CHICAGO ñ A study of employee workplace perceptions for a major financial institution strongly linked leadership behavior with two business performance metrics important to the bank: profit potential of clients and customer retention. Using its empirically derived model of leadership behavior, ISR was able to identify how leadership behavior at the financial institution is connected to the bottom-line business success.
Leadershipís link with profit potential revealed to the company that using communication effectively for making decisions and implementing change, which are common leadership traits, was strongly connected to continued profitable growth through clients. The study also revealed that all aspects of leadership behavior were significantly related to its ability to retain clients.
ISR based its findings on comparisons of the financial institutionís various divisions. Employees of those divisions that outperformed the firm overall in both Profit Potential from Client and Customer Retention were significantly more favorable about leadership in the areas of decision-making and communication than those in the lower performing divisions. These two areas revealed a significantly positive impact to the profit potential of clients and client retention.
GLOBAL CONSUMER GOODS FIRM TIES LEADERSHIP TO MARKET SHARE GROWTH
As with the bank, ISR conducted an employee opinion survey with a global consumer goods company in which employee perceptions of leadership at the firm were linked to bottom-line results. Using its model of leadership behavior, ISR found a significant 0.56 correlation between leadership behavior at the company and its market share growth over a four-year period.
ìLike our study of the bank, we found that employees of high performing divisions at this consumer goods company were significantly more favorable about leadershipís influence on the company than those employees in the lower performing divisions,î said Dan Rubin, Project Director for ISR. ìThese survey results help explain why the higher performing divisions excel in market share growth.î
Effective leaders in the higher performing divisions of the consumer goods company, especially those in a direct supervisory role, were viewed as good communicators. While the survey results revealed that employees at the company generally perceive that the majority of supervisors communicate effectively and provide feedback, those employees in higher performing divisions have an even higher view of their supervisorsí communication skills.
ìThese findings contain a strong message for all managers. That is to communicate early and often with your employees, and keep feedback channels open at all times,î said Rubin. ìThis open communication fosters a deeper understanding of employeesí strengths and development areas, and lets them know how they are doing.î
LATEST FINDINGS CONSISTENT WITH PREVIOUS STUDY OF 41 GLOBAL COMPANIES
These findings support an earlier ISR study which revealed the relationship between improved business results and employee engagement. Employee engagement is defined as the extent to which employees believe in the values of a company, feel pride in working for the company, are motivated to go the extra mile and are committed.
This global study of 41 companies revealed that high engagement companies realized a 5.75 percent difference in operating margin and a 3.44 percent difference in net profit margin versus low engagement companies, and offers further proof that companies that are able to strengthen the engagement of their employees will realize a direct or indirect influence on business performance.
ìAlthough employee engagement is proven to drive business results, an organization cannot simply issue edicts that all employees should become more engaged,î said Patrick Kulesa, Global Research Director at ISR. ìEngagement is an outcome, and therefore very difficult to change in a vacuum. However, perceptions of leadership are more easily understood and impacted.î
Strong Perceptions of Leadership Lead to Increased Customer Retention and Market Share Growth
ISR reveals links between leadership dimensions such as vision, communication and decision-making and business results
