I first heard about the “Jerk” effect during a verbal presentation at a conference. Robert Sutton apparently did a study and found that for every “jerk” in your organization, they are costing you $160K of productivity and profits each year. ((Sutton, Robert. “The No Asshole Rule.” Note – I have not read this, but was told this was where the reference came from.)) It’s incredible that you could be paying a manager who is actually costing you money, but we all have experiences with leadership where we’ve wondered “How did they get that far in their careers? They are terrible!” At the same time, these people seem to be available in abundance.
Unfortunately, if the cost of a jerk is $160K, you can quickly figure out that the toll is really extracted in terms of employee engagement and productivity. These have cascading downstream effects as well. Your decrease in productivity is only the first step as decreases in engagement are going to lead to turnover and increased hiring costs. This increase in turnover also means ramp-up time for new employees and a decrease in productivity for projects they should be associated with. I’m not sure that $160K is the total cost, in fact I think it’s low.
McKinsey also picked up this concept and wrote about it in their 2007 Number 2 issue.
The human damage done by that kind of encounter is well documented—especially the harm that superiors do to their subordinates. Bennett Tepper studied abusive supervision in a representative study of 712 employees in a midwestern city. He asked them if their bosses had engaged in abusive behavior, including ridicule, put-downs, and the silent treatment—demeaning acts that drive people out of organizations and sap the effectiveness of those who remain. A six-month follow-up found that employees with abusive supervisors quit their jobs at accelerated rates. Those still trapped felt less committed to their employers and experienced less satisfaction from work and life, as well as heightened anxiety, depression, and burnout. Dozens of other studies have uncovered similar findings; the victims report reduced levels of job satisfaction, productivity, concentration, and mental and physical health. ((Sutton, Robert. “Building the civilized workplace.” McKinsey Quarterly. 2007, Number 2.))
While I hate the idea that HR is still the “babysitter” of the organization, we are the ones who get the complaints about other employees. Part of creating a talented workforce and maintaining our competitive edge is the understanding that it’s not just talent and competencies you have to look after. Your culture and brand are major parts of the workforce equation and having the “right people” also means ensuring your employees fit the culture.
3 responses to “1 Jerk = $160K”
Jerks need to go. Jerks who are bosses, especially, need to go. But it shouldn’t be HR’s job to handle the involuntary career re-direction. Decisions about discipline at all levels should be part of the manager’s job. But in too many companies we’ve made HR the babysitter and let the bosses off the hook.
It’s interesting to see a monetary value put on poor people management. We did some research on the motivational climate that leaders create (using our own leadership tool, the Apter Leadership Profiling System) and found that leadership climate accounts for almost one half of employee engagement (measured by Schaufeli’s Utrecht Work Engagament Scale). So you really can see the impact that a good or bad people manager will have.
So, if a “jerk” costs £160k, what is a “star” manager worth to your organisation in terms of engagement.
[…] while back I had a post around “1 Jerk = $160K.” We’ve all experienced managers who are either idiots or just complete jerks. The fact of […]