To create sustainable profits, businesses have to rely on the performance of diverse, high performing teams. One prerequisite for teams to perform are highly motivated and engaged team members. This is a challenge with a workforce where 70% of all employees are either disengaged or actively disengaged. 
Engagement, and therefore performance, is directly related to the “climate” leaders create for their teams. Leaders who inspire their team members and build on their strengths see engagement doubled and active disengagement eliminated. An increase in productivity and profitability of +22% to +30% and a reduction of quality defects (-41%), accidents (-50%), and health cost (-25%) can be directly attributed to inspiring leaders (1).
Leading, Not Managing
Do leaders truly impact a company’s performance beyond setting the course of the company/teams by defining stretch goals and demanding that they are met? The answers are yes and yes.
Today’s workforce, with its multi-generational make-up, demands an environment (see slide 1) where employees are valued, respected for their ideas, trusted, and challenged. This is a significant change from the days when traditionalists and baby boomers happily kept their ideas and ingenuity in their personal life, and performed, unquestioned and uninspired, the tasks assigned to them.
For generation X and Y employees, who will soon dominate the workforce, this is not an option. As many programs, such as lean office, manufacturing initiatives, and Continuous Improvement programs show, businesses today relies on the ingenuity and ideas of every employee to stay competitive.
But what does this have to do with leadership? The answer is: everything. Let’s take a closer look at a business (see slide 2). A leader works within a complex business environment. It includes influences from the outside, like regulatory environment, competition and taxes; and internal factors like the overall business culture, vision for the company, profits, products, capitalization, available funds, and so on.
When we dive in further and look at leaders themselves, we find two important components.
- of the role they have to play
- of their responsibilities
- that they are a team member of their boss’s team, and not their own
Secondly, their personal qualifications like self-awareness, values, education, perceptions, habits, job related skills and pattern recognition capabilities.
Both form the basis for the leadership style they will exude. We understand under “leadership style” the capability to develop and express a vision, to listen, and to be mindful and compassionate. We know from research that the leaders’ behavior is responsible for 70% of the climate their teams will experience. Only 30% is determined by the external and internal factors and the overall culture of the business.
Whether the leaders are inspirational, aloof, autocratic, or they behave like demagogues, the team climate will reflect it clearly. It is easy to blame the overall company culture, the lack of a compelling vision, an overbearing autocratic boss, the perceived lack of time to delegate, or the disengaged employees, for the lack of performance.
The truth is that team members always will mimic their role model. So if leaders are truly practicing inspirational leadership and building on their team members’ strengths, their teams’ engagement and motivation levels will soar. We will find 50% more engaged team members, and the actively disengaged team members will vanish.
Businesses looking to increase their productivity and profits have to focus on employee engagement as the best way to increase performance of their team members. Extraordinary outcomes are created by average team members when we create and foster a climate where team members feel valued, trusted, and appreciated, and where they trust their team leader. “Inspiring leadership” is a set of skills that can be acquired if leaders are open to changing limiting perceptions and behaviors, and are committed to engaging with and connecting to their team members’ needs.
Good starting points for any change are unbiased assessments, like the ESCI, from the HayGroup, which we offer. It is critical in analyzing the current skill levels in employees and in finding potential blind-spots, which are probably holding back higher performance levels.
 Source: Gallup. (2013). “State of the American Workplace: Employee Engagement Insights for U.S. Business Leaders,” 2010-2012. Retrieved from http://www.gallup.com/strategicconsulting/163007/state-american-workplace.aspx