The success of a business truly lies with the people who work in the business. However, how a team performs is generally a direct result of the ability of their leaders to lead. It has been said that team members will treat customers in the same way as leaders treat their team. It’s unfortunate that many business leaders believe that business shortcomings are related to failures within the team. However, in closer examination, the cause is not the team, but poor leadership.
Psychologist Dr Fred Kiel, head of business consultancy KRW International undertook an in depth study into the connection between the financial performance of a business and the character of its leadership – or in this study, its chief executive.
It came as no surprise that researchers were able conclude that financial results were impacted by up to 30% by who was in charge.
The study interviewed 84 chief executives and polled 8600 employees. The CEOs were than ranked from being virtuosos to self focused.
Virtuosos leaders were defined as skilled business people with strong characters. They create a vision for the business, maintain a strategic focus and build a team of equally strong character.
Self focused leaders were seen by employees to place their own welfare and success as their number one priority.
The research revealed that companies headed by virtuosos leaders delivered a return on assets (net operating income divided by total assets) averaging 9.35% compared to those self focused leaders, who delivered a return of only 1.93%.
Team members headed by a virtuosos leader also reported greater satisfaction with the company providing confirmation that the behaviour of a leader filters through an organisation with positive impacts on customers and stakeholders.
So what sort of leader are you?
Characteristics of a virtuoso leader
- Keep promises and follow through with commitments
- Own up to their mistakes and correct them
- Accept that people make mistakes and forgive them
- Treat people as people, not commodities or numbers
Characteristics of a self focused leader
- Can’t be trusted to keep their promises
- Often pass the blame to others
- Frequently punish well intentioned people for making mistakes
- Are especially poor at caring for people
Leaders of high character and the teams that they develop create conditions for an engaged, innovative, adaptable and highly energised workforce which deliver on vision and strategy. This leads to better performance, as amongst other things they supercharge their team by establishing an environment where team members are confident in management, energised by vision, clear on their priorities to support the strategy and respectfully held accountable for their decisions and performance.
In summary, I believe there are no surprises with this research and reaffirms what I’ve thought all along – a team will only be as good the quality of its leadership (or as it has been put, “a fish rots from the head!”).
The results of this research could also be extended to the functionality of a family. I believe that many of today’s problems in families are caused by poor leadership, which is exacerbated through each generation – unless the cycle can be broken!
What’s your leadership style?
Does it promote maximum performance?
- Derek Parker “How self focused CEOs kill profits” In The Black August 2015
- KRW International