Amidst a period characterized by swift technological progress and shifting work dynamics, the conventional command and control leadership approach is proving inadequate for the contemporary workplace. According to the authors of "Humanocracy," spanning from Douglas McGregor's "The Human Side of Enterprise" to Dan Pink's "Drive," the essential elements fostering employee engagement have remained consistent for six decades: purpose, autonomy, collegiality, and opportunities for personal growth.
Despite the accumulation of this knowledge, numerous leadership executives continue to adhere to the command and control model. Aside from this style of leadership being found to disempower employees, stifle creativity and innovation, and reduce motivation, studies also show that maintaining a command and control leadership structure comes with significant financial costs.
These costs result from low productivity due to often disengaged employees to the cost associates with the structures needed to maintain the hierarchical nature of this leadership style. We take a deep dive to explore the real cost of command and control to your business.
Cost of Quiet Quitting and Low Engagement
The phenomenon of “quiet quitting” has gained attention in the world of work, referring to a situation where employees who are dissatisfied with their jobs choose to remain in their roles but exhibit minimal effort and engagement. It is yet another term emerging from the widespread issue of low levels of engagement within today’s workforce. Gallup found that disengaged employees cost their company the equivalent of 18% of their annual salary. Other sources calculate losses at up to 34% of a disengaged employee’s annual salary. On an individual level, the average business loses a minimum of $2,246 for every disengaged employee. The disengagement of even a single employee can have a ripple effect, negatively influencing team morale and overall organizational culture.
Gallup found that disengaged employees cost their company the equivalent of 18% of their annual salary.
"Inspire, coach and trust" leadership is not just an alternate leadership style, it is a good business decision that leads to profit.
Cost of Low Productivity
The level of engagement among employees has a direct impact on productivity. When employees are disengaged, it often leads to increased rates of absenteeism, resulting in lower productivity and reduced profitability. It’s evident that individuals who lack motivation and interest in their work are likely to produce suboptimal output. Ultimately, this cost is borne by the employer. In fact, the loss in productivity caused solely by employee disengagement can range from $3,400 to $10,000 in terms of salary costs for businesses.
Cost of turnover
In 2022, the phenomenon known as the “Great Resignation” unfolded, with a staggering number of over 50 million people in the United States alone choosing to leave their jobs. The pandemic served as a catalyst for individuals to reassess their lives, prompting them to question whether it was worthwhile to continue in unfulfilling roles. Suddenly, there was a widespread desire to pursue work that held meaning and made a positive impact.
Failing to provide inspiring leadership comes at significant costs if it means employees have to quit their jobs to find roles that connect to their sense of purpose. Studies suggest that the cost of replacing a salaried employee averages between 6 to 9 months’ worth of salary. These costs manifest in various ways, such as recruitment expenses and the investment required for training new hires to fill those roles.
Cost of having layers of management
In early 2023, Mark Zuckerberg openly acknowledged the inefficiencies inherent in Facebook’s hierarchical structures. He highlighted the need for a management approach that goes beyond simply having layers of managers overseeing other managers, ultimately leading to a disconnection from the individuals actually doing the work. This not only results in demotivation among employees, but also imposes exorbitant costs on businesses.
Back in 2014, the Bureau of Labor Statistics estimated that a staggering 2.7 trillion dollars, equivalent to 30% of all wages that year, were allocated to bureaucratic roles. It is further estimated that for every single employee, there are approximately 4.7 bureaucrats, adding to the administrative overhead and costs within organisations.
Businesses are incurring substantial costs that often go unnoticed when they maintain traditional command and control structures. It is becoming increasingly apparent that a leadership style focused on inspiring, coaching, and trusting employees is no longer a mere luxury but an essential requirement. Research by Bain and Company found that a satisfied employee is 40% more productive than an unsatisfied one, whereas an engaged employee is 44% more productive than a satisfied employee. However, an inspired employee is 125% more productive than a satisfied one. This goes to confirm that companies can raise productivity and eventually profitability with the right kind of leadership.
a satisfied employee is 40% more productive than an unsatisfied one, whereas an engaged employee is 44% more productive than a satisfied employee. However, an inspired employee is 125% more productive than a satisfied one
Fortunately, an inspire, coach and trust leadership can be developed by providing leaders with the right skills, tools and knowledge. It is not too late to become the inspiring leader your team needs you to be.
Get in touch with us if you are ready to develop human-centered leaders who inspire, coach and trust.
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