Bad leadership puts startups on the path to failure. In fact, half of American employees who leave their jobs do so to get away from their managers. Leaders who lack vision, treat people like numbers or fail to communicate with their teams can affect a company's bottom line. As a small-business owner, it's important to recognize the signs of bad leadership and address these issues before it's too late.


Great leaders are made, not born. The key to break bad leadership habits is to acknowledge your strengths and weaknesses, learn from your mistakes and focus on continuously improving your skills.

The Consequences of Bad Leadership

If you're a small-business owner, you may have already acknowledged or recognized to some small degree that bad leadership may be relevant in your business. While it's true that you have no control over external factors such as an economic downturn, you can focus on improving your leadership skills. Your actions have the power to shape the company culture and can be felt throughout the entire organization.

Poor leadership may affect team morale, productivity and performance. As you probably know, people leave managers, not companies. Bad leaders are more likely to create challenges than solutions, and their actions can have devastating effects on a company's reputation and bottom line. High turnover, increased workplace stress, conflicts and loss of revenue are all potential consequences.

As a leader, you are a role model for your employees. If, say, you tend to be late for work, it won't be long before they begin to do the same. In this role, it's your responsibility to set the company's direction and build a strong team. Your job is to help your team members achieve peak performance, not hold them back or drag them down.

For example, startup leaders often throw challenges at new hires without giving them enough time to become familiar with their roles. Those employees will most likely fail to get the job done and end up feeling frustrated. A better approach is to have tough talks with your team members, set clear expectations and help them grow professionally. Give them a chance to develop and refrain from making assumptions about what they can and cannot do.

How to Recognize Poor Leadership

A lack of transparency, poor integrity, narcissistic tendencies and inflexibility are all common characteristics of a bad leader. Many of those who fall into this category treat people like numbers, fail to adapt to changing situations or engage in unethical behavior. Great leaders, on the other hand, treat their employees like valued human beings and acknowledge their hard work. They are not afraid to experiment with a new management style depending on the situation.

Many times, bad leaders are obsessed with control, which only breeds resentment and conflicts in the workplace. While micromanaging may work in the short term, it negatively affects team morale and engagement over time. Furthermore, micromanagers often find themselves doing other people's work because they believe that no one could do a better job. This keeps them from focusing on the core aspects of their business and may affect the company as a whole.

Some leaders focus solely on profits rather than trying to drive performance and inspire their teams. Others fail to communicate effectively or don't accept any new ideas. There are also leaders who avoid meaningful involvement with their team, hiding behind their charisma. Other warning signs of a bad leader may include:

  • Comfortable with the status quo
  • Inability to make decisions
  • Lack of empathy
  • Lack of accountability
  • Lack of authority
  • Poor vision for the future
  • Difficulty building high-performing teams
  • Failure to set clear goals
  • Inappropriate behavior
  • Negativity

Good vs. Bad Leadership

Imagine the following scenario: An employee comes to you with an idea to improve a product or service. A bad leader may feel offended or annoyed instead of keeping an open mind. The employee who came up with that idea will realize that making suggestions isn't worth the effort. Even if his idea isn't that great, you could thank him for the feedback or engage in a healthy debate.

Consider another example. Someone on your team is questioning your decisions during a meeting. A bad leader would change the subject and move on with the discussion. A good leader would address the question either in front of his team or privately after the meeting.

Hoarding information is a leading cause of turnover. If your team doesn't understand the reasons behind your decisions, they may lose trust in you and feel uncertain about their jobs. This can hurt their motivation and work performance, affecting the company's bottom line. People simply don't work hard for leaders they don’t trust.

Bad leaders tend to focus on where people fall short, which may create a toxic work environment. They either expect employees to complete tasks without any guidance or supervise the smallest details of a project. If something goes wrong, they blame their team instead of taking responsibility. Any of these mistakes may cause fear and confusion among employees, leading to diminished productivity, low team morale and high staff turnover.

Leaders Are Made, Not Born

Continuous learning is a must when you are in a leadership role. Great leaders are made, not born. It's never too late to hone your skills in this area and become a role model for your team. Think of it as a journey and be prepared to fail, admit your mistakes and then start over with an open mind.

Soliciting feedback from your employees is a good starting point; do it at the end of every meeting or have them take a survey. In the meantime, try to identify your strengths and weaknesses. Thinking that you’re good at everything is a recipe for failure.

For example, if you're a micromanager, make a list of tasks you're holding on and hand them off to someone else. Let your team members know what you expect and give them the freedom to decide on a course of action. Start with smaller tasks that your team can easily manage, provide constructive feedback and reward good work.

Hone Your Leadership Skills

Make a habit out of acknowledging the hard work of your team. Sometimes, a simple thank you is all it takes to boost their morale and brighten their day. Good leaders provide constructive feedback, value the potential in their people and reward high performers. In fact, nearly 60 percent of employees would prefer to receive recognition rather than a bigger paycheck.

While it's important to care about your work, you shouldn't put it above all else. Doing so can increase stress in the workplace, disrupt work-life balance and affect team morale. Think twice before sending emails to your team members at 2 a.m. or filling their calendar with meetings. Treat your staff members with respect and trust, show empathy and focus on creating a culture of open communication.

As a leader, it's important to trust your decisions and do what's best for your team. At the same time, you must be willing to accept your weaknesses and learn from your mistakes. Keep an open mind and be receptive to what others are saying. Sometimes, an outside perspective can get you out of your comfort zone, provide direction and improve decision making.