Just how much does poor management cost worldwide? $8.8 trillion a year

Next year, one in 10 managers in the workplace will be a member of Gen Z, according to a new report from Glassdoor. And despite all we hear about generational differences from one group to the next, Gen Z-ers are entering the ranks of management at a very similar pace to what we saw from millennials, Gen X-ers and baby boomers when they were the same age.

But this is certainly a different economy and different environment for work than 10, 20, 30 years ago. So what do Gen Z managers stepping up in the ranks need to do their jobs successfully? Ben Wigert is director of research and strategy for workplace management at Gallup. He recently spoke with Marketplace’s Sabri Ben-Achour. Below is an edited transcript of their conversation.

Sabri Ben-Achour: What do the data tell us about how well companies are preparing new managers?

Ben Wigert: So, what the data tells us is that about 45% of managers received training in the past year. Often, we focus too much on the transactional things like teaching people to budget and strategically plan, but we don’t spend enough time teaching people to manage other people. So for instance, when you’re a new manager, a top challenge can be getting the trust and authority of your team, because often you were one of their peers, and they may be your age, or they actually may be older and more experienced than you. So that can be really challenging.

Ben-Achour: Are there any hurdles that are like especially challenging for Gen Z managers?

Wigert: There’s a lot of organizational change happening right now, from hybrid work to organizational disruption, to employees having new expectations from their employer and even customers having different expectations. An advantage of being a new manager — sometimes you’ll be more in tune with those changes because you were in those people’s shoes. But a challenge — you often have not had as much experience navigating organizational dynamics, so that’s challenging overall. And then another big problem for new managers is they haven’t had a lot of experience coaching their team, so learning to set clear expectations with individuals, learning to give them feedback, develop them and recognize them may be foreign to them until they have a few more reps under their belt.

Ben-Achour: Are there measurable costs that come with poor management?

Wigert: Yes, absolutely so. Gallup’s conducted a study of about 3.3 million employees and over 180,000 business units, and we’ve found that the cost of poor management results in a reduction of performance in terms of 20% lower productivity, 23% lower profitability, 50% higher turnover and 63% more safety incidents. And we translate that to global cost. The worldwide cost of poor management and lost productivity is around $8.8 trillion a year, which is equivalent to about 9% of GDP.

Ben-Achour: Wow, that is so much more stark than I would have expected. Is there any sense of whether companies in general are recognizing these costs, these challenges and investing in solutions?

Wigert: The most effective thing that companies are doing right now is 1: Simplifying the job of the manager because they have a lot on their plate; 2: Teaching them to coach, because coaching is often a foreign concept, especially for young managers. 3: I’d say providing them feedback, getting managers to reflect on how they think they’re doing versus how their team sees them can be a really powerful tool. And then the fourth thing that I see being really effective right now is providing managers with experiential learning that includes mentoring and a peer community. You know, management is not learned just in a classroom. It’s learned by doing. It’s learned from role-modeling and support from other people. So beyond just the training, we’ve also seen that providing a mentor who can be that life raft is important, and then providing a community of other managers that can be your lifeboat, that provide a plethora of ideas and experiences really help you lean into being a better manager.