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Effect of Leadership on Performance of the Organization


The goal of any organization is not only to survive, but also to sustain its existence by improving performance. In order to meet the needs of the highly competitive markets, organizations must continually increase performance. Prior literature indeed suggests that role of leadership is critically important for achieving the desired performance in any organization.

Therefore, accountability for performance in any organization always falls to the leadership. That’s why he gets fired when the organization isn’t successful. Interestingly, leadership will make or break an organization. It can create a solid future for an organisation through vision, planning, morale building, and teamwork. Leadership can also destroy an organization’s future.

An organization is considered to be effective if it finds the balance between the demands of various stakeholders (owners, employees, customers, community) and the needs of the employees. We believe that an appropriate leadership style can influence and ensure the performance and the economic growth of both the organization and employees. However, effective leadership involves motivation, management, inspiration, remuneration and analytical skills. When all these are present, the organizations record increased employee satisfaction that positively influences the productivity, performance and the profits.

Lеt’ѕ hаvе a lооk at ѕоmе оf thе most рrоminеnt wауѕ by whiсh Wоrkрlасе Productivity can be inсrеаѕе:

Lastly, it alludes to the person having some control over the situation by utilizing the ability to apportion the right amount of effort and time to both personal and work life.Leadership could be described as the collective activity of leading a group of people or an organization. It is a process in which leader is indulged in various activities to achieve any goal. Leadership refers to the attitude of a leader to collect and direct the individuals towards any goal. So the effectiveness of an organization depends upon the effective leader and effective leader is that person who has an effective leadership style. Leadership is a very important factor for any organization or group. It involves:

  • Establishing a clear vision,
  • Sharing that vision with others so that they will follow willingly,
  • Providing the information, knowledge and methods to realize that vision, and
  • Coordinating and balancing the conflicting interests of all members and stakeholders.

A leader steps up in times of crisis, and is able to think and act creatively in difficult situations. Therefore, looking at the definition of leadership, it is established that the lifeline of every organization lies in the leadership. The effects of leadership on the performance of the organization are as follows:

This means that work-life balance goes beyond spending more time on your private matters and spending less at your place of work. Honestly, there is no single human in existence who does not need balance in life.

1. Goals of the Organization

The performance of an organization is dependent on how well the goals and vision of the organization is achieved. Therefore organizational performance is the ability of the organization to achieve its goals. Rightly said before, the leadership of any organization can play a crucial role in destroying or building the organization. Leadership can help a business maintain singular focus on its operations. Larger business organizations can suffer from too many individuals attempting to make business decisions. Business owners can use leadership skills to get managers and employees on the same page and refocus on the original goal. Leadership skills can also help correct poor business practices or internal conflicts between employees.

2. Leadership Style

Leadership style can either contribute positively or negatively to the overall performance of the organization. Interestingly, different types of leadership styles exist in work environments. It includes Authoritarian, Paternalistic, Democratic, Laissez-faire, Transactional, Transformational, and Narcissistic Leadership. However, advantages and disadvantages exist within each leadership style which constitutes effect on performance of the organization. The culture and goals of an organization determine which leadership style fits the firm best. Some companies offer several leadership styles within the organization, dependent upon the necessary tasks to complete and departmental needs.

3. Leadership Motivation

Motivation is a vital for the performance of an organization. According to a quote by Jim Guyette, “A leader needs to communicate in a way that makes people feel what they need to do. As a leader of a large group you have to keep in mind that people need to believe in you and know that you’re behind any given message. It’s not only what you say but truly what you feel and believe. This rule reminds all of us, and leaders in particular, that emotions are a powerful motivator — or, in some cases, a de-motivator. We’re social creatures who need interaction, and you use that to make points when they’re important enough. When you deliver a message face-to-face, it’s strikingly different than when you do some kind of mass communication. If we’re going to have impact as leaders, we have a responsibility to communicate directly, eyeball-to-eyeball, and with authenticity”.

4. Leadership Morale

Those in leadership positions must create an environment for good working relations in business. Good leaders identify good talent, give them direction, and then get out of the way. Employees will perform when the prevailing feeling is that they are trusted and confidently expected to deliver. Morale is encouraged when employees are supported by management in their requirements, and they are treated as members of an important team.

5. Leadership Resource Management

Manage people, equipment, and money is very crucial to the performance of any organization.

6. Leadership Finances Management

Finance management is necessary for the performance of any organization. Therefore, it should go without saying that those in leadership positions should be able to make good financial decisions. Managers should be coached to make financial decisions such as periodic budget allotments, future facility improvements and expansions, hiring plans to meet work goals, and testing requirements. Testing can occur on a small scale or a grand scale, depending on the progress of product development. Some testing can engage large facilities, and this requires long range planning. Long range planning requires leadership and vision.

7. Leadership Teamwork

An expert in interpersonal relations has said that the one thing that unifies a group is adversity. The difference between good leadership and bad leadership is how well a group works together when serious adversity strikes. When problem arises, as it may, leaders must get people to work together to plan for recovery. Learning to work together under adverse conditions can be a gratifying experience. How well employees work together is a direct reflection on the organization’s leadership which can overall translate to performance.Leadership is an important function in the performance of any organization. The effect of leadership on the performance of the organization can be negative or positive. Interestingly leadership creates the vital link between organizational effectiveness and people’s performance at an organizational level.