Ignoring the Personal Stress of a Key Executive Could Cost You Millions

With one exception, the consensus was that one in six sounded far too low. A typical response was, “When you start to peel back the layers, it could be 3 or 4 out of 6. How many people go through life without personal problems?”

So, just for the record, if you or someone on your team are going through a particularly rough time personally, your company is not alone.

The Financial Costs

How do we put a number on the full impact to your company of a senior leader’s personal distractions? I think you will find the costs are immense.

Studies indicate that one in six executives is troubled by personal problems that affect his job performance. [ii]

Let’s first consider the hidden costs of keeping an underperforming executive. And then, let’s look at the often grossly underestimated costs of replacing an executive. Then we’ll look at the human factor— the personal cost of excess stress to a valued person on your team.

The Hidden Costs of Tolerating the Situation

Vision+Strategy+Leadership– Personal Distractions = Senior Executive Value

As you probably know, a long-held rule of thumb is that an employee’s value should be at least three times their compensation. So, for example, if the executive’s compensation is in the range of
$250,000 – $600,000 (and that doesn’t take bonuses into account), their value to the company should be in the range of $750,000 –
$1,800,000.