It’s a Lot More than You Think!

Leadership development is a long term vital business practice to almost all successful companies.  People will often use the term “leadership development” and “management training” interchangeably, however, I would like to distinguish the two and put a spotlight on new manager training and why it is so critical for employers.

I remember my first promotion in my career that required me to supervise others.  I was so excited about my initial step up the corporate ladder.  There was only one problem:  I had no idea what to do.  I was now responsible to tell other people (who yesterday were my peers) what to do.  At the time, the company offered little by way of training new managers.  My second day as a manager (because my first day was moving my things into that big office with a window) I woke up early, drove to the office, was the first to arrive and guess what I did?  I did the job I was doing before I became a manager.  One of my reps was in the weeds, so I grabbed a pile of her work and started doing it.  Why?  Because I didn’t know what else to do.  My former job was the job I knew and had the skills to do.  Instead of teaching her how to hunt, I hunted for her.  In my mind, this was a way to make the team, and more importantly me, look good.  In an effort to show cohesiveness, my way of resolving conflict was to use old favors to make them go away.  I nearly wore myself out in six months and our performance remained mediocre despite my tireless twelve hour days week after week.  As you can imagine, it didn’t take long before my way of “managing” blew up in my face and at the company’s expense.

I see this all the time.  New managers with explosive excitement and energy don’t have a skills map to guide them.  They are not trained with the management essentials to set and keep the team on course to meet objectives.  Companies can be hesitant to invest in new manager training where ROI is difficult to measure and turnover of new generation of workforce is increasingly high.  According to a report “Tenure of American Workers” by Steven F. Hipple and Emy Sok published in the Bureau of Labor Statistics, in 2012 the median tenure was 3.2 years for workers age 25 to 34 years compared to 10.3 years for workers age 55 to 64.

Why is investing in new manager skills such a monumental problem?  According to an article “Why Top Young Managers Are in a Nonstop Job Hunt” by Monika Hamori, Jie Cao, and Burak Koyuncu, published in Harvard Business Review, there seems to be a training conundrum.  In their report they cite, “Employers are understandably reluctant to make big investments in workers who might not stay long. But this creates a vicious circle: Companies won’t train workers because they might leave, and workers leave because they don’t get training. By offering promising young managers a more balanced menu of development opportunities, employers might boost their inclination to stick around.”

Training young leaders can be the best tool employers have to retain them, yet, there continues to be a skills gap on creating effective manager behaviors and relationships.  This issue impacts far beyond the cost to turnover a new manager jumping ship for more professional development opportunities. The bigger cost of lackluster leadership on the front lines extends to high turnover of direct reports, low morale and productivity, and absenteeism stemming from lack of engagement.

Studies shows that the number one reason employees leave a job is because of their manager. According to a Gallup poll of more than 1 million workers employed in the United States, “Peo­ple leave man­agers not companies…in the end, turnover is mostly a man­ager issue.”

The bigger shot to wallet is the price companies pay to replace the reports of new managers who lack the skills and training to engage and retain workers.  And it’s expensive.  According to a study “There Are Significant Business Costs to Replacing Employees” by Heather Boushey and Sarah Jane Glynn published by Center for American Progress, the average cost to replace a worker ranges between 10% and 30% of the worker’s annual salary.  The more complex the position, the higher the cost to replace the worker, however, generally a worker earning a $35,000.00 salary will cost anywhere from $3,500.00 to $10,500.00 to replace the worker.   Even on the low scale, these costs have a significant impact on the organization.

Gallup’s report shows that productivity is significant consideration in analyzing the cost of ineffective management.  The poll found, “Poorly managed work groups are on average 50 percent less productive and 44 percent less profitable than well-managed groups.”  These are staggering statistics in evaluating how effective management skills can contribute to the success of an organization.

The new manager skills gap can have such a substantial effect on the everyday lives of people across an organization. Investing in new managers and their initial (and long-term) leadership development will not only serve to retain new leaders recently promoted into their roles but to retain and develop talent within the organization who report to new leaders.  These investments will have a dramatic effect on reducing the often hidden costs and effects of unskilled and untrained new leaders.

This article is now published in the  September issue of Talent Management