Business leadership is essential for the success and growth of any organization. But what defines great leadership?
In this blog, we will explore what business leadership entails, the benefits of leadership for your business, the qualities of great leaders, the consequences of bad leadership, and ways a great leader is different now than with past generations.
Leadership In Business
What is great leadership? While this question may seem simple and easily definable, it’s subjective and requires more context.
Organizational culture, norms, individual perspectives, and preferences can all be considered when defining leadership.
Business leadership involves an organization finding a working model to fit their needs and collective group of employee personalities and skill sets.
Leadership in this context usually involves high-level employees or a CEO guiding a team to reach goals. However, a job title does not limit your capabilities to be a leader.
Great leadership is needed and can stem from all organizational levels, as everyone can guide their team with leadership qualities.
The Benefits Of Leadership For Your Business
As mentioned, great leadership is needed throughout all levels of your organization.
In this section, we will discuss the internal incentives of great leadership for your employees and the company’s financial benefits.
Leadership from the bottom to the top of your organization is key to the success of your organization as a whole.
Below we will get into a few employee benefits of great organizational leadership.
A survey from Gallup found the cost of disengaged employees to be between $450 billion and $550 billion due to lower productivity levels.
A great leader can elevate an organization by allowing employees to use their strengths and make decisions.
Leaders will need to facilitate this employee involvement with specific structures in place for employees to feel motivated to share ideas and feel empowered to make decisions that will benefit the organization.
When given opportunities to make decisions, employees become more engaged.
Robert Bullock of business consulting firm Scontrino-Powell defines employee involvement as “The direct participation of staff to help an organization fulfill its mission and meet its objectives by applying their ideas, expertise, and efforts towards solving problems and making decisions.”
Employee empowerment leads to increased productivity and efficiency.
By distributing and delegating leadership responsibilities across all levels, a company can tap into the unique skill sets of its workforce and improve performance.
Increased Job Satisfaction
According to a 2023 report from Mckinsey, employees facing mental health and well-being challenges are 4x more likely than others to want to leave their organizations.
Understanding that employees seek more than financial compensation from their jobs is crucial. More than ever, it is critical for organizational leaders to fulfill employee psychological needs.
Leaders can identify methods to satisfy these needs by analyzing their company culture, behaviors, and internal practices to create a workplace culture that promotes purpose, value, autonomy, and skill development.
The best way to rethink processes to fit your organization is to get employee feedback!
Company Financial Benefits of Great Leadership
In the sections below, we’ll discuss how leadership impacts financial performance.
Productivity and Efficiency
According to the 2023 Mckinsey State Of Organizations survey, respondents reported seven root causes of organizational inefficiencies.
This survey consists of over 2500 organizational leaders and 1,000 or more employees in various industries worldwide.
These causes will be listed below and shown as percentages.
- Complex Structure 41%
- Unclear Roles and Responsibilities 40%
- Unwieldy Governance Model 34%
- Redundant Activities 32%
- Unclear Processes 28%
- Slow Approval Mechanisms 23%
- Too many meetings; Too Much Time Spent On Low-Value Activities 23%
What are some ways that leaders can Improve upon these inefficiencies?
Empower Your Organization:
When employees are empowered to make decisions, they become more motivated to improve processes, operations, and results.
Identify Organizational Causes:
Identify the root causes of inefficiencies in your organization. Understanding the reasons is a great first step in finding solutions.
Efficiency From The Top:
A shift in efficiency measures must occur across the organization.
To ensure this move in processes, an organizational leader must take the initiative in their involvement.
Monitor Your Changes:
Track the impact of your changes. Identify what’s working for you and what’s not!
Employee Retention and Satisfaction
Stable leadership can also lead to improved employee retention, which impacts the company’s financial performance with reduced turnover costs and increased productivity.
High turnover rates incur expenses from recruitment, onboarding, training, and transition period processes that can be expensive and exhausting.
Strong leadership can significantly reduce turnover with better processes, a positive working environment, and employees who feel valued.
Employees who see a team with strong organizational leadership are likelier to stay long-term.
Qualities of Great Leaders
What makes a great leader?
While many different leadership styles exist, we can point to specific traits that make up a great leader.
According to Mckinsey’s analysis of academic literature and a survey of nearly 200,000 people in 81 organizations across the globe, four types of behavior account for 89 percent of leadership effectiveness. These qualities include:
Problem-solving is a precursor to decision-making. This process involves thorough gathering, analysis, and consideration of information.
Although challenging, this skill is crucial for tackling major issues like mergers and acquisitions and resolving everyday team challenges.
How well is conflict handled? Is the leader able to adequately coordinate tasks within company segments? Questions like these involve daily tasks an effective leader can take.
Real leadership extends beyond vision-setting and goal-setting; it hinges on the ability to convert and achieve tangible outcomes.
A results-driven leader prioritizes efficiency and productivity and focuses on high-value tasks to benefit the organization.
Valuing Diverse Perspectives
Leaders consistently monitor organizational trends and environmental changes.
They actively encourage employees to share ideas, discern between crucial and trivial matters, and give true consideration to the concerns of stakeholders.
Such leaders base their decisions on thorough analysis and avoid common decision-making biases.
Supportive leadership goes further than guidance to achieve a goal. These leaders have a sense of others’ emotions and commitment to understanding their needs.
They possess a genuine interest and trust in colleagues to overcome challenges in the workplace.
Such leaders will intervene in group settings to create organizational efficiency and seek to prevent internal conflicts.
Great leaders possess certain qualities that make them effective in their roles. However, leaders have different styles that will fit the context of their business.
Consequences Of Bad Leadership
Now that we better understand some qualities of great leaders, let’s explore the opposite side of the workplace.
Previously, we touched on the big-picture negatives of poor leadership, such as job satisfaction, retention, and productivity.
Below we will dig into a few statistics breaking down why great leadership will benefit your business and poor leadership can harm your business.
A 2020 Society for Human Resource Management (SHRM) survey found that employees leave managers and do not necessarily leave companies.
The survey found that 84 percent of U.S. workers say poorly trained workers create unnecessary work and stress.
This survey outlined employee perspectives on manager or supervisor competence in managing people. It went through skills managers should develop and how a manager could improve.
Below are some key findings from this survey:
- Fifty-seven percent of American workers say managers in their workplace could benefit from training on how to be better people managers.
- Half (50 percent) feel their performance would improve if their direct supervisor received additional training in people management.
- The top five skills people managers could improve, according to American workers, were: Communicating effectively (41 percent), developing and training the team (38 percent), managing time and delegating (37 percent), cultivating a positive and inclusive team culture (35 percent), and managing team performance (35 percent).
With this data in mind, it is clear to see the effects of poor leadership on an organization and, more specifically, the people within.
The need for people management skills is evident, as more than half of American employees believe managers could benefit from working in this area.
Key skills such as effective communication, team development, efficiency, and positive culture are essential for creating a functioning workforce.
Cultivating supportive and skilled leaders can create an environment where employees want to be.
Develop a win-win for an organization and its people through strong leadership.
How Leadership Has Changed
The role of a great leader has changed over time. In the past, leaders were often seen as authoritarian figures who made all the decisions.
Similarly, the regarded components of a successful company reflected the qualities sought in leaders. Demand results, use authority and control, compete, demand results, and have one bottom line (profits).
Today, organizations and leadership alike must evolve. Mckinsey’s insights highlight five shifts in mindsets and ways of working to redefine leadership. We’ll provide this table below.
|What we focus on
|As manager, deliver profits to shareholders, with a mindset of preservation
|As visionary, generate holistic impact for all stakeholders, with a mindset of possibility
|How we create value
|As planner, compete for existing value through advantage, with a mindset of scarcity
|As architect, co-create new value through reimagining, with a mindset of abundance
|How we organize
|As director, command through structured hierarchies, with a mindset of authority
|As catalyst, collaborate in empowered networks, with a mindset of partnership
|How we get work done
|As controller, administer through detailed prediction, with a mindset of certainty
|As coach, evolve through rapid learning, with a mindset of discovery
|How we show up
|As professional, meet expectations, with a mindset of conformity
|As human, be our whole best selves, with a mindset of authenticity
|Column 1 Value 6
|Column 2 Value 6
|Column 3 Value 6
|Column 4 Value 6
|Column 5 Value 6
This table represents a comprehensive approach to the shifts in mindsets of leadership. Change is needed in leadership.
It starts with what we focus on, how we create value, how we organize, how we get work done, and how we show up!
Consumers are expecting more and more out of their products and services; why shouldn’t organizations expect more of their leadership?
For more information on ways, you can implement change in your organization, consider workforce development services.
Embracing change is key to creating new capabilities and processes within an organization.
At Workforce Essentials, we have over 29 years of experience providing comprehensive training services and courses built to improve your daily work.
We provide award-winning instructional material through our team of highly qualified facilitators to provide you with a customized experience to fit your needs.
A few of our courses cover leadership, communication skills, decision-making, problem-solving & resolution, diversity, and more.
Have questions, or are you just looking for more information? Fill out our contact form, and we’ll reach out to you.