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Why does leadership matter so much?

Leaders influence a variety of outcomes, including turnover, customer satisfaction, sales, revenue, productivity, and more. Good leadership creates employee engagement and passion, which lead to higher levels of discretionary effort, employee performance, customer loyalty, service, innovation, and ultimately profits. Leaders determine values, culture, change tolerance and employee motivation. They shape institutional strategies including their execution and effectiveness. Leadership is a direct cause and has a primary effect on organisations and their success levels.

The impact of effective leadership on a workforce

An effective leader will directly impact the workforce as a whole. How? Below are some typical ways that effective leadership positively shapes the organisation.

Leaders set an example by the way they behave. No policy or set of rules is more powerful than setting the boundaries for what is acceptable or not than the precedent the leader sets. Good leaders are aware of how impactful their behaviour is and so they are mindful about behaving in the ways they want others to. For example, a good leader will treat his or her direct team the way they want other managers to interact with their staff. Or they will make decisions in a way that they want other decision-makers in the company to emulate.

The level of staff engagement, satisfaction and morale is often directly correlated to the experience employees are having with their direct line manager. Line managers are leaders too – and the way in which they lead their teams, regardless of how big or small those team are, will profoundly impact the morale of their staff. High engagement levels mean that employees will perform better and more efficiently. Good leaders make people feel safe, considered, and altogether satisfied with their employment.

Intuitively it stands to reason that if an employee does not approve or respect the leadership of the organisation, they are unlikely to see themselves with the company in the long term. The minute their commitment levels drop, so does their morale.

Effective leaders, who demonstrate that they are authentic, trustworthy, and consistent, ultimately help all other managers and leaders in the business, because they engender a trust in authority. In companies where that trust has eroded, employees will be sceptical about any message or directive that comes from someone senior.

Effective leadership is trustworthy – even when management and employees are in conflict. Trusting the leadership does not mean agreeing with them all the time, but rather, believing that they operate from a place of honesty, integrity, and rationality.

Another way that effective leaders positively impact the organisation is by setting the standard for effective communication. If the leader makes it a priority to engage and clearly articulate the vision, the strategy, the performance objectives, and the progress of the company – effectively communicating openly with his or her team, and with the organisation, that sets a standard.

Organisations who are good at communicating with their workforces will see a positive benefit in the engagement levels of staff and can also be sure that people understand how their contribution is affecting the organisational performance. This is a powerful motivator and is directly linked to the communication skills of the leader.

One of the main roles of leadership is to determine and articulate the strategy of the company. This is not about developing detailed operational plans or targets. This is about telling a compelling story that paints the picture of the future and creates a vision for people to buy into. An effective leader with a clear vision that simply but powerfully explains where the long-term goals of the company will take them, is well placed to inspire, and motivate the workforce towards something greater than the realities of today.

Lastly, a good leader helps create cohesive teams. This is partly because teams will emulate the examples set by leaders, it is also partly because of the good morale that strong leadership creates. It is also because effective leaders know how to deal with conflict and make excellent judgement calls about when to allow a team to storm and find their own path out of conflict, and when to intervene to ensure that team dynamics do not become dysfunctional. A good leader understands that a strong, cohesive team who know how to work together is the primary way to get work done through people – and the role of leadership is to help facilitate that reality.

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