Business Leadership Isn’t Just About How They Lead the Business

Bad behavior at the top is apparently “in.” In just the last few months we’ve seen all manner of examples of respected and not so respected leaders behaving badly, Uber’s former CEO Travis Kalnick being the poster child.

Is something fundamentally or inherently wrong, deficient, or even derelict about the people who hold top positions in certain organizations? Or is the ever spreading “leadership crisis” really just a function of how leaders are selected, developed and rewarded? We take the position that it is the latter.

The systems that many organizations use to select, develop, and reward top leaders all are based on their behavior and their business accomplishments. At the same time, these systems overlook the essence of leadership and leaders’ impact on people and the culture of their organizations, which is why they inadvertently promote and reinforce behaviors later deemed as “bad” rather than those that enable organizations to be resilient and effective over the long-term.

Leadership defined

Back in the mid 1990’s when “Leadership/Impact^®” was first introduced the two words were rarely used together. Now when you do a search, a slew of books, articles, and other works that include these words are identified. Unfortunately, however, both leadership and impact are words that have different meanings to different people and, as a result, most people think about, discuss, and approach the impact of leaders in a rather limiting way that produces inadequate and often unexpected results.

Kevin Kruse, author of Employee Engagement 2.0, offered this:

Leadership is a process of social influence, which maximizes the efforts of others, towards the achievement of a goal.

As Kevin points out, the distinguishing features of leadership are:

It is about influence toward achieving a specific goal or intended outcome, rather than just any kind of influence.
It stems from “social influence” rather than authority or power.
It requires “others,” which includes, but is not limited to, direct reports, peers, higher level managers.
The traits, attributes, behaviors, styles, position, and job title of the individual are not part of the definition of leadership.

The impact of leaders

When people use the word “impact” with leader or leadership, they most typically describe the individual’s influence on the organization’s business performance or discuss the personal characteristics of the leader. In fact, when I casually ask people to describe the impact of someone’s leadership, they mention the leader’s traits, behaviors, styles, accomplishments and everything except the leader’s social influence on the people inside the organization toward the achievement of its mission, purpose, and goals.

As shown in the diagram, whereas the behavior of leaders and their leadership approaches can and do impact business performance, this happens both directly, as well as indirectly through the impact that leaders have on the behavior and performance of other people within the organization and its culture.

Why the impact of leadership is more important than ever

Creating an environment and culture within which people effectively work independently and together to achieve the organization’s purpose and goals is both more challenging and critical than ever before as leaders deal with: ever-changing technology; increasing competition and customer demands and expectations; threats to cybersecurity and internal operations; attracting, engaging, and retaining scarce talent; government regulation, deregulation, economic and political changes; as well as mergers, demergers, and structural changes.

Because their indirect impact on performance via others is rarely addressed, most leaders unknowingly do things in ways that work against what they are trying to achieve by encouraging and driving the people around them to behave more defensively and therefore less productively than they intend.

Because they don’t realize their true impact on the performance-related behaviors of others, leaders miss the opportunity to redirect their approaches to maximize the contributions of members and the long-term effectiveness of their organizations.

Leading with the end in mind

Leaders have a tremendous influence on the culture of their organizations and can encourage people to behave in a number of different ways to achieve a number of different goals. For instance, an individual’s or group’s leadership can influence other people to behave in ways that attain the organization’s immediate goals at the expense of achieving its mission and purpose. Thus, we have examples like Enron and Wells Fargo and the entire mortgage banking industry a decade ago, where it was assumed, based on short-term financial performance, that the leadership was promoting effective organizational cultures that should be modeled by other leaders and organizations. It wasn’t until the longer-term effects of those behaviors took hold (which actually did not take very long), that people realized they were making overly-optimistic assumptions about the leadership’s impact on the organizations’ members and cultures based exclusively on the immediate results achieved.

These incorrect assumptions were reached without any real knowledge of the kinds of self-serving, defensive behaviors that were actually promoted and reinforced by leadership in these organizations. The cultures that they promoted certainly had tangible, bottom-line results: the achievement of the largest bankruptcies in history up to that time, the loss of thousands of jobs and billions of dollars, and prison time for top executives, just to name a few.

On the other hand, there are examples such as Tasty Catering in Chicago, Sanitarium Health and Wellbeing in Australia, and SaskCentral in Canada where the leaders intentionally changed their impact on people to behave more constructively and communicate and coordinate with one another in ways that achieve immediate goals while simultaneously achieving the organization’s long-term mission and purpose. The cultures that these leaders promote also have tangible, bottom line results — all of these organizations are thriving along multiple criteria including financial performance; attraction and retention of top talent; and sustainability.

Interestingly, in both the former defensive and latter constructive examples, the leaders motivated the people within their organizations to be agile, innovative, engaged, purposeful, and growth-oriented. The difference is to what end — permanent ruin versus sustained excellence.

Increasing effectiveness through leadership impact

Impact on people and culture is the essence of what leadership is about and is the most enduring aspect of one’s leadership legacy. The impact of leaders on people and culture is just as real and measurable as the leader’s personal characteristics and business performance. If we want our organizations to attain sustained success over the long-term rather than just look good in the short-term, leaders must understand and actively steer their impact on people and culture.

This post originally appeared on ConstructiveCulture.com