A study conducted and released by Margot Faraci, a management expert and senior leader in Australia with 20 years’ experience at Macquarie Bank, NAB, CBA and more, has revealed that toxic leadership is fuelling thousands of Australian businesses, with 27% harbouring unconscious fear. A third of corporate managers are primarily motivated by fear, creating less efficient and less psychologically safe work environments that reportedly cost $2.3 billion annually in lost productivity.

Fearful leadership isn’t just shouting or aggressive behaviour, it includes avoidance, complacency, decision fatigue, hesitancy to express viewpoints, fear of letting people down, micromanagement, reluctance to provide feedback, not creating space for others to speak up, holding back growth opportunities from others and more. Fearful leadership can stem from inexperience and low self-confidence, leading to increased stress, fatigue and compromised decision-making. It is also attributed to past experiences, creating an ongoing cycle of leadership driven by fear.

Fearful leaders in Australia lose an estimated $26,263 in a year (based on their salary and estimated hours lost), equalling a $2.3 billion cost in productivity across Australia. Seven in ten (69%) of managers also believe that stress and fear can be used as a positive or motivational tool, despite acknowledging its adverse effects on performance, wellbeing and company culture.

The findings are part of a global study by Faraci which analysed the leadership behaviours of 2500 managers in Australia, the UK and US in order to uncover unconscious fear in leadership. The challenge is that thousands of leaders are often unaware that they’re leading with fear or coming from a fearful response.

The study found that 69% of fearful leaders in Australia believe that stress can be positively harnessed in workplaces, while 87% of fearful leaders in Australia regularly witness declines in team productivity due to toxic leadership. While the majority of leaders offer guidance and learning opportunities, fearful leaders are more likely to either be fully hands on or hands off when it comes to trusting their direct reports.

Almost half (49%) of fearful leaders in Australia reported struggling with decision fatigue, while 38% of fearful leaders regularly witnessed declines in team morale. 51% are unhappy with their job and 23% say workplace relationships are strained. Fearful leaders also tend to shift the blame, believing management is at fault for declining productivity, largely due to micromanagement and lack of communication.

Faraci said that fearful leadership manifests in subtle yet corrosive ways in daily interactions and is reflected in overly controlling management styles, where leaders micromanage every aspect, stifling creativity and autonomy. According to Faraci, fearful leaders might prioritise short-term gains over long-term employee wellbeing, inadvertently fostering a tense and anxious work environment, with these actions stemming from an unconscious fear of losing control.

“Fearful leadership is fuelling Australian, and worldwide, businesses. I’ve seen it for decades and the majority of managers aren’t often aware they’re leading with fear or coming from a fearful response. It’s hardwired into our subconscious because it’s what we’ve been exposed to throughout our careers,” Faraci said.

Faraci has called for managers and leaders to acknowledge and confront their fears to break the cycle. “The opposite of leading with fear is leading with love. People think of love as a romantic connection between two people, but it’s more than that. Love includes trust, compassion, vulnerability, respect and other sentiments needed to create psychologically safe environments. It takes a level of self-awareness to reach a love-based response,” Faraci said.

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