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How to be a good leader

How to be a good leader

You don’t have to be a business dynamo to lead well. Today, empathy and trust are among the most important skills you need to successfully lead a business. Find out what good leadership looks like, why it’s important and fine tune your skills.

Why leadership is important

Most people do better with someone firmly at the helm. Without a strong leader employees may work well for a time, but eventually they’ll run out of steam. This hurts both your people and profits.
Improve your leadership skills to:

  • bring employees together
  • help people understand what’s expected of them
  • help them understand where your business is heading
  • stay passionate about your vision
  • get more done.

Focus on improving these three areas — it’s a win for your business and your people will reap the rewards.

The best leaders can switch between leadership styles.

The best leaders can switch between leadership styles.

Get to know your team

Good leaders use different intuitions. They lead based on the situation, their personality and values. Some people need to be led more than others. Different employees respond to different leadership styles, so it’s important to take time to understand your team.

Your leadership style may change daily, weekly or monthly, depending on who you’re dealing with and what you’re trying to achieve.

Discover how well you work trust and fairness into your business, and why it’s important. If you’re experienced or just learning the ropes, find out where you need to focus to boost your business.

At the end of this assessment you’ll get:

  • an understanding of your strengths and weaknesses
  • practical tips
  • links to expert advice.

5-10 minutes

Find out where to focus

Communicating intentions

Tool painter

Did you know...

Employees are most committed when they believe decisions are made using a logical, informed, and fair process with their interests represented. — Ann Latham, Forbes contributor

I tell my people the reasons behind important decisions I make for the business.

Demonstrating respect

Tool woman with paper

Did you know...

If people trust you to take care of their needs, they repay you by taking care of the needs of your business. — Julia Richardson, New Zealand Business Performance Panel

My staff have everything they need to do their work.

Personal connection

Tool woman talking to student

Did you know...

Creating a personal connection with your staff helps them perceive you as trustworthy, says David DeSteno, author of The Truth About Trust.

At work, I make a point of finding out what’s personally important to staff.

Fair processes

group of people

Did you know...

Fair workplaces are transparent about how they evaluate staff, and transparency is key to building trust among employees. — Michael J Kuhar, PhD

I use a system to evaluate staff performance.

Demonstrating respect

Tool workers talking

Did you know...

Research by Professor Michelle C Bligh found staff are much more willing to support a manager who is kind and compassionate.

I show my employees I have their best interests at heart.

Personal connection

builder and businessman

Did you know...

Employees showing gratitude is one way to gauge whether a leader is well-liked. A large-scale study by Zenger and Folkman found there is only a 1 in 2,000 chance that a strongly disliked manager will be considered a good leader by staff.

My staff show they appreciate me.

Being neutral and inviting feedback

people at desk

Did you know...

Bias can shape workplace culture in unwanted ways, including discrimination. — Horace McCormick, University of North Carolina Executive Development

I have thought about what my biases are.

Communicating intentions

Tool group talking

Did you know...

Telling staff about where a business is heading is crucial for developing employee engagement. Having engaged employees can improve business performance by over 200%. — Dale Carnegie Training

I keep staff informed about where our business is heading.

Fair processes

woman business planning

Did you know...

Some rewards or entitlements should be given equitably, eg performance bonuses. Others should be given equally, eg annual leave. Understanding the difference helps a business make fair decisions, which builds trust. — Julia Richardson, New Zealand Business Performance Panel

I've thought about when to give staff rewards and entitlements based on what each person deserves, and when to give everyone the same.

Being neutral and inviting feedback

Two farmers

Did you know...

Seeking input from your team can help to build trust. A study by Interaction Associates found businesses with a high level of trust perform 2.5 times better in revenue generation than those with low trust

I ask my team for their thoughts about big changes to my business.

Make trust a priority

Why trust is important

Businesses built on trust are generally more profitable. Making trust a key part of your work culture is an essential business strategy.

It can positively affect:

  • your operating costs
  • employee retention and engagement
  • performance outcomes.

Trust is a two-way street — the more you can trust your employees the more they will trust you and how you run your business.

Employees who don’t trust you to make good decisions or behave with integrity will struggle with morale. If people trust you, they’ll generally work harder, be loyal and less likely to move on.

Trust helps give you a competitive edge. People trusting they can experiment and make mistakes leads to a high performing team, where creativity and ideas flow.

And if you trust employees to get on with things to a high standard, it frees your time for other pursuits — whether business or personal.

Look for ways to build trust into your strategy to:

  • reduce employee turnover
  • build high performing teams
  • encourage innovation.
When people trust you to look after them, they'll repay you by looking after your business.

When people trust you to look after them, they'll repay you by looking after your business.

Work trust into your strategy

Some employees trust more easily than others, based on their life-experience or world view. You may have to work harder to build trust with people who are more guarded by nature. Work these three key steps into your leadership approach to see trust levels grow.

Step 1: Respond to your employees’ needs

Take note of what they hold dear and do something about it. It shows your team you value them and not just what they can do for you.

For example:

  • If employees are worried about safety, hear their concerns and share any steps you’re taking to improve your safety practices.
  • If an employee tells you something in confidence be sure not to repeat it to others.
  • If employees like to bike to work or go for runs at lunchtime, think about installing a shower.

Step 2: Communicate your intentions

Share why you’re doing things. Show how your actions benefit employees and the business. Make sure you’re honest and have nothing to hide.

  • Give genuine reasons for decisions
  • keep your word, or explain why you’ve changed tack 
  • hold yourself accountable
  • tell employees what they can expect and why.

Step 3: Show how you're delivering

Sharing the outcome of your decisions gives employees faith in your ability to lead. Point out when things have gone well and be honest about when they haven’t. Explain what you’re doing about things that haven’t worked quite as planned.

This is particularly useful when leading into the unknown, eg when you’re launching a new product or service. Employees may not trust the business will pull it off. Respect this. Tell people why you think the product or service will work then share incremental results, eg sales figures or customer feedback that support your reasons.

Case study

Case study

Building trust in action

Business has been slow for Jed’s lawn mowing firm. The market is crowded with people offering the same service. Jed thinks it’s time to branch out. He gathers together his 10-strong team to share his plans.

Jed explains that they’ve been losing business and that if they don’t act, he may have to start laying people off. He pitches his idea to offer tree maintenance as well as lawn mowing. He says he’s spoken to a few customers who say they struggled to find tree surgeons when they needed to trim trees on their properties. He also says he’s seen an advertisement from a power supplier looking for arborists to partner with them to keep electricity lines clear. Jed asks his team what they think of his plans and encourages them to share their ideas and concerns.

A few of the team are unsure and are worried about using a chainsaw. Jed shows them examples of the protective clothing he’s planning on getting and shares details of the training course he has lined up for staff who are interested in developing tree surgery skills. He makes it clear people who aren’t will continue doing lawns. Jed also arranges for an arborist friend to be a mentor to talk to the team about how he finds the job and to answer the team’s questions.

Jed lets the team know he has a couple of customers keen on them cutting down trees in their gardens. Once they’re up and running, he gives them regular updates on bookings. He compares booking levels to when they only offered lawn mowing.

He makes sure they’re aware he’s meeting the power suppliers to talk about being a preferred supplier, and when they’re accepted into the next round of applications, he buys the team beers to celebrate.

Some of the team get behind the new offering straight away. Little by little those who were wary see Jed knows what he’s doing and start to relax about the new venture.

Check your practices are fair

Employees are typically more engaged when they can count on you to treat people fairly and make consistently fair decisions. Ask yourself how fair your employees might perceive you to be in your:

1. Business processes

How you allocate resources: How do you decide who works which shifts, who gets to drive the company vehicle, how projects get approved or what employees are paid? In HR this is known as Distributive Justice.

How you apply policies and processes: Do you ask employees what they think before you introduce a new policy or process? Do you apply polices ethically and fairly, eg give everyone the same opportunity to take leave, or give everyone the chance to work from home? This is known as Procedural Justice.

2. How you manage and lead

How you share information: Do you explain your decisions clearly, do you get back to people in good time, are you mindful of who you’re talking to and tailor how you communicate to their needs? This is known as Informational Justice.

How you treat people: Do you treat people with dignity and respect? Do you avoid bias, or do you favour people with the same background and views as your own? This known as Interpersonal Justice.

Being fair looks different in different situations.

Being fair looks different in different situations.

Equity, equality and needs

When thinking about what’s fair, consider treating people equitably, equally or based on their individual circumstances. Think about people’s personality and individual needs.

Equity: Sometimes, giving people what they deserve — or being equitable — is the fairest way to go. For example, giving a high-performing member of the team a bigger bonus than regular or low-performing staff may be fairer than giving everyone the same.

Equality: In the case of flexible working or time off, giving everyone the same rights might be the fairest approach. These are terms and conditions of employment and not related to performance.

Needs: Sometimes the fairest decision will be based on people’s needs. For example, it’s fair to give someone time off to grieve a death, or have an operation. But it may be unfair to give someone three months off to go on a world trip, unless you’re prepared to do that for everyone.

Good leadership checklist

The best leaders:

  • Create a shared sense of purpose — clearly communicating their vision and taking people along for the journey.
  • Treat people fairly — giving credit where it’s due and taking personal responsibility when things go wrong.
  • Commit to doing the right thing — accepting they have a moral duty to everyone your business affects, whether customers, employees, their families or the community. 
  • Create a culture of continual learning — motivating their people in an environment where they can grow and learn.
  • Strengthen relationships — communicating clearly and respectfully, taking time to build trust and being consistently fair.
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