Leaders and Organisational Performance

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Leadership is the process of influencing other people in a certain organisational setting to achieve certain set goals. According to Ram and Prabhakar (2010), leadership is an aspect that largely influences the performance of an organisation and the attitude of employees and managers. A leader is someone who pushes others to achieve certain objectives. Leadership is of paramount importance in organisations.

Leadership in organisations is different from management (Gallos, 2008). Leadership should not at any given time, be confused with management. While management is the application of management functions like planning, organising, staffing and control to achieve organisational goals, leadership has an emotional aspect to it that ordinary management does not. Good leadership emotionally compels, motivates and encourages individuals to perform. This means that leadership and management are complementary aspects of achieving organisational performance (Ram & Prabhakar 2010).

One can note that leadership appeals to the emotional part of employees in an organisation. It is the dialectical process that incorporates a proactive aspect. This is where the organisation members are persuaded to perform what they had not planned to do. Leaders shape organisational events naturally through their influence, actions, and personal attributes. It is wise to note that leaders have a significant relationship with their environment. In this case, leaders and environment impacts on one another. Therefore, leadership is about change in ways that will benefit the organisation (Ram & Prabhakar 2010).

Organisational performance is the total output that an organisation gives in relation to the expected output. An organisation’s performance is what determines whether or not the organisation is making progress and whether goals and objectives are being met. Employees’ attitude towards their supervisors and their work is extremely crucial, and it determines their performance (Ferris 1985). Thus, leadership is particularly valuable in an organisation, in the general output of an organisation. This essay seeks to argue on the influence that leaders have in the ultimate performance of an organisation. Also, the question as to whether leaders are necessary or not has been answered.

Constituents of organisational performance

One can see the organisational performance in the output of a certain organisation in certain aspects. These aspects include; the profits it makes, the organisation’s flexibility, the market share it has and whether it is increasing or decreasing, production of labour, customer satisfaction, employee satisfaction, innovation and creativity, acquisition of resources and the safety of its stakeholders. Any organisation that is not making profits has no business conducting business. A major goal in organisations is to make profits. However, when this does not happen, it is only a matter of time before the organisation burns itself out.

The organisation’s performance should always be at its best to ensure that the market share continues growing; otherwise, rivalling organisations will take over. Employers are extremely beneficial to the organisation. In as much as customers are the lifeline, the organisation should understand that employees hold this lifeline. Stress in the workplace will cost an organisation significantly since it harms the employees (Paoli 1997).

When employees are not contented, they may react to “payback” the organisation. Such ways include playing truancy and deliberate and unwarranted absenteeism, among others. Such occurrences may cost the organisation a lot (Mayfield & Mayfield 2009). The management should also ensure that all resources required outstanding performance are present. Safety of all stakeholders within an organisation is also immensely influential. Apart from just avoiding high compensation and insurance fees, it serves as motivation to the employees to know that the management cares for their welfare; hence they produce better results out of appreciation (Emery & Barker 2007).

How leadership influences organisational performance

Leadership is about the ability of an individual to influence others’ performance in their areas of specialisation. In any organisation, some junior employees may have the power to encourage other people around them to produce better results. Management without leadership might not directly impact on the performance of the organisation. If this is the case, the management does not matter to the organisation life since it does not influence it in any way (Staw, Cummings & Sutton, 1979). Organisational performance is not about protocol; it is about constant improvement and the desire by the people involved to continue producing better results than before. That is the effect that leadership has on organisational performance.

Leadership has certain perspectives that mandate an individual to lead others within an organisation. These perspectives are; trait perspective, behaviour perspective, contingency perspective, and transformational perspective. Traits perspective has to do with intelligence, alertness, confidence, and responsibility. These are the traits associated with leadership. Behaviour perspective has to do with attributes like discipline, self-control, and ethical issues too. Contingency perspective constitutes theories like situational theories, leadership- substitute theory and path-goal theory that define and describe significant leadership (Emery & Barker 2007).

Differences between Leadership and Management

Management maintains the status quo in an organisation while leadership creates a vision and a realistic goal for the organisation to follow. This gives an organisation a sense of direction and encourages the members of the organisation to work toward the vision (Gill, Mathur, Sharma & Bhutani, 2011). Also, while management seeks to create consistency and order in an organisation leadership creates change and initiates movement towards achieving goals.

Leadership allows members of an organisation to express their freedom within sensible confines of set rules and regulations, encouraging innovations from the employees and benefits the organisation. Another difference is that while management seeks to do things right, leadership sets out to do the right thing. Leadership takes into account the feelings and emotions of its members. Even when decisions are made, their impact on individuals will put into consideration and the organisation’s benefits. Leadership is just not after profits for the organisation but also for the employees’ welfare, too (Wood, Zeffane, Fromholtz, Weisner & Creed, 2010).

Finally, with management, relationships are transactional. On the other hand, with leadership, relationships are transformational. Transactional relationships are whereby the employees are rewarded if they perform well and threatened with a penalty when they fail. However, transformational relationships are characterised by a leader inspiring trust, the motivation to perform, and loyalty in the employees (Zagoršek, Dimovski & Škerlavaj, 2009).

While transactional relationships compel s employees to perform, transformational ones inspire them. When leadership seeks to have a psychological contract with the organisation’s members and inspire them, the performance in the organisation improves because employees give their very best. Therefore, effective leadership means interacting with the employees in an organisation and listening to them. This way, a leader will understand the strengths, weaknesses, opportunities and challenges within the employee group. With such knowledge, management becomes effective. This is because the management easily identifies the various aspects it is handling (Wood, Zeffane, Fromholtz, Weisner & Creed, 2010).

How Leadership Influences the Performance of an Organisation

Leadership significantly influences the performance of an organisation. Without it, an organisation will just be following protocol and routine. Such an outlook towards work will not improve the performance of an organisation in any way. On the contrary, performance will go down or stagnate. Thus, leadership motivates stakeholders in an organisation want to work hard and produce satisfactory results. Leadership improves performance in several levels in an organisation. It improves in the creation of organisation agenda, development of strategies to achieve organisational agenda, implementation of the agenda, and the end results of the implemented agenda (Staw, Cummings & Sutton, 1979).

Creation of organisational agenda

Normally, when the agenda in the organisation is made, plans and budgets are made where intricate timetables and steps are implemented to achieve the desired goals, and the appropriate resources are allocated. When leadership is employed, there is a sense of direction established to guide the creation of timetables and steps for the agenda. Leadership provides definite strategies for achieving these goals. With leadership, it is easy to envision the future of the organisation and the implementation of the agenda. Leadership makes goals and objectives seem achievable and motivate the members of the organisation.

Employees tend to respond to the personal qualities of the persons directing them. Their attitude towards a certain agenda or objective is highly determined by the perception they have of their leader (Emery & Barker, 2007). This means that considerable leadership will portray the objectives and agenda of the organisation to employees and inspire them to perform.

Development of strategies

After plans have been made, management of an organisation develops to set the agenda by organising staff, develop policies that will guide employees and design control strategies to ensure that everything is done according to plan. Where leadership is concerned, more communication is done on the agenda in question to the members of the organisation. Communication goes a very long way in ensuring that set goals are achieved (Gill, Mathur, Sharma & Bhutani, 2011).

Implementing the agenda

At this stage, the organisation applies control to the implementation of the agenda. Deviations will be established, and solutions sought in the implementation of an agenda. When leadership intervenes, it brings about motivation and energises people to work harder and beat challenges (Gill, Mathur, Sharma & Bhutani, 2011). Implementing the agenda in an organisation is not simple. Challenges are sure to come and try to thwart the efforts of members of an organisation in achieving the set agenda. While organisations try to apply policies to rectify the weaknesses, leadership seeks to encourage demoralised employees (Lawrence, 2010).

Ultimate performance

The ultimate result in an organisation is determined by the management in place. Performance results are determined by how the employees work. Where appropriate leadership is non-existent, the result of the implementation of the agenda is what has been predicted by the management. The results produced by such an organisation are what the stakeholders expect. However, leadership gives unexpected results. This is because leadership is about change. A leader is an agent of change in an organisation. In this case, a leader can influence the performance of individuals in the organisation to perform far much better than the expected.

A leader influences employees to tap their potential to the fullest by inspiring them. Dierendonck, Haynes, Borril, and Stride (2004) attest that a leader can affect the way in which employees perceive themselves and their work. This means that a leader can improve the performance of an organisation. Good leadership encourages employees to give their best and also encourages talent. This brings about new ideas and innovations that assist the organisation to be more efficient and produce new products that are better. Therefore, leadership brings about change that is new and extremely useful to the organisation (Ferrell & Ferrell 2011).

How Leadership Does Not Affect Organisational Performance

Despite the fact that leadership has many advantages, there are certain scenarios in an organisation where leaders are totally irrelevant. There are certain situations that leadership alone cannot conquer. For instance, issues may arise which require critical analysis of the situation and following procedures to find a solution. Leaders are known to be agents of change and not solutions, and in their bid to do what is right, they may fail to do things the right way (Ferrel, 2011). At the end of the day, the problem might not be solved. This would surely cost the organisation as the consequences of the problem will be felt, and it will suffer loses.

Leadership applies the emotional aspect of the employees in decision making and operating the organisation. Sometimes, employees might take advantage of this factor and push the leaders into making poor decisions. Ram and Prabhakar (2010) observe that leaders influence the employees while they are, in turn, influenced by both employees and the environment. This clearly means that their decisions are affected by the employees and the environment; hence their decisions will most likely be subjective rather than objective. They will then apply irrational decisions to achieve goals. This is extremely dangerous for the organisation as such decisions might have negative impacts of its well-being, and sometimes these decisions can have irreversible effects.

Sometimes, followers may not be willing to accept change in an organisation, which will make the presence of a leader almost irrelevant in the organisation (Lawrence 2010). This may even end in tension and conflicts, in the organisation, and in turn negatively affect the performance of the organisation.

The need for leaders might also be overtaken by the presence of certain factors in an organisation. For instance, if the employees have more organised and elite groups that are close-knit. The leader might have difficulty penetrating such groups (Lawrence, 2010). Also, aspects of technology might replace the guidance provided by leaders. Intrinsic satisfaction of the employees could be another factor. Where employees in an organisation have achieved self-actualisation, they do not need constant reassurance to perform. These factors can act as substitutes for leadership in an organisation.

In addition, the long-term survival of any organisation depends on whether the stakeholders adhere to the rules and regulations of an organisation. In most cases, leaders deviate from the provisions of the rules so that they can achieve goals in the most reasonable manner. As such, the bureaucracies of an organisation are disobeyed, and this may cause conflicts with several stakeholders. There has always been a conflict between leaders and managers because managers follow procedures to achieve goals. These contradictory aspects cause conflicts because leaders try to avoid the procedures put in place by stakeholders (Gill, Mathur, Sharma & Bhutani, 2011).


Despite the few bottlenecks of leadership, it is evident that leadership plays a significant role in the performance of an organisation. Organisations with leaders are likely to perform better than organisations that do not, as proved by the fact that there are more benefits that come with leadership. Organisations have employees working for them. These employees are human beings, complete with emotions and opinions that they will form for just about anything.

The opinions formed by employees influence their attitudes towards the work they do, which in turn affects their performance. This means that policies, rules, guidelines, penalties and rewards will not enhance employee performance. This will just make the employees work with the fear of losing their jobs and their means of livelihood. Therefore, performance will be what is expected when certain protocols are followed, and work will be a frustrating routine for them. However, leadership changes all this.

Leaders have within them charisma that appeals to the employees. In essence, this inspires employees to perform better. They influence the way an employee perceives himself and his outlook towards his job. Satisfied employees will perform better than disgruntled ones. Employees who feel that the organisation does not care about them are the one who is likely to sabotage organisational operations by taking part in activities like truancy, absenteeism and absconding duties.

Leadership also brings about innovation because it is about change. Any organisation that is not flexible enough to adapt to change remains stagnant or begins deteriorating. The growth status of an organisation says so much about its performance. Leadership encourages employees to become innovative with respect to ways of doing things. This triggers change, which results in the continuous growth of the organisation. Therefore, leaders are essential in enhancing the performance of an organisation.

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