I recently attended a conference and had the opportunity to hear from more than a dozen senior-level talent development professionals, primarily of Fortune 100 and 500 companies. Each of the speakers shared current initiatives and best practices in their organizations.
One of the topics that most captured my attention was the impact of underinvestment in frontline leaders. These are your frontline supervisors (both new and seasoned), your official team leads and even your emerging leaders (not yet in a leadership role). A question was asked of the audience: “To what degree does your organization have a healthy leadership pipeline?”
- My organization has a robust pipeline: 5 percent
- My organization is building a leadership pipeline: 48 percent
- My organization is not where it needs to be: 48 percent
You can see there is progress to be made. Additionally, 86 percent of CEOs confirm developing new leaders is the No. 1 talent challenge, according to a 2014 Deloitte survey, right along with inability to find talent. The combined leadership shortage and talent shortage represent the biggest barriers to growth. The fact also remains that ineffective leadership remains a key reason for losing the hard-sought talent.
Why are frontline leaders critical?
They have the greatest impact on your brand. Your frontline leaders will typically direct the work of 60 to 70 percent of your frontline workforce. Your workforce is collectively responsible for meeting customer expectations and interacting with customers in a way that makes them feel valued. This is the customer-facing part of your brand. Internally, your frontline leaders impact the employee experience more than anyone else. Your brand is talked about in a variety of situations outside of work and will be couched in a realm of positivity or in negativity. Positivity will help you in your talent attraction efforts. Because of the importance of the relationship your employees have with their leader, they are more inclined to talk negatively if their own leader is ineffective, regardless of the organization.
They provide a competitive advantage. Developing frontline leaders is a differentiator. This is what makes you different in your customers’ minds, in your employees’ experiences and in the minds of your potential recruits. Yet consider that organizations fail to select and promote the right candidate nearly 87 percent of the time. It will likely not be a surprise to anyone reading this that the key criteria (used by most companies) for promotion into supervision is high performance. High performance does not equal effective leadership. As a result, many organizations are innocently creating a competitive disadvantage because of their supervisor selection process.
They help reduce cost. Without effective leadership, most organizations struggle with low engagement and turnover. Low engagement results in lost productivity, to the tune of $500 billion per year across the U.S. And for frontline employees who leave, the cost of turnover is conservatively 16 to 20 percent of their salary. This will translate typically to $3,500 to $15,000 per employee. Far too many decision-makers still battle the investment in leaders, while at the same time investing hundreds of thousands of dollars in capital investments. Here is a simple scenario: A 300-employee company with 30 percent turnover will experience a cost of turnover to the tune of $350,000 to $1.5 million. If turnover can be improved by 20 percent through improved leadership, this is a savings of $70,000 to $300,000.
They drive positive results. We’ve seen time and time again: a frontline leader who is equipped with the language, skill and approach for interacting with employees will impact results in measurable ways. Here are some examples from organizations that have invested in the development of their frontline leaders:
- “Our total recordable incidents decreased by 66 percent in one just year.”
- “Employees were production bonus eligible in 2017 for the first time in two years (production in 2015 and 2016 was not sufficient to qualify employees for bonuses).”
- “A shift supervisor utilized new skills to turn around his lowest performing employee’s productivity. Within three weeks, this employee went from productivity between 20 percent and 40 percent to 104 percent productivity.”
Why are organizations underinvesting in their frontline leaders? I don’t have the answer for sure. The question that so many decision-makers ask is, “How much will this cost us?” Investing in your leaders is not supposed to be inexpensive. The question that needs to be asked is, “What will happen when we invest in our frontline leaders?”