The cost that never appears in your funding acquittal
Around $340,000 a year for a mid-sized Australian organisation, distributed so widely that nobody owns it.
There is a number in your organisation that no report shows.
It is not in your P&L. It is not in the funding acquittal. It is not in any single line item your board reviews. It is distributed across the business as outcomes that should not be happening, and in care and community sectors it is compounding faster than almost anywhere else.
It is the accumulated cost of under-prepared people leadership. Research drawing on AHRI, Deloitte, Gallup and ABS data puts it at around $340,000 a year for a mid-sized Australian organisation. In thin-margin sectors like NDIS, aged care and early learning, that number does not just hurt. It decides things.
Where it hides in your business
Start with turnover, because in your sector every departure costs twice.
The first cost is the one everyone half-knows: recruitment, onboarding, the productivity gap while the role sits vacant or a new person finds their feet. Conservatively, 50 to 200 percent of the departing person’s salary.
The second cost is the one unique to care work. Continuity is the product. When a support worker leaves, a participant loses a relationship built over years. When an educator leaves, families notice and occupancy follows. When ratios wobble, agency staff arrive at a premium and quality risk arrives with them. Your funding model assumes a stable workforce. Your turnover pattern is quietly disagreeing.
Then look at where the turnover clusters. Not by role. By manager. Exit data across sectors keeps confirming the same uncomfortable truth: people leave managers, not organisations. When departures pool under particular leaders, that is not a coincidence or a run of bad luck. It is a pattern pointing at a preparation gap that was never closed.
Add the quieter costs. HR bandwidth absorbed by escalations that should have been navigated at team level. Performance variance between teams doing identical work. The slow erosion where your best people stop putting their hands up for things. None of these have a line item. All of them have a price.
Why this keeps not getting fixed
Because the cost is distributed, nobody owns it. The turnover sits in one report, the agency spend in another, the HR escalations in a third, the engagement dip in a fourth. Read separately, each looks like weather. Read together, they are the same problem showing up in different rooms: a leadership layer that was promoted without being prepared.
The organisations that shift this share one characteristic. They stop treating leadership development as a discretionary benefit and start treating it as an operating requirement, the same way they treat clinical training or safety inductions. Because in a people-intensive, regulated business, that is exactly what it is.
One thing to do this week
Run one report you have probably never run: turnover by direct manager for the last 24 months. Include internal transfers, because people escape sideways before they escape out the door. Then sit with what it shows you. In most organisations, a small number of leaders account for a disproportionate share of departures, and those leaders are almost never bad people. They are capable people who were handed a team without the foundations.
The investment required to close that gap is, in every case I have worked through, substantially less than the ongoing cost of leaving it open.
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