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

Cy Wakeman, a psychologist who heads a global consulting firm that works on creating more results for companies, takes a tough stance on employee accountability. In her book, “No Ego – How Leaders Can Cut the Cost of Workplace Drama, End Entitlement and Drive Big Results,“ she estimates that most workers spend 2.5 hours per day in workplace drama.[iii]

In the context of this study, let’s say that the leader with personal distractions is losing focus for 2.5 hours per day and operating at 66% efficiency. You’re losing $235,000 – $563,000 of value.

If the person stays on the team, you’re losing money on an ongoing basis because you’re not operating efficiently. Also bear in mind that distractions most often increase rather than decrease over time. So, at a minimum, you’re losing $235,000 year over year due to unaddressed personal issues.

How long will you tolerate that?

Here’s another way to look at this: Assuming the lower end of the salary range, if you operate on a 7% net you would need additional revenue of $3,358,000 to compensate for the distraction.

Those are the hard costs. Either way, the estimated $235,000
– $563,000 annual loss or the $3,358,000 additional revenue required to make up the deficit do not begin to take into account the havoc caused by the ripple effect throughout your organization.

“We had an executive whose wife was dying of cancer.
He was leading an initiative and the project he was working on was supposed to deliver a $3M return. Decisions were not being made. It fell short by $1.5 M and was a year and a half late.” Vice-President, Human Resources

It is almost impossible to gauge the full impact because company drama and distractions start at the top. We’ll look at the soft costs of brain drain in a minute.