It’s trendy to talk about company culture these days. The trend might make people think today’s leadership focus should be on hugs over financial performance. Not true. At Voyage Consulting Group, we help leaders connect company culture with the financial results (among other things).
Think about the best leader you’ve worked for and how they impacted you and the company.
Some benefits of effective leaders you may have noted include: positive morale of their team, consistent high performance—their own and their team, focus on results, effective response to change, and more. Effective leaders can transform work environments and push their teams to accomplish feats that wouldn’t be possible without their involvement.
Leadership is the most influential characteristic of a company’s finances and here are three ways leadership shrewdly impacts financials:
1. Effective Leadership Reduces Turnover
Data regarding employee turnover rates due to poor management was published in our whitepaper, Leadership Now: How to capitalize on the complexity of business. Bad managers are the number one cause of employee’s decisions to leave their employer in search of new opportunities.
Replacing those employees is expensive. Employee Benefit News revealed in a 2017 study that it costs employers 33% of a worker's annual salary to hire a replacement if that worker leaves. Think about the extensive human and financial capital required to hire new employees, onboard them, and speed up their contribution to your company. Such important tasks consume a significant amount of a company’s finite resources, but this burden can be lessened significantly by reducing turnover.
2. Effective Leadership Faces the Facts
Effective leaders need to possess self-awareness if they are to be a financial asset to the company. An effective leader will be able to ask, “How am I doing?” Being honest about company and individual performance helps their company set reasonable benchmarks, gauge current performance, envision the future, and rally their team to reach for the vision.
When leaders are in denial and not dealing in facts, people around them focus on them instead of on the facts. Effective leaders see the truth, which enables a faster, more relevant response than denial.
3. Effective Leadership Creates Brand Excitement
Organization leaders are visible representatives of their company brand. Stakeholders from employees to customers to investors watch leaders to determine how the company is doing, and they take their cues from those leaders. Leaders with an energized sense of enthusiasm create excitement for the brand, which converts into income for the company.
Sir Richard Branson is an example of creating brand excitement. He has been an effective leader who has improved the financial results of nearly 400 different companies. His passion, determination, and positivity have yielded tremendous success for the Virgin Group, and his example as a brand ambassador is one worth modeling.
Set an example you personally would like to follow, and you will intentionally influence your company’s success and financial performance.
The intention of this post is to help inspire organization leaders to be excited, passionate even, about their leadership role. Don’t underestimate the impact your leadership has on those around you. Recognize your influence, and you can shrewdly impact your company’s performance beyond the obvious ways.