Technical Excellence Doesn't Equal Leadership: What It's Really Costing Your Business

There's a promotion pattern that plays out in organisations across every industry, every week. Someone is exceptional at their job, technically brilliant, commercially sharp, highly productive. So the business rewards them the only way it knows how: it makes them a manager.

And that's where things get complicated.

Because being great at the work and being great at leading people who do the work are two entirely different skill sets. One is built over years of deliberate practice in a technical domain. The other requires self-awareness, communication, accountability, coaching, and the ability to build trust, capabilities that don't develop automatically, and don't come included in the promotion package.

The assumption that they should is costing businesses more than most leaders realise.

The sink-or-swim promotion

In my work with leaders and their teams, I see this pattern constantly. Leaders are promoted based on technical capability and left to figure out the people side on their own. They observe what others have done, try to emulate it, and hope for the best.

The research paints a sobering picture. According to Gallup's 2025 State of the Global Workplace, less than half of the world's managers, just 44%, say they have received any management training. A separate body of research found that almost 60% of first-time managers say they received no training at all when they transitioned into leadership roles. That's the majority of new managers left to lead people entirely on their own instinct. And for those who do eventually receive development, it often arrives years into the role, long after the habits, confidence gaps, and team dynamics have already formed.

What it's costing Australian businesses

Gallup's State of the Global Workplace 2025 report, released in April 2025, found that global employee engagement fell to 21%, the sharpest decline since the COVID-19 lockdowns, at a cost of US$438 billion in lost productivity in 2024 alone. The primary driver? A significant drop in manager engagement, which fell from 30% to 27% in a single year. Closer to home, disengagement is costing the Australian economy AU$211 billion per year, according to the Australian Human Resources Institute (2024). In Australia and New Zealand, engagement sits at just 20%, and while this region shows strong economic growth, the emotional experience of workers tells a different story.

And then there's the DDI Global Leadership Forecast 2025, the largest and longest-running leadership study in the world, which found that trust in immediate managers has plummeted to just 29%, a 37% decline since 2022. Perhaps most confronting for any organisation focused on retaining its best people: among high-potential individual contributors, intention to depart has risen sharply, from 13% in 2020 to 21% in 2024, and these employees were nearly four times more likely to leave if their manager didn't provide regular growth opportunities.

There's the turnover figure, too, that tends to stop executives in their tracks. A study by DDI found that 57% of people have quit roles because of a negative relationship with management. With the cost to recruit in Australia sitting at $23,860 per employee (AHRI), and the true cost of replacing an employee widely estimated at closer to 1.5 times their annual salary once lost productivity and onboarding are factored in, every leader who drives someone out the door is not just a culture problem. It's a balance sheet problem.

The confidence gap no one talks about

Beyond the financial metrics, there's a human cost that's harder to quantify but no less real.

Leaders promoted without proper development frequently experience a quiet erosion of confidence. They were exceptional in their previous role, and now they feel like they're performing leadership rather than actually leading. They're making it up as they go, relying on instinct in conversations that demand skill, and absorbing the stress of a job they were never properly trained to do.

This confidence gap has consequences. Leaders who aren't sure of themselves become hesitant to have difficult conversations, avoid addressing underperformance, or over-correct into micromanagement, creating a ripple of dysfunction through their teams.

Which brings me to the ripple itself.

How the ripple spreads

In my work on accountability, I talk about what I call the Ripple of Accountability, the idea that accountability starts with the individual and moves outward through shared accountability (within teams) and collective accountability (across teams, cross-functionally). But leadership behaviour ripples in the same way.

When a leader micromanages because they lack confidence in delegation, the team becomes disempowered. When they avoid accountability conversations because they're uncomfortable, underperformance becomes normalised. When they don't set clear expectations, their teams operate in ambiguity and guesswork becomes the norm.

I once worked with a senior leader whose approach to difficult situations was to dive into the details and take over. The fear that permeated the leadership team filtered down through every layer of the organisation. When that leader eventually moved on, the leadership team had to essentially relearn how to make decisions for themselves. The micromanagement had become the culture.

The impact of one underdeveloped leader doesn't stay contained to that leader's direct team. It spreads.

What technically excellent leaders actually need

The good news is that leadership skills are learnable. It's about capability, and capability can be built.

In my work with leaders, the biggest shifts comes when leaders develop competency in a handful of core areas: self-awareness, adaptive communication, feedback, coaching, accountability, and the ability to build psychological safety within their teams.

These are not soft skills. They are the skills that determine whether a technically excellent person becomes a genuinely effective leader, or a well-intentioned one who quietly chips away at their team's performance and confidence.

The businesses that invest in this development early, before the promotion or immediately after, see measurably different outcomes. Engaged teams. Stronger retention. Better performance. A culture where accountability is understood as a privilege, not a punishment.

The businesses that don't? They pay for it. Repeatedly. In turnover costs, in lost productivity, in disengaged teams, and eventually in the departure of the very people they were trying to reward.

For the leaders making these decisions

If you're responsible for how your organisation promotes and develops people, it's worth asking some direct questions.

When you promote a high performer into a leadership role, what happens next? Do they receive the development they need to lead people effectively, or are they expected to figure it out? Do they have access to coaching, frameworks, and practical tools, or just a new job title and a bigger workload?

Technical excellence earned someone that promotion. But leadership excellence is what will make it sustainable, for them, for their team, and for the business.

That is exactly why I created the Thriving Leaders Program. It is designed to help leaders build the confidence, communication skills, accountability, and practical tools they need to lead others effectively, so they are not left to figure it out on their own.

That’s an investment worth making before the costs of not making it become impossible to ignore.

Claire Gray is a leadership facilitator, coach, and author of Thriving Leaders: Learn the Skills to Lead Confidently and Thriving Teams: When Teams Unite, Align and Achieve. She works with leaders and organisations across Australia to build cultures where people and performance thrive.