Business Leadership Today

Why Leadership Is So Important in Business


Matt Tenney, Author of Inspire Greatness: How to Motivate Employees with a Simple, Repeatable, Scalable Process

We think the most important job of a leader is to inspire their teams to do great work. Yet only 2 in 10 employees strongly agree that their performance is managed in a way that motivates them to do outstanding work. 

This is something that leaders have long struggled with, but the struggle has grown more complicated since the COVID-19 pandemic, which has led to a shift in workers’ priorities and values.

This shift in priorities and values over the last two years has led to over 70 million US workers voluntarily leaving their jobs. Many of them cite poor leadership as a contributing factor.

We know that leadership is important in business because it affects so many aspects of the organization, and everything a leader does can either help or hurt its chances for long-term success. 

How should good leaders proceed in the post-pandemic workplace? In an employee-focused way that’s informed by the ways in which leaders impact the lives of their team members and what those team members need from their leaders in the post-pandemic workplace.

To figure this out, let’s take a look at why good leadership is so important for the future of business.

Leadership is so important in business because leaders have a profound impact on the employee experience. Good leaders consistently communicate cultural norms in ways that create a positive work environment where employees are engaged, have a high degree of loyalty, and feel a sense of purpose in their work.

This article will explore why leadership is so important in business and how ensuring a positive employee experience for all team members can not just cut down on turnover but also create the ideal conditions for employees to do great work. 

Why Leadership Matters

Poor leadership has been cited as one of the main drivers of the turnover we’ve seen with The Great Resignation and now quiet quitting. 

The duration of an employee’s tenure is primarily determined by the relationship they have with their direct manager according to a 25-year study by Gallup, with about 50-70% of an employee’s perception of their work environment linked to the actions and behaviors of management.

Leadership also has a powerful impact on employee engagement. This is because everything a leader does affects the organization’s culture, and culture influences the employee experience. As such, leaders can profoundly influence an organization’s profitability and long-term success. 

The day-to-day interactions employees have with management strongly impact their employee experience, which shapes a worker’s perception of their job over the course of their tenure with a company and builds engagement. This not only affects engagement, but it can also determine the likelihood a worker will stay in that position. 

Leaders Shape Employee Experience

Gallup defines employee experience as “the journey an employee takes with your organization.” This journey includes every interaction that happens during the employee lifecycle, as well as the experiences that involve an employee’s role, work environment, supervisor, and well-being.

Employee experience plays a significant role in employee motivation, employee engagement, and employee retention, but that’s not all. 

When an organization provides a positive employee experience, they see improvements in customer satisfaction, greater innovation, and generate 25% higher profits than organizations that do not provide a positive employee experience.

Too often, managers default to a transactional style of leadership, focusing mainly on organization, supervision, performance, compliance, and meeting goals, and utilizing a system of rewards and penalties to motivate employees.

While this style may yield consistent, predictable results, it does not create the conditions for a positive employee experience or necessarily motivate employees to do their best work. 

Meaningful work, job clarity, opportunities for professional development, autonomy, an inclusive work environment, regular recognition of contributions, healthy feedback between leadership and employees, a good work/life balance, and trust-based working relationships all drive employee engagement and retention. 

A leader’s ability to build authentic relationships with their employees, clearly and consistently communicate the organization’s cultural norms, and help employees find a sense of purpose in their work determines how engaged an organization’s employees are, how positive the work environment is, and how likely employees are to stay with the organization. 

Leaders Communicate Culture Norms and Core Values and Foster Positive Work Environments

Leaders provide clarity by communicating cultural norms and reinforcing more of the behaviors they want to see on their teams by modeling core values. Poor leadership can lead to toxic work environments where conflict is frequent, disengagement is widespread, and turnover is almost certainly high. 

Toxic work environments fueled the Great Resignation, with many who left their jobs citing toxic work environments as the top reason for doing so. 

One of the best reasons to continuously communicate and reinforce cultural norms, values, and expectations to employees is because it creates an environment that is inhospitable to toxicity. 

We recently sat down with Ascentim LLC founder Lisa L. Baker and discussed how to build authentic relationships in the workplace. Baker says that the best way to do this is to eliminate toxic situations as swiftly as possible. 

Leaders can do this by clearly and consistently communicating cultural norms, which helps to clarify expectations and ensures values alignment. 

Baker has outlined a five-step process known as “The 5 Cs”: 

1. Clarify

Cultural norms and expectations must be clear to everyone. It’s equally important to demonstrate what is and is not acceptable behavior as well as the consequences for toxic behaviors. It’s important for leaders to model what they want to see from their team.

2. Connect

Building meaningful relationships with your team and others inside and outside the organization is essential. Leaders need to create an inclusive environment that has an “open-door” policy, so the team feels comfortable sharing their experiences. As individuals, we must be willing to invest time to get to know people (and allow them to know us) on a personal level.

3. Communicate

If you see something, say something. Too often we hold in negative emotions and allow them to fester. Be willing to have the crucial conversations that are essential to healthy relationships and work environments. Have the conversation with the right person. Set boundaries. Focus on behaviors.

4. Confront

You cannot conquer what you’re unwilling to confront. Don’t put off difficult conversations. Swift action is necessary to prevent negative behaviors from creating a toxic culture.

5. Choose

Decide what action you will take if someone who is causing toxicity in the organization does not respond positively to culture, connection, communication, or confrontation. It’s better to terminate one toxic person than to lose many good people because of that individual.

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Leaders who follow the 5 Cs are not only providing clarity and reinforcing cultural norms for their employees, which helps them to do great work, they are ensuring a positive work environment in which their team members can thrive. 

Leaders Engage Employees

As leaders play a central role in shaping employee experience, they also play a central role in employee engagement. 

Employee engagement is an employee’s emotional commitment to their work, the organization they work for, and its goals. It describes the bond an employee builds with their specific job and the organization.

High engagement in an organization indicates that employees care about their work, are dedicated to the organization, and their attitudes and behaviors are aligned with the organization’s core values. 

Employee engagement drives organizational success and is essential for increasing retention, attracting top talent, fostering loyalty, boosting customer satisfaction, improving organizational performance, and providing stakeholder value. 

Leadership is the cornerstone of engagement because of the central role leaders play in shaping organizational culture, which, in turn, shapes employee experience. 

According to Business Leadership Today contributor Laurie Sudbrink, “Leaders affect employee engagement the most. A leader’s ability to authentically build relationships with team members, their level of self-awareness, their sense of accountability, as well as their health and well-being, can all have a significant impact on employee engagement.”

We know disengaged employees can negatively impact the overall success of an organization and adversely affect the engagement of other employees, but disengaged leaders can also do much harm to an organization’s culture and overall success.

To see a real boost in employee engagement, leaders should also be engaged in leading their teams and authentically demonstrating their dedication to the organization’s core values through real, impactful actions and behaviors.

Leaders Retain Employees

Because leadership can impact the employee experience, the work environment, its culture, and, therefore, employee engagement, leadership is strongly tied to employee retention.

Employee retention refers to a company’s ability to prevent turnover and retain its employees. Employee turnover refers to the number of employees who leave a job, either voluntarily or involuntarily, during a certain period of time. 

Employee retention is driven by employee experience and employee engagement. An employee’s attitude toward their job and work environment determines whether an employee will stay or seek out other job opportunities. 

Leaders not only play a pivotal role in shaping employees’ attitudes toward their jobs, they also play an equally important role in motivating them to do great work. 

Motivation is related to employee retention because it drives an employee’s success and plays a vital role in employee engagement and employee satisfaction. Leaders use strategies that boost motivation, resulting in employees that are more invested in their jobs and more loyal to their organizations. 

Leaders Unite Team Members with a Shared Sense of Purpose

Employees who find the work they do meaningful are more engaged and less likely to leave. Leaders can help their employees find meaning in their work. 

Good leaders unite their team members with a shared sense of purpose that is tied to their work. Leaders connect the dots between an employee’s day-to-day activities and the impact those activities have on the organization and the communities they serve. 

Meaningful work is essential for employee engagement because it gives employees a sense of purpose. They will feel passionate about the work they do and perform their jobs with greater enthusiasm when they find it meaningful.

When employees feel a shared sense of purpose with their co-workers and a strong commitment to an organization’s mission, vision, and values, it doesn’t just improve engagement. It improves morale, performance, trust, and overall job satisfaction.

It’s also a major driver of retention, and it plays an increasingly important role in recruitment efforts. 

A recent study revealed the following statistics:

  • 70% of employees say they would not work for an organization without a strong purpose
  • 60% would take a pay cut to work at a purpose-driven company
  • 90% of employees who work at organizations with a strong sense of purpose say they’re more inspired, motivated, and loyal

Having a sense of purpose and finding meaning in their work can help employees look beyond their daily job duties and see how their work impacts the organization, their co-workers, and the community they serve. 

Having a job where the work one does is purposeful and has a deeper meaning beyond  daily tasks can keep employees motivated. Seeing the impact of the meaningful work they do is just as important for keeping them motivated. 

Acknowledging the impact of employees’ work through frequent recognition can be a highly effective way of engaging and retaining them because it improves their employee experience. 

Recognition shows employees that the work they do is seen, impactful, and appreciated. This can be a great source of motivation for workers who are driven to work toward the greater good and see their jobs as a way to do that. 

Good Leadership is Good for Business

Good leaders know that the key to engaging and retaining talented employees in the post-pandemic workplace is to lead in a way that demonstrates an awareness of their needs and priorities so that they can meet their full potential, not just as workers but as people.

This means ensuring a positive employee experience for all workers. Leaders do this by clearly, consistently, and continually communicating culture, fostering positive work environments, and helping employees find their purpose by showing them the impact of their work. 

This becomes especially important during times of crisis, as we have seen with the COVID-19 pandemic. From toxic environments to a lack of feedback, recognition, or avenues for advancement, poor leadership has been responsible for many workers seeking greener pastures. 

To avoid another Great Resignation, leaders have to demonstrate to their employees they truly value them and are committed to helping them be the best versions of themselves. This is accomplished by forging authentic, trust-based relationships with team members and realizing that the well-being of the organization is tied to the well-being of its employees. 


Matt Tenney has been working to help organizations develop leaders who improve employee engagement and performance since 2012. He is the author of three leadership books, including the groundbreaking, highly acclaimed book Inspire Greatness: How to Motivate Employees with a Simple, Repeatable, Scalable Process.

Matt’s ideas have been featured in major media outlets and his clients include numerous national associations and Fortune 500 companies.

He is often invited to deliver keynote speeches at conferences and leadership meetings, and is known for delivering valuable, actionable insights in a way that is memorable and deeply inspiring.

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