How Leadership Affects Employee Performance

Although business leaders can have a substantial influence on their employees’ work, their own responsibilities can make it difficult for them to drive high-quality performance effectively and consistently. Taken together, managers’ varied responsibilities (which include ensuring team success, creating a positive atmosphere in the workplace, and solving complex problems, among others) can quickly become unbalanced. For example, a sudden shift in the market could take leaders’ attention away from their teams, leading to a drop in productivity.

Leaders can stabilize their own resources by adopting different leadership styles for different situations. In one recent study, management scholars identified three main types:

• Autocratic leadership

  Marked by a clear separation between leaders and employees, this style centralizes decision-making powers in a single person. Decisions are made quickly, and employees are expected to follow their instructions.

• Democratic leadership

  This style uses a consultative approach in which leaders solicit feedback from individual team members. Decisions are made more slowly, with leaders considering the input of relevant stakeholders.

• Participative leadership

  In this approach, leaders leave most of the decision-making process to trusted team members. Leaders provide guidance as necessary and delegate tasks to individuals based on their skills.

Organizations may use a combination of these leadership styles. Enterprises might take an autocratic approach to their investment strategies, for example, but use a more democratic style when developing products. When evaluating different types of leadership, managers must also consider how well their team members trust their decisions.

Read: The Importance of Transparency in Leadership

Evaluating the Effect of Leadership Style on Performance

The study also found that each style has a unique impact on employee performance and identified various business scenarios that naturally lend themselves to specific styles:

• The autocratic approach is useful for driving short-term performance. In situations in which teams comprise new employees, authoritarian leaders are better at defining solutions to difficult business challenges.
• The democratic approach is effective in both the short term and the long term. Specifically, the feedback loop created by soliciting opinions from team members leads not only to higher productivity but also to higher morale.
• The participative approach is less effective in the short term but very useful in the long term, with a positive impact on employee performance. This style leads to a positive work environment in which creativity is encouraged.

These findings indicate that there is no single best style of leadership. Rather, leaders need to assess their goals and determine which style—or combination of styles—is right for the current situation.

Winning Employee Trust

Trust in leadership is a critical factor in employee performance, regardless of which style leaders adopt. One 2017 study found a strong correlation between trust and employee behaviors that stimulate performance, including the willingness to stay with the organization long term.

Read: 4 Ways to Spark Employee Engagement and Growth

With only 37 percent of respondents to one survey saying they considered business leaders “extremely/very credible,” it seems that one of the best ways to boost employee performance is for leaders to build greater trust with them. Leaders can win the trust of their employees by:

• Always telling the truth
• Following through on commitments
• Listening to employees’ concerns and opinions
• Promoting a positive work environment

Trust has to be built up over time. But the more leaders strive to gain employee trust—and demonstrate their trustworthiness—the better gains they can see from employee performance.

Leadership styles and trust both have a direct impact on employee performance. Different leadership approaches suit different situations, and it’s important for managers to understand how to implement the one that best fits the circumstances. At the same time, leaders must also work to increase trust so that employees are more engaged and empowered—and therefore more likely to take the initiative.

This article originally appeared in Advanced Resources' HR Insights Magazine.