A Loss of $7,227 Per ‘People Problem’ Per Day

two business men disagree
Lisa Hochgraf Photo
Senior Editor

2 minutes

Directors Conference speaker an expert in how leaders can help their teams be more effective at a lower cost.

In research about the cost of “people problems” published in Harvard Business Review in 2016, Tanya Menon and Leigh Thompson report that executives estimated wasting an average of $7,227.07 per line item per day, for a total of $144,541.30 per day.

“These are perceptions rather than scientific measures, but they reveal significant amount of lost value,” write the authors, who asked leaders to place costs on such people problems as hiring the wrong employees, unproductive meetings and uninspiring leaders. 

A speaker at Directors Conference this December, Menon is a professor of management and human resources at the Ohio State University’s Fisher College of Business and co-author of Stop Spending, Start Managing: Strategies to Transform Wasteful Habits. Thompson is the J. Jay Gerber Distinguished Professor of Dispute Resolution and Organizations at the Kellogg School of Management, Northwestern University. 

According to Menon and Thompson, managers are by and large highly motivated and educated. They are busy trying to solve tough people problems any way they can. But sometimes traditional approaches to people problems don’t work. When this happens, managers can get caught in “spending traps” that cost their companies money.

Interestingly, it isn’t weakness that brings out these traps, according to Menon and Thompson, but overused and misapplied strengths. In this video, the authors detail the traps. 

5 Spending Traps to Avoid

Here is a quick summary of the leadership traps managers fall into when trying to handle people problems as defined by Menon and Thompson.

  1. Expertise trap. This is when managers get so practiced at their jobs they go on auto-pilot and fail to adapt to the uniqueness of a new problem.
  2. Winner’s trap. This is when successful managers become too accustomed to “seeing it through” and fail to make appropriate course corrections.
  3. Agreement trap. This is when a manager’s desire to be well-liked leads to conflict avoidance and causes the team to miss out on the kind of productive conflict that can lead to breakthroughs.
  4. Communication trap. This is when managers get overwhelmed by information and fail to focus on the good conversations where work actually gets done.
  5. Macromanagement trap. This is when managers become too far removed from their teams in the name of empowerment.

By understanding these traps, the video narration suggests, managers can channel their strengths to access real solutions without the cost. Additionally, in her Ted talk, Menon describes how leaders can find new ideas and opportunities by being more intentional about expanding our social universes.

Lisa Hochgraf is senior editor for CUES.

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