What is Leadership Capital?

What is Leadership Capital?

The principles of leadership are simple, but not easy. They take time and practice to utilize effectively. Every principle can be taken to the extreme by leaders. When they are taken too far, the leader’s influence decreases with people and organizational performance suffers. Rather than rigid adherence to each principle, effective leaders must be able to balance opposing forces – that is, they must know when to hold-the-line in critical matters and when to provide slack-in-the-line on issues of minimal importance.

Leaders only have so much capital (authority, influence, etc.) they can spend, so they must use it wisely. Leadership capital is acquired by building confidence and trust with people, as well as demonstrating they have the long-term good of the mission and team in mind. Effective leaders use leadership capital on important issues. They take time to explain the why behind asks. Ineffective leaders use leadership capital on trivial issues. Because their employees often do not understand the why behind asks, they feel they are being driven down their throats.

Leaders must set high standards and help people achieve them without becoming domineering or inflexible on matters of minimal importance. For example, the leader’s standard for team meetings is if you are early, you are on time; if you are on time, you are late; if you are late, do not attend. If an employee is always late, the leader should hold-the-line with them and explain why it negatively impacts the team. If an employee is late because of a critical customer meeting, the leader should provide the employee slack. Leaders must prioritize where leadership capital is spent.

All contents copyright 2019, Josh Lowry. All rights reserved.


One Response to What is Leadership Capital?

  1. Annie Paxton says:

    Nice post! Love the analogy of spending capital as a leader.


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