How Leadership Works

Last year, businesses invested an estimated $13 billion globally in finding the right leaders, and another $135 billion in supporting them with development. How well spent do you think that money was?

If you go by the failure rates reported in leaders, the answer is ‘not very well’. Estimates differ, but most researchers suggest that at least 40 percent of leaders either fail outright or are only minimally effective.[1] The causes of this are varied and complex. Yet over the past decade a mass of evidence has grown all pointing to one key issue. That the vast majority of current efforts to select and develop leaders are based on a flawed understanding of how leadership actually works.

It is the reason why leaders can sometimes do all the things leadership models suggest, and still not have the impact they need to. It is a big part of why the massive amounts spent each year on ensuring leaders succeed all too often fail to have the impact hoped for. And as we will go on to show, it is why firms’ efforts to select and develop leaders can even sometimes be counterproductive, and make it harder for leaders to succeed.

WHAT IS WRONG

The idea that we do not understand how leadership works is counterintuitive. After all, leadership is probably more researched and written about than just about any other business topic. We largely know the sorts of things leaders need to do to be effective, such as being strategic and motivating people. And we know the results these behaviors can produce, like higher levels of innovation, engagement, and discretionary effort.

We know all this because researchers have checked to what degree specific leadership behaviors are associated with particular outcomes. On the basis of this, they have then said ‘this is the way leaders need to behave’. “Want your business to be more innovative, then do this”. “Want your people to be more engaged, then do that”. As messages go, they are clear, practical and attractively simple.

Problem is, they are too simple. Because in focusing almost exclusively on the ways leaders behave and the outcomes produced, they tend to ignore pretty much everything else. And two key things in particular.

1. What happens between behaviors and outcomes

First, current leadership models largely ignore everything that happens in-between leadership behavior and the outcomes produced. They assume or imply that behaviors directly produce outcomes, with nothing really happening in-between. And to be fair, there are some things that leaders do that can have a direct impact. Things like key strategic decisions: Let’s build this, invest in that. But most of what leaders do has only an indirect impact on performance and it becomes more indirect the larger their team or business area is.[2] So rather than directly producing results, what leadership behaviors mostly do is to affect the environment that people work within. And it this environment that then drives outcomes such as what people do and their motivation and performance – all the aspects of employee behavior that drive business results. So by assuming a direct relationship between behaviors and outcomes, traditional leadership models have been missing a step and the piece that has been missing is the actual impact leaders have.

2. The context around leaders

The second critical thing most current leadership models ignore is everything happening around this behavior-impact-outcome relationship. The contextual factors that can change both how leaders’ behavior affects the working environment, and the type of results that this environment can then help produce.

And again, unfortunately, there seem to be a lot of factors involved. There are the characteristics of followers, the culture of the organization, its business challenges, the broader external market, and even cultural expectations of what leaders should be and do. Trying to understand the interactions between all these factors and how they determine which leadership behaviors produce which outcomes has been like trying to untangle a really big and tangled ball of string. Progress has been made, but the sheer complexity involved has prevented researchers developing clear rules of thumb that are easy for leaders to remember and act on. So most current leadership models turn a blind eye to all this complexity, and largely ignore it.

WHY THIS MATTERS

Just because you ignore something, however, does not make it go away. And the consequence of ignoring these two issues has been that almost all current leadership models and the behaviors they advocate do not always work as advertised. In fact, models of leadership behavior that have been hyped as universally useful – such as transformational, authentic and empowering leadership – have all been found to have negative, detrimental effects in some situations.[3] So leaders can sometimes use all the levers they are told to – that the leadership models promise will work – only to find that the handles come off in their hand.

HOW TO FIX THINGS

Fortunately, research into these two missing factors has been growing. Rather than just looking at which behaviors produce the best results, they have been trying to get to the bottom of how and why behaviors produce outcomes.

One of their main findings is a critical one: That we need to focus on the impact leaders have, and not just the way they behave. This may obvious, but it is subtly and crucially different from what most models currently do. It is subtle because helping leaders improve their impact involves suggesting certain behaviors. But it is crucial because rather than starting with behaviors and assuming they work, it turns things around and focuses us on the results leaders want to achieve. And in doing so, it pushes us to take things like context, culture and the other people involved into account.

It is a more complex picture than the traditional leader-pulling-the-strings and directly driving results image. But it also offers us a fuller understanding of leadership than we have had before. And that has three important consequences for how we select, evaluate and develop leadership.

1. Assess leaders’ signature environments

The first key consequence is that if we want to fully evaluate someone’s leadership then we need to look at more than just how they behave and the abilities and characteristics they have. Capabilities like influencing skills, strategic thinking and decision-making are all still important. But we also need to look at the impact they have.

What this means in practice is that leadership assessment, whether it be for selection or development, needs to look at not just capabilities, but also at the three dimensions of leadership impact. It needs to evaluate leaders’ style and approach, and the signature leadership environment that they tend to create.

Likewise, development activities need to help leaders learn how to hone their signature environment, and how to adjust and adapt it to suit different business challenges, contexts, and teams. The way to improve this impact that leaders have may well be through the way they are behaving, but the key focus will be the outcomes they are producing.

2. Develop leadership experiences, routines and moments of truth

The second key consequence is that to ensure they are building the signature leadership environment they want to, leaders need focus more on how their people experience their leadership. Or to put it in the words of Rob Morris, they need to think more about the experiences they are creating for their people.

For example, 360-degree feedback processes tend to ask people for feedback on how leaders behave. But what they should do instead - or as well - is to ask people about the impact leaders have, and how leaders affect how they think, feel and behave. This is important because it is only through understanding the experience that others have of them that leaders can understand and improve their impact.

Another way to get at this leadership experience – to both understand and develop it – is to focus on social routines: On frequently reoccurring leadership situations, such as team meetings and performance reviews, and how leaders typically behave in these. This is subtly but importantly different from focusing on leadership behaviors. Behaviors are things that you do on your own and towards others. They are separate from people’s reactions to you and there is a degree of just hoping they have the right impact. But social routines inherently involve others, their experience of you and behaviors towards you, and so focusing on these interactions make it easier to ensure you have the impact you want to.

One example of focusing on social routines is the idea of ‘Moments of Truth’. This involves focusing on the crunch situations and big calls leaders are faced with: Their reaction to stressful situations and dilemmas. As Sam Gilpin has put it, “these moments act as a kind of window to the soul for followers”, telling them what their leaders are really like and thereby setting the tone for all interactions. So the focus is on ensuring that the leadership experience given to followers in these moments is as intended and what is needed.

3. Optimize leadership responsiveness

The third consequence of focusing on leadership impact is the need to better understand how contextual factors such as business challenges, culture, and types of followers can affect how leaders think, feel and behave.

Being sensitive to your environment and varying how you behave according to the situation is generally a good thing. But in order to ensure they have the impact they want to, leaders need to better understand what kinds of environmental cues they are most sensitive to and how these cues can cause their leadership to vary. For many - if not most - leaders, this can be a blind-spot. But by better understanding how they respond to different contexts and cues, leaders can begin to take control of and deliberately shape their responses to make sure they have the impact they want to.

At present, this tends to be woefully ignored in most leadership evaluation and training. But as a simple example, imagine a 360-degree feedback tool that evaluated how leaders’ behavior changes around different people and behaviors, or in response to different situations.

WHAT WE NEED TO DO

There is a seemingly endless array of leadership models and theories all evangelically exhorting leaders to be a certain type of leader or behave in a certain way. They may all sound different, but they almost all share one common feature: They are all preoccupied with how leaders need to behave. And as a result, they inadvertently, but fundamentally misrepresent how leadership actually works.

For the vast majority of the time, what leaders do is to create a strategy and environment for their business and their people to succeed within. And it is this impact that they have, rather than how they behave that is the key to success or failure. Behavior is of course still a massively important part of the equation, of the mechanics of how leadership works. But it is one part, and not – as it is so often presented - the whole piece. What we need to do now is to supplement this focus on behavior and capability with a similar focus on the actual impact leaders have. And what this means in practice is assessing leaders’ signature environments; developing leaders through the experiences they give, their routines and moments of truth; and help leaders hone their responsiveness to the challenges and contexts they face.

This is not just semantics, either. It is important because of the high leader failure rates reported and the over-whelming evidence that the majority of leadership training and development spend does not currently produce real improvements in leaders’ performance. Time to rectify that.

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[1] Hogan, R. (2010) How to Defend Personality Measurement. Tulsa, OK: Hogan Assessments

[2] Lord, R. (2013) Four leadership principles that are worth remembering. Presentation to the Biennial Meetings of the Australian Industrial Organizational Psychology, Perth Australia

Barling, J. (2014) The Science of Leadership: Lessons from Research for Organizational Leaders. New York, NY: Oxford University Press

[3]Li, N., Chiaburu, D. S., Kirkman, B. L. and Xie, Z. (2013), Spotlight on the Followers: An Examination of Moderators of Relationships Between Transformational Leadership and Subordinates’ Citizenship and Taking Charge. Personnel Psychology, 66: 225–260

Hill, N. S. and Bartol, K. M. (2016), Empowering Leadership and Effective Collaboration in Geographically Dispersed Teams. Personnel Psychology, 69: 159–198

Robert, C., Probst, T.M., Martocchio, J.J., Drasgow, F., Lawler, J.J. (2000) Empowerment was negatively associated with work and co-worker satisfaction in India but positively associated with supervisor satisfaction in the United States. Journal of Applied Psychology, Vol 85(5), Oct 2000, 643-658

Obiwuru, T.C., Okwu, A.T., Apka, V.O., & Nwankwere, I.A. (2011) Effects Of Leadership Style On Organizational Performance: A Survey Of Selected Small Scale Enterprises In Ikosi-Ketu Council Development Area Of Lagos State, Nigeria. Australian Journal of Business and Management Research, 1(7), 100-111