How Leaders Impact Business Outcomes

Leadership is a means to an end. As great as it is to be a leader, as noble a cause as it often is, as important of a job as it is, there is always a reason and that reason is usually some kind of outcome that needs to be achieved. Leadership is rarely important in and of itself. It is important because of what it can drive, particularly for organizations. The  Gallup organization did a combined analysis of some 100 studies linking earnings per share to effectiveness of leadership. Last year while working with a major telecommunication provider we measured the impact of leaders on revenue growth, as well as customer satisfaction. All of these studies tend to yield the same conclusion which is that leadership, done well, has a significant impact on many a business outcome. So what is it that those leaders do that allows them to have an impact on business results?

1. They define the strategy and form the plans to achieve that strategy. The best leaders have a strategy. Now, if you don’t have a strategy and you are a leader then it is the business equivalent of going on a date and saying, “I don’t know. What do you want for dinner?” It’s kind of lame. Clear      strategy is “the what” and the plans to achieve that strategy provide “the how”. Great leaders need to have both. Now they don’t need to be the only ones who create it. They can involve others, and in fact the best leaders frequently do involve other, but they make sure that a strategy and a plan is in place, and leaders have to lead that process.

2. They get alignment in their organization. They get the organization galvanized around a cause because they have created a clear line of sight where everybody knows what needs to be accomplished, what their role is in accomplishing those objectives is, and their responsibility for doing so. It is called by some, goal congruence sometimes and it makes delegation quite easy. Southwest Airlines is a great example of goal congruence and alignment because, Herb Kelleher and members of the leadership team in that organization, has made it clear what behaviors are appropriate for that organization and they cascade throughout the business.

3. They inspire and motivate. Now of course, I had to include that because I co-authored a book a couple of years ago called The Inspiring Leader.  The reason it is so critical is that this leadership trait was the one that separated the best leaders from their average and poor counterparts – the ability to inspire and motivate. It also happens to be the competency or skill set that is most often described by subordinates as the one thing that would have the greatest impact on their leader’s effectiveness.  And it also has the highest correlations to employee engagement of any other leadership skill. That engagement is of course, the fuel for productivity – productivity that drives innovation, productivity that drives profit, customer satisfaction, and a host of other business objectives. So when you start to think about the impact that leaders have on outcomes it comes back to engagement and these are the ways that leaders drive engagement.

I want you to take a moment to think about a time when you were on a team that was not particularly aligned with a strategy for the organization and think about what that was like and what that team produced. Then I would ask you to think about a time when you were on a team that was very engaged and very aligned with the strategy for the organization. Consider the differences in the kind of results that those teams produced. When you have that answer it is easy to see how leaders impact business outcomes.  After all, it is the leader of any team, division, or organization who is responsible for these three things.