When It Makes Financial Sense To "Fix" Rather Than Fire
Imagine a leader so toxic, with so many complaints about her behavior, that her employer has to consult with lawyers to determine their risks.
That’s exactly what happened with one of my clients.
The toxic leader in question directed her malice particularly at junior employees. If they asked an off-topic question during a meeting, she’d make them leave. If they were giving a presentation she didn’t like or thought was irrelevant, she’d interrupt them and shame them in front of the whole team.
But she was also great at her job. She brought in tons of revenue for the company so they didn’t want to fire her. Instead, they brought me in to coach her.
Within two months, I’d helped her realize the consequence of her behavior and identify alternative ways she could operate. I also helped her understand why she acted this way to begin with. As a perfectionist, she felt that absolutely everything that happened in her organization was a reflection on her. She worried that the junior employee’s sloppy presentation or their slightly off-topic views made her look bad. So we worked to tame and even release those beliefs and find new strategies for developing the junior employees (that didn’t involve yelling!).
Better yet? Rather than spending $200,000+ and three or more months replacing this formerly-toxic leader, her employer spent a small percentage of that on coaching. Today, with so much economic uncertainty around the world, companies are looking for ways to be financially savvy. If your company has a leader who is causing turnover and impacting morale, coaching will always be more affordable than replacing them.
How one leader can create a revolving door
Studies show that over 50% of employees leave jobs because of their manager, not their workload or pay. When leadership becomes the problem, turnover skyrockets. Disengagement, loss of institutional knowledge, and burnout create ripple effects that are tough to contain.
The financial toll of leadership-driven turnover
Turnover is expensive—especially when it stems from the top. Let’s break down the real cost of replacing employees due to bad leadership:
Recruitment and hiring expenses: Job postings, search firms, interview time, and onboarding.
Lost productivity: It takes months for a new hire to reach full productivity. (This is one of the reasons we include three months of free onboarding for our executive search clients!)
Decreased team performance: Remaining employees are left to fend for themselves, overburdened or disengaged.
Reputational damage: If word spreads that a company has a toxic executive, qualified talent may avoid considering opportunities there altogether.
The numbers don’t lie—executive turnover can cost up to 213% of the predecessor’s salary. That’s before factoring in the emotional toll it takes on teams.
Replacing the executive? That’s even more expensive
Think firing the exec is the easy way out? Think again. Replacing a C-suite leader isn’t a quick fix—it’s a massive undertaking.
Time to fill: On average, executive searches take 3-6 months, leaving teams in limbo and critical work unfinished. (The good news is that our searches take 1 - 2 months.)
Cost: Retained executive search firms typically charge 33.3% of the executive’s
salary, and that’s before factoring in signing bonuses, relocation, and onboarding.Risk: If the new leader turns out to not be a cultural fit, this will create further turnover and disruption.
Instead of playing musical chairs, why not invest in making the current leader better? Great hires are only part of the equation—longevity matters. When leaders grow, organizations thrive.
Why executive coaching is the smartest investment
Coaching isn’t just about fixing weaknesses—it’s about amplifying strengths. When companies invest in executive coaching, they’re investing in leadership transformation that benefits the entire organization.
Studies show that coaching leads to:
Higher retention rates – Employees are more likely to stay when leadership improves.
Stronger engagement – Teams feel heard and valued when leaders communicate (including listening) effectively.
Increased productivity – A well-led team performs at a higher level.
A strategic approach for CHROs
If you’re a CHRO, you’re responsible for ensuring leadership stability and team engagement. Before assuming that replacing an executive is the only option, consider the potential of executive coaching. Not only is it more cost-effective, but it also strengthens the company’s culture, fosters leadership growth, and ensures long-term success. You will know pretty quickly if this approach will work or if plan B (replacing them) needs to happen.
If you’re dealing with an executive who may be driving turnover, let’s talk. The right coaching approach can turn things around faster—and more affordably—than you think.