The importance of strong leadership for businesses

It may sound like a fairly obvious point, but strong leadership within businesses is essential to ensuring success.


Despite this, weak leadership is costing UK firms £4.1 billion a year in staff turnover alone, according to new findings from global recruiter Randstad.


Nearly 11,000 workers were questioned to discover information about why people make a decision to change jobs.


Some 25% of workers said weak leadership was to blame for them switching roles, making it one of the most influential factors relating to changing jobs.


Financial implications


The Chartered Institute of Personnel and Development (CIPD) suggests that the average cost of replacing an employee is around £4,800.


Randstad found that 19% of people in Britain change employers each year with 15% moving voluntarily and a further 4% being made redundant.


If 25% of those voluntary moves are as a result of poor leadership, then nearly 4% of the UK’s employees are moving roles every single year due to bad management.


Based on these figures and current employment levels in the UK, it means staff turnover resulting from poor leadership is costing businesses £4.1 billion.


Financial losses can be handled more easily by larger firms but for small and mid-sized businesses it can place unnecessary pressures on cash flows.


Strong leadership can be vital


A vital part of the process is to ensure that all employees are aware of company values and targets as a lack of awareness of these can encourage people to move roles.


To put things in perspective, only a lack of career opportunities and uncompetitive compensation were listed as more of an issue for those looking to change jobs.


Encouraging strong leadership is therefore a way of inspiring employees without the cost implications that can follow quick promotions and increased salaries.


Both of the latter can impact on the bottom line and mismanagement can lead to widespread financial problems.


Fortunately, many of these problems can be identified at an early stage and business rescue procedures implemented if necessary, but this is not always possible.


Given the financial implications that can result from poor leadership, firms should be actively encouraged to closely monitor their situations and not delay in taking action should it be required.


By Phil Smith


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