HR & Senior Management: The Business Case for Soft Skills Development

This post is for everyone who relies on people to drive business results. This is the business case for investing in soft skills development. It’s an extension of The Ultimate Guide to Soft Skills for Managers.

Consider these alarming statistics that spotlight the need for soft skills development in the workplace:

1. 50% of US adults have left their job to get away from their manager (Gallup).

2. Only 21% of employees strongly agree that their performance is managed in a way that motivates them to do outstanding work (Gallup). 

3. 70% of employees say that motivation and morale would improve “massively” with managers simply saying “thank you” more often (Reward Gateway).

4. 93% of employees said trust in their direct manager is important to remain satisfied at work (Ultimate Software).

5. 37% of employees say “working with a great team” is their primary reason for staying (Gusto).

6. 44% say their relationship with their employer positively (or negatively) impacts stress levels (Virgin Pulse).

7. 32% of a worker’s loyalty is the result of feeling trust towards their boss (Mark Murphy, How to Build Trust in the Workplace).

8. 42% of employees feel that executive leadership does not contribute to a positive company culture (Execu-Search).

9. 65% of employees who report having had a meaningful discussion with their manager about their strengths describe themselves as flourishing at work (The VIA Institute on Character).

10. 68% of employees say their managers aren't actively engaged in their career development (Right Management)

In other words, there is cause for concern when it comes to retention, motivation, morale, job satisfaction, trust, stress levels, employee loyalty, company culture, maximizing potential, and career development. The perception, among employees, is that there are gaps in manager effectiveness. And those gaps compromise their commitment and contribution.

It’s worth noting that these ten issues are all directly linked to soft skills. To resolve any of these issues, a manager needs strong soft skills (not hard skills!) to address the root of the problem.

This post is loaded up with data from various studies to back up the need for soft skills development. To get even more data, research, and analysis about the importance of soft skills, download this treasure trove of information. It also includes links to learn more about the factoids found throughout this post.  

Why Soft Skills Development Matters So Much 

Soft skills are “the personal attributes that enable someone to interact effectively and harmoniously with other people.” These attributes include a broad and combined range of people skills, communication skills, personality traits, habits, attitudes, social intelligence, emotional intelligence, team orientation, cognitive processing of information, and ability/willingness to tolerate ambiguity and rapid change.

The primary reason your organization needs managers with strong soft skills is that soft skills unleash employee engagement.  There are significant, proven, powerful benefits when your employees are more engaged.

Employee engagement is the emotional connection people feel towards their organization that causes them to apply additional discretionary effort.

When you have emotionally connected people, they stick around longer. The attrition rate of disengaged employees is 12x higher than highly engaged employees over the period of a year (Glint). Your succession management and talent development strategies should be directly linked to engaging employees and retaining the ones with high potential. That requires attention to employee engagement.

What’s more, when engaged employees apply additional discretionary effort, you’ll see a cascade of compelling business benefits including:

• Highly engaged business units realize a 41% reduction in absenteeism and a 17% increase in productivity (Gallup)

• Highly engaged business units achieve a 10% increase in customer ratings and 20% increase in sales (Gallup)

• Organizations that have over 50% employee engagement retain over 80% of their customers (DemandMetric)

• Companies with engaged employees see 233% greater customer loyalty and a 26% greater annual increase in revenue (Aberdeen)

• Companies that double the rate of engaged employees achieve, on average, 147% higher earnings per share than their competition (Gallup)

• Highly engaged business units result in 21% greater profitability (Gallup)
  
  

That cascade of benefits is not isolated to select results in certain types of organizations. These cause-and-effect outcomes are universally applicable. In fact, “engagement is the primary enabler of successful execution of any business strategy” (DDI Report - Employee Engagement: The Key to Realizing Competitive Advantage).

Sadly, 51% of the U.S. workforce is not engaged in their work (Gallup). Only 16% are “fully engaged (Modern Survey). Disengaged employees cost organizations between $450-$550 billion annually (The Engagement Institute).

Employee engagement is directly linked to the effectiveness of the manager. “The manager has tremendous impact on employees’ levels of commitment to the team, organization and job” (The Corporate Leadership Council). The more effective the manager, the higher the level of employee engagement.

What does “manager effectiveness” entail? For the purposes of engagement, as per the definition of employee engagement, effective managers facilitate the formation of emotional connections.

Yes, emotional. “Emotional commitment drives effort. Emotional commitment is four times as valuable as rational commitment in producing discretionary effort. Indeed, the search for a high-performing workforce is synonymous with the search for emotional commitment” (Corporate Executive Board).

Emotional connections aren’t formed by using superior technical abilities or by demonstrating functional knowledge. Hard skills are essential for managing work. But managers must also lead people, and that requires soft skills. 

That’s where soft skills development comes in. These skills don’t come easily and automatically. Just like functional, technical, hard skills, developing soft skills requires training, learning, practice, mastery and ongoing application.

Soft skills development precedes the soft skills demonstration that makes managers more effective and leads to employee engagement. You can’t leapfrog or shortcut this one.      

How Can You Tell If Soft Skills Development Is an Issue in Your Organization? 

If there are gaps in soft skills, the indicators are plentiful and plain. You just have to be willing to see them and admit that there’s a problem.

Symptoms of soft skills gaps include:

• High rates of turnover. The average turnover rate, at a time when there are more jobs than there are employees to fill them, is currently 11% annual turnover. That includes voluntary and involuntary terminations. If you see a higher rate of turnover on a team (or across the organization), you should look closer at managerial effectiveness in displaying soft skills that facilitate the formation of emotional connections to the organization.

• Low levels of morale. When the work is unfulfilling, taxing, unproductive, or uninspiring, morale suffers. But it has nothing at all to do with the actual work. Two teams can do the same work but might view it differently. The difference is in how the manager (using soft skills!) positions the work and encourages people to view it and do it. The same is true during times of change. How the manager responds influences how others will respond. 

• Low productivity. If you’re seeing low output, more overtime, absenteeism, rework due to errors, or quality issues, don’t leap to the conclusion that employees are at fault. These are indications that employee engagement is low, and people are not applying additional discretionary effort. They’re doing the bare minimum to get by. You can only command and control people to a certain point (bare minimum). Beyond that, it’s a choice. People choose to do more work when they are emotionally connected to the organization. 

• Communications breakdowns. When expectations are unclear, desired outcomes are ambiguous, or priorities are ever-shifting, breakdowns in communication are inevitable. There will be disappointments, extra work that is unnecessary and misguided, and a general feeling of not being supported. Effective managers set clear expectations that include what to do, how to do it, when to do it, and why it matters. They meet regularly for check-ins with employees. They remove obstacles and provide appropriate resources so the work can get done.   

• Unproductive team conflict. Highly effective teams engage in productive, healthy conflict. Team members trust each other enough to be vulnerable and express their own opinions. They don’t shut down dialogue or dismiss input from others. By contrast, teams engage in unhealthy conflict when team members feel insecure or are unable/unwilling to trust others. They jockey for position, withhold information, operate in cliques, backbite, and fail to collaborate. People managers set the tone and the expectations for how teams operate. 

• Problems don’t get resolved quickly. Endless meetings about the same issues only frustrate people and diminish a manager’s credibility. Expecting people to clean up the same recurring messes over and over again isn’t inspiring and doesn’t demonstrate competence. Effective managers are willing to take decisive action and couple that with a genuine interest in hearing others’ ideas for making things better. Critical thinking skills are honed for information gathering, decision making and problem solving. 

• Lack of growth/development. Organizations stagnate when people are not given ample opportunities to learn and grow. People thrive when they are stretched just a bit beyond their comfort zone and trusted to tackle new challenges. Effective managers regularly delegate, coach, mentor, and create learning opportunities on a regular basis. They don’t wait for formal training programs or job openings. Instead, they work alongside employees every day to find and seize learning opportunities. They do not penalize employees who stretch themselves and make mistakes. Instead, they mine those experiences to capture what can be learned and done differently the next time. They also model an openness to learning and growing themselves.
  
  

Chances are that you know, deep down, if a manager is lacking soft skills. You’ve heard complaints from employees or colleagues. Perhaps you’ve even made excuses for your brilliant technical experts who lack soft skills (“oh, you know, that’s just the way she is…”).

You don’t need to dodge conversations or interventions when soft skills are lacking. These are absolutely imperative, essential, necessary skills for effectively managing people. Your business cannot compete unless you have high levels of engagement. You won’t get high levels of engagement unless you have effective managers who are fully equipped with soft skills. 

Show Me the Money! The ROI on Soft Skills Development

The return on an investment in soft skills development can be demonstrated in a myriad of ways. We’re going to look at just one compelling rationale. You can access more stats and stories about soft skills and why they matter in this YouTube playlist of snack-size videos. To make the case for leadership development, including how to justify the investment, be sure to watch this video with step-by-step instructions on laying this out for the executive team.

The ROI for soft skills development can be proven by looking at retention and engagement.  

• 90% of executives said keeping new hires is an issue in their organizations (Korn Ferry).

• 95% of human resource leaders admit that employee burnout is sabotaging workforce retention (Kronos).

• 87% of human resource leaders say improved retention is a high/critical priority (Kronos).

• $11 billion is lost annually due to employee turnover (Bloomberg BNA).

• Replacing a lost employee costs 150% of that person’s annual salary (Columbia University).

You can run the numbers. How much did you spend to replace employees last year? Factor in all the costs related to recruiting, interviewing, selection, and onboarding. Don’t forget about the “hidden” costs of lost opportunity. In what ways did open jobs suppress output and revenue production? How many employees who didn’t leave also didn’t perform at peak levels due to burnout from covering others’ work while jobs were vacant? As stress levels climbed, what was the impact?

When managers demonstrate solid soft skills, retention rates improve. 92% of employees say that when a manager shows empathy it advances employee retention by causing them to want to stay (Businessolver).

There’s an associated, spin-off benefit, too. Employees who get the opportunity to continually develop are twice as likely to say they will spend their career with the company (Gallup). This includes managers, perhaps one of the most important groups to retain for long-term succession management.

This may be why 49% of HR leaders named retention and leadership development programs as the top priorities among talent management goals (Saba Software). Similar findings reveal that 46% of HR pros say retention is their greatest concern, followed by employee engagement at 36% (SHRM).

It all fits together. These shouldn’t be viewed as separate issues. To improve succession management, you need higher rates of retention. To get higher rates of retention, you need improved levels of employee engagement. The single most important factor in driving employee engagement is leadership development (including managers!). More than any demographic variable about the employee or company, the way the manager behaves and interacts with employees is what determines engagement rates.

Emotional connections come from soft skills. Selecting managers who demonstrate competencies in interpersonal skills is simply smart business. Equipping your emergent talent and managers with soft skills is critical to long-term business success. Providing intervention and coaching to managers who lack soft skills and aren’t effectively building emotional connections is essential.

We can help. Here at People First Productivity Solutions, we build organizational strength by putting PEOPLE First. We consult with HR departments to create the architecture of full-scale leadership development programs. We conduct training and administer 360-degree reviews so leaders can recognize their own strengths and identify what specific actions would make them even more effective.  We offer courses in fundamental supervisory skills and in a variety of soft skills including communication and critical thinking. We also provide 1-to-1 executive coaching to ensure that every manager becomes as effective as possible in engaging employees and contributing to organizational success.