The Impact of Leadership Style on Organisational Performance

Posted by: Nigel Girling Post Date: 17th May 2018

Drawing on research involving nearly 4,000 executives, Daniel Goleman explores the leadership styles that contribute to organisational success in his article ‘Leadership That Gets Results’.

The research concludes that organisational climate contributes to around 30% of companies’ profitability, and finds that leadership styles have a direct and major impact on such climate, creating a negative or positive ‘working atmosphere’.

The study ranks the six leadership styles in terms of their positive impact on organisational climate, taking into account the climate drivers flexibility, responsibility, employee wellbeing, standards, leadership training, rewards, clarity and commitment. While the first four leadership styles have a consistently positive impact on climate, the last two have a negative impact in most contexts.

Goleman stresses that leadership style isn’t simply an accident based on personality, but something that can be shaped by practice and need for quality, and adapted to fit any situation. Each style is based on different aspects of emotional intelligence, and Goleman urges leaders to cultivate this to reap the rewards of a high performing team or organisation.

Let’s take a closer look at each of the leadership styles, in order of the positive impact they have on organisational climate and promotion of continuous improvement.

Leadership styles on organisational performance

1. Authoritative

The authoritative leader shares a vision for everyone to strive towards, encouraging collaboration in the workplace by setting clear end goals and the motivation needed to achieve them. This type of leader avoids micromanagement, encouraging an entrepreneurial approach among team members. This means that, while objectives are determined by the leader, the means of meeting them and the managing of external influences are not prescribed.

Despite a name that implies authoritarian control, this style of leadership has a host of emotional intelligence tools in its arsenal, employing empathy, team communication and the ability to inspire change, as well as a shedload of self-confidence. It, therefore, strikes a fine balance between McGregor’s Theory X and Theory Y.

This style works well with teams lacking a transparent and inspiring vision but should be used with care when leading experts who already have a fully-fledged sense of where they’re headed, as a leader it should be of one of the manager’s responsibilities to react to these problems.

2. Affiliative

Affiliative leaders generate motivation and quality management through a sense of belonging. They create strong bonds between team members and themselves and build trust and harmony through consistent praise, important to all ethical companies.

This style of leadership puts people first and draws on empathy, active listening, employee wellbeing, excellent communication skills and the ability to build relationships in order to put everyone at ease.

While this can be extremely useful where teams have weathered stormy seas and need reassurance, it shouldn’t be used as a long-term strategy. This is because continual praise in all circumstances leads to a lack of incentive for improvement, and leaves performance issues unaddressed.

3. Democratic

The democratic leader makes sure everyone’s voice is heard, achieving consensus before steaming ahead. This style values others’ views just as much as the leader’s, trusting that decision by committee is the best way to form sturdy strategies.

Democratic leaders possess excellent communication skills, using diplomacy to elicit input from participants, and skilful facilitation to kick-start collaboration.

Democratic leadership is beneficial in gaining buy-in from stakeholders, whether it’s getting the go ahead from seniors or motivating team members towards goals. It’s also commonly used where team members have large amounts of expertise to offer. Be cautious, however, of trying to introduce extreme democracy where a situation demands an urgent response, or where team members don’t have the expertise to make highly valuable contributions at a strategic level.

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4. Coaching

Coaching is all about identifying people’s particular strengths and weaknesses, then using this understanding to develop them in the right direction. Unlike the affiliative leadership style, this approach offers constructive criticism as well as praise.

Leadership training requires high levels of emotional intelligence, using perceptiveness to get to know individuals’ idiosyncrasies, and empathy to engage them towards change.

The downfall of this approach is that it takes huge amounts of time and effort to analyse what makes each person most effective, and you won’t always see a return on this. On top of this, working with individuals towards developments in skills, knowledge and behaviours is a long-term commitment that requires considerable expertise.

While this style can be used with a select few who are highly motivated and open to suggestions, coaching team members who are unwilling to accept weaknesses or change their behaviours can feel like trying to draw blood from a stone.

5. Pacesetting

Often newly promoted to leadership after success in operational roles, pacesetters model excellent performance. They set expectations by demonstrating them, assuming that everyone should be able to keep up.

This tends to be one of the least effective approaches when used in isolation, as demanding high performance with little motivation or guidance can be overwhelming and, ultimately, demotivating.

While it might be effective where team members are all motivated and high-performing, steer clear where you risk alienating some members. Remember that pushing too hard without providing the appropriate support can be a one-way ticket to sky-high turnover (of staff, not money!).

6. Coercive

Do you think team members should do as you say, not as you do? Then it’s likely you’re a coercive leader.

Leaders using this style demand compliance, valuing team members’ ability to follow instructions over their innovativeness.

While this approach might be needed in critical or time-limited situations, it seriously risks disengaging people if used extensively outside of this context. If you do make use of a coercive approach, don’t expect a team where new ideas flow and creativity flourishes. At the same time, you’ll struggle with getting team members to share your enthusiasm for the vision and values you enforce.

The infographic above ranks these leadership styles in terms of their value as independent approaches in contributing to positive organisational climate. As Daniel Goleman emphasises, however, a good leader should combine and apply the most useful elements of each of these styles to different contexts. Rather than sticking to the single ‘most effective’ style, a leader’s effectiveness is measured by the ability to adapt to the demands of a situation.

It’s important, therefore, that you don’t simply pick the top couple of styles on this list and apply them constantly; instead, you should master each of the styles and learn when to apply and combine them for the greatest positive impact for continuous improvement.

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