A serious gap in leadership effectiveness exists, according to a just released survey by Aon Hewitt

While participants from the 1,328 employers nationwide found that leaders play a vital role in meeting business goals (56 percent), meeting profitability targets (56 percent), delivering service (56 percent) and retaining talent (44 percent), only 12 percent of respondents say their leaders are extremely effective at meeting business goals. What’s more, just 14 percent believe their leaders are extremely effective at meeting profitability targets, 17 percent say the same holds true for delivering service and 7 percent believe their leaders are extremely effective at retaining talent.

Since mismanagement and misappropriation of managers and leaders seems to be such a common event at businesses today, it seems like an opportune time to revisit the difference between managers and leaders
Leadership comes with the territory when you own your own business or receive a title. But being in a leadership position does not necessarily make you a leader. Leadership experts say leaders vs. managers are two very different characters, even though most small-business owners consider them the same. 

The Peter Principle states that “in a hierarchy every employee tends to rise to his level of incompetence”, meaning that employees tend to be promoted until they reach a position at which they cannot work competently. It was formulated by Dr. Laurence J. Peter and Raymond Hull in their 1969 book The Peter Principle. The principle holds that within an organization, members are promoted so long as they work competently. Eventually they are promoted to a position, at which they are no longer competent, and there they remain, being unable to earn further promotions, often times mucking things up. Although The Peter Principle is often referred to in jest, there is often truth in humor.

More often than not we see employees rising through the ranks from entry-level employee to management, then management to leadership roles. These titles are often rewards for extra effort or loyalty along with success in the current position.  But none of these achievements justifies promotion to roles that these employees are ill-equipped to undertake. 

What then are the fundamental differences between leaders and managers?

According to Warren Bennis, one of my favorite authorities on leadership, “leaders are people who do the right thing; managers are people who do things right.”  In that vein, a leader always has the full vision in his sights and inspires the organization to follow.  Leaders set the company strategy.  A leader sets the example of how to work and live. But most importantly, an effective leader is concerned beyond the boundaries of self, and directs his or her energy to the very core of the business – its team of employees.  Bennis outlines four themes that generate empowerment, camaraderie, and a sense of belonging. They are:

  1. People feel significant.
  2. Learning and competence matter.
  3. People feel part of the larger community.
  4. Work is exciting.

An equally important characteristic according to Ken Blanchard, best-selling author of The Leader Within, is leaders “get honest, unfiltered feedback about how you are doing from the people you lead.” He further states, ”You cannot effectively lead if you do not know your own values.”

“Managing,” on the other hand, implies structure, control, rules, deadlines and efficiency, says Blanchard. A manager will dictate expectations and can some¬times push, some¬times pull and some-times a mix¬ture of both. Managers must have an understanding of the leader’s vision and share the commitment to seek it. 

That is not to say that a manager should not exhibit some leadership qualities and to learn skills that define a leader. If managers merely focus on the activities of the followers and fail to engage them in a purpose, that manager will most likely lose the interest of his followers. Loss of interest grows into loss of motivation which can lead to lower productivity.

Ultimately, the term manager typifies the more structured, controlled, analytical, orderly, and rule-oriented end of the continuum, while the term leader denotes a more experimental, visionary,  flexible, and impassioned side. Managers and leaders are not the same. They think differently internally, and behave differently externally.