Leadership as the process of shaping human interaction within an organization

The traditional definition of leadership has two components. The first is the hierarchy, i.e. the prevailing asymmetrical pecking order within the organization; the second is the organization’s ability to achieve predefined goals through the efforts of individuals or groups (Gablers Wirtschaftslexikon 2014). Within the context of this philosophy, leaders were characterized by their assertive impact - that is, by their ability to motivate people to accomplish more than they would have been willing to achieve on their own volition. Leaders were equipped not only with enough sanctions to exert pressure but also with enough professional skills and expertise to be able to evaluate the performance of every subordinate. Command and control were the accepted means of achieving defined goals.

Many of these assumptions about leadership no longer apply today. Hardly any leader today is actually capable of assessing in detail how "diligent” an employee is, because no leader is familiar with every employee's work in detail. Goal agreements are only useful as aids to the extent that they are capable of reacting flexibly to changes in existing rules that originate from outside the organization. The contemporary working environment demands that decisions be made around the globe and around the clock (e.g. the production machine in India is down; problems have arisen with permits in Chile). The old leadership structures are too slow to meet that need. By the time issues have passed upward through all levels of the old decision-making hierarchy and the outcome arrives at the lowest level, the damage has increased exponentially. Leadership in matrix organizations regularly places leaders in the position of having to balance different roles.

Leadership means: explaining relationships

Leaders who truly understand their roles within the organization see themselves as organizational developers: They continually assess the degree to which existing routines and goals are in tune with potentially changing social requirements, values and other parameters. In this way, they ensure the future viability of the organization. Their most important duty is that of communicating the meaning and purpose of the existing or evolving organization internally on the basis of this comparison of actual and target situations. The old concept of leadership was characterized by the belief that leaders are always on top of the situation, have everything under control and know better than their employees what is good for them. This type of voluntary subordination does not appear to be automatically accepted by the members of “Generation Y” today. They question every form of paternalism and base their decisions about where they work and what they work for on their own views about what is meaningful and purposeful.

Leadership as an offer for discussion

Just how productive an organization is depends for the most part on the willingness and ability of its employees to perform, a fact that reflects the changing image of the human being: Leadership motivates individuals to work at peak capacity because they recognize and accept the purpose of doing so. And that becomes possible when all leaders are willing and able to explain the meaning and purpose of tasks and objectives to their subordinates – an arduous task that must be performed (almost) daily and (actually) never ends, but must instead be renewed repeatedly. Thus leadership must redefine its claim to leadership practically every day. Yet the benefit is obvious: An employee who is aware of the strategic goals and knows how they relate to each other and how they contribute to the great whole will be a more satisfied and committed worker. The duties derived on the basis of this understanding of goals and visions differ for every employee, but explaining the relevant context, purpose and meaning enables all employees to make their own decisions, sort out their own priorities and take charge of their own areas of responsibility as entrepreneurs within the organization. Ensuring that this can happen is the duty of every leader. That is what we at Coverdale refer to as the context-based leadership style.

Success (self-)monitoring

When the performance of one or more employees is unsatisfactory, good leaders should ask themselves first of all, “What have I failed to explain properly?” And when leaders realize that they have begun (again) to exert more control over their subordinates, it is their duty to ask these questions: “How can I explain the relevant relationships more effectively? Have I expressed myself clearly and in keeping with the needs and abilities of my listeners? What improvements can I make in my explanation of strategies and goals?” The goal as we see it is to develop a new concept of the role of the leader: Top-down decisions, approvals and control measures should be regarded – with the exceptions noted below – as outdated phenomena. And they should no longer be necessary, because employees are sufficiently informed about the meaning and purpose of their duties as members of the organization and the expectations of stakeholders. The cooperative development of measurement criteria, the transparency of decisions, assumptions about the business environment and links to other objectives must be the focus of continuous discussion and clarification in order to ensure that employees can perform their duties on their own. Thus leadership is meant to “serve” employees in the truest sense of the word and enable them to exercise more self-reliance.


It should be noted that we recommend departing from this style of leadership in certain specific situations:

  • Control is necessary whenever the lives of others are at risk.
  • Control is necessary in cases of emergency.
  • Control is necessary when an individual is still learning.
  • Control is necessary when too much is being asked of people.