Fear is a tool, and leaders are using it too much

Does your boss scare you? A new report has revealed that a number of leaders use fear as a pillar of their leadership styles, and it’s causing bad business outcomes.

Individuals in the workplace are motivated by a range of emotions, and a key one that is driving corporate managers in today’s workplaces is fear. A global study by senior executive and leadership expert Margot Faraci has revealed that fear is causing a $2.3 billion loss in productivity and performance across Australian organisations.

Faraci’s study revealed that one in three managers in Australia inadvertently leads with fear, resulting in significant company loss across productivity and performance while also creating psychologically unsafe work environments.

It is a common trope that leaders throughout all workplaces often rule with an “iron fist”, with fear being one of their tactical deployments to keep employees in check. Close to 70 per cent of fearful leaders in Australia firmly believe stress can be positively harnessed in workplaces, and a staggering 87 per cent regularly witness declines in team productivity due to toxic leadership.

Fearful leadership is often overlooked in profit and loss (P and L) calculations despite its substantial impact on company performance. It manifests in various forms, such as avoidance, complacency, micromanagement, and reluctance to provide feedback. The psychological and mental health impacts can be extremely damaging to employees.

The impact of fear-driven leadership extends beyond just the mental health of employees. As noted, financial losses begin to mount, which can affect team turnover, sales, productivity, and, once again, overall employee wellbeing.

By integrating fear assessment into the P and L, leaders can identify and address toxic leadership behaviours in real time, fostering psychologically safe work environments and enhancing productivity while also creating a measure of accountability.

“Fearful leadership manifests in subtle yet corrosive ways in our daily interactions. It’s reflected in overly controlling management styles, where leaders micromanage every aspect, stifling creativity and autonomy. It’s evident in a reluctance to communicate transparently, often leading to rumours and misinterpretations,” Faraci commented.

“Fearful leaders might prioritise short-term gains over long-term employee wellbeing, inadvertently fostering a tense and anxious work environment. These actions stem from an unconscious fear of losing control.”

It’s an issue that is easily swept under the rug as it is a common leadership intangible that gets wrapped up in the “status quo” of workplace functionality. But in contemporary society, organisations must stamp out overwhelming threats towards their employee’s wellbeing if they want a positive working culture and good business outcomes.

Including fearful leadership in the P and L calculations removes it from the realm of habitual workplace attitudes and instead places it on a checklist that requires attention, organisation-wide.

“Fearful leadership isn’t just about aggressive behaviour; it’s deeply ingrained in our subconscious and often stems from inexperience and low self-confidence,” Faraci said.

Faraci is, therefore, urging businesses to prioritise creating psychologically safe work environments by reporting on and mitigating fear-driven leadership behaviours, ultimately improving both business performance and employee wellbeing.