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The Problem: Costly Leadership Failures

Several years ago, I was invited by the CFO of a fast-growing IT services company (with about 100 employees) to discuss their workplace performance challenges. In the room were the Head Recruiter, the HR Manager, the CFO, and the Director of Compliance. What followed was an eye-opening conversation that revealed how leadership failures were costing them dearly.

Over the previous 15 months, the company had hired and fired four team leaders due to poor performance. As a result, team productivity plummeted, employee disengagement soared, top talent walked out the door, and both clients and prospects became increasingly frustrated.

The Financial Impact: Millions Lost

I took out a marker and began to walk through the numbers on a whiteboard. As we looked closer, it became clear just how much these leadership failures were costing the business.

A staggering $1,250,000 had been wasted on hiring and firing these four leaders, who were supposed to ensure high performance across their respective teams – about 28 employees – an investment of $5,000,000 annually. But the financial toll didn’t stop there.

Through deeper analysis, we uncovered that the ripple effects of disengaged teams, lost talent, a tarnished reputation, and missed business opportunities had likely cost the company an additional $17,000,000 over the same 15-month period.

As I wrote the numbers on the board, I could see the shock on their faces. It was clear that no one had truly understood the scale of the losses until then.

The Solution: A Data-Driven Approach

As we continued the discussion, it became clear that the company’s “people strategy” was completely unstructured—essentially, the “wild west.” There was no data-driven process to guide leadership decisions, and it was costing them both in terms of revenue and employee retention.

The solution? A more systematic, data-driven approach to talent management. I introduced The Predictive Index (PI)—a talent optimization platform designed to help organizations better understand their people, improve engagement, and drive performance.

For a company of their size, implementing PI—including talent optimization workshops, software, and expert advisory support—would cost less than 0.25% of their total annual people investment. This seemed like a modest price to pay compared to the millions they were already losing.

But when I presented this solution, their response was surprising: “We don’t have the budget for that.”

The Lesson: A Matter of Priorities

I was taken aback. By their own calculations, the company was wasting millions of dollars every year. Yet, when faced with a solution that could help them stop the bleeding, they couldn’t justify an investment to optimize their talent strategy.

I had an epiphany.  This leadership team wasn’t directly bearing the financial consequences of these failures. The owners and investors were the ones absorbing the cost of poor decisions.

This realization raised a critical question for me: Are leaders truly incentivized to improve their people ROI?

The Takeaway: Prioritize People, Prevent Losses

As a business owner, investor, or team leader, it’s crucial to understand that poor people decisions have far-reaching effects. These costs aren’t just financial—they impact your company’s talent pool, client relationships, and overall growth potential. Ignoring the people side of the business can sabotage even the best-laid plans for success.

It’s time to prioritize your people strategy. When you invest in the right systems and processes for talent optimization, you can not only prevent losses but also unlock growth potential that directly impacts your bottom line.

If you’re ready to tackle these challenges head-on and transform your organization’s approach to talent, let’s talk. Reach out to me at csullivan@pimidlantic.com, and together, we can turn your people challenges into growth opportunities.

–Clayton Sullivan, Talent Optimization Advisor