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Toxic leadership ‘fuelling’ Australian businesses as one in three inadvertently lead with fear, causing $2.3 billion productivity loss

Margot Faraci 5 mins read

UNDER EMBARGO 7am Monday 27th November 2023

MEDIA RELEASE

 

Toxic leadership ‘fuelling’ Australian businesses as one in three inadvertently lead with fear, causing $2.3 billion productivity loss

 

Expert urges leaders to acknowledge the subtle yet corrosive ways fear manifests: reducing performance, creating friction in interactions and diminishing psychological safety in work environments.

 

People can be motivated by a range of emotions, and a key one is driving corporate managers in today’s workplaces — fear.

A new study conducted and released today by Margot Faraci, a leading management expert and prominent senior leader in Australia with over 20 years experience at Macquarie Bank, NAB, CBA and more, shows toxic leadership is fuelling thousands of Australian businesses, with one in three (27%) harbouring unconscious fear. 

A third of corporate managers are primarily motivated by fear, creating less efficient and less psychologically safe work environments that cost $2.3 billion annually in lost productivity. It’s a matter that goes beyond statistics; it touches the very core of leadership dynamics.

Fearful leaders in Australia lose an estimated $26,263 in a year (based on their salary and estimated hours lost), equaling a $2.3 billion cost in productivity across Australia.

Concerningly, seven in 10 (69%) of managers firmly believe stress and fear can be used as a positive or motivational tool, despite acknowledging its adverse effects on performance, well-being, and company culture. 

 

The findings are part of a global study by Margot Faraci which analysed the leadership behaviours of 2,500 managers in Australia, the UK, and US, in order to map and uncover unconscious fear in leadership. The challenge is that thousands of leaders are often unaware they’re leading with fear or coming from a fearful response. 

 

Fearful leadership isn’t just shouting or aggressive behaviour, it’s avoidance, complacency, decision fatigue, hesitancy to express viewpoints, fear of letting people down, micromanagement, reluctance to provide feedback, not creating space for others to speak up, holding back growth opportunities from others, and more.

 

Fearful leadership often stems from inexperience and low self-confidence, leading to increased stress, fatigue, and compromised decision-making. It’s also often attributed to past experiences, creating an ongoing cycle of leadership driven by fear.

 

 

Key findings also include:

  • 69% of fearful leaders in Australia firmly believe that stress can be positively harnessed in workplaces

  • 87% of fearful leaders in Australia regularly witness declines in team productivity due to toxic leadership

  • While the vast majority of leaders offer guidance and learning opportunities, fearful leaders are significantly more likely to either be fully hands-on or hands-off when it comes to trusting their direct reports.

  • Half (49%) of fearful leaders in Australia struggle with decision fatigue

  • Nearly two in five (38%) of fearful leaders regularly witness declines in team morale, half (51%) are unhappy with their job, and a quarter (23%) say workplace relationships are strained

  • A third (36%) of fearful leaders admit how showing compassion in the workplace can positively impact company culture, and nearly half (42%) admit it will positively impact productivity, yet fail to do so

  • Fearful leaders tend to shift the blame, believing management is at fault for declining productivity, largely due to micromanagement and lack of communication 

Margot Faraci commented: “Fearful leadership manifests in subtle yet corrosive ways in our daily interactions. It's reflected in overly controlling management styles, where leaders micromanage every aspect, stifling creativity and autonomy. It's evident in a reluctance to communicate transparently, often leading to rumors and misinterpretations. Fearful leaders might prioritize short-term gains over long-term employee well-being, inadvertently fostering a tense and anxious work environment. These actions stem from an unconscious fear of losing control.

“Our fear of failure, our fear of being wrong or being outdone has devastating consequences for us personally, for our teams, and overall business performance. Fear shows up in various ways in leadership: avoiding difficult conversations, undermining others, shifting the blame, not allowing others key opportunities for growth, or not speaking up and staying small to be safe. All of these behaviors are damaging to the system and ourselves.

“Fearful leadership is fuelling Australian, and worldwide, businesses. I’ve seen it for decades and the majority of managers aren’t often aware they’re leading with fear or coming from a fearful  response. It’s hardwired into our subconscious because it’s what we’ve been exposed to throughout our careers.

 

Margot Faraci is calling for managers and leaders to acknowledge and confront their fears to break the cycle. Faraci added:The opposite of leading with fear is leading with love. People think of love as a romantic connection between two people, but it’s more than that. Love includes trust, compassion, vulnerability, respect, and other sentiments needed to create psychologically-safe environments. It takes a level of self-awareness to reach a love-based response.

 

“In the same way that Brene Brown has changed consciousness around vulnerability, and how we see it as a strain, love leadership will move through our worldwide consciousness.

 

“Love will bring trust and it will expand. People come to you as their leader saying “I'm with you I can see you're having a hard time with you I'm with you on what you know”. It brings connection in critical moments. This can be the making of your leadership and your team. If you trust your members, it can bring the potential you didn't even know was in you.

 

“Globally, we need to see love as this massive, powerful force we have, rather than something that’s only romantic between two people. Love is nothing to be afraid of, especially in the workplace. Love needs to be redefined so that everyone understands it is the most powerful force on earth that we have.”

 

-Ends-

Notes to Editors:

Media enquiries:

For any media inquiries or to request an interview with Margot Faraci, please contact:

Jessica Frankel at The Bravery | Jess@thebraveryishere.com | +61 404 442 120

Emma Eager at The Bravery | Emma@thebraveryishere.com | +61 420 245 305

Margot Faraci is available for interviews 

Image Bank: HERE

Methodology:

Study of 2,486 managers and leaders in the UK, US, and Australia, conducted 25th August 2023-13th September 2023. Study of companies with over 500 employees.

The Love Leadership study of nearly 2,500 leaders was commissioned by experienced executive leader, international author, and speaker Margot Faraci, and conducted by First & First Consulting, a leading research and analytics firm in New York.

Sample size in the AUS: 775 emerging leaders

How the $2.3 billion cost in productivity and performance was calculated:

 

1. Understand the total market size for Fearful leaders in Australia:

  •  Used GlobalWebIndex to estimate the number of emerging leaders in Australia: 328K

  •  Used the survey to estimate % of emerging leaders that are leading with fear: 26.57%

  •  Multiplied those together to get to the total market size for Australian Fearful leaders: 87,150

 

2. Understand how much revenue they lose due to leading with fear:

  • Used the survey to gather the median of how many hours of productivity they lose on a weekly basis: 9.5

  • Used the survey to gather the median of Australian Fearful leader's salary: $115,000/year AUD

  • Calculated the hourly wage off the median salary: $55.29/hour AUD

  • Calculated the average yearly loss based on a 50-week work year: $26,263/year AUD 

 

3. Extrapolate that out for the market size: $2.2B AUD

 


About us:

About Margot Faraci: Margot Faraci is a senior leader with two decades of experience in the corporate world. Having previously worked in some of the biggest global companies, banks and digital companies, including Macquarie Bank, NAB, Seek.com, Ashurst, and CBA, she’s led cultural transformations in multiple environments. Margot’s never been put in a situation to just keep things running the way they always did. She’s a change agent, her modus operandi being to simultaneously perform and transform – with an acute commercial focus on profit.


Contact details:

For any media inquiries or to request an interview with Margot Faraci, please contact:

Jessica Frankel at The Bravery | Jess@thebraveryishere.com | +61 404 442 120

Emma Eager at The Bravery | Emma@thebraveryishere.com | +61 420 245 305

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