How To Measure Leadership Effectiveness By Unlocking The Right Metrics

How to measure leadership effectiveness? This is a question frequently asked by HRs, CEOs and other senior leaders.

Only 48% of leaders believe that the leadership effectiveness of their organization is top-notch. In contrast, only 28% of HR agree with that statement.

We all know leaders are critical to any team's success, but quantifying their effectiveness? That's a little tricky. And the traditional solutions that most organizations use are mostly inaccurate or vague.

But is it even possible to measure leadership effectiveness? And if so, how can we do it in a way that actually gives us meaningful results?

Buckle up because we're about to dive deep into this topic and find out the answers to the questions above.

What Is Leadership Effectiveness?

Leadership effectiveness refers to a leader's ability to positively influence and coordinate their team members' (or immediate subordinates') efforts to achieve organizational goals.

Cooper & Nirenberg has defined leadership effectiveness as "the successful exercise of personal influence by one or more people that results in accomplishing shared objectives in a way that is personally satisfying to those involved."

A leader wears multiple hats in an organization. From a broader perspective, leadership effectiveness depends on how successfully a leader can offer-

• Support and influence
• Direct their teams to move in the same direction
• Establish clear communication
• Make information and resources available.
• Live and promote the core values
• Track and monitor performance
• Coordinate teams to achieve shared goals
• Motivate, innovate, and produce quality work

In essence, leadership effectiveness revolves around assessing a leader's ability to direct, motivate, supervise, mentor, and develop their team members.

Why Is Measuring Leadership Effectiveness Important?

Here's why measuring your leader's performance and its effect on organizational outcomes is important-

Increase Business performance:

Effective leadership can have a significant impact on your company's success. Crafting a clear and concise leadership philosophy can help guide your decision-making and inspire others to follow your vision. Let's numbers do the talk-

28% of companies with robust growth have a strong leadership team. Another research says that the top 10% of leaders cause a profit of $4.5 million.

To understand how your leaders affect your growth and profitability, who's contributing, and who might be hindering it, you need to measure their effectiveness.

Driving Engagement and Retention:

Good leadership has a positive relationship with employee engagement. In addition, it can help an organization avoid 9-32% of voluntary turnover. It can further increase customer satisfaction by 3 - 4% and revenue growth by 1.5%.

Hence, to improve your organizational performance in these areas, you must also improve the leader's performance. Measuring leadership effectiveness can be the first step in this direction.

Identify Areas of improvement:

Research says that a whopping 71% of respondents don't have faith in their leaders' ability to take the organization forward. In comparison, only around 20% of organizations have agreed to have capable leaders.

Measuring leadership effectiveness can help you identify and address leadership deficiencies before they escalate. This will help you implement data-based changes to improve leadership performance.

Source

Here's an interesting fact for you.

A staggering 83% of organizations believe in the importance of effective leadership at every level of the organization.

However, do you know how many organizations are unsatisfied with their existing leadership.? Well, as per research, the number stands at somewhere above 77 %.

If you are looking at your screen with an open mouth or wide eyes right now, I want to ask you something-

When was the last time you asked if your leaders were doing enough?

The Challenges Of Measuring Leadership Effectiveness

Here are the most common challenges organizations face while they attempt to measure their leader's impact-

Multiple stakeholders and factors:

To measure leadership effectiveness, you need input from multiple stakeholders. This may lead to differences of opinion, making it challenging for you to arrive at a conclusion.

Similarly, external factors like market changes or unforeseen events can significantly affect a leader's performance. Thus, it's sometimes difficult to isolate the leader's impact.

Vague Assessment Standards:

Most organizations don't have any standard assessment procedures in place. Plus, the criteria for measuring effectiveness are often vaguely defined.

As a result, organizations are scratching their heads and wondering what on earth they are supposed to be looking for.

The term "effective leadership" itself covers many different skills and behaviors. It's almost like trying to measure "success," which can mean different things to different people.

For instance, if you can't measure the success of a workout routine by measuring the abstract concept of "fitness." Instead, You can measure the specific results, such as increased muscle mass, improved endurance, or decreased body fat percentage.

Similarly, to gain a clearer picture of leadership effectiveness, focus on specific, measurable outcomes resulting from effective leadership, such as increased productivity, employee satisfaction, and more.

Requires a lot of time and effort:

Measuring leadership effectiveness requires a sufficient amount of time to observe results accurately. However, considering the fact that poor leadership can cost your organization about $126,000 a year, it is all worth it.

How To Measure Leadership Effectiveness?

Want to evaluate how effective your leaders are?
Embrace the following methods of leadership measurement and analyze the following key metrics with the help of the right tools-

1. Ask your employees

As U Dhar and P Mishra have defined, leadership is effective when "individuals in the positions of leadership are able to impact on a group to perform their roles with positive organizational outcomes."

Think about it. Employees are the ones who work with your leaders day in and day out. They are the ones who see your leader in action.

Thus, who else can give a better representation of how a leader communicates, manages, motivates, or engages them? In other words, to understand how effective a leader is, start with taking feedback from their teams.

Make employee surveys your weapon to collect their opinions and measure whatever you think is important for your organization.

Make sure your pulse survey is designed in a way that measures the following key metrics for measuring leadership-

• Employee Morale
• Emotional and physical safety of employees
• Employee engagement
• Employee commitment
• eNPS score

The next step will be to take a deep dive into the numbers.

Analyze the acquired data to understand where your organization stands in these areas. Choose a tool that allows deeper insights with category, department, and question-wise reports.

Vantage Pulse could be a great tool in this regard. It not only presents you with a vivid visual representation of your employee experience cycle. At the time, also offers you an eNPS score for each survey category. Thus, it makes analyzing data of a vast number of employees easy and effortless.

However, whatever tool you use, ask the right questions. Here are some sample questions to help you get started-

A. Employee Morale

• Are you satisfied with the support you receive from your leader?
• Do you feel connected with your colleagues/ team members?
• Do you feel that working under your manager or leader causes added stress?
• What do you like the best about working under your manager?
• Do you get an even amount of work as your teammates?

B. Physical and Psychological safety of employees

• Do you feel your leader/manager cares about you?
• Do you feel emotionally secure in this organization?
• Do you feel safe taking a risk?
• Do you find it difficult to ask for help from your teammates?
• Do you feel your coworkers will hold your mistakes against you?

C. Employee engagement

• Are you clear about your roles and responsibilities?
• Do you get to utilize your skills and experiences in the current role fully?
• Do you feel valued at work?
• Do you enjoy your work?
• Are the tasks you perform challenging?

D. Employee commitment

• Do you feel loyal to the organization?
• Do your leader and team members value your judgment?
• Do you value the company's core values?
• Is your opinion considered while making team decisions?
• Do you get credit for a job well done?

E. eNPS score

• Would you recommend our company to a friend or colleague?
• Which features of our product(s) are most important to you?
• Are there any ways we can improve your experience in our organization?
• Is there anything about working at our company that excites you?
• Has your experience working for our company improved or worsened over the last 6 months?

Finally, don't forget to compare your findings to your past rates and the industry benchmarks to get a full picture.

2. Organizational Performance

Organizational performance is about how well your organization can achieve the set vision and goals. It also refers to how efficiently you use the process to achieve your strategic objectives.

Although organizational performance depends on several factors, the influence of effective leadership can't be denied. Effective leaders are capable of bringing in value performance and outcomes. They influence both the economic and operational performance of your organization.

While leaders at all levels of your organization influence your human capital output, your senior leaders have a significant role in your organization's strategic planning, management, and culture.
Measure how far your organization has been able to meet the set goals in different sectors, such as marketing, sales, business, project management, and employee performance.

Here are a few key metrics to measure your organizational growth, what is working, and how far you have been able to meet your goals-

• ROI
• Profitability
• Sales rate
• Lead generation
• Task completion rate
• Gross margin
• Employee turnover rates
• Customer/client satisfaction (If the team is directly associated or interacts with them.)

3. The EBQL Approach

EBLQ, or the Essential Behavioral Leadership Qualities approach, is a method of evaluating a leader's effectiveness based on specific abilities.

These abilities or behavioral qualities can be different for different industries. And the leader's effectiveness will be measured through a standard-based rating.

You can also consider listing qualities you want your leaders to possess. This way, you will rate your leaders based on your own criteria- specific and unique to your organization.

And if you are confused, take inspiration from thought leaders.

For instance, John Campbell has specified 6 factors that Measure leadership. They are- coaching, directing, recognizing, delegating, motivating, and role models.

While Gallup found the following characteristics as necessary for a great manager-

• Motivate with a gripping mission and vision
• Assertiveness to drive outcomes
• Trust and transparency
• Productivity
• Accountability

To measure leaders' effectiveness through the EBQL approach, systematically gather data from employees.

For instance, run a survey with questions about the desired behaviors you expect from your leaders or ask your employees to rate the leaders for each specified behavior and calculate the average result.

Use survey tools like Vantage pulse to easily structure this data and reach conclusions.

Not sure what to ask?
Let me help you.

75% of employees mention effective communication as a major leadership trait. Let's say you think the same and want to evaluate your leaders based on their communication skills.

In that case, here are some sample questions you can ask -
What are the key success metrics that your work contributes to?

• When it comes to communication, what does your leader consistently emphasize?
• How effectively does your leader communicate?
• Are you satisfied with the leader's listening skills and openness to feedback?
• Has your leader exhibited any unethical behavior, such as favoritism, inappropriate language, or conflicts of interest?

4. Coordinating Team Efforts:

Coordinating team efforts is to ensure that the individual effort of each team member is aligned well to meet one or more goals. It includes managing resources, identifying and addressing issues, and communicating in a way that ensures everyone is on the same page.

Koontz and O'Donnell once said, "Leadership is the process of influencing people so that they will strive willingly towards the achievement of group goals."

Effective leaders guide and coordinate their teams, provide support, and celebrate milestones as they are achieved. They assign or delegate tasks depending on what needs to be worked on alone or collectively as a team.

They coordinate team members based on their knowledge, skills, and experiences. At the same time, constantly monitor their performance to maintain process effectiveness.

They nurture new ideas, offer feedback, and direct their people toward better results. In other words, they make sure that tasks are done in a well-coordinated and efficient manner.

The best way to measure how well a leader can coordinate team effort is to measure the team's overall performance. And how do you do so?

Track the OKRs.

OKRs will allow you to track the team's growth and the various initiatives. At the same time, you will be able to see how the leader and their teams have been able to stretch the goals and embrace innovation.

"Any leader's job is to teach, empower and encourage the people they manage and mentor to maximize their potential. I always judge a leader by the effectiveness and ability of their team."
–Craig Howe.

You can also track the metrics (like projects assigned vs. projects completed) with the help of project management software. It will also allow you to track if their team is meeting deadlines or if tasks have been slipping through the cracks.

To Conclude:

You can't find an answer to "How to measure leadership effectiveness?" by simply conducting annual talent reviews. Instead, assess your leaders' impact with the help of some reliable and valid tools, as mentioned above.

Most importantly, don't stop at monitoring the key metrics. Beyond just gathering the information, act on it. Make data-backed adjustments to your existing leadership or bring in some fresh faces for sustained organizational growth.

With the right analytics tools in hand, finding out if you have the right leaders in your organization is surprisingly effortless.

So, be rigorous in your leadership assessments and shed some light on your leadership team's effectiveness with these measurement strategies.

This article is written by Sweta, a content marketer at Vantage Circle. Sweta loves and savors every second of communicating with the audience through her writing. Besides writing, she is also a certified teacher who loves learning new things and applying them in her life. For any related queries, contact editor@vantagecircle.com.