The SMB Leadership & Workforce Gap
SMBs are navigating sustained low engagement, elevated burnout, and high intent-to-leave. The snapshot below distills the trendlines and a practical path that develops managers and emerging leaders together.
~70% influence
Managers account for about 70% of the variance in employee engagement, a key driver of turnover risk.
Source: Gallup, State of the American Manager (2015)
~21% engaged
Global employee engagement; manager engagement trending down.
Source: Gallup, State of the Global Workplace 2025
~50% job-seeking
U.S./Canada workers watching for or actively seeking new roles.
Source: Gallup, 2025
$225.8B / yr
Estimated annual absenteeism cost to U.S. employers (~$1,685 per employee).
Source: CDC Foundation
0.5–2× salary
Typical range to replace an employee, varying by role and seniority.
Source: HR / labor economics syntheses
Why this matters
With lean teams and broad spans of control, SMBs feel these pressures faster. Manager disengagement cascades into team disengagement, attrition, absence, and rework. Small improvements in clarity, coaching, capacity, and recognition compound into stability.
Lower first-year attrition
Reduced avoidable absence
Faster time-to-productivity
More predictable operations
1
Diagnose lightly.
Short pulse on engagement, intent-to-stay, absence/turnover; quick interviews to surface friction.
2
Enable in the flow of work.
Clarity, coaching, capacity, and recognition—practiced weekly by managers and emerging leaders together.
3
Embed & measure.
Light weekly rhythm; a few lead/lag indicators tied to business outcomes.
What ROI to expect
Average 7:1 ROI from coaching
Independent analysis of company programs shows an average return of seven dollars for every dollar invested in leadership coaching.
Source: HR Dive summary of BetterManager & The Fossicker Group report (2023).
~415% annualized ROI for first‑time manager training
Case studies show ~29% ROI in the first three months and ~4.15:1 annualized returns when first‑time managers complete a focused leadership program.
Source: Training Industry Magazine (July/Aug 2019), “Was It Worth It? Measuring the Impact and ROI of Leadership Training”; Brandon Hall/Verizon case coverage.
+21–23% profitability with higher engagement
Business units in the top quartile of engagement deliver meaningfully higher profitability; manager capability is the primary lever of engagement.
Source: Gallup Q12 meta‑analyses and Business Journal summaries.
Up to 452% measured ROI when manager support is strong
Enterprise leadership programs that pair training with on‑the‑job manager support have demonstrated >4x returns.
Source: Ken Blanchard Companies / Nissan ROI case (2019).
Illustrative business sizing (100-person SMB, avg. salary $60k)
Avoided turnover: $90k–$600k/yr
Retain just 3–5 additional employees using a 0.5–2× salary replacement range.
Absence savings: ≈ $84,250/yr
Cut 0.5 day/FTE at ~$1,685 per employee (CDC Foundation benchmark).
Why managers matter
21% engaged
Global engagement (2024), down from 23%.
Source: Gallup 202527% managers engaged
Manager engagement fell from 30% → 27%.
Source: Gallup 2025≥70% influence
Managers explain ≥70% of variance in team engagement.
Source: Gallup 2015$438B impact
Global cost of the 2‑point engagement drop in 2024.
Source: Gallup 2025First‑year turnover = hidden P&L leak
~35% first‑year quits
U.S. national average for first‑year turnover.
Source: PwC Saratoga~20% → 0.5–2×
Typical replacement cost range (role/seniority dependent).
Sources: CAP review; Gallup$150k–$600k saved
Keep 5 people @ $60k salary in a 100‑person firm (range uses 0.5–2× salary).
Illustrative sizing; see References for cost rangesBurnout hurts health & output
ICD‑11
Burnout recognized as an occupational phenomenon.
Source: WHOHealth risks
Linked with higher cardiovascular risk and sleep problems.
See References (systematic reviews)$225.8B / yr
U.S. absenteeism cost (~$1,685 per employee).
Source: CDC FoundationROI snapshot: leadership as a profit center
~7:1 ROI
Average return on leadership coaching.
Sources: ICF/PwC; HR Dive (2023)~29% / 3 mo
First‑time manager training (~415% annualized).
Source: Training Industry (2019)~452% ROI
With strong manager support (Nissan case).
Source: Ken Blanchard Cos.+21–23% profit
Top‑quartile engagement vs. bottom quartile.
Source: Gallup Q12 meta‑analysesSMB reality check
~59M people
Work in small businesses (≈46% of U.S. private workforce).
Source: U.S. SBA Office of AdvocacyReferences (selected external)
- Gallup (2025). State of the Global Workplace 2025 — engagement levels, manager trends, and intent-to-leave.
- World Health Organization (ICD-11). Burn-out as an occupational phenomenon.
- CDC Foundation. Worker Illness and Injury Costs U.S. Employers $225.8 Billion Annually.
- Chartered Management Institute (CMI). SME productivity gap and management practice.
- Work Institute. Retention Report — development as a primary quit driver.
Ready to reduce churn and ramp faster?
Develop managers and emerging leaders together with a source‑anchored, in‑the‑flow approach.
Manager impact ≥70%
+21–23% profitability (high engagement)
Coaching ROI ~7:1
No long deck. We’ll discuss your goals, baselines, and the simplest pilot to prove impact.