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Entrepreneurship: What does it REALLY mean?
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A Financial Case for Leadership Development
In the competitive world of business, companies may decide to
forgo leadership training in order to cut costs. However, a
high-quality Leadership Development course can save six figures
off a company's bottom line each year. Not only does a company
need to vie for its share of today's market to keep itself
profitable and successful, but it must also compete to keep its
biggest investment, its employees.
In a recent Bureau of Labor Statistics Report, the United States
Department of Labor stated that the median tenure of employees
ages 25 to 34 was 2.9 years. They also reported that management
and professional occupations, with the highest median tenure
among major occupational groups, was only 5.0 years. Consider
then, the cost of employee turnover.
A company should calculate the replacement of an employee at
150% of the employee's annual total compensation figure, and
250% if the employee is in a managerial or sales position. This
figure includes lost productivity, training, recruitment,
temporary replacements, either through hiring temporary staff or
overtime incurred by other employees, and the actual cost of an
employee leaving. Simply put, if your company's average employee
compensation package is $50,000 then the average cost for the
loss of an employee is approximately $75,000. Consider also that
if your company maintains a workforce of 1000 people and a
yearly turnover rate of 7%, then your annual turnover
expenditure will be approximately $525,000 a year. Over a period
of 5 years, this figure can easily top two and half million. (To
see a break down of costs see our employee
turnover.) Wouldn't companies be better off using this money
in developing leadership and innovative ideas to stay ahead of
the competition? The answer will be a resounding yes.
So how does a company keep its quality employees?
A first step would be to discover what an employee feels is
important in his or her job. CMOE surveyed 327 employees about
their supervisors (117) before these supervisors attended a
Leadership
Development Course. The survey asked employees to give their
opinions about what their supervisors were doing right; and in
what areas could their supervisors improve. Twelve companies and
agencies participated in these survey evaluations, representing
the fields of banking, education, government, manufacturing, and
sales. The data showed that employees want to be engaged,
trusted, and responsible for their contributions. They also want
to share in the emotional benefits of being linked with a
growing and successful business. Good leadership is the key to
fulfilling these employee needs.
Another step is to put in place a team of leaders who have the
skills to inspire a commitment from their employees to accept
responsibility for and have a vested interest in their company
and co-workers. Unfortunately, too many managers have knowledge
about good leadership skills and still do not understand how to
put this knowledge to work in the most effective manner.
Training professionals can help these managers develop their
knowledge into successful skills. An experienced leadership
training company can also help companies develop an effective
Leadership Development Course specific to a company's needs. The
result will add dollars to the bottom line by keeping valuable
employees, increasing productivity, and creating an environment
conducive to innovation that will keep the business ahead of its
competition.
The Center for Management and Organization Effectiveness can
help you develop effective leaders through our Leadership
Development Courses such as: Applied Strategic Thinking,
Coaching Skills, Team Building, and Transition into Leadership.
About the author:
Martha Rice is a design team leader for the Center for Management and
Organization Effectiveness. She has degrees in both English
and Communication and has over twenty five years experience in
administration.
If you would like to learn more about any of these or other Leadership
Development Courses, please contact a represent
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