The quality of senior leadership has a direct, and measurable, impact on analysts’ assessments of whether companies have been successful and will be successful in the future, said a report.

The leadership qualities include core capabilities as well as personal qualities such as honesty and integrity, added the report entitled The Leadership Premium by Deloitte, a leading professional services firm.

“With this research we wanted to put a quantitative metric on the effectiveness of leadership, to help businesses understand the impact that leadership can have on their performance and market value,” said Margot Thom, managing director, Global Talent and Human Capital Consulting Leader, Deloitte.

“This report uncovers a tangible metric that has a real impact on the long-term shareholder value of organisations, which hopefully will set out a compelling vision of effective leadership for the future.”

According to the report, the analysts who said the quality of leadership affected their valuations awarded, on average, a premium of 15.7 per cent for particularly effective leadership—and a discount of 19.8 per cent for its opposite.

To that end, the gap between the value of a company with good leadership and that of a company with weaker leadership could be more than 35.5 per cent.

The report indicates that analysts look for three core components when assessing an organization’s leadership strength:

• Strategic clarity – a clear vision of what the organization needs to achieve

• Successful execution – proven ability to meet objectives

• A culture of innovation – commitment to enterprise; an environment for ideas

In addition, analysts look for two attributes that support these components: effective corporate governance and effective leadership characteristics.

Simon Holland, DTTL Strategic Change and Organizational Transformation Leader, said: “To succeed in the long term, an organization needs a clear and inspiring vision of where it wants to be and the resources, ability, and drive to get there."

“It also needs a culture that supports new ideas and that fosters a strong sense of belonging and purpose. These conditions aren’t developed accidentally: effective leaders design them in, and analysts recognize that,” he added. – TradeArabia News Service