Michelle Dix is senior vice president, Human Capital Consulting, at Hub International insurance brokerage.

Employee turnover is a costly issue to U.S. businesses, and while voluntary job quits dropped to 44.5 million in 2023 from the previous year’s record-breaking 50.6 million, there’s a ten-plus-year trend at work that HR leadership is grappling with.

It’s not just the tangible costs of the recruitment and retention battles that drag an organization down. It’s worth noting, however, that Gallup has found that replacing an employee costs up to two times their annual salary. Thus, a company employing 100 people with an average salary of $50,000 may pay as much as $2.6 million annually in turnover costs.

What should be of equal or greater concern is what’s behind the turnover, and its impact. One is the ripple effect of lack of engagement (32% of full- and part-timers in 2022, according to Gallup), which is most likely to be caused by workers who have a poor relationship with managers. It drives up quit rates as employee satisfaction and productivity rates decline.

In fact, managers have a pivotal role in shaping an organization’s success. The most effective managers influence the kind of supportive corporate culture that attracts the best people and encourages them to stick around.

They know how to get the most out of employees. Productivity and other performance measures benefit as effective managers — and leaders overall, for that matter — walk the talk, investing 2.6 times more in intangibles like workforce capabilities than less effective competitors.

But what makes an effective leader, anyway? And more to the point, can the qualities that mark one be coached?

Behaviors versus skills

It should be a given that those who have earned management positions have proven themselves on the skills front, whether those are soft (communication or time management) or hard/technical (sales, financial management, graphic design). Behaviors are how one interacts with others and situations or surroundings.

They are different, but related. Importantly, though, it’s a lot easier to build a skill set than it is to change a behavior. Incredible financial acumen or a keen understanding of the marketplace are important skills to have. But effective leaders also bring certain foundational behaviors to the party. Primary among them is empathy — or caring, authentically, for all of the organization’s stakeholders.

The boss who asks about the birthday party of a worker’s child, or another employee’s vacation plans, has the right idea — providing the interest is both well-meaning and unforced.

The most effective leaders have an approach to interpersonal dealings that mixes candor with caring to build a trusting relationship. The boss who behaves in this way, for example, holds people accountable for their decisions and job performance without allowing the discussion to devolve into a recriminatory game of “what-about.” When a culture of accountability and caring has been fostered, managers must care enough about their people to tell them positively how to improve without resorting to personal attacks to make the point.

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