This article is part of The Ascender, the Highrise platform for articles and resources.

Does Leadership Impact organizational performance?

Andrew Langat
February 24, 2023
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"If your actions inspire others to dream more, learn more, do more and become more, you are a leader."- John Quincy Adams.

In today's challenging business environment, organizations seek to find ways of creating a competitive advantage from the top.

This is because leadership impacts an organizational performance directly. This includes its culture, employee motivation, investor confidence, etc.

Leadership is considered one of the most critical factors determining success. Have sloppy leadership, and this will be reflected in organizational performance. The inverse is true.

Effective leaders are a source of motivation for their employees, no matter their preferred leadership styles.

They help them perform beyond their self-interest, increasing satisfaction and exceeding their performance targets. They make them visualize what could be achieved if extraordinary efforts are made.

In this article, we will assess the impact of Leadership on organizational performance, what leadership styles can be adopted to boost performance, and how to develop leaders who can impact performance to reap maximum benefit.

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What is the Impact of Effective Leadership on Organizational Performance?

Effective leadership has a significant impact on organizational performance as it inspires team performance, ensures organizational goals are achieved, and ensures that the organization's culture is enhanced in the following ways:

1. It Creates a good work environment.

Influential leaders positively impact the work environment. They create an environment where employees respect and trust each other, leading to a cohesive team.

This is because Employee motivation, psychological safety and morale are high with good Leadership.

Researchshows that When employees are motivated, their performance is high, contributing to the organization's overall performance.

2. It creates leaders who are good examples for their employees.

An effective leader knows that setting a good example is one of the best ways to inspire others. This can include a high degree of self awareness, striving to build positive relationships, and generally practicing good leadership.

By behaving in a way that epitomizes the values and goals of their organization, they can show others what it means to be a committed and successful leader. This helps in, among other things managing expectations.

3. It Improves efficiency.

A productive leader can improve efficiency by ensuring they get more out of their team. Leaders can improve efficiency by providing everyone is working towards the same goal and doing their best.

Influential leaders delegate tasks to individuals, and they know how to make up for their strengths. Thiess ensures everyone works where they are comfortable and where they can perform at their best. This ensures that performance, either as a team or individually, is guaranteed.

4. It creates a strong vision and direction for the future.

An effective leader understands the importance of having a solid vision and how to create one that will guide their organization toward maximum benefit.

A strong vision means having a clear idea of where the organization is going and what it wants to achieve. It also means communicating this vision that inspires and motivates employees or creating succession plans ahead of time.

A leader with a strong vision can create a sense of direction and purpose, helping to focus and energize an entire organization to perform.

5. It Improves Communication.

One of the most critical roles of an organizational leader is effective communication in the workplace.

Effective communication is essential to the performance of an organization. Influential leaders create communication channels where they share their visions or changes that need to be incorporated into the organization.

An open communication channel will allow employees to share their opinions and concerns. This ensures that sharing ideas is possible and misunderstandings can be avoided.

6. It enhances productivity.

An effective leader makes all the difference in a team's productivity. When employees feel valued and motivated, they are more likely to be productive.

However, poor Leadership can cause employees to lose interest in their work. A team led effectively and efficiently will be more productive and thrive in the

7. It helps reduce mistakes

A good leader is essential for any workplace that wants to reduce mistakes and operate smoothly, especially in high-pressure environments where mistakes can have profound implications.

A leader must identify potential problems early on and head them off to avoid costly mistakes and misuse of an organization's resources.

8. It helps Inspire hard work.

Senior leaders in any organization know how to inspire a sense of purpose in their teams.

A good leader knows how to tap into an inspiration gear where they can encourage their employees to believe in something bigger than themselves by setting performance targets.

This will inspire them to go the extra mile to perform in a way that will maximize the organization's benefit.

9. It helps develop future leaders.

Influential leaders have an eye for talent and developing leadership.

They notice aspiring leaders within their ranks and offer them development opportunities such as leadership training.

Developing future leaders will help an organization sustain its performance and ensure they reap the continuous benefit.

Leadership training through intiatives such as coaching and mentoring is essential as it helps nature talent, which can benefit the organization in the long run.

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What leadership styles be adopted to boost performance?

To boost performance, a leader must develop an effective leadership style that stimulates performance among team members and create a significant impact.

That said, there is no best leadership style. What to opt for will largely depend on the skill levels of team members, the type of industry, and desired outputs.

The preferred leadership style must create a positive environment and solve complex problems.

Here are some different styles and the significant role they play in boosting performance.

Autocratic Leadership Style.

Autocratic leadership style centralizes decision-making to a single person creating a clear separation between the leader and employees. Autocratic leaders make decisions and expect employees to follow their instructions.

This leadership style is beneficial, especially when an organization has new employees. Autocratic leaders determine values, maintain organizational culture, and are better at defining solutions to complex business challenges.

On the flip slide, this leadership produces a toxic work culture and employees with little motivation.

How Autocratic leadership impacts organizational performance

Autocratic leaders can influence productivity by moving information quickly throughout an organization, affecting more efficient project completion. Delivering communication and decision on time ensures employees receive all necessary information to complete the project on time.

Moreover, such a leader increases workplace productivity by guiding employees on what to do and how to accomplish their goals on time. This process has a powerful impact on the employee's performance and typically results in the consistent delivery of projects.

Lastly, autocratic leaders are better crisis managers. They know how to react to stressful situations, which shows their confidence and boosts employee commitment as they have faith in the individual leading them.

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Democratic leadership style.

A democratic leadership style uses a consultative approach where leaders solicit feedback from individual team members.

While democratic leadership sounds good, one of the drawbacks is that decisions are made more slowly, with leaders considering the input of their team and other relevant stakeholders.

How Democratic leadership impacts organizational performance

A democratic leader encourages team members to share ideas, engage others, reward creativity, and foster creativity. These lead to increased team cohesion and innovation and ensure job satisfaction and commitment.

A democratic leadership style can foster an environment for leadership training where future leaders can adopt the necessary leadership skills to become successful leaders.

Transformational leadership style

This leadership style transforms people by tapping into ideals, hopes, and dreams. A transformational leader motivates employees by motivating themselves. They enhance productivity through high-performance results and communication.

This style uses the vision and future to get their team excited and committed to a project. These don't only require the owner of the team to accomplish goals; it also requires the leader's involvement.

How transformational leadership impacts organizational performance

Leaders should use this style to focus on building lasting personal strengths. These strengths make team members more successful and confident in themselves and the organization.

Transformational leaders can make an organization more successful by valuing its employees and creating significant impact in the following ways:

Intellectual stimulation: leaders encourage innovation and creativity by challenging a group's common beliefs or views. Leaders with intellectual stimulation promote critical thinking and problem-solving to improve the organization.

The best leaders are known to be creative and innovative and know how to foster innovation, which can significantly impact the overall performance results.

Individual consideration: leaders act as coaches and advisors to their employees. A leader with individual consideration can develop training classes to teach employees who aspire to be future leaders how to build their self-awareness, have change tolerance, positively affect relationships with other employees, and be the direct cause of positive change.

Transformational leaders influence their teams to shape institutional strategies that can positively impact performance results.

Idealized influence: It describes leaders who lead by example. Leaders with idealized influence can be trusted and respected by their employees to make good organizational decisions. Such leaders tend to attain referent power.

Inspirational motivation: It describes leaders who motivate employees to commit to the organization's vision. Leaders with inspirational motivation encourage team spirit, which increases employee engagement and builds up positive relationships, which will significantly impact performance.

It will also help the organization reach increased revenue and market growth goals and ensure group members are highly engaged in the workplace.

Effective leadership styles such as this(transformational leadership style) are encouraged since it takes an interactive leadership process.

A transformational leader listens to all viewpoints to develop a spirit of cooperation, is a robust role model with high values, creates a vision using people in the organization, and acts as a change driver by setting an example of how to initiate and implement change.


Charismatic leadership is the most trait-driven leadership style. Charismatic leaders have a vision and a personality that motivates most followers to implement that vision. This leadership type has primarily been one of the most valued.

How Charismatic leadership impacts organizational performance

Charismatic Leadership provides an enabling environment for innovation and creativity and is usually highly motivational. Having charismatic leaders at the helm, the organization's members want to follow.

One significant concern that potentially undercuts the value of charismatic leaders is that once they are gone, an organization can appear without direction, leading to inevitable failure.

The leadership gap can last for years because charismatic leaders seldom develop future leaders. This leadership style is based upon the strength of their personality.

Inspiring, isn’t it ? Want to learn more about connecting self-awareness to professional development? Get in touch today.

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To sum up & Impacting your Organizational performance

Regardless of the leadership roles, leaders in organizations provide motivation, guidance and inspiration to their employees to drive them to achieve their goals. They develop a shared vision which people can rally around, and they possess the skills to make sound judgments to solve problems effectively.

An effective leader is essential to the success of any business; without that achieving the objectives at an individual and organizational level will be challenging.

Organizations have different leadership styles depending on their culture. In today's business environment, it is advisable not to be tied to one leadership style as conditions are constantly changing.

At highrise, we have the right tools to refine your leadership skills through our comprehensive training to enhance leadership and performance.

Reach out today and learn how to grow your own authentic leadership.

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Andrew Langat
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Andrew Langat is an experienced content specialist in Leadership, Productivity, Education, Fintech, and Research. He is an avid reader and loves swimming as a hobby. He believes that quality content should be actionable and helpful.