ORGANISATIONAL effectiveness depends on effective leadership. Leaders differ from managers because leaders rely mainly on personal power whereas managers rely mainly on formal power.

Personal power stems from expertise, personality, social skills and ethical conduct whereas formal power stems from the power inherent in a position such as the power to reward, punish and force compliance.

Leaders build long-lasting relationships based on social exchange and relational trust whereas managers build short-term relationships that are based on economic exchange and calculative trust.

Examples of social exchanges are sharing and delegating authority, respecting and seeking input from followers, treating all followers fairly, and showing a genuine concern for the welfare and development of followers.

Social exchanges result in an emotional bond with the leader such that followers identify with the leader and the leader’s vision, and believe that the leader has their best interests at heart and truly appreciates their contributions.

Economic exchanges are short-term oriented and result in a conditional trust in the leader. Examples of economic exchanges are rewarding followers in accordance with any agreements made with them and providing them with the technical support needed to effectively perform their roles.

Economic exchanges yield calculative trust in the leader because the leader keeps promises and treats followers equitably.

True leadership

True leadership transforms the norm and seeks goals that are morally sound and beneficial to all stakeholders. One of the key functions of leadership therefore is to influence others so they will enthusiastically accept and commit to the radical propositions of the leader.

When you attempt to influence others, they can resist, comply or agree because they have an emotional connection with you. Or, they can agree because they believe in what you believe in.

Leaders differ from managers because leaders can create an emotional bond with others and make others believe in their visions. Leaders rely on influence tactics such as inspirational appeal, personal appeal and rational persuasion whereas managers rely on pressure, exchange and legitimatisation.

The Seven Is

Leaders can increase organisational effectiveness by sincerely and consistently practising the seven Is because these create an emotional bond with the leader and make others believe in what the leader wants to achieve.

People who are emotionally connected to the leader and internalise the ideals of the leader are likely to make extraordinary efforts to achieve the leader’s vision.

Here are the seven Is:

1. Integrity

This is a cornerstone of trust and shows that the leader has a high level of morality, walks the talk, and is an honest and good-hearted person.

2. Inclusiveness

This quality shows people that the leader values them and does not have favourites. Inclusiveness shows that the leader respects the contributions that others make and thus builds an emotional bond with them.

3. Individualisation

This makes people feel that the leader cares about them and facilitates the development of close relationships because the leader is a mentor who willingly shares explicit and tacit information.

4. Idealism

The leader demonstrates that he has high standards, an advanced sense of morality, and seeks a future that surpasses the present. Idealism stems from dissatisfaction with the status quo and an optimism that the future can be better than the present.

5. Industriousness

This means the leader walks the talk and is prepared to do more than what is asked of others. Great leaders work tirelessly towards their vision and this inspires others to do the same.

6. Innovation

Leaders encourage people to reconsider old ways of doing things and create organisational cultures in which people feel safe taking risks and making mistakes. Leaders who act upon the ideas of others are able to facilitate creativity and ultimately innovation.

7. Inspiration

This is an outcome of great leadership and happens when the leader an admirable role model and creates a compelling vision that excites others and makes them identify with collective goals.

Leaders influence organisational effectiveness directly and indirectly. Leaders who are role models and who work tirelessly and demonstrate exceptional social skills directly influence organisational effectiveness.

However, leaders who practise the seven Is of effective leadership can have a greater indirect influence on organisational effectiveness by exciting others to do their utmost to achieve organisational goals.