Let’s start with the short answer for the impatient: Yes, and rather significantly. We learnt this when conducting a study into how leadership behavior and turnover correlated.

The study setting was intriguing. We managed to get a long-term customer with several years of follow-up studies behind it to participate in the study. The sample size was easily large enough to ensure that all the results were statistically very significant.

And yet, the aim of the study was very simple: to combine the 360 measurement conducted among supervisors with rolling development of turnover. In other words, we wanted to study whether a traditional HR indicator can measure hard turnover figures.

Not the most original idea in the world, I admit. But still, despite its importance, an issue that has been studied embarrassingly little. We already talked about the initial results in early spring.

Measuring money and behavior

Leadership behavior was measured with a 360 evaluation, where supervisors evaluated received feedback from their colleagues and subordinates. The 360 indicator used is a result of Psycon's own product development and it relies on a psychologically strong and empirically validated leadership model.

The customer had also performed for a long time reasonably detailed performance analyses on the supervisors studied. When this information was combined with 360 evaluation, the study design became exceptionally interesting.

Each supervisor works in an independent entrepreneur-like role. Moreover, each supervisor has several subordinates and extensive financial responsibility for their actions. In other words, the sample was ideal for this kind of study.

Dramatic results

The first results showed that the predictive power of the 360 measurement with regard to turnover was very good, in some cases even astoundingly so.

Or what would you say, if I told you that we discovered several correlations exceeding 0.40 between these two very different indicators?

At its best, the correlation between leadership behavior and development of turnover was close to 0.50, which genuinely high in human sciences – no corrective coefficients or similar statistical tricks were used.

Moreover, the highest correlation was found in the leadership areas, where the theory expected them to be found. This is heuristically extremely interesting.

The following areas of leadership had the greatest correlation to the turnover results achieved:

  • Prompt and smooth organization of daily activities
  • Actions consolidating mutual trust
  • The ability to achieve the goals set to your own unit
  • The ability to perceive the overall best interests of the organization
  • The ability to meet the expectations of the subordinates as a supervisor
  • Ample interaction with the subordinates

Also reverse correlations were found. For example, not intervening with negligenceinability to set clear goals, and not listening enough to deviating opinions, predicted negative development of the turnover. In other words, it was worthwhile measuring also the dark side of behavior.

This was especially interesting since 360 measurement seldom approaches leadership from the negative perspective. Often, we do not want to ask about unpleasant things, since this may cause awkward situations to all parties at the feedback stage.

However, it has long been known that personality traits have their dark and light sides, why should they not be present in leadership behavior as well.  And if they even seem to directly correlate with a weaker turnover, it would be stupid not studying them separately.

Later on, looking at the results, it is easy to say “that was exactly the way it should have gone”. However, everyone who has ever combined indicators of human sciences with hard business figures, has been disappointed by the weak predictive ability of the indicators many times over.

This did not happen on this occasion. I must admit that I checked the data rows many times, since the end result was so strong. The result held. 

You just had to believe it: leadership behavior has a direct, logical and surprisingly extensive link to money.

What about personality?

At the same time, we also experimented with trying to predict turnover and 360 evaluations on the basis of personality. This is because the majority of the supervisors had at one time visited Psycon for personal assessment.

We got results also here. With regard to personality, anti-social and narcissistic personality traits were poison in 360 evaluations.  When these traits prevail, the following areas of leadership suffer the most:

  • Ability to change your actions based on feedback
  • The ability to set clear goals for the activities
  • The ability to reward success
  • The ability to give feedback on a personal level
  • The ability to organize daily activities smoothly

These two personality traits were clearly evident in negative terms in almost all leadership areas. But they are particularly harmful in managing people and operations.

In addition to leadership style, personality also predicted the development of turnover. But this story is getting so long and meandering that it is better to continue it in the next blog entry!