3 Leadership Management Pain Points That Are Costing You Money

U.S. companies pour over $200 billion into leadership development each year—yet only 10% see real results, according to Harvard Business Review. There are numerous reasons why, but a contributing factor is probably how most organizations focus on developing leaders… but not managing them for sustainable growth.

Even the best leadership development programs will fall short without a comprehensive strategy to retain, assign, and support those leaders afterward. That’s where Leadership Resources Management (LRM) comes in—a smarter, strategic, data-informed way to treat leadership as the critical resource it truly is.

LRM helps solve an organization’s three most prevalent and costly leadership pain points, which are:

• Retaining high-potential leaders before they become high-cost losses
• Reducing regrets by making smarter leadership assignments and promotions decisions
• Revealing and addressing toxic leadership behaviors before it damages morale, performance, and brand reputation

Retaining Your Most Marketable Leadership Talent

Top-performing leaders are not only valuable—they’re highly poachable. Studies show that the top reasons high performers leave are lack of purpose, development, and appreciation—not compensation.

Employee replacement can cost 1–2x their annual salary – even more for a high-valued leader. Proactive retention starts with identifying your most valuable leaders, understanding their drivers, and building individualized growth paths. Remember that your most valuable leaders are also most desirable by your competitors.

To alleviate the impact of this pain point, organizations need to identify at-risk high-potential leaders, understand what motivates them, and build loyalty and engagement through meaningful development and removing obstacles to their success.

Reducing Costly Leadership Assignment Missteps

Organizations get leadership appointments wrong 82% of the time, according to a study by Gallup. The most likely reason is because promotions are often based on functional expertise – not leadership readiness. A brilliant individual contributor doesn’t automatically make a great team leader. Misaligned assignments lead to team disengagement, poor performance, and high turnover.

Employees echo these sentiments as just 1 out of every 10 employees believe they work for a manager truly built for the job according to another Gallup study. They further state, “Bad managers cost businesses billions of dollars each year… and nothing fixes that—except making better decisions about who manages.”

To alleviate the impact of this pain point, match the right leader, with the right expertise and leadership readiness to the right role that best fits their abilities at the right time. This will help reduce “trial and error” promotions, when a person is provided an opportunity they may not be well suited for. Whatever the situation, support transitions with targeted coaching and onboarding.

Revealing and Addressing Toxic Leadership Behaviors Early

Every organization, regardless of size, harbors at least one toxic leadership situation. These leaders usually “manage up” effectively and deliver results, but leave a trail of low morale, high turnover, and team dysfunction. Gallup estimates that poor management-related disengagement costs U.S. businesses $500 billion annually.

To alleviate the impact of this pain point, organizations need to uncover toxic leadership patterns by going beyond typical 360s and engagement surveys to utilizing objective, quantifiable tools that produce actionable results. Once a toxic leadership situation is identified, provide actionable coaching to help them correct course or move on.

Conclusion

Each one these pain points can be very costly to an organization. In reality, most organizations face a combination of them, if not all 3. The cost of inaction is just too much for any organization to accept, whether they be large or small, and can easily run into the millions of dollars.

If you’re ready to treat leadership as a strategic resource, contact us to let us help you build a Leadership Resources Management strategy tailored to your organization’s culture, goals, and leadership challenges.

Start fortifying your leadership pipeline today before someone else does – with your leaders!

For further insights, read the case study of a Leadership Resources Management implementation performed for a hospital system.