Bad managers cost you money – a fact I know to be true because I see it time and time again. Yet, business owners struggle to identify what exactly it is within their managers or management team that is causing the drain on their finances.
The answer? It’s probably training – or a severe lack of it.
But I get it, training is so broad, it could be any specific arm of management that’s causing them to cost the business money. So how do you know where to start when it comes to dealing with manager incapability?
The following is an excerpt from my free guide, How much money you’re losing on bad managers, and how training can save you thousands, which you can download here.
The management crisis hiding in plain sight
A lot of business owners tell me that the biggest hindrance to their business is growth is manager incapability. But here’s what shocked me: when I asked why they hadn’t addressed it, the answers were always the same – “no time”, “don’t know where to start”, and the one that makes the hairs on my neck stand-up, “it’s not a priority right now.”
Meanwhile, these same businesses are haemorrhaging money through poor management decisions, failed probations, tribunal claims, and endless recruitment cycles. They’re spending tens of thousands on the symptoms while ignoring the cause that’s staring them in the face.
Your managers are either your secret weapon or your hidden liability. There’s no middle ground. They’re either preventing problems before they start and driving your business forward, or they’re creating expensive disasters that could destroy everything you’ve built.
Here’s the reality that most business owners refuse to face: 82% of managers are “accidental” – thrust into roles without proper training. We promote people because they’re brilliant at their technical job, then expect them to manage humans without any preparation. It’s like putting someone in charge of a ship just because they’re good at swimming.
With the new Employment Rights Bill likely to bring day-one unfair dismissal rights, every single management decision is about to become critical. The two-year buffer that’s hidden so much management incompetence is disappearing. When it does, businesses with unprepared managers will face a tribunal tsunami.
But here’s the opportunity: while your competitors are sleepwalking into expensive legal problems, you can gain a massive competitive advantage by investing in management capability now. The businesses that get ahead of this change won’t just avoid costly mistakes – they’ll attract and retain the best talent while their poorly-managed competitors struggle with endless recruitment.
This guide will show you exactly where the hidden costs are draining your business, how to audit your current management capability, and most importantly, what to do about it before it’s too late.
Chapter 1: Performance management disasters
The fear: What could go wrong
Picture this: An employee isn’t meeting expectations. Your manager, wanting to be “supportive,” avoids difficult conversations for months. Eventually, frustration boils over and they’re dismissed over the phone for “not being a good fit.” Cost? £30,000+ in tribunal awards plus legal fees, because no proper process was followed.
Or this: A dyslexic employee struggles but never receives adjustments because no one bothers to ask about barriers to learning. She fails probation and claims disability discrimination. Your defence of “we didn’t know” crumbles when the tribunal finds you failed in your duty to make reasonable adjustments.
These aren’t hypothetical scenarios – they’re real cases from my clients. Performance management failures are the most expensive HR mistakes because they’re so common and so preventable.
The problem: Why managers struggle with performance
Most managers approach underperformance completely wrong. They want quick fixes – “Can’t I just fire them?” or “How quickly can we get rid of someone on a PIP?” But effective performance management isn’t about creating paper trails for dismissal – it’s about helping people succeed.
The hidden costs of poor performance management are staggering:
Direct costs include recruitment fees averaging £3,000-£5,000 per failed hire, legal fees starting at £20,000 per tribunal, and settlement payments ranging from £5,000-£50,000. But these are just the obvious expenses.
Hidden costs devastate your bottom line: lost productivity from managers avoiding difficult conversations, team morale damage when poor performers aren’t addressed, good employees leaving because they’re carrying underperformers’ workload, and customer relationships suffering due to inconsistent service quality.
Opportunity costs represent the biggest loss: What could high-performing teams achieve if managers weren’t constantly firefighting performance problems? How much innovation gets stifled because energy goes into managing problems instead of developing potential?
The root cause is almost always the same: managers who promote technical experts into people management roles without any training on how to manage people.
The solution: Performance management that actually works
Train managers to diagnose before they prescribe. Most performance issues stem from management failures: poor recruitment, inadequate onboarding, unclear expectations, or lack of support. Before addressing employee performance, managers need to examine their own contribution to the problem.
Teach the skill vs. will distinction. Capability issues (someone can’t do the job despite trying) require patience, training, and support. Conduct issues (someone won’t do the job despite being able) need disciplinary action. Get this wrong and you’ll increase the chances of it all going wrong.
Implement structured probation processes. Day 1 induction setting clear expectations, week 1 check-in, formal reviews at 7, 45, and 90 days, with documented outcomes. No more waving people through probation because “we need the staff.”
Develop feedback frameworks. The PEERS model (Permission, Explain, Effect, Required action, Support) gives managers structure for difficult conversations. They stop avoiding performance issues because they know how to address them constructively.
Create performance improvement systems. Clear criteria for what improvement looks like, specific timelines, regular check-ins, and documented support offered. This protects both the employee and your business.
Document everything properly. Every conversation, every support offered, every improvement or decline. If things escalate to dismissal, you need evidence you’ve followed a fair process.
The businesses that invest in performance management training see immediate results: fewer failed probations, reduced recruitment costs, improved team morale, and virtually eliminated tribunal risk around performance dismissals.
Want to read on? This excerpt is from my free guide, How much money you’re losing on bad managers, and how training can save you thousands, which you can download here.