What is 'Leadership'

Leadership is the ability of a company's management to make sound decisions and inspire others to perform well. Effective leaders are able to set and achieve challenging goals, to take swift and decisive action even in difficult situations, to outperform their competition, to take calculated risks and to persevere in the face of failure. Strong communication skills, self-confidence, the ability to manage others and a willingness to embrace change also characterize good leaders.

BREAKING DOWN 'Leadership'

Leadership is often overlooked by investors. This may be because it is tough to place a value on qualitative aspects of a company (leadership being one), compared to quantitative metrics, which are commonly tracked and much easier to compare between companies. Individuals with strong leadership skills in the business world often rise to executive positions such as CEO, COO, CFO, president and chairman.

A successful businessman who has frequently been admired for his leadership skills is Jack Welch, former CEO of General Electric. He eliminated inefficiencies, dramatically increased the value of the company and routinely fired underperforming managers while rewarding the best.

RELATED TERMS
  1. Michigan Leadership Studies

    A well-known series of leadership studies that commenced at the ...
  2. Price Leadership

    When a firm that is the leader in its sector determines the price ...
  3. Servant Leadership

    A leadership philosophy in which an individual interacts with ...
  4. Hersey And Blanchard Model

    A situational leadership model which suggests that there is no ...
  5. Soft Skills

    The character traits and interpersonal skills that characterize ...
  6. Chief Operating Officer - COO

    The senior manager who is responsible for managing the company's ...
Related Articles
  1. Small Business

    How Leadership Impacts Investments

    Investors often overlook a company’s leadership when evaluating an opportunity, but it’s an important quality to consider.
  2. Personal Finance

    How To Improve Your Leadership Skills

    Being a leader can help you in your career. Here are some tips for improving your leadership skills.
  3. Managing Wealth

    How To Improve Your Leadership Skills

    Few people are born leaders. Most need to learn the required skills, and then practice them throughout their lives.
  4. Small Business

    What Is Servant Leadership?

    Robert Greenleaf developed the concept of servant leadership, and many believe it is the key to avoiding greed-based company activity.
  5. Managing Wealth

    Management Strategies From A Top CEO

    Find out what this winning manager did to grow one of the biggest companies in the world.
  6. Small Business

    What Is Servant Leadership?

    Servant leadership emphasizes innovation, employee empowerment, and the development of leaders who serve an organization’s stakeholders first.
  7. Small Business

    3 Secrets Of Successful Companies

    Make smart investments by spotting up-and-coming success stories early.
  8. Personal Finance

    Management Strategies From A Top CEO

    Jack Welch is a legend in the business world: during the two decades he was CEO of General Electric, the company’s value rose by 4000%.
  9. Managing Wealth

    Preparing Your Kids to Take Over Your Business

    Most family businesses do not survive in successive generations, but these steps can help ensure that yours will.
  10. Investing

    5 Characteristics of Good Growth Stocks

    Growth stocks can give investors good returns, but not all growth stocks are the same. From leadership to growth, there are traits good growth stocks share.
RELATED FAQS
  1. How to Get from CIO or CFO to CEO

    Discover the career path from CIO or CFO to CEO and how traditional organizational leadership roles evolve as businesses ... Read Answer >>
  2. What are the different ways a CEO could influence stock prices?

    A CEO's influence on a stock price reflects the company's growth strategy and outlook, its financing needs and decisions ... Read Answer >>
  3. What information should I look at on a publicly traded company for use in fundamental ...

    Learn what information is important in fundamental analysis of a publicly traded company and how to use it to assess the ... Read Answer >>
  4. Why is it less than ideal for a CEO of a company to also hold the position of COO?

    Learn the difference between a company's CEO and COO, and understand the division of labor that should be present between ... Read Answer >>
  5. What advice has Tim Cook given to would-be business leaders?

    Learn what Apple CEO Tim Cook had to say to the business leaders of the future during an address at Duke University's Fuqua ... Read Answer >>
  6. How do interpersonal skills influence a business culture?

    Interpersonal skills are vital to business culture because they determine not only how a person interacts with others, but ... Read Answer >>
Hot Definitions
  1. IRS Publication 970

    A document published by the Internal Revenue Service (IRS) that provides information on tax benefits available to students ...
  2. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  3. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  4. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  5. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  6. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
Trading Center