Studies show that the problem isn’t bad workers as much as bad bosses, who aren’t just a nuisance — they’re expensive. They cost a company productivity and turnover. Yet for some reason they’re being hired again and again. So why are we so rotten at hiring leaders, and how can we change?

The Cost of Bad Bosses

Pick any metric you want: Lousy bosses are bad for profit, revenue, safety, morale and even emotional well-being. Gallup calculates the overall cost of low employee engagement to be $319 to $398 billion annually. And the bosses themselves don’t seem to care. “Fifty-one percent of managers have essentially ‘checked out,’ meaning they care little, if at all, about their job and company,” Gallup finds.

More and more studies are exploring this dynamic. At Florida State, researchers tried to quantify how often managers exhibit the seven deadly sins — wrath, greed, sloth, pride, lust, envy and gluttony — in the workplace. A survey of 750 employees found greed, sloth and wrath were the most common bad traits: Twenty-seven percent of employees said their boss “vigorously pursued undeserved rewards,” 41 percent said the boss delegated work he or she should do themselves, and 25 percent said their boss had trouble managing anger. Poor management takes a toll. The study found that employees with a sinful leader contributed 40 percent less than their happier counterparts, were 33 percent more likely to feel overloaded and a whopping 66 percent less likely to to make creative suggestions.  

Organizational psychologist Dr. Stanley Silverman, dean of Akron University’s Summit College, created the WARS metric (Workplace Arrogance Scale) to track the correlation between arrogance, performance and employee satisfaction. “Subordinates of arrogant bosses have much lower levels of morale, higher levels of burnout,” Silverman tells me. “There’s what I call the ‘spillover effect.’ When you’re working for an arrogant boss, you bring that home.” Or you quit. Gallup found that half of all employees have left their job to escape poor managment at some point in their careers.

The Mean Boss is the easiest caricature to visualize, but a weak manager can be just as problematic, says Bruce Tulgan, head of consulting firm Rainmaker Thinking. He’s the author of an entire shelf of leadership books with titles like It’s Okay to Be the Boss and The 27 Challenges Managers Face. “The biggest pitfall is what I call the False Nice Guy Complex,” Tulgan says. “They think that ‘If I’m strong, then people will think I’m a jerk,’ so they soft-pedal their authority. But nobody needs a weak leader. The only people who want a weak leader are the people who don’t want to do anything.”

Choose Your Own (Mis)Adventure

Some of this, of course, has been around forever. We can all relate to the disgruntled employees in Office Space; Cinderella’s boss forced her to scrub the floor; surely a caveman once complained of his boss always demanding he rearrange his stack of stones. Yet Gallup’s research suggests a deeper problem: Companies often have reward systems in place that promote inadequate managers.

“Organizations fail to choose the candidate with the right talent for the manager job a whopping 82 percent of the time,” says Gallup CEO Jim Clifton in The State of the American Manager, a report which canvassed 2.5 million manager-led teams in 195 countries.

Consider the Peter Principle, formulated by Laurence J. Peter in 1969: When someone does a good job, their reward is a promotion to management. But the skills required to be a good manager are typically different from the skills needed to succeed autonomously. According to the report, employers who reward performance with managerial roles “overlook talent, and when they do, they lose. They spend needless time and energy trying to fit square pegs into round holes.”

Poll: Tell us the worst bad-boss archetype

This is compounded by two other problems. The first is self-delusion: Companies don’t even realize there’s an issue. “Managers and leaders hold on to overly optimistic views of their own performance,” says Silverman. “They’re often told what they want to hear, and not what they need to hear.”

Silverman has traveled all over the world to help companies perform 360-Degree Feedback evaluations, where employees get scored by their managers, coworkers and subordinates. Self-evaluations are always the most glowing, he says, adding “There’s rarely a good environment for feedback. There’s no mechanism.”  

The second problem: Training is scarce. “When we put people in a supervisory role, maybe we teach them how to do a little extra paperwork,” says Tulgan. “But we almost never do the rigorous training to teach them how to do the people-work.” Plenty of companies offer nominal gestures like a leadership workshop — a brown bag lunch where you talk about the importance of teamwork — and maybe you’ll get a binder with some slides featuring outdated clip-art. But rarely is there a devoted process, system and framework for management growth and development.

The Fix

At last count, there were approximately 37 billion books on how to improve your company’s management team, so there’s no simple solution. The experts I spoke to, however, all emphasized a few core principles: diagnose, promote the right people, train, and create a culture of feedback and communication.

It starts with zeroing in on the problem. According to Dr. Richard Klimoski, an organizational psychologist at George Mason University, you can root out bad management without time-consuming formal feedback and a third-party consultant. “A flawed manager might show up in lawsuits, harassment, union grievances or high turnover,” he says. “If you see this across the company, then you have a company problem. If you find these things are clustered in a division, it’s a divisional problem. You have to be somewhat like a detective.”  

Make sure your leaders are taking the time to actually lead. “Are your managers engaged?” asks Tulgar. “How do managers spend their time? How much of management time is spent planning versus firefighting? How much time is spent teaching, coaching, guiding, directing? How much of your management time is spent giving feedback?”

And if the real problem is that companies promote the wrong people, then the fix, of course, is to promote the right ones. According to Gallup, “Companies that hire managers based on talent realize a 48-percent increase in profitability, a 22-percent increase in productivity, a 30-percent increase in employee engagement scores, a 17-percent increase in customer engagement scores and a 19-percent decrease in turnover.”

But what does “talent” mean here, exactly?  After sifting through their soup of data, Gallup found five key attributes that seemed to separate the aces from the duds. First, great managers motivate employees. They’re also assertive, and they “make decisions on productivity, not politics.” Solid leadership is able to “create a culture of accountability.” Lastly, “They build relationships that create trust, open dialogue and full transparency.” In some particularly grim news, Gallup found that only 10 percent of all employees have the talent needed to become good managers. Yikes. However, reading through the report, you can’t help but notice they’re a little vague on how one detects this managerial talent. (Presumably, you need to hire Gallup’s consultant team, which promises to help you find the talent.)

Yet hidden in these weeds is a useful concept: We can reward people without making them managers. “For a long period in America, it was possible for a company to provide two different career paths: up through management or up through the science of your profession,” says Klimoski, channeling the Peter Principle. “A strong contributor on the technical side might not be a strong manager, and vice versa.” So instead of turning a star coder into a mediocre boss, find a more effective way to recognize the coder’s excellence.

The most obvious way is a bump in salary and a snazzier title. Other incentives include more flexibility and ownership, cooler projects and meatier challenges. Klimoski notes that companies like 3M and Google give employees time to develop new products and services, as “the techie is motivated by the thrill of the chase.” Or you could give them a seat at the decision-making table. “You can reward employees by not keeping them in the dark,” says Klimoski. “Trust them. Invite them into the decision-making process.”

While Gallup’s view of the lack of managerial talent might sound fatalistic, Tulgar disagrees that great leaders are simply born with skills. The way he sees things, corporate America’s lousy manager problem is less about hiring the wrong people and more about inadequate training. His firm emphasizes the importance of structure and processes — it needs to be ingrained in the fabric of the culture. “Look at the military,” Tulgar points out. “They’ve found a way to teach leadership … The military teaches people to spend time with their subordinates one-on-one to track performance, and to reward people when they’re performing well.”

OK, so realistically, how exactly does a firm implement a proper management development program and open up the lines of communication? Often it requires outside help, but Silverman says there is a simple exercise that every manager can do with their employees tomorrow — and without hiring a pricey consultant. “Think of your job as a pie,” he says. “Slice that pie into eight pieces. ‘What are your eight key responsibilities? What do I think they are, and what do you think they are?  Let’s see if we’re on the same page.’ It’s a positive conversation because you’re talking about going forward, you’re not talking about going backwards.”

Is this a bulletproof solution? It’s hard to imagine that I would have suddenly re-engaged with my job if Pat had said to me, “Jeff, imagine that your job is a pie, and cut it up into eight pieces. What are your eight responsibilities? Are we on the same page here? Where do you see yourself in five years?” Then again, maybe I would.  Everyone likes to feel included, even grocery store clerks.

America’s management problem isn’t easy, and it won’t be solved by one conversation. But it might be a good place to start.