Why Leading by Example Sends the Most Powerful Message to Your Employees

Leading by example is one of the most powerful tools your company has in droves. And the best part? You don’t have to spend a dime to do it. You just have to show up and, well, inspire action by simply doing what you say you’re going to do.

Why is leading by example so important when you’re transforming company culture and want to retain employees?

Because, as a business owner, your employees watch everything you do. No, they don’t actively pursue this activity every moment of every day (but it’s probably a good bet they’ve found your personal Facebook or Instagram by Day Two of their new hire training). But how you act and react when communicating with people sends messages to your workers. 

How do you behave in company meetings? What happens during a crisis? What do you do when conflict arises? How do you handle employees who are no longer a good fit? What do you do in lean times?

Even during emergencies, you can still set a good example. When you have to let someone go, give them a good severance package whether they deserve it or not. Cover an employee’s salary if they have to take a week off and they’re out of PTO. 

Read on to learn why leading by example sends a powerful message to your employees. 

The Basics

The Great Game of Business teaches companies how transparent workplace leadership can transform your culture for the better, making your company more profitable in the long run. As such, leaders must embrace transparency from the start and continue to do so, even radically so, every day thereafter.

Leading by example is just the beginning of this transformation. Setting the tone from Day One fosters a sense of trust, loyalty, and respect throughout the organization. When leaders take the initiative to be role models for others, it is an essential reminder that they are committed to the company's mission and values of transparent leadership. This pattern, in turn, has a ripple effect on employee morale and engagement, ultimately leading to better retention and a healthier corporate culture.

The Benefits of Leading by Example

Leading by example is not just a buzzword or a cliché phrase. It holds immense value when retaining employees and revamping company culture. When you show the way, it inspires others to follow suit. 

1. Increased Trust

Leading by example builds trust among employees, as they see their managers, supervisors, and owners embodying the values and behaviors they expect from others. A lack of trust in leadership is the number one killer of an open-book management culture.

2. Improved Communication 

Setting the example encourages open and transparent communication, creating a culture where ideas flow freely. That’s why you should always be transparent because that transparency will be returned to you.

3. Enhanced Morale

Employees feel motivated and inspired when they see their leaders working hard and setting high standards for their own behavior.

4. Strengthened Accountability

You hold yourself accountable and take responsibility. Therefore, your employees are more likely to do the same thing. They’ll also take ownership of their daily tasks and professional goals within your organization. The saying “The best ability is accountability” isn’t just a saying.

5. Heightened Engagement

Employees want to feel like their work means something. When they see your passion for the company, employees feel more engaged and connected to their work because they want to feel those same feelings of fulfillment and purpose.

6. Increased Productivity

Employees tend to work harder and strive for excellence when they see their leaders setting the bar for performance. This attitude shift starts when you swing for the fences.

7. More Innovation

By leading by example, leaders encourage employees to think creatively and explore new ideas, ultimately fostering innovation within the company. You begin this process by opening a dialogue with something like, “No ideas are off the table.”

8. Less Stress 

Take a one-week vacation once a quarter. You’ll see your workers do the same thing because you convey that work-life balance matters. Encourage employees to take PTO and be happy.

9. Conflict Reduction

Company leaders must always be respectful, even when someone treats them disrespectfully. You’ll create a harmonious work environment with fewer conflicts when you treat others with respect at all times. No matter what kind of day you have at home, you cannot snap at someone else in your company. Ever. No, it’s not easy to accomplish this. See bullet point number 8, “Less stress,” as noted above.

10. Attracting Top Talent

Look at Glassdoor sometime. We dare you. Read what some people say about company leadership, either your own company, one of your competitors, or some of the world’s most well-known brands. 

Companies known for exemplary leadership and positive culture often become magnets for top talent, leading to better recruitment prospects if all other factors are equal as you try to land the best hires.

How Leading by Example Increases Employee Retention

Employee retention is a fundamental benefit of open management. You don’t want to lose long-time employees, nor do you want younger hires to stay for a year and then leave. Thirty percent of new hires quit within the first six months of employment, while workers are 10 times more likely to rethink their career path at their first anniversary compared to the fifth anniversary. 

Do you know how much it costs to replace someone who leaves? It costs $1,500 to replace an hourly employee and as much as six to nine months of a salaried employee’s compensation, according to PeopleKeep’s 2023 study. If your salaried employee made $70,000 before leaving, it would cost you $35,000 to $52,500 to replace that person.

No, you can’t help it if some people leave. But you want to eliminate or reduce those odds. And here’s how open management comes through with employee retention: An open, honest employee will tell you first, “Hey, I’m thinking about finding another job.” Your first response should be, “What can we do to keep you?”

And this behavior starts with you being open and honest with workers. From the moment someone comes on board, tell them, “Hey, we know there are other jobs out there, and we know that sometimes you might feel frustrated or stressed at any job, regardless of the job you have. Before you decide to find another opportunity, talk to us and see how we can keep you.”

That kind of dialog sends a message that the new hire is valuable to the company even before working one second on a single project. And you set the tone immediately that there is the possibility of open communication. But then you can’t go back into your shell after that. Ask questions. Engage with employees. Meet them where they’re at. Transparency doesn’t start and end with worker onboarding. It never ends. But that’s a great thing for everyone.

Engagement = Retention

It’s a simple formula with long-lasting ramifications. According to a survey conducted by Gallup, employees who have strong and supportive leadership are 70% more likely to be engaged at work. This supportive leadership is the sole responsibility of the team leader or manager. 

Did you know that the third-highest reason (after pay and advancement opportunities) why people leave their jobs is because of company leadership? (This stat also comes from a Gallup survey). So, yeah, the saying “People leave their managers, not their companies” is actually true.

In early 2023, Gallup also noted that 32% of employees are engaged at work, while 18% are actively disengaged out of 15,000 people surveyed. As you have no doubt guessed, disengaged employees are more likely to leave. 

Simple Strategies to Get You Leading by Example

There is one misconception we want to set straight about leading by example. You don’t have to be perfect. No one is. You just have to be a leader.

We all mess up sometimes. Heck, we’re human. Are company leaders set to a higher standard? Yes. That’s one of the burdens of being someone in a leadership role. But you don’t have to be perfect.

Take a look at some easy strategies to lead by example in your company.

1. Set Clear Expectations

Clearly communicate your expectations and the company's values to your team. Lead by example by consistently demonstrating these values in your own actions and decision-making, in whatever dynamic your company culture is.

2. Be Transparent

Foster a culture of transparency by openly sharing information with your team. Involve employees in decision-making processes and communicate the rationale behind critical decisions. This process helps build trust and shows employees that their opinions and contributions are valued. Employees need to know the why behind decisions, not just the how.

3. Encourage Collaboration

Create opportunities for cross-departmental collaboration and teamwork. Encourage employees to share knowledge and support one another. As a leader, actively participate in collaborative efforts and demonstrate the value of working together towards shared goals.

4. Continuously Learn and Grow

If you’re not growing, what are you doing? Demonstrate a commitment to personal and professional growth by actively seeking opportunities to learn and develop new skills. Encourage employees to do the same by providing resources for ongoing learning and supporting career development.

5. Practice Work-Life Balance

Take time off when needed, prioritize self-care, and encourage employees to do the same. Show that you value the well-being of your team by fostering a supportive and flexible work environment.

6. Provide Regular Feedback

Transparency includes offering timely and constructive feedback to your team members. Celebrate their successes and provide guidance for improvement. By actively engaging in feedback discussions, you show your commitment to growth and development while creating an environment where feedback is valued and encouraged from all sides.

Book a Coaching Call Today

We know leading by example isn’t necessarily hard, but you have to do it intentionally and every day for it to be effective. 

Take the next steps in your journey to leading by example with an open-book management culture at your company. Making this change is one way to show your employees and leadership team that you have their best interests at heart.

Get personalized coaching from the Great Game of Business today!