The Importance of Leadership in Business Performance


For any business to succeed, both visionary leadership and effective management are essential. While leadership and management are connected, they are actually two distinct functions that are often confused.

Management involves the day-to-day coordination of different activities and resources in an organisation, while leadership involves formulating a vision, enabling others to understand that vision, and making sure that the vision is achieved.

Leadership is arguably one of the most important factors for the success of a business.

The approach of a leader can affect how productive employees are in an organisation, and how the business as a whole achieves its goals and vision.

While the daily performance of a business depends on every department successfully performing its role, guided by its department heads and managers, all of this can be strongly impacted by the top-level leadership.

Defining organisational values

Leaders usually set the tone for their entire organisation. They do this by defining the organisational values and formulating a mission statement that guides everyone in the business.

From the organisational values and the mission statement, practical guidelines should be derived, which can then be used to train and evaluate employees.

These guidelines can also be used to decide which employees are under-performing, and who should be brought up to speed, or removed.

The 3 main types of leadership

There are three major types of leadership. These are laissez-faire, authoritarian and democratic. Each type of leadership affects organisations in different ways. 

In laissez-faire leadership models, a lot of freedom and autonomy is given to all levels of the hierarchy. Managers and employees are allowed a free hand, and they are free to make their own decisions and work with their preferred methods.

In democratic leadership models, decisions made by the top-level leaders are based on feedback provided by the management and employees of the organisation.

And thirdly, authoritarian leadership is a kind of leadership where employees are given clearly defined objectives and strict guidelines. It tolerates much less autonomy and individual flexibility.          

The effect of leadership on communication

The leadership style can affect not just productivity, but also communication.

When leaders are overly bureaucratic and follow established procedures too much, this will tend to inhibit communication in an organisation and slow down the decision-making process.

This is because everything is always expected to flow through established channels, and feedback, or discussion, outside of these channels are not desired.

On the other hand, leaders that do not follow any communication protocols can risk distorting information. If communication channels are not properly maintained, this can lead to inaccurate, or no information being conveyed.

Clearly, there is a need to seek a proper balance in communication styles within an organisation.

Boosting morale through leadership

When employees are highly motivated and believe in the vision of their organisation, they will be more productive, and will readily do all they can to ensure that goals are met.

The style of leadership can directly affect the morale of an employee. For example, authoritarian leadership may keep employees feeling less motivated, as their input is rarely sought for the running of the company.

Democratic leadership, on the other hand, allows employees to get involved in the decision-making process and thereby tends to keep their morale high.

In general, when employees are involved in the decision-making process, they are usually a lot more motivated and productive.

Inspiring staff to take responsibility for company goals 

When employees and management take responsibility for the organisational goals, a business is well on its way to success. Employees can even be inspired to become good leaders in their own way.

A good leader can achieve this by instilling an ownership mindset in their workforce. Good leadership skills work by changing the mindset of the employees.

Employees that have an ownership mindset will look for ways to improve and make an organisation better.

The effect of leadership on organisational focus

A good leader will ensure that a business remains highly focused on its organisational goals. Many businesses suffer when too many people are trying to make decisions that lead in different directions.

Instead, there should be clarity of purpose and a singularity of vision in an organisation.

Good leaders know when to re-align both employees and managers with the organisational goals, to ensure that everyone is focused on working towards these goals, and not getting distracted by sideshows.

The effect of leadership on organisational culture

Every organisation has a culture. This culture can make the company stronger or weaker, and so it's one of the main responsibilities of the leadership to see to it that a healthy culture is created and maintained.

Corporate culture strongly affects the way people do things in a business. Employees often emulate their leaders, both consciously and subconsciously, so leadership styles can strongly affect the corporate culture of an organisation.



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