Written by Dan Hughes, Senior Director of R&D
Leadership is one of the most discussed topics in talent acquisition and development. The question of how to be a great leader is constantly debated.
This is hardly surprising; leadership of course is fundamentally challenging and complex. Leadership is also continually evolving, based on the changing working context and expectations of employees and organisations.
In all these debates, it is typically treated as a given that leadership is critical for organisational success. But what do we actually know about the impact and benefits of great leadership and how it makes a difference?
What do employees think?
In our international research report, which explored the future of leadership, we asked employees to rate the importance of leadership for overall organisational performance and various specific factors. The results are shown in this graph:
In terms of overall organisational performance, 90% of employees indicated that effective leadership was either extremely or very important. Perceived importance of leadership on specific factors varied, with at least 75% of employees stating that leadership was extremely or very important for adapting to change, employee retention, collaboration, and productivity.
These results are of course based on the opinions and experiences of employees. So, what do we know from scientific research, in terms of which organisational outcomes are statistically associated with great leadership?
Benefits of great leadership from scientific research
Here are some key areas where research has demonstrated the link between leadership and organisational outcomes:
- Financial metrics: It can be difficult to make a direct link between leadership and financial metrics of an organisation, given the variety of factors involved. However, different studies have shown that CEOs in technology organisations and leaders in a commercial bank who showed more effective leadership (as rated by others) achieved higher levels of financial profitability.
- Employee job performance: Various leadership practices – for example motivational communication, relationship building, and coaching behaviours – are associated both with better team effectiveness and job performance of individual employees. Transformational leadership has also been highlighted as particularly relevant for generating higher employee performance.
- Organisational citizenship: These are discretionary behaviours outside someone’s formal job description, for example going above and beyond to help colleagues and benefit the wider organisation. A meta-analysis of research found that several positive leadership styles are associated with more organisational citizenship among teams and individual employees, with servant leadership behaviours highlighted as particularly valuable.
- Creativity and innovation: The same meta-analysis also demonstrated an association between leadership styles and employee creativity, with servant leadership behaviours again being highlighted as particularly important for this area.
Does great leadership make a difference to employees?
Great leadership has also been shown to correlate with various aspects of the employee experience. The employee experience is key because the way employees feel impacts their performance. It affects their motivation, their effort, and their desire to stay in the organisation long term.
Another meta-analysis of research studies found a significant association between various positive leadership styles and elements of the employee experience. More effective leadership related to higher:
- Work engagement
- Job satisfaction
- Emotional attachment to the organisation
- Trust in leaders
Taken together, this scientific research proves that yes, great leadership does make a difference to the employee. It underlines the critical importance of leadership for organisations and the people working in them. Both are key for sustainable organisational success because this requires leaders to enable high performance as well as retain effective, engaged employees within the organisation.
What does great leadership look like?
At Talogy, we have conducted extensive research ourselves over many years to explore how leadership is evolving and what great leadership should look like. We have used this to inform the development of our own Talogy InView Leadership Framework.
Our own research as well as other scientific research studies highlight several key themes that demonstrate what great leadership looks like in today’s world of work:
- There is no ‘one size fits all’: There is no single best leadership style or approach for every occasion. Great leaders recognise and manage the constant tension and interplay between demands of their organisation’s context – the need to achieve results while looking after the people delivering them – and the need to drive transformation that is required for future success while also providing stability to employees. This requires leaders to continually navigate the right balance between these competing demands in terms of their own behaviour and emphasis.
- There is a need for more human-centred leadership: Great leaders tend to demonstrate more human-centred leadership qualities and emotional intelligence. Leaders need to consider how they can best support employees’ psychological needs and growth to facilitate more intrinsic motivation. In our research, ‘Inspiring, motivating and engaging’ was the number one attribute that leaders needed to demonstrate both to achieve results and to enable a positive employee experience. It is a false dichotomy to think that leaders need to choose between delivering results and looking after their people – they go hand in hand.
- Humble awareness and intentionality are key: Great leadership requires leaders to be humble and self-aware. They need to reflect on their own ‘leadership identity’ – why they want to be a leader and how they connect their personal values to the way they lead. Great leaders understand their strengths and limitations, recognising that they can’t have all the answers themselves. At the same time, leaders also need to be continually aware of the impact of their behaviour and be intentional about how they choose to conduct themselves in their day-to-day interactions.
Does great leadership make a difference overall?
These themes emphasise the need for organisations to consider the ways that they are approaching the identification and development of leaders at different levels. When it comes to promoting a culture of great leadership, ask yourself these tangible questions:
- Are our leadership assessment approaches identifying people with the right values and qualities to be a great leader in our organisation?
- Do our leaders understand the qualities they really need to be a great leader and how to properly develop them?
- Are the development and growth opportunities we are providing to leaders at different levels actually working?
These are key questions that every organisation faces because great leadership makes a real and practical difference at work. Great leaders facilitate high performance and happy workers, which together help to drive sustainable success for organisations.
