- 08 Jan
As a Leader can we really make a Difference?
Let’s consider the issue of leadership performance from this perspective: does effective (or ineffective) leadership actually make a difference to the performance of our private organisations and public institutions?
New Sam Wilko Advisory Blog by Peter Wilkinson
In a previous article I explored the concept of our individual expectations of leadership and proposed how each of us might discharge some personal responsibility in making a difference to the performance of our leaders in all spheres.
In this article let’s consider the issue of leadership performance from a different perspective: does effective (or ineffective) leadership actually make a difference to the performance of our private organisations and public institutions?
Our own experiences with leaders good and bad, might intuitively lead us to the conclusion that leadership definitely does influence organisational performance. But is this a reasonable conclusion?
There is an alternative position – that leadership has relatively little effect on performance. This “contextualist” viewpoint emphasises the constraints that are placed on leaders by situational factors, in particular firm size and the type of industry in which the firm operates.
Surprisingly, from a literature perspective there is a real lack of consensus regarding the evidence definitively supporting or refuting the effect of leadership on performance.
According to Alan Berkeley Thomas in his 1988 paper “Does Leadership Make a Difference to Organisational Performance?” the contextualist argument has traditionally rested heavily on the findings of just one major study, that of Lieberson and O’Connor (1972). Their findings were that leadership:
- has a substantial effect at the level of the individual firm, however
- has little impact on performance at the aggregate level (performance between firms of varying sizes and industries).
Unsurprisingly, Lieberson and O’Connor’s seemingly counter-intuitive conclusions have been the subject of substantial criticism. However and according to Thomas the conclusions may be explained by recognising that while leaders can and do impact firm performance, their overall impact is insufficient to outweigh the inbuilt differences between firms that largely account for performance variation among firms.
Interestingly, the plethora of studies carried out in the nearly six decades since publication of Lieberson and O’Connor’s work have apparently done little to advance the argument. Although a significant amount of observation-based evidence has been collated regarding links between leadership and organisational performance, much of the assessment of performance has involved subjective measures such as surveyed “satisfaction with the leader”. This opens the work up to criticism based on attribution theory ie. the impact of leadership on performance is no more than a social construct – people just interpret it that way.
So where does this leave us?
I believe that the answer lies within the concept of what leadership actually is. “Leadership and Organisational Performance: State of the Art and Research Agenda (Knies, Jacobsen & Tummers (2016)) proposes the following based on common definitional elements used by scholars:
“…leadership is about an influencing process, more specifically a process whereby intentional influence is exercised over other people to guide, structure and facilitate activities in groups or organisations”.
So leadership does not and cannot operate in a vacuum – it’s fundamentally an enabling process. In essence, leadership and employees are intrinsically linked and rely on each other to create effective performance. It stands to reason then that great leaders require excellent employees to achieve outstanding performance.
Maybe a humbling thought for leaders that consider their people to be expendable commodities…
About the Author
Peter Wilkinson is a Director of SamWilko Advisory, a company that provides specialist consulting and coaching services to businesses in the transportation, construction and technical services industries. Peter believes that “business, like many of life’s challenges, is all about luck. The best business people work hard and smart and are well prepared for when the luck comes along”. Peter brings 25 years’ plus experience to helping entrepreneurs, business leaders and senior managers who wish to "get lucky" by implementing smart, effective and innovative strategies to better manage time, increase revenue and improve return on equity. Peter's expertise is in developing, implementing and managing transportation and construction businesses and major projects. He specialises in outsourced services and has extensive experience in both private and Government funded infrastructure involving procurement across the full spectrum of contracting methodologies. Peter has applied his asset and systems development and management expertise in the mining, transportation, defence, utilities, property and infrastructure industries both locally and overseas. Peter has refined his project development skills both locally and internationally. Peter has held Executive Management positions within Transfield Services, GHD Pty Ltd and Serco Asia Pacific and has previously held positions with UGL and in the Public Sector with NSW State Rail Authority (now Sydney Trains).