By building the capability and performance of organisations within a specific geographic area, larger scale impacts are possible, including economic, social and environmental
Leadership topics have gained interest for hundreds of years now — from the early Greek philosophers, such as Plato and Socrates, to a plethora of management and behavioural experts — all have discussed them threadbare. Seldom, however, has the need for effective leadership been voiced more strongly than in present times of a changing global environment. Leadership holds an answer for not only the success of an individual or an organisation, but also for sectors, regions and nations. Despite the recognition of its importance, mystery remains as to what it actually is or how do we define it. Leadership is definitely not a ‘one-size-fits-all’ concept; it is one of those words that is ceaselessly debated and typically elicits a spectrum of individual opinions — from describing personality attributes, position characteristics to even behaviours. Whatever the arena — sports, politics, religion, business — a leader impacts and influences organisational effectiveness.
But the question is: How does leadership impact an organisation’s effectiveness? In fact, how does a leader’s behaviour have a direct relationship with the overall perception of the organisation’s will to perform? Employees trust their leader’s capabilities. They expect him/her to provide (i) a compelling vision of where the organisation is going (ii) consistency in pursuing and achieving goals (iii) clear, concise communication, whether in general or in conveying their ideas and organisational direction (iv) team-building and orchestration (v) credible proof — a solid track record — of performance accomplishments. A capable leader, who is competent, with a strong personal sense of efficacy and an ability to ‘stay the course’ in the midst of a group of people, has considerable effects on the confidence of others.
This is why it is significant for leaders to understand how their behaviour impacts their employees. While considering the likely impact of leadership and management on performance, a number of effects can be identified. The initial effect is likely to be at an individual level. Following developments, it is expected of the individual leader to become more effective. This can be revealed through hard measures, such as enhanced productivity, technical competence and/or knowledge, which is more likely to be demonstrated through soft measures, such as improved self-awareness, communication and strategic thinking.
The next level is likely to be at a group level, whereby an individual leader’s behaviour begins to affect his/her colleagues/subordinates. As before, this change may be revealed in hard productivity or output measures. However, it is more likely to be exhibited, at least in the initial stages, through improved communication, motivation, morale and team work. Related measures that may be affected include decreased absenteeism and staff turnover, increased willingness to work overtime and enhanced participation, accountability and providing relevant feedback. The third effect can be seen at the organisational level. Indeed, improving organisational effectiveness is often the key driver behind investment in management and leadership development. At this level, it is intended that through development of a critical mass of effective leadership in different parts of the organisation, the firm as a whole becomes more successful. These impacts may well be revealed in hard measures, such as improved profit, turnover and share value and reduced wastage. However, a wide array of other measures could be considered, including customer satisfaction, relationship with suppliers, organisational culture and innovation.
Although the most important consideration of the impact of leadership development stops at the organisational level, the commitment of national and regional Governments, to enhance leadership capabilities, indicates that the potential impact of effectiveness can traverse organisational boundaries. By building the capability and performance of organisations within a specific geographic area — be it regional, national or international — larger scale impacts are possible, including economic, social and environmental.
Another key issue to consider while attempting to monitor the performance impact of the management and leadership is the time delay for visible improvements. For example, it will be far easier to measure the impact of a leadership development initiative in terms of staff attitudes rather than changes in productivity. The latter will be slow to achieve and subject to a much wider range of influencing factors.
It is widely assumed that leadership development will enhance individual capability and subsequently performance but evidence shows a more complex interaction. The key challenge is that the current supply of leadership development may not address the right skills, improve capability or enhance performance. In fact, the impact of off-the-job management education or generic management courses may be negligible. Instead, the most useful kind of development relates to work-based activities, such as giving and receiving detailed feedback, goal-setting and action planning.
Another concern for organisations is the mere existence of leadership competencies that does not guarantee usage. Therefore, leadership development should aim to encourage and support people to take on leadership roles and responsibilities rather than simply equipping them with necessary skills.
There are two key factors that increase the impact of leadership development on individual capability and performance: The inclusion of opportunities for receiving and discussing individual feedback and the quality of management processes preceding, supporting and reinforcing development activities. Thus, it appears that providing leadership development alone is insufficient to ensure an increase in individual capability and performance. Rather, it needs to incorporate appropriate opportunities for feedback and discussion, and be accompanied by supportive management processes.
The problem in demonstrating the relationship between leadership development, capability and performance is largely a result of the difficulty in untangling a series of interwoven debates, including the appropriateness of leadership development, and whether it addresses the right skills for the right people through an appropriate and effective pedagogy. Undoubtedly, not all leadership development activity is equal. It is more the quality than the quantity that matters.
In a vein similar to individual development, capability and performance, despite the tendency of many management and leadership gurus to make categorical statements about the characteristics of leaders of successful organisations, more reliable empirical evidence is hard to come by. In one of the studies, Sears store in the US found employee attitudes towards their job to be positively linked to customer attitudes and business results, with the line manager emerging as a key link in this chain.
A similar study of 100 stores of a major UK retailer found employee satisfaction and commitment to be positively related to sales increases. In both these studies, the quality of line management, as perceived by staff, was an important link in the chain between capability and organisational performance via its impact on employee commitment and motivation.
In addition, management competence has a greater influence on performance in a dynamic environment than in a static environment, thus implying that effective management and leadership are more necessary in times of change than in periods of stability. Positive relation between management, leadership development and organisational performance is evident from the example of British Telecom that saved GBP 270 million as the result of a management-training programme resulting in the reduction of errors by untrained junior managers and waste caused by missed deadlines, customer complaints and so on. Therefore, organisations involved in management development activity can identify an impact of this on business performance — primarily via improved staff morale and response, flexibility and improvements in quality, which in turn, could lead to greater customer loyalty and new business.
The positive outcomes of management development investment could largely be attributed to the manner in which an organisation made its policy choices, with particular importance being given to the company’s commitment to training activity. The use of external consultants in management development of small and medium-sized enterprises is likely to improve the business performance. It is now a widely accepted fact that the relationship between management, leadership and performance is the key ingredient in the effective performance of individuals, groups, organisations, regions and nation states.
The manner in which improved management and leadership leads to enhanced performance is highly complex, and thus when considering the benefits arising from interventions, a much broader notion of performance needs to be embraced than mere enhanced productivity or profit.
(The writer is Assistant Professor, Amity University)
