Appendix BLeadership Effectiveness and Business Performance
In Mastering Leadership, we reported our research on the relationship between a measure of Leadership Effectiveness on the Leadership Circle Profile (LCP) and a measure of business performance. We created a metric of business performance by asking managers to evaluate the performance of the business on metrics such as market share, profitability, return on assets, and quality of products and services. We then correlated the resulting Index of Business Performance with the Leadership Effectiveness measure on the LCP and confirmed a strong correlation between Leadership Effectiveness and Business Performance of 0.61 (Figure B.1). This figure shows the results from 500 organizations assessed. The study was later expanded to 2,000 organizations and 250,000 surveys with the same result.
Figure B.1 Leadership Effectiveness and Business Performance
We sorted the Business Performance data from highest to lowest. We then looked at the average Leadership Effectiveness scores of the leaders of the organizations whose Business Performance was rated in the in the top and bottom decile. As shown in Figure B.2, the average Leadership Effectiveness score is at the 80th percentile for the leaders in the highest-performing organizations and merely at the 30th percentile for the lowest-performing organizations. The data speaks for ...
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