Is Your Culture an Asset or a Liability on Your Balance Sheet?

Culture and management quality aren't soft metrics. They're either compounding assets that lower your cost of growth, or quiet liabilities that erode margin every quarter you don't measure them.

Today, we are looking at the two specific mechanisms doing the damage — mis-hires and the management gap — with the research behind each, what the same dynamics look like in Romania and the wider CEE region, and the mistakes we see CEOs repeat because the incentives around them make the mistake look reasonable in the moment.

The invisible tax of growth

Employee engagement is the closest thing HR research has to a single proxy for "is this organization running well." Gallup's latest global tracking puts only 20% of employees worldwide as engaged in 2025 — the lowest level since 2020 — costing the global economy an estimated $10 trillion in lost productivity, roughly 9% of global GDP (Gallup, State of the Global Workplace 2025–2026).

The mechanism behind the decline is specific, not vague: Gallup's own data shows the steepest driver was manager engagement, which fell five points — from 27% to 22% — between 2024 and 2025 alone, the sharpest single-year drop the study has recorded. When the people running your teams disengage, their teams follow. Europe, where most of our clients are, has consistently been the least-engaged region in every recent edition of this study.

For scale: best-practice organizations already run at roughly 70% engagement — that gap between 20% and 70% is Gallup's own basis for the $9.6 trillion global productivity-recovery estimate.

Insight — reading the two Gallup numbers together: The overall engagement number and the manager-specific number aren't two separate problems — they're the same problem measured twice. Engagement didn't fall broadly and evenly; it fell hardest at exactly the layer that determines whether everyone below them stays engaged. That's the thread running through both headaches below: mis-hires and undertrained managers aren't parallel issues, they're the same structural gap showing up at two different points in the org chart.

#1 — the cost of mis-hires

A "bad hire" is never priced at the salary you paid them. It's priced at the salary, plus the recruiting cost, plus the onboarding time, plus the manager-hours spent managing them out, plus what their team didn't do while all of that was happening.

•At the middle-management level, a bad hire is estimated to cost 100–150% of annual salary (Source: SHRM).

•At the C-suite level, that estimate rises to up to 200–213% of annual salary (Source: MyCulture).

•Independently, industry research on disengaged teams (which is where most mis-hires end up if they aren't removed quickly) finds turnover running 18–43% higher than in engaged teams, and engaged business units outperforming disengaged ones by 23% in profitability.

For a company at your scale, one mis-hired department head is a figure that belongs on the CFO's risk register, not something buried in a "recruitment fees" line.

Insight — the same range shows up independently in Romanian data: The 50–200%-of-salary replacement cost isn't a US-specific number inflated by different labor-market conditions. Romanian HR-cost analyses, working from local payroll and replacement data rather than SHRM's, land in the same 50–200% band. Two independent research traditions, two languages, two very different labor markets — and the same order of magnitude. That convergence is more convincing than either source alone.

#2 — the management gap

The second view is upstream of the first: most department heads were never taught to manage. They were promoted because they were the best individual performer, then handed a team with zero preparation for the actual job of managing people.

•82% have no training — of new managers receive no formal training before taking on the role (Chartered Management Institute, via Ambr AI).

•29% declining trust — 29% of employees globally say they trust their immediate manager, a 37% relative decline since 2022 (DDI, Global Leadership Forecast 2025).

•71% higher stress — of leaders report significantly higher stress since stepping into their management role (DDI, Global Leadership Forecast 2025).

•19% ready to delegate — of newly promoted leaders have the delegation skills needed to actually operate as managers (DDI, Global Leadership Forecast 2025).

This is the mechanism behind "turning your department heads into high-performance mentors" — it's more than a motivational upgrade, it's closing a documented, measured skills gap that most companies never diagnose because the manager in question is still hitting their own individual targets.

The Romania engagement paradox

Here's the part that doesn't fit the global narrative: Romania isn't a low-engagement market. It's one of the highest-engagement markets in Europe. Gallup's most recent global report puts Romania at 31% employee engagement — second in Europe only to Albania, roughly 2.5x the European regional average of 12%, and above the 20% global average. Romanian employees also score higher on Gallup's "thriving" measure — how positively people rate their life and five-year outlook — at 55%, versus 49% for Europe and 34% globally (Gallup, State of the Global Workplace 2026; reported by Complice.ro and Revista Cariere, both Romanian outlets).

So the problem in Romania was never getting people to feel engaged. It's what happens after that. Despite the high engagement score, Romanian private-sector turnover has run around 20% annually (PwC Saratoga benchmark, via AmCham Romania's labour market analysis — the underlying benchmark year is 2022, so treat it as directional, not current-quarter) — roughly double the 10–15% range typically cited as the European norm, and above the ~10% threshold Romanian HR specialists themselves flag as the point where turnover stops being "normal" and starts being a problem.

Insight — the paradox, and what it points to: High engagement plus high turnover works as a diagnostic: it rules out "people don't like working here" as the explanation and points squarely at the two mechanisms this article opened with — managers who weren't trained to hold on to the engaged people they're given, and hiring processes that let mis-hires back into a workforce that was otherwise doing fine. Romanian data on managers specifically supports this: the same Gallup report, covered by the Romanian outlet Complice.ro, shows managers globally reporting markedly more stress, anger, sadness, and loneliness than the individual contributors they lead — the same manager-strain pattern the DDI research above documents, independently confirmed by a second research organization and picked up by Romanian press specifically because it explains why a high-engagement market like Romania still leaks people.

•Romania faces a structural labor deficit estimated at over 600,000 workers, with a job-vacancy rate that stayed low (0.7% in 2024) even as employers report they still can't fill roles — a sign the shortage is about matching skills to open roles, not headcount alone.

•In PwC's CEE CEO Survey, over 40% of CEE CEOs cite lack of workforce skills as a significant internal barrier to transformation — on par with limited financial resources.

•eJobs' own 2026 employer survey found 20.2% of Romanian companies froze hiring entirely and a further 18.3% cut recruitment by 10–25%, citing domestic political instability and rising operating costs — exactly the growth-under-pressure conditions where hiring bars quietly slip.

"The labor market is going through its toughest stretch for new job postings in a decade — companies are delaying investment, hiring more cautiously, and a lack of private-sector confidence is starting to show up directly in the numbers."

— Bogdan Badea, CEO, eJobs (Romania's largest online recruitment platform) — ZF Live, Ziarul Financiar, April 2026 (original in Romanian; quote translated and paraphrased)

Why we're flagging this instead of smoothing it over: the correlation between Romania's engagement-retention gap and its management-training gap is a reasonable read of two independent datasets — it is not a causal study, and we haven't found one that quantifies it in euros for the Romanian market specifically. Until a company runs its own cost-of-turnover audit, this should inform urgency, not be quoted as a proven causal chain in your own board deck.

The mistakes we see CEOs repeat in CEE and Romania

These are composite patterns drawn from the regional data above and from what a scaling company's structure typically produces under those conditions — not quotes from a single named study, and not one of our specific clients. Each is labeled with why it happens, because the mistake usually looks rational from inside the pressure that causes it.

1. Lowering the bar to fill a seat fast.

Nearly 40% of Romanian companies froze or cut recruitment in 2026 while still needing roles filled — a structural labor deficit doesn't pause just because hiring budgets do. "Good enough, available now" starts to look like the only realistic option. Why it happens: the cost of an empty seat is visible today (missed deadlines); the cost of a wrong hire is invisible for 3–6 months. Visible pain wins the decision.

2. Promoting the top performer, not the best manager.

The best salesperson becomes Head of Sales overnight — with the 82% of new managers who get zero formal training as their only preparation. Why it happens: it's the path of least resistance and looks like a reward, not a risk. There's no internal mechanism that flags "great at the old job" as a poor predictor of "great at managing people".

3. Treating HR as the first budget line to cut.

When macro pressure hits — and Romanian employers cite exactly this in 2026 surveys, from political instability to rising operating costs — hiring freezes and HR headcount are usually first to go. Why it happens: HR is booked as a cost center on the P&L, so it reads as discretionary. The retention and mis-hire costs it prevents never appear on the same page, so the trade-off is invisible to whoever's cutting.

4. No cost-of-turnover number anyone can point to.

Most companies at this scale can tell you last quarter's revenue to the euro. Very few can tell you what their last five departures actually cost. Why it happens: turnover cost rarely gets tracked by finance — it's diffused across recruiting, onboarding time, and lost output, not a single line item. What isn't measured doesn't get a seat at the strategy table.

5. Running engagement surveys with no structural follow-through.

A survey gets sent, scores come back low, a summary slide gets shown once — and nothing about how people are managed actually changes. Why it happens: the survey satisfies the instinct to "do something about culture" without requiring the harder step of retraining or replacing the manager the low scores are actually about.

6. Investing in C-suite coaching, not the middle layer.

Leadership development budgets skew toward the top team, while the DDI data shows it's frontline and middle managers who are most stressed and least trusted. Why it happens: the C-suite controls the budget and naturally prioritizes its own development. The middle layer — the one actually running day-to-day retention — gets what's left over.

Classic cost-center HR vs. our HR Strategy Advisory

The difference isn't "more HR." It's what HR is actually asked to be accountable for.

•Hiring approach — Classic: CV screen plus gut-feel interview, speed over fit. Ours: a structured profile built from your top performers' actual traits, validated before offer stage.

•Management pipeline — Classic: best performer promoted, given a title and a team. Ours: management readiness assessed and coached before the promotion, not after the damage.

•Culture measurement — Classic: annual engagement survey, filed and forgotten. Ours: ongoing signal tracked against retention and performance, tied to specific management action.

•Cost visibility — Classic: turnover and mis-hire cost untracked, invisible on the P&L. Ours: mis-hire and turnover exposure quantified and reported like any other business risk.

•CEO's role — Classic: approves the HR budget, rarely reviews HR outcomes. Ours: reviews people metrics with the same rigor as revenue and margin.

The bottom line

Scaling a company is a milestone. It's also the point where the invisible tax of growth starts compounding — slower communication, quieter top performers, a mis-hire rate nobody's pricing. At that stage, HR can't stay "admin and payroll". It has to become the function that turns every person on your payroll into an investment, not a cost.

Our HR Strategy Advisory exists for exactly the two headaches above: stopping the financial drain of mis-hires, and turning department heads into managers who drive results without your constant intervention. Not a rebrand of HR — a shift from Organizational Survival to Organizational Performance.

Book your HR Strategy roadmap: www.ascensi.ro/en/contact

Sources

•Gallup, State of the Global Workplace 2025–2026 — 20% global engagement (2025), $10T / 9% of global GDP lost to disengagement, manager engagement decline from 27% to 22%, 70% best-practice benchmark, and Romania's 2026 country-level engagement/thriving scores.

•SHRM, "The Cost of a Bad Hire Can Be Astronomical" — middle-management bad-hire cost, 100–150% of salary.

•MyCulture, "Cost of Bad Hire" — C-suite bad-hire cost, up to 200–213% of salary.

•Ambr AI, citing Chartered Management Institute (CMI) research — 82% of new managers receive no formal training before the role.

•DDI, Global Leadership Forecast 2025 — manager trust at 29% (37% relative decline since 2022), 71% of leaders report higher stress, 19% have adequate delegation skills.

•Zarina CRM (RO), "Fluctuația de Personal: Cauze și Strategii de Reducere 2026" — Romanian-language replacement-cost estimate, 50–200% of annual salary.

•Complice.ro (RO), "Managerii, veriga ruptă din lanțul de engagement" — Romania's Gallup 2026 engagement/thriving scores vs. Europe and global, and the global manager-vs-contributor stress gap.

•Revista Cariere (RO), "România se menține pe primul loc în Europa la employee engagement" — Romania's Gallup 2025 engagement ranking vs. regional peers.

•Ziarul Financiar (RO), ZF Live interview with Bogdan Badea, CEO of eJobs — CEO quote on hiring caution and private-sector confidence, April 2026.

•Business Review, "Romanian companies' hiring plans affected by lower consumption, political instability and rising costs" — eJobs 2026 employer survey: 20.2% froze hiring, 18.3% cut recruitment 10–25%.

•AmCham Romania, Labour Market Analysis, citing PwC Saratoga (2022 benchmark) — ~20% average annual private-sector turnover in Romania.

•BusinessMagazin (RO), "Fluctuații de personal" — the ~10% turnover threshold Romanian HR specialists cite as the point of concern.

•Euro HR Solutions, "How to Calculate Employee Turnover Rate" — European turnover benchmark typically cited at 10–15%.

•PwC, 27th Annual Global CEO Survey — CEE Edition — over 40% of CEE CEOs cite lack of workforce skills as a significant internal transformation barrier.

•BCM Group, "Romania Updated Market Data For Workers", compiling Eurostat/INS figures — estimated 600,000+ structural worker deficit, 0.7% job-vacancy rate (2024).