4 Signs Your Company is Experiencing Leadership Loss and What to do About It
Leadership loss is deeper than turnover.
Turnover is the surface-level, tangible, easy-to-see example of leadership loss. It’s what we usually look to to gauge company health. But just like a doctor, there are signs of ill health that are invisible to the eye. There are signs of ill health that are predictors of worsened conditions. In companies, there are signs that, when missed or willfully ignored, ultimately lead to turnover.
My original, rough notes on the concept of leadership loss - Jan 27, 2025
The leadership loss I am talking about results from the leadership environment bottlenecks I recently wrote about. Leadership environment bottlenecks constrain cultures and spaces that squeeze potential, just as it sounds, into a bottle’s neck.
They don’t get the best out of those in the workplace because there’s no space. There is no room. The air gets sucked out by the handful that are anointed as “the leadership” of the organization, disregarding all of the leadership that is happening at every single level. (Could you imagine if, when we talked about “the leadership” of the organization, we weren’t talking about the C-suite but actually talking about actions, behaviors, and commitment of anyone who chooses to lead from where they are on the org. chart?)
The Hidden Signs of Leadership Loss
Here are the more prominent symptoms of leadership loss
Quiet quitting – throwing your proverbial hands up in the air quietly. Doing enough, but not a bit more. Feeling so defeated that you know that there is not much else you can do to have a fair chance of getting ahead. So you do enough to get by. You refocus energy towards efforts that matter – your family, your health, your passions – and work just becomes what it is. Work. You do it well but don’t do it at your best because the leadership environment bottleneck doesn’t recognize your best.
Burnout – 44% of people feel burned out at work. I will bet that that percentage climbs sharply when thinking about how many of us have been burned out at some point in our careers. I’m not sure when we got to the point of looking at burnout as just a typical and accepted part of our modern working life. That should not be. Don’t you think?
Reduced productivity – If there is a leadership environment bottleneck, then the experience of those in that tight pipeline is riddled with precious cognitive focus directed at trying to figure it all out rather than the work at hand. Energy is finite. Cognitive resources are finite. This is not to say that those experiencing a bottleneck are less productive as a deficit towards them. It is to say that companies are not getting the full potential of productive contribution from them because it is being used up trying to navigate.
Employee turnover (obvi) - especially at the middle and early upper management levels. When good people leave, I’m willing to bet it is because they hit a bottleneck in some way. They know their efforts are not worth giving in those environments. They’re smart, capable, and aware – all qualities that companies would cherish in their midst and qualities that cue these leaders to go elsewhere.
Why This Happens: The Leadership Bottleneck Problem
The real challenge of leadership loss harkens back to what I began with. It is hard to see.
There are deeper, early-detection symptoms that are hard to pick up on. Unless you have a solidly embedded culture of learning at an organization and distributed and inclusive leadership practices, you’re likely woefully unaware of the shadow signs of loss.
People will show up to work and do good enough without you having an idea of what great would look like. They will be going through the motions rather than pouring their best in.
Your most talented may be shifting and conforming – and contorting –to show up in ways that shed their authentic genius to align with constrained expectations for success.
Folks will be going home completely drained, living for the weekend and battling the Sunday Scaries, returning to the office on Mondays with an energy cup that a weekend, or even a vacation, could not refill because
One, this is no way to be in life in general. Nothing works my nerves more than people who are talented, committed, and operating with high integrity, having their meteoric potential flattened by limiting workplaces. I’ve witnessed it too many times over in the past couple of decades, working with leaders across levels and industries.
But second, this is no way to operate a business. At least, not one that you’re hoping for deepest impact or biggest profit, if that’s what you’re aiming for.
It’s costly.
The Cost of Leadership Loss
Let’s put some numbers to this and see just how costly leadership loss can be.
Imagine you have Krista, a highly talented manager making $100,000 annually. She’s dedicated, ambitious, and eager to take on more responsibility. Over the years, she proves herself and sets her sights on a promotion to director.
But instead of a clear path, Krista faces a leadership bottleneck. She spends a significant portion of her time navigating political hurdles, tiptoeing around unchecked power dynamics, and adjusting aspects of herself—whether it’s her communication style, appearance, or approach to leadership—to align with unwritten expectations. This adaptation isn’t just emotional labor; it’s a drain on her productivity. Let’s estimate that 15% of her efforts are redirected toward simply navigating these challenges, meaning the company is effectively losing $15,000 worth of her potential contributions each year.
Now, let’s say Krista successfully breaks through and earns a promotion to director, with a 20% salary increase, bringing her to $120,000. But instead of relief, the pressure intensifies. As one of the few—perhaps the first woman, the first woman of color, the first mother, or another underrepresented identity—at this level, she now faces even greater scrutiny, bias, and lack of support. The bottleneck tightens. She now spends an additional 5% of her time managing these dynamics rather than focusing on strategic impact. That’s another $6,000 worth of productivity lost annually.
So now, while the company is paying Krista $120,000 for her leadership and expertise, $21,000 of that investment is effectively wasted—not due to her ability, but because the work environment makes it harder for her to focus on doing the job she was promoted to do.
Eventually, Krista reaches a breaking point. She sees the writing on the wall and decides to leave.
Now, the company isn’t just losing an experienced leader—it’s absorbing the cost of turnover: recruiting, hiring, onboarding, lost institutional knowledge, and decreased team morale. Depending on industry estimates, replacing a senior-level employee like Krista can cost anywhere from 50% to 200% of her salary—meaning her departure alone could cost the company anywhere from $60,000 to $240,000.
And this is just one leader. Multiply this across an organization, and the financial impact of leadership loss—driven by a constrained, subtly exclusionary leadership environment—becomes staggering.
While the numbers here are arbitrary, the point is not. It does not make financial sense to have a bottlenecked environment.
The Solution: Develop a Company Theory of Leadership
So what is the solution? Well, as with much of my work focusing on establishing effective leadership practices, it’s complex. There is no quick fix, but the deep work required can be broken down into developing and acting upon a Company Theory of Leadership.
Similar to a Theory of Change (sometimes called a Logic Model), companies need to establish, incorporate, and act upon their unique Theory of Leadership.
“If I were to ask you what your theory of leadership as a company is, would you know how to answer it? ”
If you do have an answer, is it a statement of good-sounding words that echo your mission or vision? Or is it something that is living, breathing, understood, and felt by all contributors in your organization?
The reason why so many organizations don’t catch the signs of leadership loss until the very visible signs of employee turnover is that they’re not even aware of the leadership they are looking for (and definitely not aware of what is being overlooked). Leadership culture is often explicitly undefined– left to the implicitly developed definitions of what behaviors and qualities are promoted and what is not, along with what behaviors and qualities are tolerated as long as other valued definitions of leadership exist.
How does your company define leadership? What is the proof? How is it enacted? How is it jeopardized?
Essentially, you have to deeply understand the workplace leadership system that has been created and test to see if that system is actually allowing you to capture all of the leadership potential among your people, or if it's creating a bottleneck dynamic where only a few eek through.
If your organization is experiencing leadership loss, the real question is: What kind of leadership system have you created, and is it actually working?
Too often, leadership culture is left undefined—shaped by implicit norms rather than intentional design. A Company Theory of Leadership serves as a structured framework to define, cultivate, and sustain leadership at every level. Similar to a Theory of Change, this model clarifies how leadership is developed, what factors shape it, and whether the environment supports or constrains it.
Here are just a few initial questions to ask as you evaluate and reshape your leadership system to prevent leadership loss:
1. Inputs: What Resources and Structures Shape Leadership?
What assumptions about leadership are baked into our hiring, promotion, and performance evaluation processes?
Who has access to leadership development opportunities, and who is unintentionally excluded?
How do our company values show up in decision-making, leadership behaviors, and recognition systems?
Are we investing in leadership development for all employees, or only those already in senior roles?
What systems are in place to actively identify and address leadership bottlenecks before they result in turnover?
2. Activities: What Leadership Practices Are Being Modeled?
Who gets mentored, sponsored, or fast-tracked for promotion, and why?
Are our leadership development programs designed to recognize and develop diverse leadership styles?
How do we support employees in navigating bias, power dynamics, and unwritten rules?
Do we encourage leadership at all levels, or is it concentrated at the top?
How often do employees feel psychologically safe to challenge the status quo or voice concerns?
3. Outputs: What Are the Immediate Signs of Leadership Health or Loss?
What do our promotion and retention rates reveal about who succeeds in leadership here?
Are there patterns in who is leaving and why—particularly among middle and early upper management?
How many employees report burnout, disengagement, or "quiet quitting"?
Do our employees feel they can bring their authentic leadership styles to work, or do they feel pressure to conform?
How frequently do employees see leaders that reflect their identities and leadership values?
4. Outcomes: What Are the Longer-Term Effects on the Organization?
Does our leadership pipeline consistently produce strong, diverse, and engaged leaders?
Are employees energized, motivated, and committed to growing within the company, or do they seek opportunities elsewhere?
Do teams feel empowered to innovate and lead from where they are, or is decision-making centralized at the top?
How well do employees understand what leadership looks like in our organization, and do they believe they have a fair shot at it?
What are the financial and cultural costs of leadership loss, and do we track them?
5. Impact: Are We Achieving the Leadership Culture We Want?
Have we created a workplace where leadership is distributed and inclusive, rather than hierarchical and exclusionary?
Are we seeing strong leadership engagement, retention, and succession planning?
Have we eliminated leadership bottlenecks, or do they still persist at key levels?
What does our leadership culture say about who thrives in our organization—and is that aligned with our mission?
Would employees at every level describe leadership here in the same way?
If you can't clearly articulate your Company Theory of Leadership, you are likely operating on implicit leadership norms—and those norms may be creating bottlenecks, disengagement, and turnover.
Let’s use a hypothetical company, ApexCorp, to illustrate an example.
ApexCorp, a mid-sized but growing company in the professional services sector, has built its reputation on expertise and strong client relationships. Over the past decade, it has expanded rapidly, yet internally, its leadership structure has remained largely unchanged—hierarchical, centralized, and reliant on long-tenured executives making the key decisions.
While the company prides itself on having a "promote from within" culture, promotions tend to be based on tenure and familiarity rather than demonstrated leadership potential. Leaders at the top have similar backgrounds, perspectives, and working styles, reinforcing an unwritten standard for leadership that many employees find difficult—if not impossible—to navigate.
At first glance, ApexCorp seems stable. Turnover is moderate, business is steady, and employee surveys don’t indicate an outright crisis. But beneath the surface, the company is experiencing leadership loss—a slow but significant drain on its future potential.
The Symptoms of Leadership Loss at ApexCorp
1. Quiet Disengagement
Mid-level managers like Monica, a high-performing team leader, are mentally checking out. Jordan used to be an engaged, go-getter employee who contributed innovative ideas in leadership meetings. But after years of seeing less-qualified peers promoted—often because they fit the “leadership mold” better—Monica has stopped raising ideas. Instead, they do the work, hit their KPIs, and go home.
The Lesson? Leadership loss isn’t always loud. Sometimes, your best people are showing up—but they’ve stopped giving their best because they don’t see a path forward.
2. The Energy Drain & Burnout Spiral
Jeff, a senior manager, works twice as hard as some of his peers to prove he’s ready for an executive role. But he spends just as much energy managing office politics, code-switching, and adjusting his leadership style to fit the unspoken expectations of the leadership team. Despite being one of the highest-rated performers, he’s constantly overlooked for promotions.
After years of being told he’s “not quite ready,” Jeff burns out and decides to leave the company altogether. ApexCorp now loses a proven leader, and the cost of recruiting and training someone new will likely exceed six figures.
The Lesson? When the unwritten rules of leadership require employees to expend energy just to be seen, organizations waste potential and risk losing top talent.
3. Innovation Stagnation
ApexCorp’s leadership team often says they value innovation, but in reality, new ideas rarely make it to implementation. Teams spend more time trying to get leadership buy-in than actually developing solutions. Because decision-making is concentrated at the top, fresh thinking is filtered through the same group of executives who tend to default to "tried-and-true" strategies.
Younger employees and emerging leaders quickly recognize the pattern—if you challenge the status quo too much, your ideas won’t go anywhere. Over time, fewer people bother to contribute bold ideas. ApexCorp, once an industry leader, starts falling behind competitors who empower leadership at all levels.
The Lesson? When leadership is too centralized and risk-averse, employees stop offering new ideas, and the company loses its innovative edge.
4. The Hidden Cost of Turnover
Turnover at ApexCorp isn't catastrophic, but there's a clear pattern—the most capable mid-level managers leave within 3-5 years. HR notices it’s taking longer to fill leadership roles, and recruiting costs are steadily increasing. Meanwhile, the executives assume these departures are about compensation or individual career choices and not leadership culture.
The Lesson? Leadership loss isn’t just about turnover. It’s about the knowledge, creativity, and leadership pipeline that leaves with departing employees.
The Root Problem: ApexCorp Lacks a Clear Theory of Leadership
ApexCorp’s challenges aren’t unique. Many organizations suffer from implicit leadership cultures that reward conformity, unintentionally exclude emerging leaders, and concentrate leadership in a select few.
The fundamental question ApexCorp never asked itself was:
What is our Theory of Leadership?
Do we explicitly define what leadership looks like at every level?
Are we measuring leadership potential beyond traditional norms?
Do we create pathways for diverse leaders to thrive, or do we expect them to conform?
How do we capture the leadership potential that already exists in our workforce?
ApexCorp's leadership bottleneck directly results from the failure to design an intentional leadership model. If they had defined and acted upon a Company Theory of Leadership, they could have:
Created leadership pathways that valued diverse contributions.
Established clearer, more equitable criteria for promotion.
Fostered an environment where employees could lead from where they are.
Prevented the hidden but costly loss of talent, engagement, and innovation.
Don't Wait Until Leadership Loss Becomes a Crisis
Without a clear, inclusive, distributed leadership system, companies risk losing their most promising leaders, innovative thinkers, long-term sustainability, and competitive edge.
Build a Company Theory of Leadership—deliberately, not by default.
Here’s my call to action for companies:
Don’t wait for the stakes to be high when you’re dealing with a turnover crisis or a broadly disengaged workforce. Spend time and effort looking for the signs of leadership loss early. Many of those early signs are ripe for “sweeping under the rug” as we tend to do in professional systems, but I’m telling you, lifting that rug and looking at the mess straight on is the only way you can clean it.
It’s worth it, and your efforts will be thanked by a retained, engaged, and diverse workforce who you can trust is giving their best to your vision and who trust you in giving them your best in a working environment.
An Invitation to Tackle Leadership Loss
If this article resonated with you, you’re not alone. Leadership loss is happening every day, but it doesn’t have to be inevitable.
Get in touch if you’re looking for strategic solutions to retain your top talent.
