Bad Management, Higher CostThursday, March 23, 2006I was reading a review of a new book on micromanaging. I haven't read the book yet, so I am not going to talk about it right now. In this review, what was more interesting than the review of the book was the statement that there is a growing concern over cost of bad management. Cost? Yes, every bad manager costs companies money. Ask most companies how much money they lose each day to bad managers and I bet you they cantt tell you. Some do not even have a clue about the lost opportunity costs associated with managers that lack real leadership skills. It is true and it really makes sense. How does a company lose money by not dealing with a bad manager? Here are four reasons I came up with in just a couple of minutes. Lose employees - very costly Lose productivity - very costly Lose creativity - lost opportunity cost Low morale - exacerbates lost productivity and creates more lost opportunity With these four examples, you begin to see how they begin to move like a virus throughout the organization. The scenarios you could create would become alarming. In fact this whole issue is alarming to me. I have seen it first hand for years. What is more disturbing is that I have seen no appreciable improvement in dealing with bad managers over the span of my career. Even if you did the Jack Welch thing and got rid of 10% of your people (low performers), that leaves 90% of your employees reporting to almost the same number of bad managers. Out of the bottom 10% that are fired, a low percentage are actually managers. Don’t get me wrong, I support helping low performers find jobs elsewhere. I have told employees that I thought they may want to consider moving on. Truth be told, they would be happier and the company would be better off. It usually is a win-win, even if the employee does not have the emotional intelligence to understand it. Now think about the cost of a bad manager over time. The manager is probably getting increases every year and yet continues to build management debt. Over 15 or 20 years, how much did they cost the company? That would be interesting to try to figure out. Maybe one day I will try to do some rough calculations; however, I already know it is significant. posted at 3/23/2006 08:00:00 PM |
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3 Comments:
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Bad bosses have another impact. The keep talented people from joining their team. In most organizations, the bad managers are known far and wide and often times the manager is proud of their reputation. As word of their demeanor grows people are unwilling to join their team or even work with the team on projects. This constantly forces the team to hire from the outside, which increases training costs, and causes unnecessary hits to productivity while new outsiders are brought up to speed. There is usually high turnover under these managers which also causes a neverending rotating door of new employees.
Uinseann,
Great point! Bad managers are typically transparent in an interview, IF the interviewee is intuitive.
I have had experiences like that when I could tell that a certain manager was a problem in the first 5 minutes of an interview. They were not the manager I would report to or I would not have pursued the opportunity any further.
Seriously, most of what I am trying to get out of the initial interview is - can I work for this person?
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