The Real Cost of Untrained Leaders: A $438 Billion Problem

Manager engagement just hit 27%. Down from an already-low 30% just one year ago.

The global cost? $438 billion in lost productivity (Gallup, 2025).

This isn't a training problem. It's a leadership capability crisis - and it's hitting Australian businesses hard.

Here's what's actually happening: People get promoted because they're good at their jobs. Sales, operations, technical delivery - they crushed it as individual contributors. So organisations make them managers.

Suddenly they're responsible for other people's performance, difficult conversations, conflict resolution, and coaching. And nobody trained them how.

The Pattern: Promoted Without Preparation

You got promoted because you were good at your job. Nobody trained you to lead people.

Here's what probably happened:

You excelled at your individual contributor role. So they made you a manager. Suddenly you're responsible for other people's performance, difficult conversations, conflict resolution, coaching and development, and decision-making under ambiguity.

And nobody taught you how.

You default to what you know:

• Work harder (hero mode)

• Avoid difficult conversations

• Solve problems yourself instead of coaching

• Push through stress instead of regulating it

This is normal. It's also damaging—to your team (they need coaching, not solutions), to your organisation (hero mode doesn't scale), and to yourself (burnout is inevitable).

Why Hero Mode Is Killing Your Business

In tactical operations, hero mode gets people killed. In business, it kills your culture.

What hero mode looks like: The leader who works 70-hour weeks solving every problem, makes all critical decisions themselves, "doesn't have time" to coach team members, and takes pride in being indispensable.

Short term, performance looks good. Problems get solved. The boss is happy.

Long term:

• The team never develops capability

• Turnover increases (people want development)

• The leader burns out

• The organisation depends on one person
  

We learned this in tactical operations: Hero operators don't build capable teams. Systematic operators build teams that perform regardless of who's on shift.

The same applies to business leadership.

Your job isn't to be the hero solving problems. Your job is to build a team capable of solving problems without you.

That requires coaching instead of solving, systematic capability building, trust and psychological safety, and leaders who can perform under pressure.

Not hero mode. Systematic performance.

The Growth Stage Multiplier

This problem compounds dramatically in growth-stage companies.

Your leaders got promoted because they could do the work. Now they need to build others who can do the work. That's a completely different skillset.

What happens: The best salesperson becomes sales manager. The best developer becomes engineering lead. The best operator becomes operations manager.

None of them were trained to lead. So they default to hero mode - solve problems themselves, avoid difficult conversations, work harder instead of building capability, and eventually burn out.

Your growth stalls because leadership capability doesn't scale.

According to Gartner research, 74% of managers aren't equipped to lead change. When your business is scaling, change is constant. Untrained leaders become the bottleneck.

The Measurable Costs

"What's the ROI on leadership development?" Fair question.

Here's the honest answer based on measurable impacts:

Turnover Costs

Replacing an employee costs 150% of their annual salary (recruitment, onboarding, lost productivity, knowledge drain).

High leadership turnover? The cost is exponentially higher.

When we built leadership capability at Aldi, turnover dropped from 22% to 7%—a 68% reduction. For a 1,000-employee operation, that's over one hundred positions not needing replacement annually.

Safety and Compensation Costs

Psychological injuries spike when leaders can't manage pressure effectively, trust doesn't exist in teams, conflict goes unresolved, and people feel unsafe speaking up.

Building leadership capability under pressure delivered:

• 420% increase in people speaking up (problems surfaced early)

• 40% reduction in workers compensation claims

• 49% reduction in workers compensation costs

NSW's recent workers compensation legislation changes made psychological injuries harder to claim. But the actual opportunity isn't compliance - it's prevention through capable leadership.

Operational Inefficiency

When leaders operate in hero mode, they create bottlenecks. Decisions stack up waiting for approval. Problems don't surface until they're crises. Teams work in silos instead of collaborating.

In a $96M FMCG operation, building systematic leadership capability delivered:

• 49.2% reduction in inventory loss (direct P&L impact)

• Methodology pushed globally across the organisation

Customer Impact

When leadership teams can't perform under pressure, customer experience suffers. Inconsistent service. Slow problem resolution. High complaint rates.

At Crown Holiday Parks, leadership capability development contributed to:

• 30-point increase in Net Promoter Score

• Measurably improved customer retention and referrals

  
  

What 420% Actually Means

"420% increase in safety reporting" sounds impressive. Here's what it actually means in business impact:

Before: Problems festered until they became crises. People didn't speak up because they didn't trust the system. Leaders found out about issues when it was too late to prevent damage.

After: Teams identified problems early. People felt safe raising concerns. Leaders could solve issues before they escalated.

This wasn't a safety program. It was a leadership capability program. The safety metrics improved because leaders learned to create psychological safety in their teams, respond effectively to concerns, coach in high-pressure moments, and build trust systematically.

The 420% isn't the goal. It's proof the leadership transformation worked.

The Real ROI Calculation

If you're looking for immediate revenue increase, leadership development probably isn't the right investment right now.

If you're facing:

• High turnover (expensive recruitment cycles)

• Safety incidents (workers comp costs)

• Operational chaos (inventory loss, quality issues)

• Customer complaints (NPS decline)

• Leadership gaps (people promoted without training)

• 
  

Then the ROI is measurable and compounds over time.

The investment: Two days of intensive development with ongoing coaching.

The timeline: realistically 3-6 months to see sustained results in metrics like turnover, safety reporting, and team performance.

The requirement: Leaders willing to experience discomfort and do the work.

Not every organisation is ready for this. But for those dealing with leadership-driven operational problems where hero mode is masking capability gaps, the cost of not investing is $438 billion in lost productivity.

Building Capability, Not Dependency

Here's what actually changed in the organisations that saw these results:

Not systems. Not processes. Not technology.

Leadership capability under pressure.

When leaders can maintain clarity during conflict, build trust in their teams, and coach effectively in the moment - everything downstream improves.

Safety reporting goes up because people trust they'll be heard. Turnover drops because teams have clear standards and psychological safety. Customer satisfaction improves because strong teams deliver consistent experiences.

This is what happens when you build capability, not dependency. We transfer methodology. You own the outcomes.

The companies that scale successfully don't just hire more people. They build leadership capability that can handle the pressure of growth.

That's the real ROI.

Facing leadership-driven operational problems? Let's discuss whether building capability under pressure makes sense for your organisation.