Your Good Leaders Are the Hidden Problem

BreAnne:
Welcome back to The 90th Percentile: An Unconventional Leadership Podcast. I’m BreAnne Okoren with Zenger Folkman and today I’m joined by Joe Folkman.

Joe, today’s conversation centers around a leadership problem that honestly doesn’t get talked about enough because it’s not dramatic. It’s not the toxic boss everyone complains about. It’s not the executive disaster story that goes viral on LinkedIn.

It’s something much quieter.

It’s the leader who’s… good.

Competent. Reliable. Well-liked enough. Producing decent results.

And your latest research argues that this group may actually be one of the biggest hidden organizational costs.

Joe:
That’s exactly right. Most organizations are intensely focused on identifying and fixing poor leaders — and understandably so. Bad leaders create visible damage. People complain about them. HR hears about them. Turnover spikes around them.

But what we discovered over two decades of research is that organizations are overlooking a much larger leadership population: the leaders who are functioning adequately but never become exceptional.

And because there are so many of them, the collective impact is enormous.

BreAnne:
One of the things that struck me in the article was this idea that “good” leadership creates almost invisible organizational drag.

Because from the outside, these leaders look fine.

Joe:
Exactly. They’re hitting most objectives. They aren’t creating conflict. Their teams may not be failing.

But they also aren’t inspiring extraordinary performance, innovation, commitment, or engagement.

And that’s where the danger lies.

In our data, leaders in roughly the 50th to 60th percentile still had about 26% of employees considering leaving. Compare that to about 12% under exceptional leaders.

That’s a massive difference in retention risk.

BreAnne:
And the scary part is most organizations would probably classify those 50th percentile leaders as successful.

Joe:
Absolutely. Most performance management systems reward adequacy. If someone isn’t failing, they’re often left alone.

But leadership effectiveness isn’t binary. There’s an enormous gap between acceptable and exceptional.

And employees feel that gap every day.

BreAnne:
What I also found interesting is that your findings line up with a lot of external organizational research.

McKinsey has published research showing that employees leaving organizations frequently cite poor leadership and lack of development as primary drivers of turnover.

And Gallup has repeatedly found that managers account for roughly 70% of the variance in employee engagement.

This isn’t soft culture stuff anymore. This is operational performance.

Joe:
Exactly. Leadership quality directly affects productivity, retention, innovation, discretionary effort — all the things organizations are trying to improve.

There’s also fascinating research from Harvard Business Review showing that high-performing teams aren’t simply more talented — they’re more energized, more psychologically safe, and more connected to purpose.

Exceptional leaders create those conditions.

Good leaders often maintain the status quo.

BreAnne:
That reminds me of research from MIT Sloan on transformational leadership and innovation climates. They found that leaders who create trust and empowerment dramatically increase employees’ willingness to contribute ideas and take initiative.

So the difference between good and exceptional leadership isn’t just morale. It’s whether organizations fully access the intelligence and creativity of their people.

Joe:
Exactly right.

A merely good leader may get compliance.

An exceptional leader gets contribution.

And those are very different outcomes.

BreAnne:
One of the biggest ideas in the article is that organizations are often using the wrong development prescription.

You make this distinction between leaders with fatal flaws and leaders without them.

Explain that.

Joe:
In our research, about 20% of leaders have a fatal flaw — a serious weakness that actively undermines their effectiveness.

Maybe they lack integrity. Maybe they can’t collaborate. Maybe they create fear or confusion.

Those leaders absolutely need to address those issues.

But the majority of leaders — roughly 80% — don’t have fatal flaws.

And for them, constantly focusing on weaknesses is often the wrong strategy.

BreAnne:
Because most development systems are built around deficit correction.

“Here’s your lowest score. Improve it.”

Joe:
Exactly. But our data showed something very different.

For leaders without fatal flaws, improving a weakness from below average to average creates very little movement in overall effectiveness.

What creates dramatic movement is building a profound strength.

That’s where the nonlinear gains occur.

BreAnne:
This section of the research honestly challenges how many organizations think about development entirely.

Because the relationship between strengths and effectiveness wasn’t incremental — it was exponential.

Joe:
Exactly.

A leader with zero profound strengths averaged around the 34th percentile in effectiveness. Add just one profound strength and they jumped to the 64th percentile.

That’s an extraordinary increase from a single competency.

Then three profound strengths pushed leaders into the 80th percentile range.

Five profound strengths placed them among the top 10% globally.

BreAnne:
That’s remarkable because it suggests extraordinary leadership doesn’t require perfection.

Joe:
Exactly. Exceptional leaders are not universally exceptional at everything.

They tend to have several deeply developed competencies that elevate everything around them.

And this aligns with research outside our firm as well.

There’s compelling work from Marcus Buckingham and the strengths movement showing that people grow fastest in areas of natural energy and aptitude.

And Harvard researchers have also shown that focusing excessively on weaknesses can actually reduce confidence and motivation over time.

BreAnne:
One of my favorite concepts in the article was the idea of “strength builders.”

That extraordinary strengths almost never develop in isolation.

Joe:
Yes. This was one of the most fascinating discoveries in our research.

When we analyzed leaders who developed extraordinary competency in a particular area, we consistently found companion behaviors that amplified that strength.

For example, someone may already possess strong technical expertise. But unless they can communicate clearly and persuasively, other people may never fully experience that expertise.

BreAnne:
Which was the example of Bob in the article.

He didn’t necessarily become more knowledgeable. He became better at helping others access his knowledge.

Joe:
Exactly.

And once he developed communication skills, people rated his technical expertise dramatically higher because they could now understand, trust, and apply what he knew.

That’s why leadership development is not simply about adding isolated skills. It’s about understanding the combinations that create extraordinary impact.

BreAnne:
I think organizations often underestimate the middle because good leaders don’t create urgency.

No one’s filing complaints.

No crisis exists.

Joe:
That’s exactly the problem.

Poor leaders are visible.

Good-but-not-great leaders are invisible.

But because there are so many more of them, their cumulative impact is enormous.

Imagine hundreds of teams operating at 70% discretionary effort instead of 95%.

Imagine innovation slowing slightly across an enterprise.

Imagine retention gradually eroding.

Those small gaps compound over years.

BreAnne:
And what’s fascinating is that research from McKinsey has shown that organizations in the top quartile of leadership effectiveness significantly outperform financially compared to peers.

So this isn’t just an HR conversation. It’s a business performance conversation.

Joe:
Absolutely.

Leadership quality affects virtually every business outcome organizations care about.

BreAnne:
So if organizations are listening today, what’s the biggest mistake they’re making?

Joe:
Treating all leaders the same developmentally.

Organizations often apply one universal formula:

Identify weaknesses. Build improvement plans. Repeat.

But leadership development should be far more individualized.

If a leader has a fatal flaw, address it immediately.

If they don’t, identify their highest-potential strength and accelerate it intentionally.

Those are entirely different development pathways.

BreAnne:
And honestly that feels much more motivating too.

People are energized by becoming extraordinary at something meaningful.

They’re rarely inspired by becoming slightly less weak.

Joe:
Exactly.

People gain confidence, momentum, and energy when they build strengths.

And organizations see dramatically larger returns from that strategy.

BreAnne:
Joe, I think one of the most powerful ideas from this article is that organizations may be dramatically underestimating the cost of “fine.”

Because fine doesn’t create extraordinary teams.

Fine doesn’t create innovation.

Fine doesn’t create deep engagement.

And fine certainly doesn’t maximize human potential.

Joe:
Exactly.

The greatest opportunity inside most organizations isn’t simply fixing bad leaders.

It’s transforming good leaders into exceptional ones.

And when that happens, the impact compounds across culture, retention, performance, and business results.

BreAnne:
Joe, thanks so much for joining me today.

And for those listening, if this conversation resonated with you, we’d encourage you to read the full research brief from Zenger Folkman titled Your Good Leaders Are the Hidden Problem.

And if you’re thinking about how to better identify and develop leadership strengths inside your organization, visit the website to learn more about Zenger Folkman’s research-based leadership development solutions.

Thanks for listening to The 90th Percentile. If you enjoyed today’s episode, be sure to subscribe, share it with a colleague, and leave us a review.

We’ll see you next time.