Why Does Leadership Matter?
The problem with measuring leadership is that people want to measure its attributes rather than its results. I get that, I really do. Knowing the attributes allows you to build and reinforce those attributes in leaders and potential leaders. Similarly, the presence of flour, sugar, eggs, and chocolate chips is much more likely to result in cookies than if you don't have those things on hand. However, if I can simply measure the presence of the cookies themselves, I can work backward to figure out how they got there.
Measure the results of leadership rather than its attributes.
So what are the results of leadership?
Employee retention: Most organizations spend good time and money measuring employee engagement and employee satisfaction. These are useful measures because engaged and satisfied employees are much more likely be productive employees. But more importantly, low engagement and satisfaction is a clear predictor of turnover. And while all employees go through ups and downs in productivity, it's guaranteed that when an employee leaves, the time between their departure and their replacement becoming fully productive is usually measured in weeks or months.
So the most obvious measure of leadership is employee engagement and satisfaction, then ultimately retention. And if retention is one of the chocolate chip cookies of leadership, the ingredients are rapport with employees, a culture that makes room for fun, and individual growth opportunities. There are more ingredients, and those are the ones assessed by your engagement or satisfaction survey.
Oh and by the way, in the case where a leader has high retention because her employees keep getting promoted, that's also a positive measure of leadership because she's building leaders.
Organizational results: Every team, department, division, and company has organizational results to achieve. This could be improving throughput, improving customer satisfaction, improving sales, or improving some other key performance indicator. Most senior leaders are paying attention to organizational results, but the people hiring and training leaders often focus on softer skills (employee engagement) and neglect organizational results.
Organizational results come from either incremental improvement or from innovation, both of which are important, but are taught and reinforced differently. So in measuring organizational results, look closely at whether leaders are good at continuously improving something, or good at introducing something new that gets results (or both).
Financial rigor: It's less glamorous than employee retention and organizational results (which ARE glamorous, trust me) but there is specific value in managing to a budget. When I was developing leadership training, I often asked how good leaders were at reading a profit and loss statement. Financial acumen isn't often included as a leadership skill, but leaders who regularly miss their budget are going to have a tough time growing in an organization. So in measuring leadership, look for those leaders who meet their budgets. That said, budget adherence in the absence of organizational results and employee retention may tell a story of static leadership.
Vision: I've left vision for the last, not because it's less important, but because it's what I want to leave you with. Having and executing a vision is often the difference between a leader and a manager. No shade cast on managers here...I believe that leading and managing are different skills and good leaders are good at both. I also believe that some managers are in leadership positions despite a lack of vision and over time that shows.
Vision is an idea for what the organization (department, division, etc) CAN be, but isn't yet. Admittedly, this is tougher to measure because by nature a vision is aspirational. So it comes back to innovation, which is one of the key building blocks of a vision. Measure a leader's ability to express an innovative solution to a problem, including a problem no one has thought of yet. Look at how that innovation fits into that leaders's expressed vision and that will give you a sense of their ability to turn vision into reality.