What is the best way to determine a business leader's effectiveness?
This is a very difficult question to answer as there are drawbacks to each of the possible ways to measure leadership effectiveness. Let us discuss this with reference to two possible ways of measuring effectiveness.
On the one hand, we might measure leadership effectiveness by looking at the attributes and attitudes of the people whom the leader is leading. We can ask whether the team members understand what they are trying to achieve and what obstacles face them. We can ask whether their procedures and practices seem to be the proper ones for dealing with those challenges. Finally, we can ask whether they are committed to their work and their team. These measures should be valid because they measure the sorts of outcomes that leaders are supposed to bring about.
There are, however, two problems. First, we cannot know how much impact the leader actually had in bringing these conditions about. Perhaps the team’s workers are simply very good on their own. In that case, the measures would be measuring the workers’ innate aptitudes, not the leader’s effectiveness. Second, it is also possible that workers could score well on all of these measures without actually producing business outcomes that are useful. In other words, they could have all the right attitudes and knowledge, but fail to produce anything usable.
That brings us to a second measure. We can look at the outputs and say that a team that is highly productive has a good leader. This is the approach of “the proof is in the pudding.” This seems intuitively obvious. But there are problems here as well. Essentially, a team can have a good leader and still be unproductive if, for example, it turns out that its task is not really doable. Thinking about this in terms of sports, a team can have a good coach and lose because the other team was much better.
So, in measuring leadership effectiveness, we need to measure both the attitudes and attributes of the team and its outputs. We need to understand that neither measure is perfect and that leadership effectiveness cannot be measured precisely.