Page 56 - The extraordinary leader

Great Leaders Make a Great Difference • 33

employee. He went on to say that, “One firm I work with just calculated the
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cost of an engineer vacancy in lost revenue at $7,000 per day.” Although there
are many reasons for turnover, our research consistently bears out that the
relationship an employee has with his or her manager substantially influences
the employee’s decision to stay with a company or move on.
Figure 2-3 shows the results from a study conducted at a large insurance
company. Leadership effectiveness was determined and matched up with
yearly turnover rates within each leader’s group. In this study, higher turnover
(19 percent per year) was created by leaders in the bottom third in terms of
their leadership ability as seen by their subordinates and peers. These leaders
presumably did nothing to force people to leave, but their style and approach
did not encourage them to stay. Better achievement came from good leaders,
who experienced 14 percent turnover. However, extraordinary leaders cut the
average turnover rate in their groups by another 5 percent. Reduced turnover
had a direct impact on profitability, customer satisfaction, and claim-resolu-
tion speed.

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19
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Turnover Percent 14 14

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Bottom 30% Middle 60% Top 10%
Leadership Effectiveness
Figure 2-3 Turnover Percent