If you’re responsible for profit and loss or leading a cost center, you have probably faced this question: When budgets are tight, where do you invest — equipment or people?
Many leaders invest in what they can see and touch; new systems, tools, and machines. But the truth is, the largest untapped profit center in your organization is your leadership team.
Mid-level leaders — your managers and supervisors — are the ones who run the day-to-day, shape your culture, and influence employee engagement. Developing them is one of the smartest business decisions you can make.
Here are three reasons why.
- Retention: Keep Your Best People
Turnover is expensive — at least one times salary for every employee who leaves. And that’s a conservative estimate.
Gallup’s research shows that managers account for 70% of the variability in employee engagement. Highly engaged teams see 43% lower turnover.
Let’s run a simple example:
- Mid-size company
- $50M in revenue
- $5M in profit (10%)
- 100 employees, average salary $100K
At a low 3% turnover rate, you would lose three employees a year — a $300K hit to your bottom line. Improve engagement enough to keep just one of them, and you’ve saved $100K — money that could be reinvested in development, operations, or innovation.
- Profitability: Unlock Higher Performance
Engaged employees perform well.
Gallup found that highly engaged workforces deliver 23% higher profitability. Even if we scale that back to 20%, our $5M profit example jumps by $1M.
Combined with retention savings, that is $1.1M added to your bottom line — simply by increasing engagement.
- The Intangibles: Culture That Compounds
Some of the most powerful benefits are hard to put on a spreadsheet:
- Lower absenteeism
- Better quality and safety records
- Increased customer loyalty and referrals
- A reputation that attracts top talent
These “soft” outcomes create a competitive advantage that compounds year after year — and they all start with strong leadership.
The Takeaway
When budgets tighten, leadership development is often the first line item to get cut. But that’s a mistake. The data shows that investing in your mid-level leaders is one of the highest-ROI moves you can make.
If you retained just one employee, you already gained $100K to reinvest. What could that buy you in leadership development?
And don’t stop at workshops — consider coaching as part of your strategy. Individual coaching, group coaching, and team coaching can transform how your leaders engage their teams and drive results.
Let’s Talk About Your Leaders
When your leaders grow, your organization grows.
At Great Transitions Strategies, we help organizations develop stronger leaders—improving engagement, retention, and performance along the way.
Learn more: https://greattransitionsstrategies.com/contact-us/
