“Managers often fail to appreciate how profoundly the organisational climate can influence financial results.  It can account for nearly one third of financial performance”. wrote Daniel Goleman nearly twenty yeras ago. in an excellent HBR article entitled Leadership that gets results.  

Based on research of nearly 4,000 executives, he identified six leadership styles and assessed their impact on the six elements of organisational climate:  

• Flexibility, how free employees feel to innovate unencumbered by bureaucracy;
• their sense of Responsibility to the organisation;
• the level of Standards that people set;
• the sense of accuracy about performance feedback and aptness of Rewards; 
• the Clarity that people have about mission and values; and finally,
• the level of Commitment to a common purpose

Four of the six leadership styles had a very strong correlation with improving each element of the organisation climate. And two had a negative impact, although they were found to be beneficial in certain situations:

Source: HBR April 2000 issue, “Leadership that gets results” by Daniel Goleman

The four styles with a positive impact on the organisation climate were:

• Visionary – “come with me” – the leader states the goal but gives people freedom to choose their own means of achieving it
• Affiliative – “people come first” – very strong for building team harmony and increasing morale
• Democratic – “participate in decisions” – leader gives workers a voice and listens, which builds organisational flexibility
• Coaching – “help you improve” – focus is on conversations for personal development rather than on immediate work-related tasks.

The two which negatively affected organisation climate were:

• Directive – “do as I say” – this inhibits organisation flexibility, scalability and employee motivation
• Pacesetting – “do as I do now” – people tend to feel overwhelmed by leaders’ demands for excellent and become burned out, and they resent their tendency to take over a situation

We all have a favourite style (our default style), but Goleman’s research identified that the most successful leaders employed each style at appropriate times.

Whilst much has been written on the softer skills associated with leadership styles, and various industries have sprouted up to help leaders develop them, less has been written on how the creation and implementation of business strategy can affect the leadership styles of everyone within the organisation.

We believe that how a leader develops and implements strategy is a ‘hard’ skill that every leader can apply. And, when done well, it not only hardcodes the key drivers of organisational climate into the business operating system, it also creates fertile ground for the four positive leadership styles to flourish, regardless of the leadership team’s awareness of, or training in, the styles.

By ‘hard’ skill, we mean there is a process that can be followed which gets results for the business.  And that’s what we do with our clients.  We use our proprietary framework to develop and implement strategies in a way that encourages, supports and harnesses the four positive leadership styles.

Source: HBR March-April 2000 issue, “Leadership that gets results” by Daniel Goleman. If you’d like to read the original article, go to: HBR Aricle: Leadership that gets results