Top 10 Characteristics of An Effective Leader

Every business needs an effective leader. And yet, highly effective leadership is rare. Here's a checklist that comes from helping hundreds of CEOs, entrepreneurs and managers become more effective leaders.

If you're feeling brave, in the spirit of a new year, you might rate yourself on the following characteristics on a scale of 1 - 10, then ask some customers and staff to do the same - anonymously, of course, using something like SurveyMonkey. The results might surprise you.

1) Truly Humble - Leads to Serve

This is #1 because no one likes to work for a jerk or buy from a jerk. If you are selfish and obsessed with your own self-image, you will be your own worst enemy. Sure, there are exceptions. But for every Larry Ellison, there are hundreds, perhaps even thousands, of nice-guy/gal business leaders whose good character makes people want to associate with them.

I say "truly humble," because we are living in a time where fake humility is an epidemic - and people are becoming increasingly good at spotting it. And, "leads to serve," because a real leader lives to help others, using the talents and desires he was born with.

2) Non-Judgmentally Observant

During a working day, the effective leader observes his own behavior and that of others.

If you observe your own behavior non-judgmentally, but with the constant desire to improve, you will get much farther than if you berate yourself, or excuse or justify your shortcomings. Doing these things will ensure that your problems remain unsolved. And, if you are asking others to solve their problems, they must first see you solving your own.

If you take the same "calm observer" approach with others, you will be a dispassionate listener. It will be more difficult for them to guess what you're thinking, and they will be more likely to tell you more.

They will still be on their best behavior - after all, the boss is in the room - but they will relax just a little bit more than they would if you were becoming agitated as you listened to them.

Everyone who works for you should know that what you're really interested in is the facts. Gathering them unemotionally will help those facts come out. Of course, there are other aspects of their behavior and character that you are always observing - including how they treat those below them, how much they contribute to the solution (rather than being part of the problem), how much others respect them, how competitive or cooperative they are, how observant they are of others, how much they include others, and so on. Being a calm observer will help you see these behaviors more clearly.

3) Faces and Solves Problems

Once the good leader has observed and is satisfied that she has uncovered the truth, she then sets out to solve the problem. She doesn't procrastinate or spend too much time gathering unnecessary additional data. She gets the right people involved right away, she tells them what she has observed, tells them what she's decided to do so far, and then works with their help to solve the problem. In the course of solving that problem, they may uncover others. She takes the same approach with each new problem.

The leaders who limit their own businesses, on the other hand, will react to a problem in all sorts of unproductive ways. She may decide that it's personal, and invest her energy in "taking offense." She may simply refuse to acknowledge there's a problem. Even if she does acknowledge it, she may decide to ignore it; push it off on to someone else to fix; or blame someone else for causing it, then fail to do anything about it. If she acknowledges it and starts to do something about it, she may come up with a solution that doesn't really solve the problem. She may also pretend she is solving the problem when in fact she is doing nothing.

In these cases, the best employees and partners will try to help her do the right thing. If their efforts fail, they will start looking around for new opportunities. As soon as they have found one, they will leave.

4) Ruthlessly Improves

The best businesses - the ones that continue to survive, even when massive market shifts affect their industry - are ruthless about improvement. They are constantly finding new ways to educate their customers, employees, and partners. They are always looking at their processes, policies, and systems, and asking themselves: "How could we make this more efficient? What don't we need anymore? What do we need now?" They don't fall into the "we've always done it this way" trap, which causes far too many companies to struggle - and fall.

5) Is Fiscally Conservative

Being in the tech business as long as I have, I've seen some spectacular failures. They all had one thing in common: They overspent. They managed to get some outside funding - either from venture capital or over-inflated stock prices - and they spent like there was no tomorrow. They were right - ultimately, for these companies, there was no tomorrow. In our current economic climate, fiscal conservatism hardly needs mentioning - but it is one of the signs of the effective leader, so it must be in this list. A good leader will think twice and will keep asking himself, "Do we need this now? Is there a less-expensive way of doing this?"

6) Invests in the Business

Even in a terrible economy, a good leader will invest in the business. He will just choose his investments wisely - the goal is to get the biggest bang for the buck, and to invest where it will have an immediate positive effect on revenue growth.

For example, I just interviewed a number of salespeople for a client. The client sells very complex software programs and services. One of the recommendations I'm making to the client is to increase education for their salespeople; to make sure that they are regularly trained by the company's technical folks - and by the company's trainer, who is in constant contact with customers and their specific concerns/misunderstandings/needs. Salespeople who can answer customer questions accurately and with confidence always speed up the sales cycle - and make it more likely that the customer will buy from them.

7) Communicates Consistently, Clearly, Concisely

Tech companies are often run by technical types, or, in times like these, financial types. Both tend to be poor communicators. But even the CEOs I've worked with in the health, food, and travel businesses have problems in this area. It's not just a "guy thing," either.

I'm going to generalize here and say that the guys with communication problems tend to communicate too infrequently, and in a way that doesn't instill confidence in their troops. The gals with communication problems may communicate more often, but they tend to go off-subject, to the point where people leave meetings with too much data and not enough clear direction. Of course there are exceptions to these general rules - that's the whole point.

The effective leaders communicate regularly, clearly, and concisely. Because they have been humble and objective enough to get the real story, whatever they say rings true to those hearing it. The listeners are open to whatever comes next - a solution or a new directive.

On the other hand, if the leader has obviously mis-read the signs, or has been misled, those listening will know it - and will not buy into his "solution."

The ineffective leader also tends to send mixed messages. For example, he will repeatedly say that he cares about employees. This same person will never leave his office to fraternize with the cubicle dwellers, and his off-hand remarks about specific employees makes his real feelings quite clear.

Communication is not just about talking and writing. It's also about behavior and character. If you say one thing and behave differently, your character will come into question. Once people start to be suspicious of your character, they are no longer following. They are holding back and questioning.

8) Gives Clear Direction

The effective leader gives clear directions. He works out how a project should proceed, then presents the plan in a well-organized, logical fashion that is easy for his customers, employees, or partners to understand and act upon.

He doesn't ramble on, verbally or in emails. He doesn't "think outloud." He doesn't rant. He doesn't berate anyone (especially in front of others), except in the very rare instance when it is entirely appropriate and necessary to do so.

I've been in meetings where the CEO allowed himself to ramble, rant, and berate for a half hour straight. By the time he was done, the employees were more confused than ever, demoralized, and drained of energy.

Ranting is a data dump that satisfies the ego of the person ranting without benefiting those who must suffer through it - and then try to solve the problems anyway, as best they can. They will hesitate to come to the manager with the problem again, because they won't want to sit through another harangue.

9) Is An Aggressive "Evolutionizer"

An "evolutionizer" is a leader who knows that the company's products or services won't be in demand forever. He doesn't spend any time trying to imagine what the market will need next; that guessing game is almost always an unprofitable exercise. Instead, he keeps his finger on the pulse of the customer's world, and the minute the customer feels a need and starts to make a shift, he's all over it.

He learns everything he can about it - from customers. His interviews will either convince him that it's only a passing fad, or that it's a real trend - and if it's a trend, he starts working immediately to see how his company can help customers meet their needs in that area. He starts with his current product offerings. Can they be repositioned? Repackaged? Repriced? Redesigned?

Could a new technology be applied to the customer's problem? Should a new product or service be developed? He also opens up the possibility that a partnership will help him capitalize on the new market opportunity. He doesn't set the whole company running off in a new direction abandoning all the good things that everyone is already doing, but he does start to allocate resources to start meeting the new need and generating new revenue.

The effective leader becomes a valued and trusted business partner for his customers, opening the door for him to introduce new products and services to them. They'll be more likely to buy from his company, because they already trust his company to deliver what they need.

10) Has a Sense of Humor

Running a company is serious business, but if you can't laugh once and a while, you're not going to be an effective leader. A little wit goes a long way; no one considers a clown a leader. Self-deprecating humor is best, but that can also be taken too far. A business owner or CEO who constantly makes fun of himself will erode confidence in his abilities.

It's a balance, as are most things in life. You should know what your strengths and weaknesses are. You should be able to laugh about them, while constantly working to eliminate those weaknesses.

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Here's the list again, in case you want to print out a short form of it. I'm going to - just to make sure I'm always eating my own dog food.

The Top 10 Characteristics of An Effective Leader

1) Be Truly Humble - Lead to Serve
2) Be Non-Judgmentally Observant
3) Face and Solve Problems
4) Ruthlessly Improve
5) Be Fiscally Conservative
6) Invest in the Business
7) Communicate Consistently, Clearly, Concisely
8) Give Clear Direction
9) Aggressively Evolve
10) Have a Sense of Humor

May your revenue grow mightily in 2010 - thanks in no small part to your effective leadership.