The True Cost of Bad Employee Management

Want to know how much bad employee management impacts your business?

Try this: ask a few friends why they quit their last job. Chances are, half of them will say it wasn’t something about the job itself. It was because of someone — their boss.

A 2015 Gallup study found that close to 50 percent of employees report quitting their last job “to get away from their manager.” If you’re dealing with employee turnover at your business, the problem may not be that your employees can’t do the work. It may be the people in charge.

It’s tempting to write off changes in your team as just another cost of doing business. But for small businesses, the true cost of bad management and employee turnover can add up to more than just a few headaches.

The Hard Numbers

According to the Center for American Progress, employee turnover typically impacts overall revenue in three ways:

• productivity losses when an employee leaves a job
• hiring and training a new employee
• slower productivity rates until the new employee gets up to speed

Based on these factors, replacing a worker who makes less than $75,000 a year costs employers about 20 percent of their annual pay. Replacing a worker earning below $30,000 a year costs employers 16 percent.

That means one minimum wage employee could cost your business almost $2,500 — just by walking out the door.

However, bad employee management doesn’t just contribute to higher turnover costs. It also impacts the overall productivity of your remaining staff.

Bad bosses cost the U.S. economy $360 billion every year in lost productivity. They contribute to poor employee engagement and negatively impact their employees’ health, leading to more sick days and a higher risk of heart attack.

Yes, heart attacks.

Let’s face it: it can be easy to let bad management slide. After all, everyone has a different way of doing things. Some people are born to be managers, some people achieve management positions, and some people have management thrust upon them.

But when it comes to your employees’ well-being, “letting it slide” no longer becomes an option. The cost is just too high. If you know employee management is an issue for your business, it’s time to do something about it.

So what does “good employee management” look like?

“Bad management” and “good management” often mean different things to different people. While every manager has their own style, there are several key traits you can incorporate on a daily basis to reduce employee turnover.

Fair and Equal Treatment

First things first: before anything else, a good workplace culture ensures all employees are treated equally, regardless of age, role, religion, gender, genetics, disability, or race. It’s also the law.

Flexibility

In today’s job market, flexibility rivals salary when it comes to accepting an offer. A third of employees around the globe feel it’s harder to balance life and work now more than ever, with up to 88 percent of millennial workers wishing they had more opportunities to pick their own schedule.

Turns out they’re onto something. Employees with flexible work options have been found to be happier at work, less prone to burnout, and yes, actually more productive than their more restricted peers.

More importantly, flexible workers who were encouraged and supported by their managers to pursue a good work-life balance reported less stress and higher job satisfaction.

Saying you champion work-life balance is one thing. Building it into your business values is another.

An easy way to start? Cut down on your overtime. Make sure employees feel comfortable asking for a day off, not guilty. Even a little wiggle room can go a long way in reducing employee turnover.

Interest in Long-Term Growth

A recent study by Glassdoor found that workers who stayed longer in the same job without a title change were significantly more likely to leave for another company in order to advance their career.

Showing interest in employees’ career development can be key to employee loyalty, even if there isn’t enough money for raises or promotions to go around. Helping them build a strong resume and paying for additional classes or training are low-cost ways to show employees you’re invested in their future.

It may seem counterintuitive — why turn your employees into more attractive candidates for other jobs? Showing you’re interested in their long-term growth is another way of communicating their value to your business. The more valued employees feel at work, the less likely they are to leave their job in the next six to 12 months.

Recognition for a Job Well Done

It’s unfair to expect great performance without appreciation. Employees who don’t feel recognized at work are twice as likely to say they intend to quit in the next year.

Whether your employees are blowing their quotas out of the water or consistently providing excellent customer service, it’s important to let them know their hard work is seen. Make sure they know how their role impacts your overall success.

You might not be able to name a new employee of the month every month, but taking the time to celebrate work anniversaries and recent accomplishments can jumpstart your team’s motivation and engagement.

Transparency

Transparency is everything when running a small business. According to Entrepreneur, only a quarter of employees trust their boss, and half don’t believe their employer is open with them.

Trust and transparency are a package deal. You can’t have one without the other. That doesn’t mean you have to make every employee part of every business decision. But if something impacts your employees’ daily routines and livelihood, it’s important to include them in the conversation.

Being open creates better employees. While it’s never fun to discuss mistakes or question the future, it shows you’re human and vulnerable, just like your team. Knowing someone else experiences the same stress and can empathize with your day-to-day frustrations builds trust and deeper engagement.

You may not have all the answers, but being willing to talk about issues openly and get your team’s feedback can help employees to feel more confident and supportive of your leadership decisions.

Willingness to Say Enough is Enough

Bad managers are hard to deal with, and sometimes even harder to get rid of.
Like I said before, the effects of these “toxic employees” aren’t limited to their own work. Toxic managers are responsible for poor workplace engagement, decreases in productivity, increases in sick days, and can impact your other employees’ personal well-being.

A single supervisor could easily be the source of your entire employee turnover rate. So then why does saying “enough is enough” to a bad manager end up being so difficult?

Often, toxic employees stick around because their strengths seem to outweigh the costs — on the surface. They may be bringing in great sales, have crucial skills, or been a part of your business from the very beginning. Their results may be enough for you to ignore their less-than-perfect management style. You might even be friends.

It’s tempting to keep a bad manager around. However, if they’re the main cause of employee turnover, then your bottom line, current staff, and future hiring opportunities are all at risk.

Bringing it Full Circle

Almost everyone has a horror story about a difficult boss. But that doesn’t mean bad employee management should be the norm.

Understanding the true cost of bad bosses in your own business is the first step towards building a stronger workplace culture. In turn, supporting better management habits (and leading by example) will help you get your employee turnover rate under control for good.

Incorporating flexible schedules, starting an employee recognition program, and saying goodbye to bad managers are all key factors for attracting and retaining the best employees. Your team will become more engaged, more productive — and more likely to stick around for the long haul.

Chad Halvorson

Chad Halvorson is the Founder & CEO of When I Work. When I Work makes work less work for the hourly workforce. Over 70,000 workplaces rely on When I Work to schedule, communicate, and track time with their employees.