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How To Measure Leadership Effectiveness: 14 Essential Tips

Business literature tends to offer different meanings for what makes an effective leader. Maybe it's an entrepreneur that can increase the value of a company. Perhaps it's a person who can help the business pivot into a new industry efficiently. Regardless of what the people within a business consider effective leadership, it all comes back to how it can be measured. For the most part, many of these measures of effectiveness are qualitative. They don't rely on hard numbers to demonstrate their conclusions. Instead, they look at a particular outcome.

If an entrepreneur was concerned with their leadership effectiveness by the numbers, where would they start? Are there any key performance indicators or metrics that would give a clue as to efficacy? Would there be a way to use that information to make leadership more effective? Below, 14 members of Forbes Business Council explore the different ways in which business executives could measure their leadership effectiveness.

1. Foster Growth And Strong Values

The ability to recognize talent in the hiring process and building a team of strong and capable people is one of the hardest yet significant parts of a leader’s role. But creating an environment that fosters growth and strong values is just as important. When a business’s employees are excited to come to work and to provide their all, that’s a good sign of effective leadership. - Roger David, Gold Star Chili and Tom & Chee

2. Measure Workforce Attitudes

There are many ways to assess the effectiveness of leadership. Evaluations, external audits and business results are among them. However, the best way, in my opinion, is to measure and understand the attitudes among the workforce. A great leader has one foot on the mountain and the other in the valley. - Adam Povlitz, Anago Cleaning Systems


3. Measure The Company's Profitability

As an entrepreneur, it's simple. Are you profitable and winning clients? Do you and your company have a great reputation that others will recommend? Have you stood the test of time? If you're an effective leader, you will lead a profitable company. - Chris J "Mohawk" Reed, Black Marketing

4. Evaluate Strategic Objectives

For our clients—private equity investors and their portfolio companies—leaders have clear insight into whether they and their teams are meeting growth metrics and return on investment targets. Most firms have strategic objectives, so leaders should measure themselves on whether those goals are being met or not. If not, then leaders should do a deeper dive to uncover the causes. - Victoria Lakers, The Lancer Group

5. Measure These Five Metrics

Leadership is effective when these five things are on track: 1. Vision—everybody knows and loves the vision; 2. Alignment—all activities feed each other; 3. Core values—written core values are discussed regularly; 4. 90-day execution plan—a clear execution plan for the next 12 weeks; 5. Weekly numbers—marketing numbers, sales numbers, operations numbers. - Simon Severino, Strategy Sprints

6. Look At Objectives And Key Results

Measuring leadership effectiveness can happen in many different ways and necessarily includes some intangible aspects. But for big-picture objectives, an OKR (objectives and key results) system or a similar process can help create accountability and transparency. OKRs give leadership the freedom to stretch the business and push for innovation even while it establishes a system for measuring the results of various initiatives. - Chuck Hengel, Marketing Architects

7. Check The Growth Of The Team

The growth of your team is a key metric. Entrepreneurs often limit their leadership from growing because they are too involved. Allowing your team to make their own decisions, fail and learn from those failures causes growth. Many times this is unintentional. If you're being looped in on decisions for your tacit or explicit approval, that is a sign you are limiting their growth. - Christian Brim, Core Group

8. Measure Confidence In Employees

You're only as good as the people who work for you. An effective leader supports their team and puts them in roles that celebrate their strengths. As a leader, you know you're being effective when your employees shine and you feel confident enough to be hands off to allow them to do so. It's also important to remain accessible. Make sure they are seen, heard and valued. - Mitra Ahouraian, Ahouraian Law

9. Examine The Customer Experience

A leader is only as effective as their weakest team member. The quickest way to sales growth is through happy, talented teams because those teams will drive the best experience for your clients. Research shows that customers remember their experience more than what they paid. Think back to your last Lyft ride. What do you remember: the driver or the cost? - Sabrina Shafer, Transformation Continuum

10. Use Multiple Employee Variables

The best way is using multiple variables such as employee engagement survey scores, percentage of employees promoted, employee turnover and profit generated per employee. A leader that can show highly engaged employees that are getting developed to be promoted while maintaining low turnover and a high profit per employee shows they can run a hyper-efficient and people-focused business. - Marcus Chan, Venli Consulting Group

11. Focus On Inner- And Outer-Game Evolution

Focus on the inner-game and the outer-game evolution. Great leadership can be achieved when we evolve our outer-game through skills and capability building in order to be an effective leader, and our inner-game that is focused on integrity, passion, purposefulness, vision, compassion, courage, authenticity, collaboration, self-awareness and humility. Great leaders are great humans! - Andreea Vanacker, SPARKX5

12. Inspire Others With A Shared Passion

Effective leadership is measured by inspiring others toward a shared passion. When your team members truly understand the vision and can explain “why” in their own words, when they focus on who they are serving and how they can better serve those customers and when they are energized to bring new ideas to the table, you have inspired them with a shared passion. Make the impossible possible. - Hany Fam, Markaaz

13. Assess The Success Of Each Team Member

Leadership effectiveness can be measured by the success of the individual members of the team as they embrace the organizational vision and act to materialize it. At the end of the day, production statistics will tell the truth. - Dimitrios Kostopoulos, Hands-On Companies

14. Know If You're Creating Good Leaders

Are you building great leaders? Any leader's job is to teach, empower and encourage the people they manage and mentor to maximize their potential. I always judge a leader by the effectiveness and ability of their team. - Craig Howe, Rebel Ventures

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