Poor leaders lose money; good leaders make profit. Common sense? Surely there are reams of studies that have proved this since time in memoriam? Apparently not.
But recently, an article published in Forbes claimed to illuminate statistical findings which did exactly that. In an investigation carried out by Joe Folkman and Jack Zenger, (both development and leadership statisticians), evidence has been built up to quantify the effect that effective leadership has on an organisation. Arguably, to find a correlation between good leadership and financial success is to make the case for renewed focus on specific leadership development.
A significant amount of data was analysed: as many as 500,000 feedback reports relating to 50,000 managers. Folkman and Zenger premised their investigation with the opinion that the best way of finding out about the effectiveness of the people who do the leading is to consult the people who are led.
The findings not only revealed that organisations with good leadership generate more economic value than those with poor leadership, but that excellent leadership far outperforms good. Extraordinary leaders more than doubled the organisation’s profits in comparison to the remaining 90%.
We can conclude, therefore, that effective leadership is completely necessary or, rather, completely necessary if profit is to be chased, and success to be gained. The benefit of possessing excellent leaders, with the competencies required to really make a difference, could be the most lucrative strategic move you will ever make.
To read the Forbes article go to:http://www.forbes.com/sites/jackzenger/2015/01/15/great-leaders-can-double-profits-research-shows/