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How Much Does Good Leadership Affect the Bottom-Line?

How much does good leadership affect the bottom-line?

A study by the talent firm, Development Dimensions International (DDI), says the impact on an organization’s bottom-line is significant.  DDI completed a global leadership forecast study in 2011 with responses from 1,897 human resources professionals and 12,423 leaders from 74 countries.

Quality leadership affects the bottom-line. Effective leaders are 13 times more likely to outperform their industry competitors. Click To Tweet

The study is rich with data and it provides some useful data for anyone who is a promoter of effective leadership. Three findings from this study on the impact of good leadership on an organization’s bottom line are the following:

  1. The difference in the impact of a top performing leader and an average performing leader is 50%.
  2. In the area of key metrics like financial performance, organizations with the highest quality leaders were 13 times more likely to outperform their industry competitors.
  3. Organizations with higher quality leadership had higher employee retention and engagement rates (up to three times that of their competitors).
Quality leadership affects the bottom-line. Organizations with effective leaders have higher employee retention and engagement rates. Click To Tweet

One principle of good research is that an independent researcher should be able to replicate the results of a study under the same conditions. For business researchers, one consistent finding over the years is that effective leadership positively affects organizational financials.

This recent DDI study is more quantitative ammunition for internal and external professionals who have to work with organizational leaders to get them to see the value of people skills and leadership development efforts.

Quality leadership affects the bottom-line. Effective leaders outperform average leaders by 50%. Click To Tweet
Written by Robert Tanner | Copyrighted Material | All Rights Reserved Worldwide

Robert Tanner, MBA

Welcome to my leadership blog. I'm the Founder & Principal Consultant of Business Consulting Solutions LLC, a certified practitioner of psychometric assessments, and a former Adjunct Professor of Management. As a leadership professional, I bring 20+ years of real world experience at all levels of management.

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