Effective Leadership Development: Making the link between Performance and Business Impact 

L&D (learning and development) teams are crucial in enhancing leadership skills. However, many leadership programs fail to deliver the desired level of impact. One of the key reasons for this that we observe is that frequently they fail to consider the elements that exist between demonstrating desired leadership behaviours and delivering business impact and this disconnect can make it harder for leaders to apply what they learn to real-world challenges. 

In recent blogs, we’ve explored how leadership actions cascade through an organization to influence overall performance and, ultimately, business impact. With a focus on the Leadership Impact Chain model. This blog aims to provide a comprehensive look at how performance plays a critical role in this chain, why it's often misunderstood, and the value of integrating this thinking into tailored leadership development solutions.

So let’s dive into the intricacies of performance and why a customized approach can make all the difference.

Defining performance

Performance can be hard to define, and many leaders (and even CEOs) need help understanding it fully. In our experience, it's often why leaders find it difficult to effectively manage performance.

Let us explain.

Put simply, performance refers to what people are actually doing in their roles. So, at its core, performance is about action – how well employees, teams, and organisations carry out their tasks, work together, and anticipate each other’s roles. For example, how team members troubleshoot and solve problems or how a customer service representative builds client relationships.

A useful analogy is to think of performance in the context of a Formula One pitstop. Performance is how well the pit stop team works together in those few seconds, with each member executing their specific task (lifting the car, unscrewing the wheel nuts, bringing the new tyre etc) flawlessly and in perfect timing, allowing the car to get back on the track as quickly and safely as possible. 

Let’s consider a busy retail store too. The performance here is about how well each employee carries out their specific role, from greeting customers to handling transactions and dealing with customer problems. It’s not just about closing sales but also about delivering a seamless, high-quality customer experience. 

Performance vs. business impact

If we think about that Formula One pitstop for a second, performance is completing the tasks quickly,  efficiently, and safely so the driver gets back in the race as quickly as possible. 

Business impact, however, is winning the race. The lasting change that comes from all those pit stops, training, and planning — things like improving the team's efficiency, changing the organisation's culture, or strengthening its position in the market.  

(We’ll talk about culture in detail next month when we look at how creating the right conditions enables performance.)

As a result, to be effective, leadership development programs must go beyond thinking just about quick wins. They should help leaders think critically about the specific performance required from their teams to drive desired business outcomes. When L&D teams design programs that integrate this focus, they can create learning solutions that drive long-term success and sustainable growth.

For maximum impact, leadership programs must align with the collective performance needed to achieve business outcomes. By focusing on how each skill contributes to the success, L&D teams can design development initiatives that help leaders understand and drive the specific performance needed to achieve strategic goals.

The challenges in measuring performance

Measuring the impact of leadership development on performance can be complex. Linking a leader's performance to tangible business outcomes is not always straightforward. Defining and measuring the specific behaviours or outcomes that will directly lead to the desired business impact can be challenging. 

Second, long-term sustained behaviour changes in performance can take a longer period of time to show results, and it’s harder to measure the impact compared to short-term improvements. It’s like judging the success of an entire race season, not just one pit stop.

Third, many development solutions can be off-the-shelf not customised for specific organisational performance needs. Generic leadership training programs don’t dig deep into understanding the specific performance required to deliver desired business outcomes, instead focusing on standardised sets of competencies that define “good” leaders anywhere. 

Finally, if there’s a focus on learning metrics like course completion rates, satisfaction scores, and knowledge assessments over business metrics, while these metrics indicate how well leaders engage with learning content, they don’t necessarily show how learning impacts the performance of the people they lead

Shifting the focus from learning outcomes to business metrics requires a mindset change where success is measured by the leadership program’s real-world improvement on performance, rather than by participation or satisfaction alone.

By designing development solutions with a clear understanding of how leadership, and in turn performance affects business results, it's possible to align metrics with key business objectives. This ensures that leadership programs focus on measurable outcomes, making it easier to track progress and demonstrate their value in achieving real business results.

Introducing the LIW Leadership Impact Chain 

Many leadership development programs fail to consider the broader factors that connect demonstrating a desired leadership behaviour to achieving business impact. For example, they may overlook the environment in which the leader's team operates or fail to define good performance for both teams and individuals and how that performance is measured.

Cue the LIW leadership impact chain. 

The Leadership Impact Chain reduces the guesswork. It connects leadership actions to tangible business outcomes, just like each pit stop action directly impacts the race result. If performance doesn’t meet expectations, leaders can explore the "broken links" in the chain, identify issues, and take action to fix them. By using clear frameworks and asking the right questions, L&D professionals can ensure their leadership development programs make a real difference.

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Business Impact

Just as a pit stop has a clear goal – to get the car back on track – when L&D defines the desired business impact first, all development efforts can align with these goals. Think of this as setting the goal for the race: what the company wants to achieve, like growth, societal impact, or world domination. 

Performance

Remember, this is about the specific actions of leaders and their teams to achieve the desired business impact. 

In the same way, each team member has a role in our pit stop scenario; leaders must understand what their team members need to do to drive results. It's about ensuring everyone knows their part, works in sync, and aligns their efforts toward the bigger goal.

The optimum environment

Leaders must create an environment that supports the defined performance. L&D can help set the right conditions for success by ensuring leaders are empowered, clear on their goals, and skilled. By providing leadership development programs focusing on role clarity, teamwork, and alignment, L&D can ensure leaders set the right conditions for success.

Leadership behaviour

Leaders must demonstrate the right behaviours to create the optimal environment, like a pit crew member having the tools and support necessary to do their job well. When leaders show the right behaviours, like giving timely feedback, coaching, and removing barriers for their teams, it creates the necessary conditions for success.

The leadership impact chain connects leadership behaviours with both performance and business impact, ensuring your leadership development efforts lead to lasting changes. This way, your organisation performs better now and sets itself up to keep pace with constant change.

Understand performance for leadership development with LIW

Although we’re not really experts in Formula One pit stops, we are experts in leadership development programs that improve lives by transforming people’s experience of work through leadership. 

We do know that, just like in racing, it’s all about helping Leaders to create the right environment for their teams to deliver the performance to create the desired business impact and a key part of this in the chain, is helping Leaders to focus on the specific performance they need from their team and the associated measures.   

LIW has worked extensively with global leaders across all three levels and in diverse business sectors, ranging from small businesses to larger enterprises. We would love to hear your thoughts! Let’s start a conversation about leadership performance. Contact us today.

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