The Impact of

Leadership
THE IMPACT OF
LEADERSHIP
One of the most important findings of the AIM
2019 Leadership Survey is that poor leadership is
a major contributing factor to employee attrition.

Almost three-quarters (72.28 per cent) of

participants stated that they had left an
organisation in their last three roles because
of the leadership team, their direct manager or
a combination of both. These roles included a
variety of public and private-sector positions.

The results send a clear message – poor

leadership will not be tolerated by a large
proportion of employees, and businesses will
pay a heavy price if they do not appoint leaders
with the soft skills today’s employees expect.
How Australian
employees rate
their leaders
In the light of these results,
businesses need to take
note of the fact that, overall,
Australian employees rate the
performance of their business
leaders as quite ordinary.
Participants in the AIM 2019 Leadership
Survey scored the leadership of their
organisation at an average of just 5.43
out of 10.
Some 21.06 per cent of employees said
their leaders were not competent at creating
a high-performance culture. Respondents
identified problem areas as managing
staff performance, delegation and staff
empowerment. The results also indicate that
vast improvement is also needed in coaching
and mentoring, facilitating team cohesion,
recognising success and reward, driving
change initiatives and practising emotional
intelligence.
The standout area of success for leaders was
demonstrating commitment and passion,
with 70.11 per cent ranking their leaders
as competent, very competent or highly
competent in this area.
The skill in need of the greatest improvement
was communication, employees said.
This was followed by people management,
leading by example, providing direction and
inspiring confidence.
 THE STATE OF AUSTRALIAN LEADERSHIP | 5

Thinking about the leadership in your organisation,

how would you rate their ability on each of the following?

Managing staff
performance

Coaching &
mentoring

Facilitating team
cohesion

Recognising
success & reward

Driving change
inititiaves

Displaying emotional
intelligence

Effectively
communicating
the vision

Delegation and
empowerment
of staff
Creating a high
performance
culture

Setting goals and

expectations

Collaborating
with others

Hiring great
talent

Displaying honesty
and integrity

Being decisive and

making critical
decisions
Showing
commitment
and passion

0% 5% 10% 15% 20% 25% 30% 35% 40%

 Not competent  Somewhat competent  Competent  Very competent  Highly competent

The cost of
bad leadership
Lack of competence in key
leadership areas can cost an
organisation dearly.
Talent, engagement,
productivity and revenue can
all be lost under leaders who
haven’t developed the skills
employees value in their
leaders.
In fact, the AIM 2019 Leadership Survey
showed that almost 40 per cent of
respondents explicitly nominated ‘poor
leadership’ as a contributing reason for
leaving their job.
The survey also found many employees had
experience of working under an ineffective
leader who didn’t inspire a sense of loyalty
or contentment. Some of this is related to
a poorly communicated leadership vision:
28.28 per cent of respondents rank their
leader as only ‘somewhat competent’ at this
task. Damningly, 17.08 per cent said leaders
were not at all competent at it.
“There are two costs [of poor leadership]
that you can calculate: retention cost and
an engagement cost in terms of productivity
decrease,” Foote says. “But I think the
bigger cost is having less collaboration, a
worse environment for sharing ideas and not
embracing people with different thoughts
and opinions.”
“Ultimately, in today’s incredibly fast-moving
and complex work environments, if we’re not
utilising all our people and all of their ideas
and they’re not engaged, business is pretty
brutal, and the results are pretty evident for a
business’ longevity.”
 THE STATE OF AUSTRALIAN LEADERSHIP | 7

Losing skilled staff is a major problem for The AIM Leadership Survey
obvious reasons, but the domino effects can
showed that almost

40 %
be just as damaging. Former employees can
find roles with competitor organisations,
and the morale and engagement of
remaining staff are likely to fall along with
retention rates.
of respondents explicitly
Of course, this all makes the task of
nominated “poor leadership”
leadership incredibly stressful, and this
stress trickles down. Overwhelmed leaders
as a contributing reason for
struggle to make smart moves or take any leaving their job.
action at all.1 Some only do so when the
organisation in crisis, which is often too late.

1
The High Cost of Bad Leaders, 2017, Forbes
LESSONS FROM THE
ROYAL COMMISSION
There were numerous reports of malpractice and
greed during the nine months of the 2018 Royal
Commission into Misconduct in the Banking,
Superannuation and Financial Services Industry.
More than 130 witnesses and 400 witness statements provided evidence
of poor practices in banks, insurance firms and superannuation funds.
Commissioner Kenneth Hayne found that the financial services
organisations involved in these cases were to blame for “preferring pursuit
of profit to pursuit of any other purpose”.
The commission’s final report delved into the problems embedded within
the cultures of financial organisations. It underscored the critical role
leaders play in developing positive cultures where mistakes are identified
and learned from, and a blind eye is not turned to wrongdoing.
The final report of the commission states: “Because primary responsibility
for misconduct in the financial services industry lies with the entities
concerned and those who manage and control them, effective leadership,
good governance and appropriate culture within the entities are
fundamentally important. And culture, governance and remuneration are
closely connected.”
Striking the right note at the top is a step towards remedying leadership
problems. In its final report, the Hayne Royal Commission says the
responsibility for this rests squarely with leaders.
“Hence, it is rightly said that the ‘tone’ of the entity is, and must be, set
at the top,” the report states. “But that tone must also be echoed from
the bottom and reinforced at every level of the entity’s management and
supervision; it must always ‘sound from above’. And a culture that fosters
poor leadership, poor decision-making or poor behaviour will undermine
the governance framework of the entity”.
 THE STATE OF AUSTRALIAN LEADERSHIP | 9

The benefits of
good leadership
In sharp contrast, enlightened leadership has numerous
benefits; in particular, improved employee engagement
with the business.
When asked what impact leadership was “The things that are driving businesses to
on their level of engagement, almost 50 think more about leadership training and
per cent of respondents in the AIM 2019 development are twofold,” Foote says.
Leadership Survey said it was influential or “One is a defensive play against retention
very influential. challenges businesses are facing in a world
The link between leadership and where it’s hard to attract the right talent and
engagement is undeniable, Foote says. very hard to keep it.

“The AIM survey clearly showed that “And a more strategic move, which I think is
engagement and leadership have a positive a smaller focus now but we’ll see it growing
correlation,” he says. in the future, is to properly enable companies
and teams to work better in a highly
So what does engagement mean?
innovative, complex, collaborative workplace
“It means people are proud of what they’re so that people are ultimately more engaged
doing, they work harder ultimately, and they and produce much better outcomes.”
go further,” says Foote. “Their productivity
But, he says, “Organisations are still probably
increase is significant. But it’s not only
searching in terms of putting real, tangible
productivity, it’s deeper than that – it’s about
programs in place to help people with the
purpose, happiness and inspiring people to
tools they need to be effective leaders in
be excited every time they wake up and go
extremely complex and extremely difficult
to work, which I think is an extraordinary
workplaces and industries.”
benefit.”
Organisations are beginning to realise the
influence leadership has on retention and
engagement and are turning their attention
to developing their leaders.
 Australia’s missed
leadership opportunity.
5

4.5

4
ENGAGEMENT SCORE

3.5

2.5

1.5

0.5

0
1 2 3 4 5 6 7 8 9 10
LEADERSHIP SCORE

The AIM Leadership Survey highlights a large missed opportunity

to increase engagement through better leadership.
The graph above illustrates a strong correlation between leadership and
engagement, escalating significantly as leadership improves. However, with
Australian leaders currently assessed by employees at an average of 5.6,
the engagement effect of strong leadership has largely been left unrealised.
LEADERSHIP
BEYOND BUSINESS
The impact of the attitudes and actions of
leaders on culture is not restricted to the
business environment – it is equally evident
within society as a whole.
The words and actions of our political and religious leaders,
celebrity figures, influencers and thought leaders have the capacity
to inspire collaboration and inclusion – or incite the hatred and fear
that divides society.
New Zealand Prime Minister Jacinda Ardern’s response to the
Christchurch terror attack was a powerful blend of strong, decisive
leadership and traditionally ‘feminine’ soft skills that united
communities across the country.
Successfully passing a contentious gun-control law within a month
of the shooting, Prime Minister Ardern received worldwide praise for
her response to the attack, and her domestic approval rating rose to
its highest level since she took office in 2017.1
It is telling that in the days following the Christchurch attack,
despite New Zealand becoming a terror target for the first time,
Immigration New Zealand received a sharp increase in registrations
of interest to live and work in New Zealand – with the biggest
increase of more than 70% coming from the United States. 2

1
New Zealand PM Ardern’s approval rating rises to highest since taking office, 2019, Reuters
2
After New Zealand Attacks, More People Registered to Move There, 2019, New York Times
CONCLUSION
It is interesting to note that the skill considered most
critical to effective leadership, communication, is also
deemed the skill in need of the greatest improvement.
This shows that there is a fundamental gap between
expectation and reality in the majority of businesses.

When we consider that 40% of respondents cited

“poor leadership” as why they left a job, it becomes
immediately obvious that meeting employees’
expectation of a communicative leader would drastically
improve retention. Similarly, as quality management
positively impacts engagement, meaning to create a
workforce that actively wants to do their job and do it
well, the value and impact of leadership is unequivocal.

The bottom line of this debate is how it affects

businesses’ bottom line: good, effective leadership
invariably leads to increased productivity and profit.
 For further information on the full suite of
leadership & future skill development programs
available at AIM, visit www.aim.com.au
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