Who Is an Effective Leader?

 

 

Leadership has a profound impact on the performance, motivation, and well-being of every team. But what truly defines an effective leader? In this article, we explore the qualities and behaviors that distinguish great leaders.

Objectively, we can measure a leader’s effectiveness based on the influence they had in setting new goals and the extent to which those goals were achieved. Subjectively, however, we tend to evaluate leaders based on other factors. These include their character and the integrity of the methods they use to influence others and achieve goals. And, of course, the nature of the goals toward which they guide others.

 

 

Key Leadership Theories

 

 

The scientific community that studies effective leadership has developed various related theories. Below, we present some of the most notable ones:  

 

Transactional Leadership

 

 

The basic assumption here is that leadership is an exchange process, similar to contractual relationships in economic life, and depends on the good faith of the participants. Leaders interact with subordinates to achieve results, create expectations, set goals, and provide recognition and rewards for task completion. Mutual benefits are exchanged between leaders and followers within a framework of rewards and “penalties” that shape cooperation and trust.  

 

Transformational Leadership

 

 

This approach to leadership focuses on how leaders transform group goals and actions mainly using their charisma. While transactional leaders appeal to the personal interests of subordinates, transformational leaders inspire them to embrace a vision that goes beyond individual self-interest.  

The three key elements of transformational leadership are:

• • Individualized consideration: attention to employees’ needs, abilities, and aspirations, aiming to help them raise their ambitions, improve their skills, and satisfy their needs.
  • Intellectual stimulation: encouraging employees to challenge their basic ways of thinking, assumptions, and practices, helping them develop new and better ways of thinking and acting.
  • Charismatic / inspirational leadership: providing the energy, mindset, and sense of urgency that transform followers.

 

 

Likert’s Leadership Styles

 

 

Rensis Likert, Director of the Institute for Social Research at the University of Michigan, developed a theory describing four leadership styles. These depend on the degree of participation in decision-making.  

 

Exploitative-Authoritative System

• • Goals are determined by top management and communicated through orders
  • Limited trust in team members and highly centralized control
  • Motivation is based mainly on fear of punishment and occasionally on rewards
  • Results include negative attitudes, high turnover, and low productivity

 

Well-Intentioned Authoritative System

• • Characterized by a paternalistic approach
  • Some upward communication is allowed
  • Fear of punishment is used less, while financial rewards are used more frequently to increase productivity

 

Consultative System

• • Requires greater trust in employees
  • Uses employees’ opinions and ideas through two-way communication
  • Leaders make the major decisions, while less critical decisions are handled at lower levels. Punishment is used occasionally.

 

Participative System

• • The leader places full trust in the team
  • Decisions are made democratically by the members of the group concerned, based on majority rule
  • Emphasis is placed on teamwork, group results, and group rewards

Perspectives on the Effective Leader

 

 

As mentioned in the introduction, there are many subjective interpretations of what an effective leader is. However, there seems to be a growing agreement regarding the characteristics that define a leader who delivers results while also maintaining healthy team relationships. In a  relevant article in the Harvard Business Review, the results of an interesting study were presented. A total of 195 leaders around the world were asked to rate 74 leadership qualities.

The qualities that were ranked highest were related to characteristics such as:

• high ethical and moral standards
• ability to self-organize
• willingness to learn
• interest in developing team members
• open communication
• supportiveness toward colleagues

 

 

A similar perspective is reflected in articles published by Forbes magazine. In one such article, leadership characteristics highlighted include self-management, strategic thinking and goal setting, effective communication, reliability, complexity management, and investment in relationships. Another characteristic attracting the attention of many leadership experts is humility. Dan Cable, Professor of Organizational Behavior at London Business School, states that when leaders demonstrate humility and respect toward their colleagues, organizational effectiveness becomes exceptional. According to him, this matters more than the constant pursuit of improved performance metrics.

Closing

 

 

We believe that effective leadership is a matter of combining the right personality traits with the demands of the situation. Trust also plays a crucial role, supported both by fairness and impartiality, as well as by a solid understanding of the principles and rules of collective decision-making.