Can You Afford the Cost of a Bad Boss?

by Valorie Waldon, B.A., SPHR, SHRM-SCP Director, Human Resource Services

Bulletin,  HR Expertise and Support,  Leadership

We’ve all heard stories about terrible bosses. There have been books and blogs written, songs sung, and movies produced on the subject. Bad boss behavior ranges from benign neglect all the way to blatant hostility and abuse. Wherever it falls on this spectrum, poor management costs organizations in multiple ways, including employee productivity, employee health, and turnover. All of the above equates to a negative impact on the bottom line and other organizational measures of success.

According to, bad bosses cost the American economy $360 billion per year in lost productivity. Using the cost of turnover, low engagement, and communication errors as a backdrop, Tom Place with Vital Learning, LLC estimates that every mediocre manager, one that does not use solid management skills, costs an organization as much as $33 per day. So one ineffective manager can cost an organization $12,045 per year according to his calculations.

In addition to lower employee engagement, decreased productivity and higher turnover, bad managers are a leading contributor to employee stress for employees that stay. Studies have shown that chronic and persistent negative stress plays a part in serious health issues, from headaches to high blood pressure, diabetes, depression, and even employee death. An article published at reveals that workplace stress leads to 120,000 deaths annually, a human and societal toll that is simultaneously shocking and heartbreaking.

So what causes this bad boss phenomenon and, more importantly, what can we do about it?

Organizations don’t often take the time to identify and hire for critical management skills or competencies that lead to stellar performance when selecting supervisors and managers. Individuals are chosen for management roles based on their technical success as individual contributors or their tenure within the organization. Neither of these criteria indicates that an individual has the unique combination of talents that are needed to lead a team successfully. According to the Gallup State of the American Manager Report, great managers possess a rare combination of five talents: they motivate their employees; help their team overcome obstacles; build a culture of accountability; build trusting relationships; and make informed, unbiased decisions for the good of their team and company. Although managers possessing all five of these characteristics are a rare breed, all is not lost. If managers have some of these talents, research shows that they can become successful with appropriate coaching and development efforts.

To help your organization create a distinctive management culture, you will want to begin by hiring and promoting people into management roles that possess the skill and talent to lead successfully. Gallup finds that when selecting managers, organizations pick the wrong candidate for the job 82% of the time. When those management opportunities present themselves, create a recruiting and selection plan that focuses on whether candidates have soft skills like relationship building, the ability to inspire and ignite the imagination of employees, and a track record of drawing out the best in others for the benefit of the organization. If we select the right person for the right reasons, success is more likely.

Next, begin to change the culture by introducing focused, deliberate management training. A critical factor in engagement is whether there are opportunities for professional and personal development; this is true for managers, not just individual contributors. Setting clear expectations for how we expect managers to relate to and interact with their teams is essential. Giving them the tools that they need to succeed is critical. Gallup has found that engagement has a trickle-down effect. Engaged senior leaders create an engaged management level, and an engaged management level creates engaged individual contributors.

Use that training program to introduce the concept of the boss as a coach. We’ve seen over the years that the top-down, autocratic approach to management is not as effective as we once thought it might be. Employees want their manager to communicate with them frequently and honestly. It is for both parties to understand what success will look like, both in terms of tasks and behaviors, so clear expectations are foundational. While employees appreciate coaching to lead a team successfully, they also want regular check-ins with time set aside to share with their “coach” what is working and what is not. These check-ins should be a two-way conversation with the focus being on how to help the employee grow, develop and succeed in their role.

Finally, help managers shift their leadership focus from improving employee weaknesses to capitalizing on employee strengths. Weaknesses are those things that might get in the way of our success, while strengths can propel us toward it. As a coach, it is vital to recognize what each employee’s strengths are and work with them to develop in those areas so that the individual and the organization reap the greatest benefit. The best managers help employees capitalize on their strengths and manage around their weaknesses.

According to Jim Clifton, one of the reasons we have this phenomenon of bad bosses is because, in his opinion, CEOs don’t care.  But I believe HR does care. After all, while HR may not be making the decisions that contribute to bad bosses in our workplaces, we can work to provide a solution. Wherever they fall on the bad boss spectrum, poor managers cost organizations dearly.

About the author
Valorie Waldon, B.A., SPHR, SHRM-SCP Director, Human Resource Services

Valorie Waldon has been a consultant with Employers Council since 2007, most recently within the Integrated Human Capital Services department, and is now Director of the department. In her role she consults, advises and trains on issues such as HR metrics and analytics, performance management, recruitment and selection, and employee relations. Prior to coming to the Council, Valorie had over 20 years of human resource management experience in both the public and private sectors. She is a graduate of the University of Colorado at Boulder and holds SPHR and SHRM-SCP certifications.