong leaders and a strong culture are directly linked to engaged employees. And engaged employees are directly linked to a company’s financial health. Call it woo-woo or just good business, but the bottom line is that if you address Leadership and Culture consciously, you’re bottom line will benefit.

The ‘Woo-Woo’ Stuff Has a Calculable Impact on Revenue by Janine Davis