Poor leadership causes a decrease in productivity, possibly because employees are not motivated, do not feel recognized, or are not spoken with respect, resulting in lower profits for the company.

In some cases, there is high employee turnover as employees resign from working under such supervisors or managers. These employees have acquired technical knowledge, learned the company’s culture, and understood how to navigate policies and regulations, as well as the company’s processes and systems. Hiring new employees becomes a very costly endeavour for the company, and searching for new employees also decreases productivity because they are not trained, or other employees have to assist with production, resulting in losses in profits.

Operational errors can also occur due to poor leadership, as people may not handle materials, tools, or machinery with care, leading to costly mistakes in the company’s operations and further losses for the company.

Sometimes, employees who are not respected due to poor leadership or the lack of a harassment-free environment may file lawsuits against the company.

Additionally, accidents can happen due to negligence or even intentional actions, leading to legal claims or increased insurance costs, resulting in further losses.

Another consequence of the lack of leadership is the waste of resources, which again creates losses.

Furthermore, as many individuals are busy trying to solve issues related to low productivity, high employee turnover, operational errors, accidents, legal claims, and resource wasted, they do not have time to focus on other potentially more profitable projects. This is the opportunity cost. The lack of time to explore new opportunities affects the potential profits the company could generate.

The question is, what is the annual cost for your company due to poor leadership? Based on my analysis of many companies, sometimes it can reach hundreds of thousands of dollars, and in some cases, several million dollars per year.

So, what will you do with individuals who lack proper leadership?

Now let us analyze what happens when supervisors and managers are well-trained in terms of their leadership skills.

When there is good leadership, higher productivity is achieved. This is a result of having motivated employees who are treated with respect, trained adequately, and compensated appropriately, leading to increased profits for the company.

Moreover, retaining good employees who work with higher productivity becomes possible with efficient supervisors. These supervisors also train and make the operations more effective, resulting in more earnings for the company.

Having these efficient supervisors reduces accidents and subsequently legal claims, leading to increased profits for the company.

There are also savings in waste since all employees are well-trained and have the desire to take care of the company’s resources, thereby contributing to revenue.

In this case, managers and supervisors have more time to dedicate to projects that benefit the company, such as building a new production line, expanding into a new area, or creating a business that complements the existing one, all of which help increase earnings.

If you are seeking ways to improve profits in your company, call us to see how we can assist you.