Soft Skills Drive Firm Results

cost of leadership leadership leadership culture performance poor leadership poor leadership leading to organizational failures profitability results return on investment the impact of leadership on organizational performance Feb 01, 2023
The Impact of Leadership on Organizational Performance

I can remember the phone call like it was yesterday… One Friday evening around 7pm several years ago, a friend of mine called as he was sitting in the parking lot at a high school football game where one of his kids would be playing with the band during halftime. I’m usually exhausted by Friday so I was all but asleep but decided to answer since he rarely called unless it was something important. He was the CEO of a local company and was frustrated about a conversation he had earlier that day with that organization’s board of directors.

The rub was based on the expectation that had been placed on him to develop stronger relationships with his direct reports. I’ll spare you the details of the entire 30 minute conversation but one part that stands out to this day was when he said, “My job is to get results! I don’t have time for that touchy-feely stuff…” During his time in that role, the organization’s revenue had doubled. The challenge was that nearly all of the managers who reported directly to him were ready to jump ship! My immediate response to his comment was “You don’t have to not to work on the touchy-feely stuff!”

Like so many other executives I’ve interacted with over the last 25 years, this extremely fast-paced and task-oriented guy had convinced himself that the organization’s success was based solely on his sheer grit and technical expertise in the field. While each of those things certainly contributed to their overall growth, ignoring the touchy-feely stuff ultimately resulted in him leaving the organization and moving his family across the country.

I don’t share that story to condemn my friend. Quite frankly, I think he’s an amazing person and I hated watching it all unfold. That said, I believe there’s a powerful lesson for all of us who have accepted leadership responsibility; the soft skills that are so often considered as touchy-feely really do drive firm results!

In Good Leaders Ask Great Questions, John Maxwell states that “One thing that holds many talented and intelligent people back from being good leaders is a lack of people skills. Someone with weak people skills can become a reasonably good manager, because management is focused on systems and procedures. But nobody without good people skills can be a great leader!” Confusing good management with effective leadership is a costly mistake made by far too many organizations and executives! I’ve frequently cited a Harvard Business Review study on the direct impact leadership has on a team’s performance and I’ll do it once more here: “increased commitment can lead to a 57% improvement in discretionary effort… which produces, on average, a 20% (more) individual productivity.”

If we want to address the things that are killing our profitability, we cannot afford to write off the critical skills necessary for driving results as touchy-feely! And to do this effectively, we need to consider each area these skills can impact so we’ll identify several of those next time before beginning to work through action steps for each individual one.