Seven leadership actions that increase business profitability and productivity
The potential of leadership in business is boundless. Yet it is amazing how organisations struggle to harness this capability in ways that are financially quantifiable, such as enhanced competitiveness, widened profit margins and increased market share.
Deployed effectively, leadership can be a highly profitable undertaking, helping to target investment, increase efficiency, reduce costs and generate new income streams. On the flip side, ineffective leadership is costly, often leading to needless duplication, lost time, cost overruns and unproductive effort.
So how do you translate leadership capability into organisational productivity and profitability? Well set out below are seven key actions that can do exactly that.
1. Active delegation
Delegation is a return on an organisation’s investment in its workforce. Leaders who delegate are not afraid of getting it wrong. They understand that through trial and error, they will eventually get it right and from there, the financial benefits will flow. A leader who delegates does three things: first they maximise the value of leadership potential along the hierarchical chain; second, they contribute to organisational efficiency by circumventing bureaucracy and third they control risks associated with delayed decision making. Therefore, when organisations delegate they not only increase productivity, they can also cut costs and increase profits.
2. Cultivating an ownership culture
Creating and ownership culture could mean anything from sharing recognition to profit sharing. Irrespective of how you define it, when you give people something to share you give them something to own. An employee who is a ‘shareholder’ in the success of an organisation will feel a sense of belonging to, and ownership of, that organisation. Like loyal customers, loyal employees contribute value through their skills, knowledge and expertise. This kind of ‘loyalty capital’ is of significant productive value to an organisation.
3. Thought leadership
Nobody is better equipped to solve organisational problems than those who deal with those issues on a day-to-day basis. An organisation that promotes and facilitates thought leadership is best placed to harness the creative competencies of its workforce. Innovation flourishes in environments where people are empowered to lead with ideas and design better systems and processes. Better systems and processes contribute to increased efficiency and increased efficiency contributes to higher productivity and profitability.
4. Establishing cultural norms
Leaders are the engine room of business growth. The actions of one leader can have a profound impact upon or set the tone for, an entire group. When leaders act in concert, the ripple effect of their actions can create irresistible organisational momentum. There is probably no more powerful contribution to dynamic workforce productivity and profitability, than a good leadership example that is applied consistently. Leadership examples not only set the tone, but they also establish the trend and the trend once firmly established, will become the norm.
5. Being fair and being seen to be fair
When an organisation is driving towards a hard target, getting the best out of everyone is not easy, but it can be made more difficult. In terms of workforce productivity, there is one constant truth which is: treat others as you would like to be treated. Employees are not robots or units of production; they can be enthused and energised or disempowered and demoralised. To that extent, they can slow down your productive process or speed it up. When leaders treat their workforce with dignity and respect, they create environments where people choose to work, not where they must work.
6. Transferring skills and knowledge
One of the costliest risks to organisational effectiveness is key person dependency or single point of failure. This often happens when knowledge about a business or activity is retained by one individual or postholder. That may be all well and good when that person is available, but it represents a significant risk to productivity when they are not or if they decamp to a competitor. At such a moment, valuable time and a competitive edge can be lost. Sharing skills is essential for any organisation that is serious about de-risking their organisational environment and safeguarding productivity and profitability.
7. Taking it for the team
During times of crisis, organisational leaders must be at the front to shield the wider workforce. For the avoidance of doubt, there is no deniability in accountability. Far from being an act of bravado or a show of generosity, the willingness to ‘take one for team’ is the price of admission for those with designs on leading others. Courageous leadership engenders confidence, boosts morale and attributes high value to the workforce. When those around you know that you have their back, they are more likely to be motivated, committed and productive.
In conclusion, leadership is a critical function that is performed to improve organisational effectiveness. However, at a more fundamental level, it is inextricably linked to the productivity and profitability of an organisation. Factors such as motivation, loyalty, inspiration and a sense of ownership are the soft currency of investment and the lubricants of commercial success. An energised and enthused workforce makes a direct, not tangential, contribution to the profit margins of a business. Therefore, when leaders perform their roles, mindful of the above realities, they add quantifiable value and show their immeasurable worth.
