Sour-faced bosses are damaging the bottom line with negative working atmospheres.

This is according to global management consultancy the Hay Group, that says the problem is becoming rife and, in the financial services sector alone, it is costing a whopping £8.5 billion in reduced profits.

The study, based on research of over 2,800 business leaders across the sectors, shows some worrying findings. According to the report, 59% of bosses fail to bring about a positive working climate, a figure that is made up of 43% of bosses who create a de-motivating climate for staff and 16% who only manage to generate a neutral environment.

The news is concerning, given that as much as one third of an organisation’s business performance is dependent on a positive working climate.

Chris Watkin, UK head of talent management at Hay Group, commented: “Up to 30% of business performance is dependent on a motivational working climate. And in times of economic uncertainty, maximising staff motivation and discretionary effort will be more critical than ever.

“Yet our research demonstrates that business leaders are struggling to create the right climate to motivate employees and drive high performance. UK Plc urgently needs a climate change.”

According to the Hay Group, the broader the range of styles a leader uses, the more likely they are to create a high performance climate.

Among those senior managers who generate a high performance climate, three quarters regularly utilise three or more leadership styles. Of those generating negative climates, the same proportion use two or fewer leadership styles.

Watkin added: “You wouldn’t go round a golf course armed only with a putter. A player needs a whole set of clubs in order to adapt to whatever situations the golf course throws at him.

“In the same way, business leaders need to rely on a range of approaches, and to be able to adapt them to each team member or business situation.”

The study also revealed that business leaders who create high performance climates tend to use the more ‘collaborative’ or team-based approaches described as affiliative, participative and coaching leadership styles. Up to 70% use a combination of these three and the visionary approach.

By contrast, those generating de-motivating climates tend towards more ‘individualistic’ styles that is directive and pacesetting. Over half rely predominantly on these two.

Watkin concluded: “The message for managers would seem to be – teams respond better to support than to coercion.”