The Impact of Bad Leadership on an Organisation

The Impact of Bad Leadership on an Organisation

Seeing the potential of a high-functioning organisation being wasted and witnessing first-hand the impact of bad leadership and internal turmoil is extremely frustrating. Leadership is one of the few things about a business that can be controlled, and there is a concrete link between bad leadership and underperforming organisations.

Bad leadership in business leads to toxic working attitudes, staff segregation, loss of high-performing employees, and an unattractive workplace culture that is unlikely to inspire results from your staff while creating a cycle of poor staff retention.


Research from the Australian Institute of Management with Monash University shows that “83% of the almost 2000 employees surveyed rated their manager’s leadership skills as average or below average and they also ranked poorly in terms of communication, skills, strategic influence and their ability to oversee staff performance.” 

Evidently, the impact of these changes to staff performance will be negative for your organisation and lead to a loss of profit.

As with bad leadership, although an attractive pay-packet might help spur some motivation within an individual, it’s not feasible when it comes to long-term, sustainable motivation and productivity in the workplace.

Employee retention is achieved through investing in employees. For many organisations, they have rebranded their HR departments to be ‘people and culture’ as it’s no longer being viewed as a cost centre, but rather as a source of value creation, considering how much more value a productive and happy employee can add to the organisation.

As Ricahrd Branson said, “you should aim to train staff so they can leave, but treat them so they won’t.”

The Impact of Bad Leadership on an Organisation

Unlike some external issues that organisations face that are detrimental to business, like economic downturn or a pandemic, leadership is an internal issue within a company’s control.

Bad leadership can have a negative impact on employees and might even damage the company’s bottom line.

A poor leader is defined as “a person in a leadership role that lacks the necessary skill, ability and overall qualities to effectively lead.” 

It‘s no surprise that poor leaders are also poor listeners. Employees want and deserve to be heard. Good leaders listen to their employees, consider alternative viewpoints, and are fair decision-makers. If you find your boss avoiding conversation, you can count this among the signs of bad leadership skills. Likewise, leaders that can’t take constructive criticism are probably not skilled leaders, as effective leaders are able to motivate a team while simultaneously listening to the team’s suggestions.

The negative impacts to an organisation from bad leadership are ongoing, however a good leader can increase a businesses sales, boost employee morale and make staff want to stay at an organisation achieving their best for as long as possible.

This internal factor should not be overlooked by business owners. Investing in good management helps organisations succeed as a whole.

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