German companies lose an estimated 130 billion euros every year due to the consequences of "internal dismissal" and "service by the book". For the U.S., the value is currently estimated at $450 billion to $550 billion. In addition, there are immense monetary and social costs due to psychological stress and its consequences, especially continuous underperformance, absenteeism, illness costs, and early retirement. When asked about the causes of this grievance, the number one issue in almost all surveys is the poor quality of leadership. Employees leave their boss, not their company.

Two HR managers meet. One asks, "Tell me, how many people actually work in your company?" Replies the other, "Hmm... about 50%, I'd say." On the one hand, this joke is quite whimsical, but the punch line can also get stuck in your throat on closer inspection. According to a study by the AOK (one of the largest health insurers in Germany), absenteeism due to burnout syndrome and similar psychological stresses increased eighteenfold(!) in Germany between 2004 and 2011. According to almost all surveys, the reason is poor leadership. And thus completely in the spirit of the bon mot: Employees leave their boss, not their company.

To complement this, here is another big figure: according to recurring studies by the Institute of the German Economy in Cologne, German companies have been continuously investing more than 25 billion euros in the further training of their employees for years. Leadership training accounts for a not insignificant portion of this. If you then add expenses for individual coaching and the much-booked rhetoric and presentation seminars as instruments of leadership, it becomes clear: leadership knowledge should be available enough. The problem is: it doesn't seem to be doing much good. Although billions of euros are invested in leadership quality every year, "perceived leadership" remains the number one shortcoming in companies.

Relevance for private equity companies

This "energy loss" is also highly relevant for private equity firms. On the one hand, it reduces the expected returns on corporate acquisitions. On the other hand, a serious lack of employee engagement can be triggered by poorly managed M&A processes - especially if the "soft side" of such a transaction is left out.