14 Jul 2009

Profits hinge on good leaders

As Leadership Week approaches, New Zealand businesses are being urged to take a closer look at the cost of poor management.

International performance consultancy Leading Teams estimates New Zealand loses $2.6 billion a year in potential productivity. Leading Teams managing director Paddy Steinfort said the cost of one poor leader alone to the average business was about $140,000 a year. He said figures were reached using Statistics New Zealand data on the number of employees, bosses and their salaries.

It was based on the theory that a worker should return at least the value of their salary to the company, and that good bosses could increase a worker's value by up to 35 per cent. Poor bosses were thought to have nil-to-negative value on a business. Turnover costs of about half the average salary were also factored in. The resulting figure was then multiplies by the number of leaders in the organisation. The number of poor or good bosses was drawn from an online survey that suggested 45 per cent of employees had trust or confidence in their leaders.

Businesses can work out their leadership costs or benefits at leadershipcalculator.co.nz . Mr Steinfort said "the formula was conservative because most businesses needed a return of more than an employee's salary to make a decent profit, but to keep it simple, it was left to one. Most losses could be avoided through simple, relatively cheap investments to develop a company's leader and culture" he said.

Two online surveys of 1500 New Zealand employees showed more than a quarter of employees under the age of 40 were not clear on, or simply did not care about, their company's goals. Leadership Week was instituted by the Sir Peter Blake Trust and takes places from June 26 to July 3, starting with the Sir Peter Blake Leadership Awards.

The Dominion Post - 22 June 2009