Organizational Leadership: What It Is & Why It's Important

Leadership is essential to organizations’ success, but many struggle to implement the right training. According to job search site Zippia, 83 percent of businesses believe it’s important to develop leaders at every level, but only five percent successfully do.

If you want to become an effective leader, here's an overview of what organizational leadership is, why it’s important, and how you can make an impact on your company.

What Is Organizational Leadership?

Leadership is the ability to implement change by creating and communicating a vision to others. Organizational leadership is the qualities and skills required to run a company or one of its divisions. It’s greater in scale and scope than many other forms of leadership.

“Scale refers to the sheer size and magnitude of what you’re leading,” says Harvard Business School Professor Anthony Mayo in the online course Organizational Leadership, “how many people; how large a budget; and how many teams, locations, and operations you oversee. Scope refers to the range and diversity of what you’re responsible for—the range and diversity of the people, teams, business lines, locations, operations, and facilities you’re leading.”

Although leadership doesn't inherently require business acumen, it’s helpful for organizational leaders to have, so they can guide their organizations, drive innovation, and manage organizational change.

Organizational leaders must consider what’s happening outside and inside their businesses. They often don’t directly interact with everyone they lead—engaging in what’s known as capital “L” leadership.

The Capital "L" in Leadership

Many senior-level leaders hold capital "L" leadership roles. According to Organizational Leadership, those leaders no longer have direct contact with everyone in their organizations and must:

• Inspire and motivate their employees
• Lead their organizations into the future
• Anticipate and respond to internal and external threats
• Pursue opportunities that range from money makers to risky bets
• Handle crises quickly and assuredly

As your duties increase as a leader—overseeing or guiding those you don’t directly supervise—it's essential to learn how to communicate effectively and execute tasks. This is particularly important when considering the differences between organizational leadership and traditional management.

Organizational Leadership vs. Traditional Management

Leadership and management differ in several ways. At an organizational level, the two are highly intertwined but have three primary differences.

• Proximity to the team: Managers work closely with the individuals they oversee, whereas organizational leaders don't always have direct contact with those they lead.
• Scale: Like leadership, management is a broad term that can be big or small in scale, whereas organizational leadership involves managing larger populations.
• Role: Managers are hired for specific roles; organizational leaders oversee managers and ensure their companies’ visions are reflected in how they guide and align teams.

What Makes Organizational Leaders Effective?

Organizational leaders bring unique qualities, competencies, and practices to their roles. In Organizational Leadership, this is called a leadership constellation.

A leadership constellation includes:

• Qualities: The aspects of who you are as a person. They contribute to how others perceive you.
• Competencies: The skills and knowledge you've developed over time that enable you to fulfill responsibilities—either by yourself or by leading others.
• Practices: The routine actions you engage in to complete tasks, guide your team and organization, and enhance your and others’ skills.

According to Organizational Leadership, you can leverage these attributes in three ways:

• Leader as beacon: Creating and communicating a vision to your organization and embodying it in your conduct (i.e., leading by example)
• Leader as architect: Ensuring your organization can follow the direction you set, and creating value using the tools and resources at your disposal
• Leader as catalyst of change: Leading organizational change by encouraging and enabling it

To be an effective leader, strive to be proficient in each.

Why Is Effective Organizational Leadership Important?

Leadership is vital in business. Organizational leaders assume an additional role because they often set the tone for the directions their companies—and sometimes even their industries—will take.

Here are four reasons why effective organizational leadership is important.

1. Motivates Team Members

Leaders play a critical role in employee engagement. According to Zippia, 69 percent of employees say they would work harder if their efforts were better recognized. This is an important statistic to consider if you struggle to retain talent or want to boost team performance.

Motivated, engaged employees can lead to higher productivity. A Gallup analysis of employee engagement data shows that highly engaged employees resulted in a 14 percent increase in productivity compared to those who were less engaged.

Leaders focus on improving team morale and their companies. Those at higher levels face the challenge of improving employees’ motivation without direct lines of contact.

According to Organizational Leadership, you can improve employee morale by:

• Hiring for leadership: If you’re involved in the recruiting process, ensure you hire effective leaders for management positions.
• Creating a positive company culture: If your company’s culture is positive and encouraging, your employees will likely be more motivated.
• Structuring effectively: For your organization to deliver value, its structures, systems, and processes must align with its people and culture.
• Openness to feedback: Even if you're not directly responsible for leading every employee, making yourself available to them can go a long way toward ensuring they feel valued.

Related: 6 Strategies for Engaging Your Employees

2. Promotes Problem-Solving and Decision-Making

Leadership requires a large degree of adaptability. Many problems require creative solutions, especially when their causes are hard to identify. As a leader, you’re responsible for helping others navigate difficult situations and making decisions that benefit your organization.

Even if you don't encounter most of your company’s daily high-level problems, you can be a role model for other employees and establish a structured approach to becoming a creative problem-solver.

3. Fosters Open Communication

Communication skills are essential for leaders. Poor communication in the workplace can lead to a host of problems, such as stress, project delays, and decreased morale.

Organizational Leadership offers four ways to foster open communication in your company, including:

1. Providing information about what's going on in a way that encourages and enables employees to act
2. Explaining your organization's direction in a logical manner that appeals to employees’ emotions
3. Ensuring employees know how their everyday tasks connect to your organization's overarching mission
4. Accomplishing tasks with individual employees and groups, virtually and in-person

Neglecting these actions can hinder your company’s success.

4. Allows Leaders to be Goal-Oriented

Organizational leaders typically set the direction for their company and enable others to follow it. According to Organizational Leadership, a good direction must be:

• Clear: An unclear direction can prevent others from supporting it. Ensure you convey your expectations so they can be met.
• Compelling: Make sure it's a direction people are willing and eager to follow.
• Concise: If others in your organization can't understand the direction, they won't follow it.

Once the path forward is clear, exciting, and accessible, it becomes much easier to set and achieve organizational goals.

Taking the First Step to Becoming an Organizational Leader

To be a successful leader, it's crucial to continuously develop your skills. Identify which leadership style resonates with you and seek opportunities to grow and adapt.

Whether you're already an organizational leader or hoping to become one, you can benefit from pursuing educational opportunities that enhance your leadership knowledge and abilities.

Ready to take the next step in your career? Consider enrolling in Organizational Leadership—one of our online leadership and management courses—to discover how to lead at scale. To learn more about what it takes to be an effective leader, download our free leadership e-book.