How to Lead by Example and Its Impact on Organizations

International businessmen celebrating

The behavior of leaders has an outsized effect on organizational performance. This is placed in sharp relief by the growing understanding that people don’t generally leave jobs — they leave bosses. An uninspiring example as a direct manager is not helpful for long-term retention prospects. However, senior leaders like the CEO can make an even bigger impact when they lead by example.

Early in life, it seems self-evident that leaders should be role models. As people mature and develop, however, the connection between these concepts is often lost. Leaders whom others sincerely look up to are more likely to inspire excellence. Leading by example is particularly important in setting the tone for those who have only recently joined an enterprise and whose future is uncertain.

Some elements of leading by example include:

  • Sharing in sacrifice — never asking others to do what you’d be unwilling to do
  • Looking for opportunities to be proactive and pitch in with the team’s efforts
  • Treating everyone with respect, regardless of their position in the organization
  • Being honest with others and keeping clear lines of communication with teams

Leading by example is inseparable from ethics. An ethical business culture, in turn, has a number of great benefits. It leads to long-term performance improvements and a focus on creating new value. It enhances confidence across the company and throughout the market. And, of course, it helps reduce liabilities from non-compliance with regulations and other questionable behavior.

Let’s review some pillars of leading by example.

Deliver on Results

If employees don’t know what’s expected of them, they won’t be able to deliver it. Setting clear, high standards is essential. Those standards should be supported by the resources employees need to achieve them — and the positive reinforcement that shows their efforts are recognized. Leaders should strive to promise timely, positive outcomes and then deliver what’s expected. This may come at the expense of toning down rhetoric: It’s of little value to overpromise if you ultimately under-deliver.

Virgin’s Sir Richard Branson provides several great examples of delivering on results, extending back even before his business career. When stranded at an airport on the way to Puerto Rico, Branson didn’t head for the ticket counter to complain. He called for a chartered flight, booked it, and communicated with the other passengers so everyone would contribute their share. In a situation with no obligation to perform, he looked for a way to solve problems, add value, and excel.

Value Employee Relationships

Credibility, caring, and front-line leadership are core values that have helped make Southwest Airlines employees engaged and effective. Much of this culture, however, starts at the top: Team members must know senior leaders value them. Taking a genuine interest in others, as Dale Carnegie said, is key. That means understanding not only what individuals do, but who they are and their goals professionally and personally. Everyone has different motivational levers that can help them perform.

Bill Gates may not be the first person who comes to mind when one thinks of employee retention. However, a commitment to Microsoft’s people has been part of his outlook for decades. Early on, his method of figuring out who was invested was to memorize employee license plates and track who was arriving early or leaving late. With time, however, his company became known for great benefits and training opportunities that reflected the importance of investing in others. “Take my 20 best people away,” Gates reportedly said, “and, virtually overnight, Microsoft becomes a mediocre company.”

Another recent example comes from Japan Airlines CEO Haruka Nishimatsu. When his company hit hard financial times, Nishimatsu took action. He cut his salary to levels near those of his pilots and eliminated executive perks. He took buses to work and ate at the company cafeteria. His goal? More than anything else, it was to demonstrate the importance of his employees and show he would support them in rising to the challenge. After all, an airline needs pilots, attendants, and mechanics to function.

Resolve Conflicts

In any large organization, not everyone will get along. However, that doesn’t give a leader carte blanche to ignore simmering tensions. Likewise, in a world that churns constantly with vengeful online reviews from customers who feel disrespected, leaders need to be on the lookout to resolve customer conflicts, too. In both cases, flexibility is crucial.

Among employees, it’s important to be able to reframe conflicts so they are not zero-sum struggles where one party will be the victor and the other the vanquished. This approach leads to intractable status conflicts and a “them or me” attitude that can cost companies otherwise valuable employees. Instead, it’s crucial to approach conflicts by identifying common ground.
What about customer conflicts? It’s long been argued “the customer is always right” can contribute to an attitude of sneering entitlement in which nothing the company offers is good enough. Still, good customer service can turn most conflicts into new opportunities to build relationships.

Southwest Airlines may be the best current example of both approaches. It’s training for flight attendants prioritizes conflict resolution and voluntary compliance. Front-line employees aren’t the only ones who are expected to be creative when dealing with conflict: When the company was challenged by a much smaller aviation firm over its “Just Plane Smart” branding, Southwest Airlines CEO Herbert D. Kelleher accepted a challenge to arm wrestle to settle the issue — despite being 61 years of age to his opponent’s 38.

Much of the televised 1992 event was staged, but the collaboration between the two companies in developing it went a long way to resolving the dispute. Plus, two major charities benefited substantially as the key players devoted proceeds to charity. Tiny Stevens Aviation grew massively as a result of the publicity, and Southwest saved $500,000 in legal fees. It went on to achieve top rankings in customer satisfaction, baggage handling, and on-time performance later that year.

Empower Employees

Workplace psychologists have long emphasized the importance of autonomy in job satisfaction. For employees to solve problems, they need to be confident they are permitted to take action. They must also know that taking a new approach won’t get them penalized if they don’t see immediate results. Greater empowerment means employees will naturally support one another, celebrate success, and pursue stretch goals. Without empowerment, they will wait for explicit directions in any situation.

General Electric CEO Jack Welch is one of the leading champions of employee empowerment. He was the original architect of the “boundaryless organization” — a then-revolutionary concept that leaders should be willing to entertain ideas and suggestions from anyone within the enterprise. By acknowledging that each perspective could offer unique insights, he gave everyone permission to take pride in their work. By soliciting and following up on feedback, he drove positive change at GE, vastly raising employee engagement.

True leadership inspires and motivates, helping others tap their potential. An executive who leads by example primes others to do their best work and be resilient if times are tough. To rise to the challenge, leaders must know their values well and always stick by them.

Learn More

At Ohio University, we understand how important an MBA can be to advancing your career. We also know that your MBA should be affordable, engaging, and academically-rigorous. That’s why we have designed an online MBA that is comprehensive and challenging, yet flexible to fit your lifestyle. When you earn your MBA online from Ohio University you are making a conscious decision to improve your professional value and position yourself for current and future business opportunities.

Additional Reading

Ethical Leadership Case Studies
5 Key Insights From Today’s Top Business Leaders

Sources, “Are You a Good Leader? (Infographic)”, “Richard Branson’s Three Most Important Leadership Principles”, “Here’s Why Bill Gates Used to Memorize Employee License Plate”, “4 ways leaders effectively manage employee conflict”, “You’ll never go wrong leading by example”, “6 Key Tips for Leading by Example” 
Dale Carnegie Way, “Take a Genuine Interest in Other People”