Explore how leadership functions within organisations. Learn about leadership levels, styles, and how to develop leaders at every organisational tier.
Written by Laura Bouttell • Sat 10th January 2026
Organisational leadership is the ability to lead groups of individuals toward fulfilling an organisation's mission. It entails directing and coordinating individuals within an organisation to achieve its goals. The Society for Human Resources Management (SHRM) defines leadership as "the process by which an individual determines direction, influences a group, and directs the group toward a specific goal or mission."
Critically, SHRM explains that leadership is not a position, but instead, a behaviour. This distinction matters enormously for understanding how leadership operates within organisations—it can emerge from anywhere in the hierarchy, not just from those with formal authority.
Understanding how leadership functions across different levels and contexts enables organisations to develop leaders more effectively and deploy leadership capability where it's needed most.
Leadership in organisations is an inherently multilevel phenomenon. Organisational effectiveness hinges on coordinated leadership being enacted from leaders residing within multiple hierarchical levels, whose leadership shapes crucial individual-, team-, unit-, and organisational-level outcomes.
"Leadership is the most influential factor in shaping organisational culture."
Research demonstrates clear links between leadership and a range of important outcomes:
| Outcome | Leadership Impact |
|---|---|
| Patient satisfaction (healthcare) | Directly correlated with leadership quality |
| Patient mortality | Leadership affects safety culture and outcomes |
| Financial performance | Leadership drives strategic execution |
| Staff wellbeing | Leaders shape working environment |
| Engagement and turnover | Leadership is primary driver |
| Overall quality | Leaders establish and maintain standards |
These connections make leadership development not a "nice to have" but a strategic imperative.
A crucial distinction: the three levels of leadership development are not positions in an organisation—they are levels of development for a leader.
"Tragically, you can have the CEO of an organisation operating at level 1. You can also have someone in a position like receptionist acting at level 3."
This insight challenges assumptions about where leadership resides. Position confers authority, but leadership effectiveness depends on development, regardless of role.
John Maxwell's influential model describes five levels through which leaders develop, each building on the previous.
At this foundational level, people follow because they have to—the leader has a title that grants formal authority. Leadership at this level relies entirely on positional power.
Characteristics:
Developing beyond Level 1: Build relationships that transcend role requirements.
At this level, people follow because they want to. The leader has invested in relationships, and followers choose to engage beyond minimal requirements.
Characteristics:
Developing beyond Level 2: Focus on producing results that establish credibility.
People follow because of what the leader has done for the organisation. Track record builds credibility and attracts followership.
Characteristics:
Developing beyond Level 3: Invest in developing other leaders.
People follow because of what the leader has done for them. The leader invests in growing others, multiplying impact.
Characteristics:
Developing beyond Level 4: Achieve sustained excellence over time.
People follow because of who the leader is and what they represent. This level comes only from years of growing people and organisations.
Characteristics:
Leadership types aren't always used in isolation; rather, effective leaders often integrate a combination of styles. Leadership style plays a significant role in an organisation's work environment, influencing both employee morale and productivity.
Transformational leaders use charisma to unify their group and encourage critical thinking across all levels of employees. This leadership style is future-thinking and sees change as exciting, achievable, and necessary.
Best suited for:
Transactional leaders motivate followers through a system of rewards and consequences based on contingent reward and management by exception. They focus on operational efficiency, goal setting, and productivity.
Best suited for:
Democratic leaders share decision-making with group members, promote their interests, and practise social equality. This style often proves highly effective, creating better contributions from employees and increased morale and innovation.
Best suited for:
Visionary leaders create a compelling picture of where the team is going, but not exactly how they'll get there. This frees employees to experiment and take calculated risks.
Best suited for:
Coaching leadership focuses on developing individuals and showing them how to improve their performance whilst aligning their goals with organisational objectives.
Best suited for:
Commanding leadership is the classic "military" style—top-down and directive. Research suggests it is probably the most popular but least effective style. It features criticism and lacks support, potentially harming job satisfaction and morale.
Use sparingly for:
Different levels require different leadership capabilities and focus areas.
Senior leaders face increasingly complex strategic and operational problems arising from the demands of an ageing population, shortages in key workforce groups, and ongoing financial constraint (in healthcare contexts) or equivalent pressures in other sectors.
Senior leadership requires:
Middle leaders serve as the crucial connective tissue between strategy and execution.
Middle leadership requires:
Front-line leaders directly impact employee experience and customer outcomes daily.
Front-line leadership requires:
Organisational leaders are needed in all sectors: business corporations, technology, healthcare, government, education, and non-profit organisations. Leadership jobs can be found at various levels.
Look for individuals who demonstrate:
| Indicator | What to Observe |
|---|---|
| Initiative | Taking action without being asked |
| Influence | Ability to persuade and inspire others |
| Learning agility | Quickly adapting to new situations |
| Self-awareness | Understanding strengths and limitations |
| Results orientation | Focus on outcomes and achievement |
Experiential learning:
Formal development:
Relationship-based:
Organisations develop leadership culture through:
Several challenges commonly undermine leadership effectiveness within organisations.
Collaboration between leaders and managers is key; when high social friction arises between these positions, organisational progress suffers.
Addressing this:
The median tenure of NHS trust chief executives is only 3 years, and high managerial turnover creates particular challenges for improving performance.
Addressing this:
One key issue is that many leaders join organisations as individual contributors and then find themselves taking on leadership roles, often without the core skills and experiences needed to lead efficiently, sustainably, and thoughtfully.
Addressing this:
Organisational leadership is the ability to lead groups toward fulfilling an organisation's mission. It involves directing and coordinating individuals to achieve organisational goals. Importantly, leadership is a behaviour, not a position—it can emerge from any level, not just formal authority roles.
Leadership operates at multiple levels: senior (strategic direction, culture, governance), middle (strategy translation, coordination, talent development), and front-line (daily direction, performance, engagement). Separately, individual leaders develop through levels from positional authority to earned respect through results, relationships, and people development.
No single leadership style is universally best. Effective leaders adapt their style to context—using transformational approaches for change, coaching for development, democratic methods for buy-in, and commanding styles only for emergencies. The best leaders integrate multiple styles based on situational needs.
Organisations develop leaders through experiential learning (stretch assignments, projects), formal development (programmes, coaching), and relationship-based approaches (mentoring, networks). Effective development combines all three and begins before leaders assume formal leadership positions.
Leadership is the most influential factor in shaping organisational culture and affects numerous outcomes including employee engagement, retention, performance, innovation, and financial results. Without effective leadership at all levels, organisations struggle to execute strategy, adapt to change, and retain talent.
Leadership can be developed through deliberate effort. Whilst some individuals may have natural tendencies that support leadership, the capabilities that drive effectiveness—communication, influence, strategic thinking, people development—respond to practice, feedback, and experience. Development works best when started before leadership roles are assumed.
Leadership focuses on direction, inspiration, and change—answering "why" and "where." Management focuses on coordination, control, and execution—answering "how" and "when." Organisations need both capabilities, often within the same individuals. Leadership without management produces vision without execution; management without leadership produces efficiency without direction.