Leadership key to profits

by 30 Sep 2008

THE TOP 10 per cent of leaders make nearly double the profit of average-to-good leaders, while poor leaders lose money and drive customers away from their company, recent research has found.

Average-to-good leaders (the middle 80 per cent) make a reasonable profit, while the difference in profitability results between an average-to-good leader and a leader in the top 10 per cent are staggering.

Michael Bunting, managing director of WorkSmart Australia, said Australians were marginally below the global average in leadership capability. “So they are not showing exceptional leadership, but are also not showing poor leadership,” he said.

“If we look at the data around extraordinary leadership versus good/average leadership and its impact on performance and competitiveness, it would point to the real need for leadership development in Australia to be taken more seriously if Australia wants to become globally more competitive.”

Bunting, who runs leadership workshops in Sydney and Melbourne, said research indicates that Australians value honesty in their leaders above all else and put an extremely high value on good relationships in the workplace. This presents a big challenge to the leaders we have worked with. How does one remain consistently honest and maintain good relationships and harmony?” he said.

“So the challenge for the Australian leader is to find ways to build relationships at exactly the same time as remaining totally honest about performance issues, people’s career prospects, company problems etc.”

Jim Kouzes, who co-authored The Leadership Challenge, and conducted the abovementioned research into leadership, said good leaders demonstrate five practices: modelling the way; inspiring a shared vision; challenging established processes; enabling others to act; and encouraging the heart.

“It’s a matter of how frequently leaders engage in these behaviours. The more frequently one clarifies values, sets a positive example, envisions the future, enlists others, searches for opportunities, takes risks and learns, strengthens others, fosters collaboration, recognises individuals and celebrates successes … the more impact they’ll have. The less they do them, the less impact,” he said.

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