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Bad Leadership: The Signs, The Impact, and The Cure

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U.S. companies are facing a crisis of bad leadership, and it’s costing them in terms of lost employee trust, excessive turnover, and ultimately poorer business performance. The good news is that companies with strong leadership are thriving, and their experience provides a guide to fixing the problems.

According to a recent LinkedIn article, Leadership in Crisis: Mismanaged Leadership Communication and Intimidation Tactics Erode Organizations by industrial psychology research Jacob Stewart:

“In recent years we have seen an alarming trend leading to organizational decline. Failure in leadership, particularly through poor communication and oppressive behaviors, emerges as a silent but deadly catalyst in the collapse of organizational performance, no matter the size or industry.”

“We’re in a crisis of trust in leadership,” Sandra Sucher, a Harvard Business School professor who studies layoffs and trust, told CNBC Make It. “Leaders of all kinds … are failing some of the basic expectations that people have for how they should be treated.”

“The past two years revealed the leaders who are truly focused on the well-being of their workers, versus the ones who are focused on the bottom line,” added Anthony Klotz, an associate professor of management at University College of London who coined the term “Great Resignation.

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An article in Forbes adds, “It’s almost a cliché to say that employees don’t leave companies, they leave bad bosses. However, this happens all the time. A top talent will resign, and in the exit interview, it’s confirmed that their manager was the root cause of their departure.”

What are the costs of leadership failure? And what is the return on improving it? Again, per Stewart, “Companies with poor leadership have a 32% lower return on assets and a 48% lower return on equity. A study conducted by Gallup found that poor leadership accounts for 26% of employee turnover, and it also revealed that teams guided by influential leaders are 21% more profitable than those with poor leadership.”

What is bad leadership?

While we’ve all met people who seem like “born leaders,” the fact is that leadership skills don’t come naturally to most people. Often, top individual performers are promoted into management roles, where they flounder—because the skills needed to excel in a particular role in sales, finance, operations, marketing, or another function, are very different from the skills needed to be an effective leader.

Bad leaders are occasionally people who just really don’t belong in the role. But most often, they’re smart, talented, well-intentioned individuals who simply aren’t properly prepared for the challenges of leading others. Bad leadership shows itself in a variety of ways.

Per the article Global leadership is in crisis – it’s time to stop the rot by Theo Veldsman, a professor and department head in industrial psychology, bad leadership is sometimes due to innate personal characteristics that are difficult to change in adulthood.

“A growing number of leaders lack a moral conscience, compass and courage…They have little or no integrity…They shy away from any accountability for their own decisions, actions and the consequences of these.

“Immoral leaders’ followers are very rarely empowered and enabled to do their jobs well. These leaders feel threatened by their followers and tend to actively block their development.”

There’s no solution to that kind of leadership other than to identify and replace it. But more often, bad leadership is caused by inadequate preparation—it’s good people who don’t quite know how to be good leaders.

It can also be the result of organizational factors. As Veldsman adds, “Because they are constantly under pressure, leaders are unable – or don’t make – time to build and maintain the essential qualities of hope, passion, confidence, efficacy, courage and perseverance in their followers.”

In her article Why A Lack of Leadership Can Lead to an Even Bigger Crisis, speaker and author Sonia McDonald identifies four signs of bad leadership:

  1. The inability to lead and the lack of direction

    This often stems from a leader’s own lack of vision and goals. Not setting goals along with unclear expectations, vision, and directions leads to frustration and confusion. Without direction, people won’t know what they are meant to be doing and will lack strong purpose, which leads to lower morale.

  2. Slow decision making

    While it pays to not rush into things and think before you act, leaders who are slow to act are only hurting themselves and their team. If a process is taking longer than expected, let your team know. Be open and honest with them that you don’t have an answer yet, but are working on it.

  3. Poor organizational skills

    Poor organizational skills cause poor decision-making, conflict, toxic workplaces, and bad communication between leaders and employees. Balance work efficiently and you’ll have an easier time managing your team, more productive employees, and fewer mistakes.

  4. Lack of empathy

    Great leaders understand the problems their team faces and communicate with them to remove barriers so their team can do the best job possible. A lack of empathy means lower morale, a toxic workplace culture, and less trust in leaders from employees. A little bit of compassion and empathy goes a long way.

What are the impacts of bad leadership?

One of the most damaging impacts of bad leadership is that it destroys trust. As Jacob Stewart writes:

“When leaders adopt a rigid and unyielding approach, refusing to consider their subordinates’ opinions or concerns, it can create severe fractures within the organization…(It) leaves employees feeling disrespected, invalidated, apprehensive about future communications, and distrustful of their leaders and organizations…(Fear-based leadership) undermines trust within the organization, which is integral to cohesive team performance and job satisfaction. The erosion of trust in leaders contributes to increased job stress and turnover.”

Bad leadership also stifles creativity, reduces productivity, and harms employee mental health and well-being, contributing to higher absenteeism and turnover. Ultimately, Stewart notes, it “makes employees less likely to contribute creatively, causing the organization to miss valuable insights, market share, and potential innovation.”

What does bad leadership look like in the real world?

Stewart also highlights several real-world examples of the results of bad leadership, including:

Nokia: Once a market leader in the mobile phone industry, the company’s decline has been partly attributed to a leadership failure characterized by a culture of fear and poor communication. Executives were reluctant to share bad news, and middle managers weren’t empowered to make decisions. The lack of open communication and oppressive behavior led to a slowdown in innovation failure to respond to market changes.

Lehman Brothers: The collapse of the fourth-largest investment bank in the U.S. in 2008 was also attributed to poor leadership. The leaders at Lehman Brothers created an environment of intimidation, where employees feared to voice concerns about the company’s risky investment strategies. This oppressive culture was a critical factor in the firm’s bankruptcy.

Enron: To foster competition, leaders created a fear-driven culture where employees hesitated to voice their concerns. Unfortunately, this led to a lack of innovation and contributed significantly to the company’s downfall.

General Motors: The infamous GM ignition switch scandal revealed a culture where employees were afraid to bring bad news to their superiors, leading to a catastrophic loss of trust internally and externally. The scandal caused significant reputational and financial damage.

What is good leadership?

In organizations with strong, influential leadership, employees are empowered to do their jobs. Managers guide employee efforts to achieve clearly communicated goals and objectives, and take an active role in helping employees expand and improve their skills and capabilities. Communication in all directions is open and honest.

Stewart writes that, “Leadership is about influence and guidance, not authoritarian dictates. In a functional organization, communication flows freely up and down, creating a feedback loop that guides decision-making and enables growth… Viewing challenges as opportunities and mistakes as learning experiences encourages innovation and resilience.”

The impact is that “An open and respectful communication environment can significantly enhance its success… Google’s Project Aristotle, a study initiated to understand the dynamics of effective teams, found that psychological safety is the most critical factor for team success.”

Per CNBC, “Good bosses proactively tell the truth.” Their communication is transparent, “from the gut,” and regardless of position within the organization, it “meets people where they are…Effective leaders listen before speaking.”

Weak leaders micromanage employees and take credit for their accomplishments. Strong leaders build mutual trust with their teams, empower them to make decisions, and confidently give credit to the people they supervise.

Weak leaders hire people who won’t outshine them. Strong leaders seek to hire the best. As Steve Jobs famously said, “It doesn’t make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.”

How can organizations develop strong, positive leadership?

IT organizations often face the question of “build or buy” in relation to software. But when it comes to optimizing leadership quality, the best approach is build and buy.” That is, consider it within the recruiting and hiring process as well as part of ongoing employee training and development. Here are three specific recommendations.

Hire on attitude as much as aptitude. 

Job skills, processes, and tools can all be taught and learned. But it’s really not possible to teach integrity, curiosity, humility, or a sense of gratitude. Even when hiring for entry-level positions, keep in mind the intrinsic qualities of strong leaders (as well as positive contribution to your culture). Many of today’s entry-level hires will be tomorrow’s leaders.

Not everyone is cut out for management. 

Some employees will be stellar individual contributors but have no interest in management. Create alternative professional paths to keep them challenged, engaged, and attractively compensated.

Train, train, train. 

As Sonia McDonald wrote, “The very best leaders never stop learning or growing from the challenges and experiences they face every day, whether in the workplace or in their lives. Creating a path of growth and educating your employees is vital to the survival of a business, because it makes for a smarter and hungrier team. You WANT your team to grow and to learn.”

Stewart’s prescription for preventing bad leadership is that, “Regular leadership development programs should be put into place, with emphasis on empathy, emotional intelligence, and practical communication skills. This approach fosters better interpersonal relationships within the team, promotes a supportive work culture, and enhances leader effectiveness.”

And Theo Veldsman concludes, “Continuous lifelong, blended leadership development across all leadership facets must occur and form part of leaders’ key performance areas. Leadership capacity, and its development, must be a priority.”

He also emphasizes that, as we’ve written previously, everyone can benefit from leadership training. Those already in positions of authority will improve their skills. Broadening training beyond those already in management helps to build a strong “bench” and be prepared for succession planning. And even employees with no interest in supervising others will benefit by learning how to more effectively communicate up, down, and across the organization.

What training courses and workshops help develop strong leaders?

Specific professional development workshops and leadership training programs offered by Best Corporate Events include:

Practical Management Skills

Developing Emerging Leaders: This program consists of five virtual sessions, each lasting 90-120 minutes, held bi-weekly. Tailored for high-potential contributors, the program covers diverse leadership topics. Through coaching, exercises, and peer discussions, participants transition from contributors to future leaders, armed with practical tools for immediate application.

Strategic Leadership: This three-session program, conducted bi-weekly, guides participants through deep dives into diverse topics. Using self-assessments and a Participant Guide, individuals explore ways to enhance efficiency and effectiveness in daily situations. The program, featuring coaching tools, exercises, and peer discussions, encourages strategic thinking for organizational and personal development goals.

Manager’s Guide to Business Coaching: This professional development workshop focuses on feedback techniques and proven coaching practices to enhance relationships and foster open communication. Managers learn to communicate requests, lessons, and suggestions effectively, considering individual factors that impact perception. The workshop covers building trust, using questions for top performance, providing timely feedback, and overcoming common coaching pitfalls.

Empathy and Emotional Intelligence

DiSC Profile Workshop: This enlightening workshop will help build mutual understanding and respect within your group. Participants explore their behavioral styles, learning how to adapt and utilize differences for overall group success. Using the DiSC Profile tool, the workshop identifies group strengths, teaches appreciation of peer traits, and empowers individuals to replace unproductive communication habits.

Emotional Intelligence Training: This workshop explores the transformative impact of Emotional Intelligence (E.I.) in organizations, emphasizing effective emotion management, personal responsibility, and the Six Components of E.I. Participants gain insights into the business case for E.I., fostering trust, loyalty, and open communication–plus practical applications for assessing and enhancing emotional quotient (E.Q.) in personal and professional growth.

Conflict Resolution Training: The workshop introduces the Thomas-Kilmann Inventory assessment, refining participants’ natural conflict-handling styles. Key outcomes include initiating dialogue to prevent conflicts, addressing conflicts directly, utilizing the Kilmann Inventory as a toolkit, understanding the progressive steps of conflicts, identifying appropriate conflict resolution strategies, and alleviating the negative emotions associated with conflict.

Leading Virtual and Hybrid Teams

Building Your Hybrid Team: This customized workshop is designed to navigate the challenges of remote and hybrid work environments. The program focuses on practical methodologies for effective meetings, team charters, buy-in assessment, and conflict resolution. Participants collaborate on creating team S.M.A.R.T. goals, conducting a Trust Audit, and aligning on a Scope and Objective Statement.

Leading Virtual Teams: This course is designed to equip managers with the skills needed for successful leadership in a remote setting. Covering feedback, coaching, team cohesion, virtual task delegation, and stress management, the program helps translate natural leadership abilities into effective virtual leadership.

Virtual Coaching and Feedback: This course delves into the art of providing constructive feedback in a remote setting, emphasizing trust and relationship-building. Topics include strategic coaching, overcoming common mistakes, understanding “The Ladder of Inference,” and distinguishing between performance and development coaching.

Bad leadership is unfortunately far too common in American business. It increases absenteeism and turnover, reduces business performance, and destroys trust.

But it can be fixed. Businesses that focus on hiring and developing strong leaders develop healthier cultures with higher productivity. Ongoing leadership training and professional development, for employees at all levels, is the most important practice companies can adopt. For creative and effective ideas to help improve leadership in your company, contact Best Corporate Events.

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