Learn why leadership is important in the workplace. Discover how managers affect daily employee experience, engagement, productivity, and wellbeing with data.
Written by Laura Bouttell • Wed 31st December 2025
Leadership is important in the workplace because your manager determines your daily experience more than any other factor. Research from Gallup demonstrates that managers account for 70% of the variance in employee engagement—meaning leadership quality shapes workplace experience more than compensation, benefits, company reputation, or physical environment. When 77% of employees globally report being disengaged or actively disengaged, leadership quality represents the difference between thriving at work and merely surviving.
Yet workplace leadership extends beyond motivation. Leaders determine what you work on, who you work with, how your performance is evaluated, what development you receive, and whether your workplace feels psychologically safe. Understanding why leadership matters in the workplace reveals why some teams flourish while others languish despite similar resources and circumstances.
Managers matter disproportionately because they control the conditions of daily work life:
Direct influence: Managers interact with employees regularly—setting expectations, providing feedback, assigning work, and shaping priorities. This direct influence occurs continuously, not occasionally.
Resource control: Managers allocate resources—time, equipment, support, opportunities. What managers provide or withhold directly affects employees' ability to succeed.
Experience creation: Managers create the micro-environment employees inhabit daily. A supportive manager creates a supportive experience; an unsupportive manager creates the opposite.
Interpretation role: Managers interpret organisational direction for their teams. How managers translate and communicate affects how employees understand their purpose.
Development gateway: Managers largely determine development opportunity—assignments, feedback, coaching, and advancement recommendations.
Protection function: Good managers protect teams from organisational dysfunction, unreasonable demands, and external pressure. Poor managers amplify these stresses.
The 70% factor in context:
| Factor | Impact on Engagement |
|---|---|
| Manager quality | ~70% of variance |
| Compensation | Significant but secondary |
| Benefits | Matters but not primary |
| Physical environment | Moderate impact |
| Company reputation | Some influence |
| Co-worker relationships | Important but manager-shaped |
Research consistently confirms manager centrality:
Trust statistics: Employees who strongly agree they trust their organisation's leadership are four times as likely to be engaged and 58% less likely to be watching for or actively seeking a new job.
Engagement data: Currently only 23% of employees globally are engaged. 62% are not engaged, and 15% are actively disengaged. This engagement crisis costs the global economy approximately $7.8 trillion annually.
Training gap: Less than half of managers worldwide (44%) report receiving management training. Many are "accidental managers"—promoted for technical skill without leadership development.
Leader burnout: 72% of leaders feel used up at the end of the day. Burned-out leaders struggle to support teams effectively.
Retention connection: The axiom "people leave managers, not companies" reflects reality. Manager quality directly determines whether talented people stay or go.
Effective workplace leaders demonstrate specific behaviours:
Clear direction: Good leaders communicate expectations clearly. Employees understand what they're supposed to accomplish, why it matters, and how success is measured.
Resource provision: Effective leaders ensure employees have what they need—tools, information, time, support—to succeed at their work.
Recognition delivery: Good leaders notice and acknowledge contribution. Regular recognition sustains motivation and signals value.
Development investment: Effective leaders develop their people through feedback, coaching, assignments, and growth opportunities.
Psychological safety: Good leaders create environments where employees can speak up, make mistakes, and learn without fear.
Obstacle removal: Effective leaders remove barriers preventing employee success—bureaucratic impediments, conflicting priorities, insufficient resources.
Human connection: Good leaders connect with employees as people, showing genuine interest in their wellbeing and development.
Effective workplace leadership checklist:
| Behaviour | Impact |
|---|---|
| Clear expectations | Reduces anxiety, enables focus |
| Resource adequacy | Enables task completion |
| Regular recognition | Sustains motivation |
| Development focus | Builds capability, retention |
| Psychological safety | Enables voice, learning |
| Obstacle removal | Eliminates frustration |
| Human connection | Builds trust, loyalty |
Poor workplace leadership produces predictable negative effects:
Ambiguity: Poor leaders leave employees uncertain about expectations, priorities, and success criteria. This ambiguity creates anxiety and wasted effort.
Resource starvation: Ineffective leaders fail to provide what employees need. Workers struggle without adequate tools, information, or support.
Invisibility: Poor leaders ignore contribution. Employees feel unnoticed and unvalued regardless of effort or results.
Stagnation: Ineffective leaders neglect development. Employees plateau, lose engagement, and eventually leave.
Fear environment: Poor leaders create unsafe environments where speaking up risks punishment. Innovation and improvement stop; problems hide.
Frustration accumulation: Ineffective leaders fail to address barriers. Employees encounter the same obstacles repeatedly, building frustration.
Disconnection: Poor leaders maintain distance from their people. Employees feel like resources rather than humans.
Engagement represents discretionary effort—going beyond minimum requirements because you want to, not because you must:
The engagement equation: Engaged employees invest energy beyond job requirements. They think about improvement, care about quality, and contribute beyond their job descriptions.
Current engagement reality:
Productivity connection: Engaged teams demonstrate 21% higher productivity than disengaged teams. This productivity premium represents the tangible return on engagement.
Quality linkage: Engaged employees produce higher quality work and create better customer experiences.
Innovation dependency: Innovation requires discretionary thought and effort. Disengaged employees don't innovate; they comply.
Leaders build engagement through specific practices:
1. Purpose connection
Help employees see how their work connects to meaningful outcomes. Purpose transforms tasks into contributions.
2. Strength utilisation
Deploy people in roles using their strengths. Working in strength zones energises; working against strengths exhausts.
3. Autonomy provision
Give appropriate autonomy over how work is accomplished. Micromanagement destroys engagement; trust builds it.
4. Growth opportunity
Provide learning and development opportunities. Growth possibility sustains engagement; stagnation destroys it.
5. Recognition practice
Recognise contribution regularly. Recognition signals value and sustains motivation.
6. Voice enabling
Listen to employee input and act on it where appropriate. Being heard builds investment; being ignored destroys it.
7. Relationship investment
Build genuine relationships with team members. Human connection creates commitment beyond transactional exchange.
Leaders create workplace culture through daily behaviour:
Modelling: What leaders do, others copy. Leader behaviour establishes behavioural norms regardless of stated policies.
Reinforcement: What leaders reward, recognise, and tolerate defines what matters. Attention signals importance.
Decision patterns: How leaders make decisions—who's consulted, what's prioritised, how conflicts resolve—establishes cultural patterns.
Communication style: How leaders communicate establishes communication norms. Openness breeds openness; secrecy breeds secrecy.
Response to mistakes: How leaders respond to errors determines whether culture supports learning or punishes failure.
Consistency: Consistent leader behaviour builds predictable culture; inconsistent behaviour creates cultural confusion.
Culture shapes employee experience and behaviour:
Behaviour guidance: Culture tells employees how to behave in ambiguous situations. Strong cultures guide behaviour consistently.
Experience determination: Culture determines whether the workplace feels supportive, competitive, innovative, or toxic. Experience flows from culture.
Attraction and retention: Cultures attract people who fit and repel those who don't. This matching affects who joins and stays.
Performance enablement: Cultures either enable or constrain performance. High-performance cultures produce high performance.
Wellbeing impact: Workplace culture significantly affects mental and physical wellbeing. Toxic cultures damage health.
Culture elements shaped by leadership:
| Element | Leader Influence |
|---|---|
| Trust | Built through consistent, honest behaviour |
| Collaboration | Modelled and rewarded by leaders |
| Innovation | Enabled through psychological safety |
| Accountability | Established through clear expectations |
| Respect | Demonstrated through leader treatment |
| Learning | Supported through response to mistakes |
Leadership significantly impacts employee wellbeing:
Stress levels: Leader behaviour can increase or decrease employee stress. Supportive leaders buffer stress; unsupportive leaders amplify it.
Mental health: Workplace experience affects mental health. Poor leadership contributes to anxiety, depression, and burnout.
Work-life balance: Leaders influence whether employees can maintain healthy boundaries. Respectful leaders support balance; demanding leaders destroy it.
Physical health: Chronic workplace stress affects physical health. Leadership quality indirectly affects employee physical wellbeing.
Burnout prevention: Leaders play central roles in preventing burnout through reasonable expectations, support provision, and recognition.
Thriving enablement: Beyond preventing harm, good leaders enable employees to thrive—finding meaning, growth, and fulfilment through work.
Leaders support wellbeing through:
Workload management: Ensure workloads remain reasonable. Advocate for additional resources when needed.
Boundary respect: Model and protect healthy work-life boundaries. Don't expect constant availability.
Psychological safety: Create environments where employees feel safe being human—acknowledging struggle, asking for help, making mistakes.
Recognition delivery: Provide regular recognition that affirms value and contribution.
Connection maintenance: Maintain human connection, particularly in remote or hybrid arrangements where isolation threatens.
Resource provision: Connect employees with support resources when needed—employee assistance programmes, mental health support, flexible arrangements.
Personal modelling: Model healthy behaviour. Leaders who run themselves into the ground signal that self-care isn't valued.
A significant workplace leadership problem: many managers receive no leadership training:
The statistics: Almost 60% of first-time managers receive no training when transitioning into management. Less than 44% of managers report receiving any management training.
The promotion pattern: Organisations typically promote based on technical performance. Strong individual contributors become managers without leadership development.
The assumption error: Organisations assume technical competence translates to leadership capability. This assumption frequently proves false.
The support gap: New managers often lack mentors, coaches, or support systems. They figure out leadership through trial and error—often at their teams' expense.
The time squeeze: Managers face operational demands that crowd out development. Without protected development time, capability building doesn't happen.
Untrained managers produce predictable workplace problems:
Engagement damage: Without leadership skill, managers cannot build engagement. The 70% engagement variance becomes 70% negative.
Talent loss: Employees leave untrained managers who create poor experiences. The best employees—with options—leave first.
Performance limitation: Teams led by untrained managers underperform their potential. Capability without effective leadership yields limited results.
Culture degradation: Untrained managers create unintentional cultures through unconscious behaviour. These cultures often prove dysfunctional.
Problem escalation: Managers without conflict resolution skill allow problems to escalate. Small issues become large ones.
Career damage: Untrained managers sometimes make career-limiting mistakes. Their own advancement suffers alongside team performance.
Organisations can improve workplace leadership through:
Selection improvement: Assess leadership capability alongside technical skill when selecting managers. Don't assume technical success predicts leadership success.
Transition support: Provide training and support for new managers. Don't expect people to figure out leadership alone.
Ongoing development: Continue developing managers throughout their careers. Leadership capability requires continuous investment.
Coaching access: Provide coaching support helping managers navigate challenges. Individual coaching produces 580% ROI.
Feedback systems: Establish mechanisms for feedback to managers. Without feedback, managers cannot calibrate effectiveness.
Manager support: Recognise that managing is difficult. Provide resources, community, and support for managers facing challenges.
Accountability establishment: Hold managers accountable for team engagement and experience, not just operational results.
Individual managers can improve workplace leadership through:
Self-development: Don't wait for organisational support. Invest in your own leadership development through reading, courses, and practice.
Feedback seeking: Actively seek feedback from your team and others. What you don't know about your impact you cannot change.
Relationship investment: Build genuine relationships with team members. Know them as people, not just workers.
Coaching adoption: Apply coaching approaches in daily interaction. Ask questions; develop thinking; support growth.
Recognition practice: Make recognition a regular habit. Notice and acknowledge contribution consistently.
Boundary maintenance: Model and protect reasonable work-life boundaries. What you model, others copy.
Continuous learning: Never stop learning about leadership. Each challenge offers learning opportunity.
Leadership is important in the workplace because managers account for 70% of variance in employee engagement—more than compensation, benefits, or any other factor. Leaders determine daily experience through expectations, resources, recognition, development, and culture creation. With only 23% of employees globally engaged, leadership quality represents the primary lever for improving workplace experience.
Leadership affects employee experience through every interaction: setting expectations, providing resources, delivering feedback, recognising contribution, removing obstacles, and creating psychological safety. Good leaders create experiences where employees feel valued, capable, and purposeful. Poor leaders create experiences marked by confusion, frustration, and disengagement.
Good workplace leaders provide clear direction, adequate resources, regular recognition, development opportunity, psychological safety, obstacle removal, and human connection. They build engagement through purpose connection, strength utilisation, autonomy provision, and voice enabling. Good leaders also support wellbeing through workload management, boundary respect, and genuine care for their people.
Employees leave managers who create poor experiences: unclear expectations, inadequate support, no recognition, limited development, unsafe environments, unresolved obstacles, and impersonal treatment. Research confirms "people leave managers, not companies." Manager quality directly predicts retention, with employees trusting leadership being 58% less likely to seek other employment.
Research shows less than 44% of managers receive any management training, and almost 60% of first-time managers receive no training when transitioning into leadership roles. This training gap means many managers learn leadership through trial and error—often at their teams' expense. Untrained managers struggle to build engagement and frequently damage employee experience.
Leadership creates workplace culture through modelling (demonstrating behaviour), reinforcement (rewarding and recognising), decisions (revealing priorities), communication (establishing norms), and response to mistakes (enabling or preventing learning). What leaders do consistently becomes cultural norm regardless of stated policies or values.
Organisations can improve workplace leadership through better selection assessing leadership capability, transition support for new managers, ongoing development investment, coaching access, feedback systems, manager support and community, and accountability for engagement outcomes. Individual managers can improve through self-development, feedback seeking, relationship investment, and coaching approaches.
Leadership is important in the workplace because it is the workplace—at least the workplace as employees experience it. The manager standing between organisational intentions and individual experience determines whether work feels meaningful or meaningless, energising or exhausting, growing or stagnating.
The statistics confirm this reality: 70% engagement variance from managers, only 23% engagement globally, $7.8 trillion annual cost of disengagement. Each statistic reflects leadership's position as the primary determinant of workplace experience.
For organisations, the implication is clear: manager development deserves priority investment. The untrained manager problem—60% receiving no training—represents an unforced error with enormous cost. Training managers to lead effectively improves experience for everyone they lead.
For individual leaders, the opportunity is personal impact. Every interaction shapes employee experience. Every decision affects engagement. Every day offers opportunity to create workplace where people thrive rather than merely survive.
For employees evaluating opportunities, manager quality should weigh heavily. The company's reputation, the compensation package, the growth opportunity—all matter less than the answer to "who will I work for?" That manager will determine daily experience more than any other factor.
The workplace where you flourish versus the workplace where you flounder often comes down to a single factor: leadership. Understanding this reveals why leadership development represents perhaps the highest-leverage investment any organisation—or any leader—can make.
Your manager is your workplace experience. Leadership is why.