When Leaders Get It Wrong: The Real Cost of Culture Nobody's Measuring
Every association I work with has a version of the same story. A manager or executive steps into a leadership role, sometimes a new or current CEO taking over an organisation for the first time, because they were technically excellent, not because anyone assessed whether they had the capability to lead people. A year or two later, the symptoms show up: high turnover in one team but not others, an engagement survey nobody wants to talk about, exit interviews that all say some version of the same thing without ever naming it directly.
I was reminded of the flip side of this recently at a reunion for Swisse Wellness, where I worked before the business was acquired. What struck me wasn’t nostalgia. It was how unanimous the room was about the culture there, a particular way of communicating, working and leading that the CEO at the time modelled every day, built around a clear sense of purpose. Years later, people were still talking about it. That culture wasn’t incidental to how the business grew. It was part of how it grew.
Most organisations treat these as two unrelated stories: good culture is a nice-to-have, and leadership failure is a personnel issue to be managed quietly. In practice, they’re the same story told two ways, and the difference between them is capability, not personality.
Poor leadership has a recognisable shape. It looks like a manager who avoids the hard conversation until it becomes a crisis, then handles it badly because they’ve had no practice. It looks like credit flowing upward and blame flowing downward. It looks like someone who manages by mood, so the team spends half their energy reading the room instead of doing the work. Feedback gets punished or quietly ignored, so people stop offering it. Favouritism replaces fairness. Organisational values sit on a page somewhere, disconnected from how people are actually treated day to day. None of this is a fixed personality trait. It’s an absence of specific, learnable capability: reading a room, handling conflict without shutting people down, understanding your own impact on others.
The cost of getting this wrong is measurable, and the Australian data backs it up. A 2023 PwC report commissioned by Beyond Blue found poor leadership to be a significant driver of stress-related absenteeism, costing the Australian economy $10 billion a year. Gallagher’s 2025 Workforce Wellbeing Index puts burnout among Australian employees at 26%, with poor leadership cited as a major contributor. McKinsey research shows disengaged teams, often a direct result of poor leadership, are 37% less productive and 49% more likely to quit.
Boards will fund a customer experience initiative without hesitation. Few will ask whether a specific leader, new or long-standing, is the actual source of a declining engagement score two years running.
Leaders carry real responsibility to do right by their people, and most of the time the gap isn’t will, it’s capability. That’s where PACS comes in: a structured way to see exactly where a leader’s capability sits across the domains that actually drive culture, and where the gaps are that a workshop or a generic leadership course won’t touch. For a new CEO especially, this is often the fastest way to build genuine confidence, both their own and the Board’s, rather than guessing at what needs shoring up. Paired with an Organisational Effectiveness Diagnostic, it also tells a Board whether the structure around that leader is catching problems early or letting them run.
Culture isn’t the soft part of the business. It’s measurable, it’s buildable, and it starts with being honest about the capability gap in the room.