Is Untapped Potential Costing Your Company Millions of Dollars?

Ken Blanchard Companies state that “The average company is forfeiting over $1 million per year in untapped potential because of less–than-optimal leadership practices”; however we believe there are many factors that are affecting your bottom line.

Between employee disengagement, high staff turnover, poor leadership, and a lack of customer satisfaction; your organization could be doomed to fail if nothing is done to make improvements.

Disengagement

Currently only 13% of the worlds working population are engaged. That means that 87% of employees are disengaged. So what does this really mean – well the majority of workers work, because they have to, and not because they want to.

In Australia 76% of employees are disengaged; whilst in the US the number of workers that are disengages is 68%. The cost of this disengagement in the US alone = $450 Billion. Over the past 12 years these numbers have barely changed.

As Dr Phil would say “How is it working?” Well clearly it isn’t and therefore something needs to change for improvements to occur.

Providing employees with the necessary tools, resources, guidance and support to help them perform at their optimum, are just some of the motivational elements that can improve engagement.

Gallup has also discovered that when companies raise employee engagement levels consistently across all areas, there is significant improvements across the entire organization including: an increase in customer ratings; higher profitability, productivity and quality (fewer defects); better retention rates; less absenteeism and shrinkage (i.e. theft); and fewer safety issues.

Companies with engaged workers can expect to have in the region of 6% higher profits and 5 x shareholder return over 5 years.

It is therefore imperative that companies ensure that every team in their workforce has a great manager.

Staff Turnover

High Staff turnover costs can run into the hundreds of thousands. The cost of turnover ranges from 30% of annual salary to replace a lower-skilled employee to as much as 250% to replace a more specialized position.

Replacing staff costs time, money, knowledge and experience and has a significant impact on managers. Finding a way to retain staff is the more sensible and cost effective way to go.

Managers need to build trusting relationships with their employees. They need to listen and understand their staff’s needs. Regular coaching and mentoring discussions can help to develop these relationships.

Clear goals personally and professionally need to be set and continuously evaluated as time progresses.

Managers need to recognize talent, see possible potential and identify people’s strengths. They also need to be proactive when providing feedback.

Poor Leadership

Ever heard the saying “People don’t leave their jobs……they leave their managers”?

As per the 2016 Gallup report “Managers account for at least 70% of the variances in employee engagement.”

Only 10% of people have the right combination of talents to manage. These individuals naturally engage team members and customers, retain top performers and sustain a culture of high productivity. Gallup have also found that there are a further 20% of people who exhibit some managerial characteristics that could be developed, if their company invest in their development.

Currently only 18% of those in management positions actually demonstrate a high level of talent for managing. Managing is not about experience, skills or promoting people to these roles.

Hiring individuals who have been managers previously is also not necessarily the answer, as it seems that it may require a certain natural talent in the way managers think, feel and behave.

According to the 2016 Gallup Report - Large companies have approximately one manager for every 10 employees, and Gallup finds that one in 10 people possess the inherent talent to manage. When you do the math, it's likely that someone on each team has the talent to lead -- but chances are, it's not the manager. More than likely, it's an employee with high managerial potential waiting to be discovered.

Whatever the situation, managers will need to change their own behaviour in order to make the necessary changes to improve employee engagement. This means that they too will need to be supported in the same way that they need to support those members of their team.

Therefore, whilst change doesn’t always have to start from the top down; it does help if those at the top support the changes within their organizations and can offer their staff the tools that will help, to deliver better people and performance strategies.

If you’re interested in how Mentors Insync can assist you with your People & Performance Strategy please contact us at: info@mentorsinsync.com.au