Required Qualities Of An Effective Business Leader


An efficient leader is a leader that staff members are prepared to follow and react favorably to. Terry Leahy, who is the president of Tesco, specified a good leader as someone who takes you further than you would go on your own. Also, an excellent and efficient leader will frequently have a brand-new vision if the scenario needs to be changed and everybody will follow him. Studies and studies have actually shown that efficient leaders around the globe share the very same few qualities and same chooses the inefficient ones.

So, what are the qualities needed in order to become efficient magnate?

Characteristics of an effective leader

First off, an effective leader will have undoubted self-esteem in himself. It is the fundamental basis from which leadership grows. A leader without self-confidence is just like a house without structure of sand. An effective leader will not be scared to make any decisions. If you, as a magnate, mean to build your confidence, you need to find out to deal with failures.

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When you have actually made a mistake, you must gain from it and proceed, so that if comes a day when you are met the comparable obstacle, you can face it head-on since you currently have experience on how to handle it.

Moreover, the capability to believe outside package and imagination is likewise needed by a reliable leader. Steve Jobs and Bill Gates are fine examples of the excellent leaders of our time. Both these men lead their group with amazing management qualities, plus out-of-the-box creative minds.

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Leaders ought to promote creativity for 2 very important reasons, to avoid obsolescence and increase performance. An efficient leader will always come up with originalities so that business will not be outdated and the modifications may make the work of higher quality, lower cost and faster completion.


Truly effective leaders are also distinguished by a high degree of emotional intelligence, which includes self-awareness, self management, social awareness and social skills. It was Daniel Goleman who first applied the concept to business. These qualities may sound “soft” and unbusiness-like, but Goleman found direct ties between emotional intelligence and measurable business results. It is the ability of managers to understand their own emotions, and those of the people they work with, to achieve better business performance. Therefore, effective leaders should possess high emotional intelligence.

Motivational theories

In addition, an effective leader must have a thorough knowledge of motivational factors for others. Being a role model is one of the key motivators that influence people in reaching their goals. A leader should set a good example to ensure his people to grow and achieve their goals effectively. He can also refer to Herzberg’s two-factor theory. Herzberg suggested emphasizing recognition, responsibility, growth and other motivators if leaders want to motivate people. However, to become an efficient leader, you must be self-motivated. You must know your identity, your needs and you must have a strong urge to do anything to achieve your goals. Once you are self-motivated, only then you can motivate others to achieve their goals and to harmonize their personal goals with the common goals of the organization.

Leadership styles

On the other hand, a leader should know what leadership style is appropriate to be used. Different situations will need different leadership style. There are 4 distinct leadership styles, which are autocratic, democratic, paternalistic and laissez-faire.

Autocratic leaders like to make all the important decisions and closely supervise and control workers. Managers do not trust workers and simply give orders that they expect to be obeyed. This approach derives from the views of Taylor as to how to motivate workers and relates to McGregor’s theory X view of workers. This approach has limitations, as highlighted by other motivational theorists such as Mayo and Herzberg, but it can be effective in
certain situations. For example, quick decisions are needed in a company or controlling large numbers of low skilled workers.

A democratic style of management will put trust in employees and encourage them to make decisions. They will delegate to them the authority to do this and listen to their advice. This requires good two-way communication and often involves democratic discussion groups, which can offer useful suggestions and ideas. Managers must be willing to encourage leadership skills in subordinates. The ultimate democratic system occurs when decisions are made based on the majority view of all workers. However, this is not feasible for the majority of decisions taken by a business- indeed one of the criticisms of this style is that it can take longer to reach a decision. This style has close links with Herzberg’s motivators and Maslow’s higher order skills and also applies to McGregor’s theory Y view of workers.

Paternalistic leaders give more attention to the social needs and views of their workers. Managers are interested in how happy workers feel and in many ways they act as a father figure. They consult employees over issues and listen to their feedback or opinions. The leader will however make the actual decisions in the best interests of the workers as they believe the staffs still need direction and in this way it is still somewhat of an autocratic approach. The style is closely linked with Mayo’s Human Relation view of motivation and also the social needs of Maslow.

The laissez-faire leadership style is also known as the “hands-off” style. It is one in which the manager provides little or no direction and gives employees as much freedom as possible. All authority or power is given to the employees and they must determine goals, make decisions, and resolve problems on their own. This style could be effective in the case of research or design teams. In other cases, workers may not appreciate the lack of structure and direction in their work.

Financial & non-financial motivators

Other than just the theories of motivation, there are also the actual motivations in practice. These motivators are categorized into two specific groups, which are the financial and non-financial motivators. Financial motivators in forms of payments are of primary importance in most workers’ views and very few people would be prepared to work without financial reward. Effective business leaders should be able to distinguish the type of payment that suits his workers the best, so as to bring out the best in them by application of that financial reward. A few examples of payment methods would be the hourly-wage rate, which pays by the hour, the piece-rate system, which is wages given on every product produced and performance-related pay, a bonus scheme to reward staff for above-average work performance.

As the saying goes, ‘one man’s meat is another man’s poison’. This means that not every worker can be effectively motivated by financial rewards. Like what critics have commented on Taylor’s theory that money is the best motivator, the question hanging in the air is; is it sufficient to generate effective motivation?

There are other forms of motivations which don’t involve money, termed non-financial motivators. These are enhancements of the workers’ tasks, like having job-rotations, job-enrichments or delegation and empowerments to the workers. Job rotations are usually applied in factory production as the tasks of workers tend to be monotonous all-year round and rotating their jobs will allow them to have a wider variety of tasks instead of doing the same one all the time while delegations give employees the sense of having some form of authority which would increase their responsibility and hence would be more focused on what they do.

It is vital for an effective leader to have the knowledge that no one thing can cater to everyone’s preferences.

Management functions

In addition, a leader should also know what managers are responsible for, which are known as management functions. The most commonly cited functions of management are planning, organizing, leading, and controlling, although some identify additional functions. An effective leader is aware that leading and managing are two poles apart, and being good at either of them does not make him an effective leader. Instead, the leader must be adept at both managing his personnel and leading them along the right track.

Ethical decisions

Every leader from big or small companies would unsurprisingly face the dilemma of making ethical decisions in the midst of keeping their business running. The growing acceptance of corporate social responsibility has led businesses to adopting an ‘ethical code’, which is a document detailing on a company’s rules and guidelines on staff behaviour that must be followed by all employees. An effective leader would possess the ability to make ethical decisions that takes into account the interests of all members and are within moral dimensions.

Traits or drawbacks of an ineffective leader

All the characteristics mentioned above are the ones employees hope to see in their leaders. There are, inevitably, also some traits that no worker would want to find in their employers, like lack of integrity. These are also the leaders that don’t walk the talk by setting up standards of behaviour and expectations, then violating the rules themselves. Business leaders should do whatever is possible to get the company up and going, and when a leader is resisting good ideas with the addition of having tunnel vision, the organisation gets stuck. A business also does not need a leader that would run people over. This crushes any worker’s spirits and if this approach is used as a matter of routine, then it is likely to alienate many members of the team. Lastly, taking credit for everything. An effective leader gives credit where credit is due and even though it’s not in the form of financial rewards, everyone appreciates a pat on the back for a job well done. When a leader has this knowledge in his mind, he will help boost the company’s performance as workers feel appreciated and the great sense of belonging.

Wrapping this up, there is a plethora of qualities that are required of an effective leader but amongst all the positive traits provided, my personal choice of the most significant quality that an effective leader should be endowed with is high emotional intelligence because the imperativeness of
drawing the line between personal life and work is indescribable and without it, a leader might lash out at his workers due to problems in his personal life or even bringing out personal vendettas toward a particular employee.

Updated: Jul 06, 2022
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Required Qualities Of An Effective Business Leader. (2016, Feb 29). Retrieved from

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