Over 4.4 million new companies are formed annually; according to the BLS, 20% will fail within their first two years, 45% within the first five, and 65% by the end of a decade. Angela List CEO of Adamus Resources reports that it while it may take a lot for a company to succeed, the primary reason why is leadership development.
Companies that have invested in leadership development have positively impacted their employee retention, recruitment, and overall profitability. The return-on-investment boosts employee productivity, which creates more effective managerial roles and leads to more profitable business decisions.
Leadership Development
Leadership development is more than just creating a new boss. It teaches organizational members how to engage and communicate effectively in leadership roles, positively influencing employees in return. Simply put, it helps create bosses, managers, and even non-designated leaders that inspire and work with their teams to reach company goals successfully.
Leadership development activities begin with both corporate and individual values in mind. A company should know its short- and long-term strategic goals as well as what leadership traits are essential to the organization and the path toward its goals.
Once established, the company should submit a list of selected participants and their baseline. Then, the leadership development activities could include:
- Mentoring
- Coaching
- Training and workshops
- Feedback and assessment
- Action learning
- Role-playing and simulation
- Peer learning
Why Companies Need Leadership Development
Organizations invest in leadership for three main reasons: human capital, social capital, and cognitive dimension. Let’s inspect what each means and why they’re important for company success.
· Human Capital
Effective leadership development creates human capital, enhancing each individual’s knowledge, skills, and abilities to enable new and innovative thinking. A self-aware, self-motivated, and self-regulated leader will embody knowledge, trust, and personal power, leading employees to more effectively work toward common goals.
· Social Capital
The second facet of leadership development is growing social capital. Social capital builds on networked relationships to cultivate cooperation and resource exchange, allowing for easy and effective communication within the company as well as outside of it. When communication within an organization is smooth and clear, outward clients, partners, and networks notice their more effective work processes.
· Cognitive Dimension
The final reason leadership development is pivotal for a company is due to cognitive dimension, an expression that means the shared representations and collective meanings among a group of people. This allows an effective leader to connect with employees through their shared vision and common values. It creates a feeling of mutual respect that engages employees with not only their work but also those around them.
The Qualities of Effective Leadership
There are no rigid guidelines for what creates effective leadership within a company, but a few common themes stand out across disciplines.
- Leadership must have the ability to develop trust and positively influence others.
- Leadership must be professionally transparent about goals and challenges to drive employee engagement.
- Leadership must be risk-taking and innovative, creating a culture that embraces failure and experimentation.
- Leadership must be decisive, accountable, and resilient.
Establishing such qualities is no easy feat, which is where leadership development comes in. This is the designated first stop for any company that wants to improve productivity, company culture, and employee engagement.
