Objective: To calculate the net financial impact of each leadership style over 8 weeks.
Step 1: Calculate Total Costs for Manager A (Autocratic)
This includes turnover costs, standard training, and remedial training.
- Turnover Cost: 2 employees × 1,500=3,000
- Training Costs: $1,200 (standard) + $600 (remedial) = 1,800
- Total Cost (A): 3,000+1,800 = **4,800∗∗
Step 2: Calculate Total Costs for Manager B (Democratic)
This only includes the standard training cost as there was no turnover or need for remedial training.
- Turnover Cost: 0
- Training Costs: $1,200 (standard)
- Total Cost (B): **1,200∗∗
Step 3: Calculate Total Revenue Gains for Each Store
The revenue gain of $9,000 per week only starts after the implementation is complete.
- Revenue Gain (A): The project finished in 4 weeks, so gains are for weeks 5, 6, 7, and 8 (4 weeks).
4 weeks × $9,000/week = $36,000
- Revenue Gain (B): The project finished in 5 weeks, so gains are for weeks 6, 7, and 8 (3 weeks).
3 weeks × $9,000/week = $27,000
Step 4: Calculate Net Financial Impact
Net Impact = Total Revenue Gain - Total Costs
- Net Impact (A): 36,000−4,800 = **31,200∗∗
- Net Impact (B): 27,000−1,200 = **25,800∗∗
Evaluation:
Based purely on the 8-week financial calculation, the autocratic style of Manager A resulted in a higher net financial impact ($31,200) compared to the democratic style of Manager B ($25,800). The faster implementation allowed Store A to realise the revenue benefits one week earlier, outweighing its higher costs from staff turnover and remedial training.
However, a full evaluation must consider the longer-term and non-financial consequences. The democratic approach, despite being slower, resulted in zero staff turnover and avoided extra training costs, suggesting higher employee morale and buy-in. This could lead to greater long-term productivity, lower future recruitment costs, and a culture that is more adaptable to future changes. The financial advantage of the autocratic style is likely to diminish over time, and the high staff turnover could be a significant strategic weakness.