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How Much Poor Leadership Costs You

        posted by , May 06, 2013

Poor leadership can cost you everything.

That's right. Your entire budget can all go down the drain due to poor leadership.

That's why organizations spend over $100 billion a year globally on leadership training and development.

There are 8 ways that poor leadership can burn money:

1. Doing the wrong thing right

A leader successfully executes a strategy that shouldn't be executed at all.

Examples include:

Developing a product for which there is no market.

Building a system that solves problems that don't exist.

Increasing quality too much.

Decreasing risks too much.



2. Short term success for long term failure

A leader who executes a short term strategy that has negative long term consequences.

Example
A leader launches an investment product that is profitable. The leader collects significant short term incentives. The product loads the firm with large amounts of risk that eventually takes the entire firm down.


3. Alienating employees

A leader who fails to motive employees. Previously productive staff become disengaged or hostile to the organization.

Example
Few employees feel comfortable working month after month with no feedback. It's well known that employees who don't get regular feedback become disengaged.

When you compliment an employee on their work, their engagement level jumps. They become more creative and productive.

Employees that receive fair constructive criticism are also likely to stay engaged. They will try to improve.

Employees who receive no feedback become disengaged and resentful.


4. Inability to deliver

A leader who invests in programs and projects that never deliver any value.

A few failed projects isn't necessarily the mark of poor leadership. In fact, failing quickly and cheaply can be an effective leadership strategy.

That being said, failed projects cost organizations hundreds of billions of dollars each year. When a leader can't deliver it's painful for an organization.

Example
IT spending is expected to be $3.7 trillion globally in 2013. Some estimates indicate that 70% of all IT projects fail.


5. Damages your firm's reputation

Leaders who display questionable judgment or ethics that lead to a reputation disaster for your firm.


6. Establishes a culture of bad leaders

Leaders often recruit like-minded leaders who they know. One bad leader can lead to an army of bad leaders.

This is the first in a 9-part series of posts called how to win at leadership.


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