More than one-third of emerging corporate leaders in the U.S. lead through fear, which creates work environments that cost the economy $36 billion annually in lost productivity, according to a Nov. 6 report from executive leader Margot Faraci.
In a survey, fear-based leaders were those who said they always or often experienced anxiety, micromanagement, imposter syndrome, anger, unwillingness to receive feedback, hesitancy to speak up, complacency and quiet quitting.
“An entire generation of leaders is creating a workplace culture marred by systemic fear and this culture is causing a massive loss of productivity, to the tune of billions of dollars a year,” Faraci, a speaker, author and coach who focuses on corporate performance, said in a statement. “To break this toxic cycle, we need leaders to turn away from fear and embrace courage, honest communication and compassion.”
In a survey of nearly 2,500 managers between ages 24-54 who work in corporate offices with more than 500 employees, 36% were found to be leading through fear. This translates to a loss of 10 hours per week in productivity for their companies, or equivalent to $28,750 a year per leader — and $36 billion annually nationwide.
Nearly 40% of fear-based leaders said they strongly believe that stress can be positively harnessed. At the same time, 90% of fear-based leaders said they witnessed a decline in employee productivity. In addition, about half said they noticed a drop in performance from their teams, while nearly 60% acknowledged that their direct reports are “unhappy with their job.”
Even still, there are promising opportunities to reverse the trend of fear-based leadership, according to the report. About 8 in 10 leaders expressed a positive view of compassion and vulnerability in the workplace.
Fear-based leadership qualities, such as micromanagement and inefficiency, can lead to major retention challenges. In a recent survey from Ten Spot, nearly half of employees said they have a manager who makes them want to quit their job.
The effects are even worse in workplaces where employees feel they can’t speak up without fear of repercussion, according to data from DEI consulting firm The Courage Collective. In particular, toxic workplaces that lack psychological safety can lead to increased turnover among employees of color.
Leadership training and development could help. Employee trust in leadership has declined this year, according to a report from Challenger, Gray & Christmas, Inc., largely due to inefficacy, inconsistency and poor communication. Workers also reported major burnout, which they attributed to leadership. Training may help with negative views around leader efficacy, communication and company culture.
