Managers often fail to appreciate how profoundly the organizational climate can influence financial results. It can account for nearly a third of financial performance. Organizational climate, in turn, is influenced by leadership style—by the way that managers motivate direct reports, gather and use information, make decisions, manage change initiatives, and handle crises. There are six basic leadership styles. Each derives from different emotional intelligence competencies, works best in particular situations, and affects the organizational climate in different ways.
1. The coercive style. This “Do what I say” approach can be very effective in a turnaround situation, a natural disaster, or when working with problem employees. But in most situations, coercive leadership inhibits
the organization’s flexibility and dampens employees’ motivation.
2. The authoritative style. An authoritative leader takes a “Come with me” approach: she states the overall goal but gives people the freedom to choose their own means of achieving it. This style works especially
well when a business is adrift. It is less effective when the leader is working with a team of experts who are more experienced than he is.
3. The affiliative style. The hallmark of the affiliative leader is a “People come first” attitude. This style is particularly useful for building team harmony or increasing morale. But its exclusive focus on praise can
allow poor performance to go uncorrected. Also, affiliative leaders rarely offer advice, which often leaves employees in a quandary.
4. The democratic style. This style’s impact on organizational climate is not as high as you might imagine. By giving workers a voice in decisions, democratic leaders build organizational flexibility and responsibility and help generate fresh ideas. But sometimes the price is endless meetings and confused employees who feel leaderless.
5. The pacesetting style. A leader who sets high performance standards and exemplifies them himself has a very positive impact on employees who are self-motivated and highly competent. But other employees tend to feel overwhelmed by such a leader’s demands for excellence—and to resent his tendency to take over a situation.
6. The coaching style. This style focuses more on personal development than on immediate work-related tasks. It works well when employees are already aware of their weaknesses and want to improve, but not when they are resistant to changing their ways.
The more styles a leader has mastered, the better.
In particular, being able to switch among the authoritative, affiliative, democratic, and coaching styles as conditions dictate creates the best organizational climate and optimizes business performance.
It has been more than a decade since research first linked aspects of emotional intelligence to business results. The late David McClelland, a noted Harvard University psychologist, found that leaders with strengths in a critical mass of six or more emotional intelligence competencies were far more effective than peers who lacked such strengths. For instance, when he analyzed the performance of di-vision heads at a global food and beverage company, he found that among leaders with this critical mass of competence, 87% placed in the top third for annual salary bonuses based on their business performance. More telling, their divisions on average outperformed yearly revenue targets by 15% to 20%.
More important is that the findings revealed that those executives who lacked emotional intelligence were rarely rated as outstanding in their annual performance reviews, and their divisions underperformed by an average of almost 20%.
Further research was made to gain a more molecular view of the links among leadership and emotional intelligence, and climate and performance. A team of McClelland’s colleagues headed by Mary Fontaine and Ruth Jacobs from Hay/McBer studied data about or observed thousands of executives, noting specific behaviors and their impact on climate.
How did each individual motivate direct reports?
Manage change initiatives?
Handle crises?
It was in a later phase of the research that they identified which emotional intelligence capabilities drive the six leadership styles (mentioned on the top).
How does he rate in terms of self-control and social skill?
Does a leader show high or low levels of empathy?
The team tested each executive’s immediate sphere of influence for its climate. “Climate” is not an amorphous term. First defined by psychologists George Litwin and Richard Stringer and later refined by McClelland and his colleagues, it refers to six key factors that influence an organization’s working environment: its flexibility – that is, how free employees feel to innovate unencumbered by red tape; their sense of responsibility to the organization; the level of standards that people set; the sense of accuracy about performance feedback and aptness of rewards; the clarity people have about mission and values; and finally, the level of commitment to a common purpose.
The research revealed that all six leadership styles have a measurable effect on each aspect of climate. Further, when they researched the impact of climate on financial results
- such as return on sales,
- revenue growth,
- efficiency,
- profitability
It was found a direct correlation between the two. Leaders who used styles that positively affected the climate had decidedly better financial results than those who did not. That is not to say that organizational climate is the only driver of performance. But it was proven to have a direct relation!
Conclusion:
Economic conditions and competitive dynamics matter enormously. But the analysis strongly suggests that climate accounts for nearly a third of results. And that’s simply too much of an impact to ignore. Therefore many managers mistakenly assume that leadership style is a function of personality rather than strategic choice. Instead of choosing the one style that suits their temperament, they should ask which style best addresses the demands of a particular situation. Don’t be a product of your basic emotions and behaviors, you have a choice.
Research shows that the most successful leaders have strengths in the following emotional intelligence competencies: self-awareness, self-regulation, motivation, empathy, and social skill. There are six basic styles of leadership; each makes use of the key components of emotional intelligence in different combinations. The best leaders don’t know just one style of leadership—they’re skilled at several, and have the flexibility to switch between styles as the circumstances dictate.
Having worked many years as a leadership coach, I do realize that few leaders, of course, have different styles in their repertory, and even fewer know when and how to use them. In fact, when I discuss this subject with many leaders and organizations, the most common responses have been, “But I have mainly one or two of those!” and, “I can’t use all those styles. It wouldn’t be natural.” Such feelings are understandable, and in some cases, the antidote is relatively simple. The leader can build a team with members who employ styles he/she lacks. Take the case of a VP for manufacturing. She successfully ran a global factory system largely by using the affiliative style. She was on the road constantly, meeting with plant managers, attending to their pressing concerns, and letting them know how much she cared about them personally. She left the division’s strategy – extreme efficiency – to a trusted lieutenant with a keen understanding of technology, and she delegated its performance standards to a colleague who was adept at the authoritative approach. She also had a pacesetter on her team who always visited the plants with her. An alternative approach, and one I would recommend more, is for leaders to expand their own style repertories.
To do so, leaders must first understand which emotional intelligence competencies underlie the leadership styles they are lacking. They can then work assiduously to increase their quotient of them. For instance, an affiliative leader has strengths in three emotional intelligence competencies: in empathy, in building relationships, and in communication. Empathy –sensing how people are feeling in the moment – allows the affiliative leader to respond to employees in a way that is highly congruent with that person’s emotions, thus building rapport. The affiliative leader also displays a natural ease in forming new relationships, getting to know someone as a person, and cultivating a bond.
Finally, the outstanding affiliative leader has mastered the art of interpersonal communication, particularly in saying just the right thing or making the apt symbolic gesture at just the right moment. So if you are primarily a pacesetting leader who wants to be able to use the affiliative style more often, you would need to improve your level of empathy and, perhaps, your skills at building relationships or communicating effectively. As another example, an authoritative leader who wants to add the democratic style to his repertory might need to work on the capabilities of collaboration and communication.
I strongly believe that Leadership excellence is made, not born. Such advice about adding capabilities may seem simplistic – ”Go change yourself” – but enhancing emotional intelligence is entirely possible with practice. That's why I’m dedicated to helping you grow and master practice this difficult task.
Regards - Mark
