To most business founders, leadership is seen as being tied to a specific role or formal position. However, there are more factors to understanding what is leadership effectiveness. First, it’s essential to understand what is leadership effectiveness to lead a business well.
Successful leadership isn’t about merely having the qualities of a leader, nor is it just about holding on to a particular role. Relating effectively with other people is vital to impacting business management. Through this guide, we’ll focus on helping you understand what is leadership effectiveness and the means to provide the best leadership while running your business.
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What is Leadership Effectiveness?
There’s a common concept that leaders are made and not born, which is mostly true. Business leaders have the role of handling strategy to figure out courses of action, managing resources effectively, and motivating people to achieve a common goal. However, when referring to what is leadership effectiveness, it generally refers to a business leader’s ability to inspire their team members and others.
Leadership effectiveness as a business founder is defined as the ability to influence followers and other organisational stakeholders to reach the organisation’s goals. It’s also one of the critical indicators of business success or failure.
In understanding what is leadership effectiveness in a business, it’s important to note that it’s a never-ending journey to achieve, as you constantly strive towards improving your performance. This is far more relevant in today’s fast-paced and highly technological workforce.
While leadership behaviour in founders can be developed, it’s essential to take note of the different approaches that effective leadership entails. According to The Leadership Triangle, there are three main effective leadership styles, particular in a business founder:
- Tactical leadership – these leaders focus on solving immediate and straightforward problems using operations-oriented expertise.
- Strategic leadership – these leaders focus on the future and forecast industry and market trends to maintain a specific vision for the organization.
- Transformational leadership – these leaders focus more on initiating collaboration within the organization to achieve growth and drive a vision forward.
In figuring out what is leadership effectiveness as a business founder, gaining a clearer understanding of a leader’s capabilities can help you be more comfortable with whichever style you see yourself applying:
- An effective leader knows how to understand and be understood later on. A leader must also learn to change their perceptions to apply effective change.
- An effective leader must learn to listen to relate effectively with other people. Listening requires emotional control and patience to be open to change and criticism.
When it comes to running businesses, a leader who considers others first is enthusiastic at maintaining effective interpersonal relations, which ultimately helps in achieving organisational objectives.
Benefits of Leadership Effectiveness in Business
As you understand what is leadership effectiveness further, it’s essential to relate effective leadership with the positive outcomes it can achieve while running your business:
1. Influential Leaders Maintain the Company's Vision
Every business needs to have a vision of where they hope to be in the long run and how it’s perceived by clients, its partners and stakeholders, and the community in general.
Unfortunately, in all the hustle of everyday operation, these things can often get lost as things get busy to keep it all running. A strong business leader has the proper foundation to stay the course and ensures that the organization’s vision and values remain protected and maintained.
2. Good Leaders Can Spot Opportunities
Effective leaders in charge of businesses don’t just focus on day-to-day operations; they also need to look ahead to find great opportunities for the business. Aside from being aware of market trends and future possibilities, leaders need to have great insight to stay one step ahead of the competition. This is especially true with the level of competition that business founders face on a daily basis.
3. Effective Leadership Leads to Increased Revenues
The most appealing of the benefits of leadership performance is how it affects the bottom line of the business you’re running. The connection between leadership and revenue generated is a point that businesses prefer, especially since it’s been shown that outstanding leadership often leads to a doubling in profits in your business.
This positive impact on financial performance relies greatly on strategies made by strong business leaders, with not just the business founder, but the business’s executives plotting the policies and actions that are needed to be implemented.
4. Skilled Leaders Promote a Good Business Culture
In business, company culture refers to the personality of the company itself, representing the company values, ethics, goals, and mission that each employee is a part of. Having proper direction from effective leadership is a great way to sustain a positive company culture. How the leaders in the business espouse this culture will determine how it flourishes and can significantly reflect on the company itself.
5. Effective Leaders Raise Potential and Capabilities
Successful leaders are vital towards influencing human capital outputs, especially when your business is in the growth stage. Aside from motivating and engaging staff towards personal development, good leaders are also great mentors. They see the potential in others while passing on their skills and knowledge to other people.
They provide great inspiration for the employees in their business and are role models that people can aspire to become. These leaders don’t hesitate to see other people succeed because they know that the business can gain from developing people’s skills.
6. Great Leaders Provide Motivation and Boost Morale
Effective leaders know how to empower employees in their business to achieve better engagement towards gaining results. A contented and happy workforce backed by a leader they admire and respect is the combination most businesses need. Leaders who appreciate their team and are involved in their work boost morale your staff often requires to perform at their full potential.
This motivation that leaders provide is vital to understanding what is leadership effectiveness in their businesses. This level of influence and respect is essential to ensuring that employees will be more likely to stay loyal and work harder to achieve your business goals.
7. Smart Leaders Manage Resources Wisely
A good leader knows how to allocate available resources and makes sure that every team member has the right tools to do the job effectively. They distribute these tools wisely while considering the limitations of the business. When a leader provides support in this manner, members of the team show appreciation by striving harder to produce quality work for the business and its customers.
8. Effective Leaders Facilitate Communication
Information is essential to any business, and communication is pivotal for teams to function effectively. When new strategies are made, or changes in plans are enacted, it’s necessary to keep everyone informed to avoid any sort of miscommunication. True business leaders facilitate this communication throughout their teams and encourage sharing information that ensures collaborative development throughout the business.
Strong leaders provide effective communication, whether a simple email or an office staff meeting, to disseminate the proper instructions or diffuse any doubt and address concerns. Leaders also use open communication to enact strategies and plans more efficiently while mitigating conflicts to achieve positive outcomes for the business overall.
Leadership Effectiveness in Businesses
In understanding what is leadership effectiveness, it’s also important to consider the challenges that can be faced on the path to achieving it in businesses. The act of leading happens several times a day without actually being conscious about it. As a business founder, it’s essential to know how to face these challenges no matter how small these moments can be, so they don’t collectively become a more significant concern for your business.
As business founders, a lot of leaders tend to micromanage too much and lack the ability to delegate tasks effectively. This can stifle creativity, independent thinking and leads people to focus on the short term. It can also cause over-controlling people in leadership positions to experience burning out, which hampers development and delays results.
Leaders have to think big rather than centering on the small picture. They need to stay focused while allowing people to learn, think, and act to achieve the grander vision of their business.
2. Leadership Effectiveness is Hard to Measure
While leadership performance can be measured in many different ways, the quality of effective leadership can be challenging to quantify. Most leadership research focuses on leadership styles or the strategies that leaders apply, and it’s also difficult to find research that specifically targets business founders.
There are, however, several means to create valid and reliable measures for leadership effectiveness that can be tailored to suit a particular setting in your business. And while business results are the best indicators of leadership measurement, this can be achieved through methods such as conducting evaluation feedback, external audits, and customer assessments.
3. The Lack of Negotiation and Problem-Solving Skills
Regardless of the sector or the size of the business, negotiation and problem-solving skills are vital skills that every business founder should master as an effective leader. These are important in leadership as these skills provide the means to better resolve differences and challenges in the workplace.
Unfortunately, these skills aren’t taught to ensure successful application and positive outcomes, and business founders are usually left to experience this themselves the hard way.
Training for these scenarios with actual techniques from experts can provide the necessary skills and strategies applied to any business setting. In Super Scaling, the Inner Circle is a program with 1-on-1 coaching that gives business founders role-play sessions to enact this before having to go through it in real-life. In addition, having these negotiation skills allows business leaders to manage conflict a lot faster, which is vital to mitigating concerns within a team in a business.
4. Assumed Collaboration
Team members who are asked to work together in a business require authentic, effective leadership to perform optimally together. True collaboration needs communication and negotiation to create a genuine collaborative work environment that can produce the best results for the business.
As effective leaders in a business, they have to provide the proper management by choosing the right team members, allotting the appropriate resources, and giving the necessary guidance to achieve a team’s goals.
5. Effective Leadership is Subjective
One of the biggest challenges to understanding what is leadership effectiveness is the subjective manner of its measure. Most feedback gained on effective leadership is based on peer or subordinate ratings of a particular leader. While this provides vital information, they can also be subjected to rater bias. This is why more research is needed to find out how and why successful leaders can influence a business’s performance.
More often than not, business leaders and their teams may reach a scenario where playing safe and going through the motion of the job becomes the path of least resistance. This is a behaviour that is dangerous for a business, as it severely limits innovation and growth. It also leads to mediocre performance, a drop in productivity, and a reluctance to go for something new — all characteristics of a business on the path to stagnation.
To be an effective leader in your business, you need to prevent this workplace complacency to push things forward constantly from happening in your business. This can be overcome by engaging and developing new concepts in your employees to learn new skills. The continuous state of learning for leadership and team members can provide an environment of motivation, excitement, and creativity in your business that is the opposite of staying stagnant.
7. Ineffective Innovation
From the many interactions that the Super Scaling team has had with businesses, we have seen many business founders making the mistake of initiating innovation for innovation’s sake without actually realising the potential of innovation.
Business leaders who push innovation with this objective inevitably find themselves failing and frustrated since innovation is merely based on ineffective and superficial collaborations.
Instead, good leaders need to rely on effective innovation to ensure that their teams work cohesively together and handle the challenges that these innovations can come along with.
5 Tips to Increase Leadership Effectiveness
Through effective leadership, success can be achieved in your business when you and your leaders apply these five practices:
1. Show Flexibility
An effective leader in a business needs to be able to respond in many different situations, especially in an ever-changing business landscape. Being flexible when working with staff makes it easier to recognise what needs to be done and provide what their team needs.
A research of 484 managers from businesses within the United States found that managers who showed flexibility by being directive and collaborative were seen to be most successful. Being a flexible leader also provides more motivation for team members, as it allows more open communication instead of instigating conflicts.
2. Know Your Blind Spots
Leaders often neglect their inabilities because of the position they maintain. These blind spots hold people back from making positive changes to achieve better results. Having honest feedback from other leaders and colleagues, or even from other team members, should be welcomed to learn from it.
This is where team development assessments and performance reviews can provide the needed insight to allow leaders to grow further. Having regular assessments of a leader’s competencies can help a leader grow the business more effectively.
3. Education and Training
Every person in a leadership position in a business should be carefully chosen. These leaders should always have the motivation and desire to keep learning. This will allow leaders in businesses to develop the necessary skills to be effective.
From training, conferences and seminars, and specific programs designed to develop growth, striving to fine-tune one’s leadership capabilities are always beneficial for you and your business.
4. Demonstrate Great Social Skills
Leadership effectiveness is about influence and respect, and successful leaders need to inspire and motivate others to reach the high-performance standards expected from them. This can only be achieved when leaders demonstrate high intrapersonal and interpersonal skills.
You won’t do any motivating if you’re merely behind the desk all day relishing in your leadership position. If you want your team to function successfully, you’ll need to lead them effectively.
5. Communicate Effectively
One of the key differentiating factors of a successful business is the clarity of their business vision. Business founders who know their business vision, and can communicate this vision to team members effectively, start off on the right foot as business leaders.
Excellent communication is vital to a team doing its job and achieving goals, and it cannot be possible if leaders can’t express the business’s direction correctly.
Unfortunately, miscommunication is the biggest challenge to many teams, especially when they’re scattered across multiple locations, which is why leaders have to be the connecting piece that ties it all together in their business.
Effective leaders don’t just lead by example, they embody the values of their business. They motivate and inspire teams to perform at their best.
When leaders lead by example, they become a vital cog in the machine that drives towards their business’s success. Business founders who aim to improve their leadership effectiveness should invest in personal development while initiating the means to develop those around them. When this is achieved, overall performance for the organization becomes the real benefit.
This is just a brief guide, for more details on how you can become a more effective leader as a business founder, download our free 61-page playbook: Learn more about creating world-class teams as a business founder.