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Natalia Rossingol

Leadership vs. Management: Fundamental Differences You Need to Know

Is every manager a leader? And does every leader have to be a manager? You decide, as we break down the differences between leadership vs. management.

We often use the words “management” and “leadership” as synonyms. We tend to think that top executives are leaders by default, and, likewise, we usually think that those in the middle of the organizational structure are managers.

These beliefs are pretty deeply rooted. But look at the concepts of leadership and management under the microscope, and you’ll find that this picture doesn’t really pass muster. 

Leadership and management are fundamentally different concepts. The difference consists primarily in their function: leaders and managers both want their teams to succeed - but they think about the path to success in different ways.

They’re like two separate lines, each adding something unique to the picture. These lines overlap at some points, but they never completely blur into one. In this article, we’ll explain why.

So, let’s dive in and shed some light on the fundamental differences that distinguish leadership from management.

What is leadership?

According to Kevin Cruse, the founder and CEO of LEADx, leadership is “a process of social influence, which maximizes the efforts of others, towards the achievement of a goal.”

Leaders focus on the big picture. They create and communicate vision, and empower others to carry it out. In other words, they set a direction, help people understand it, and create conditions for them to act and make things happen. 

John Kotter, the Professor of Leadership at Harvard Business School, explains that leadership is about change for the better, and a leader is someone who can help others make that change possible and benefit from it.

"It’s not just running something. It’s not just making trains run on time. It’s changing systems to take advantage of the opportunities that come with a rapidly changing world to duck the hazards and to make a difference in people’s lives." John Kotter, Professor of Leadership at Harvard Business School

In their book “Nine Lies About Work,” Marcus Buckingham and Ashley Goodall underline that there isn’t any set of qualities that every leader possesses. They explain the phenomenon of leadership through one criterion:

"A leader is someone who has followers, plain and simple. The only determinant of whether anyone is leading is whether anyone else is following."

To have a crowd of followers, a leader must be passionate. He or she must deeply believe in something and get others inspired. Only if the leader’s faith and passion are strong, people will be willing to invest their energy into reaching the goals.    

Misconceptions about leadership

Though this is generally assumed to be the case, leadership is not necessarily tied to a certain position in the company hierarchy. It has nothing to do with a title or job description. If you’re at the top, it means you’re a senior executive - but not necessarily a leader. You may be both...but that’s not guaranteed.

What is management?

Management concerns the coordination and administration of tasks. It is a process of coordinating the efforts of employees to accomplish the objectives, using available resources.

The basic responsibilities of managers, according to Kotter, can be divided into three groups:

  1. Planning and budgeting
    Managers determine objectives and develop plans for how to achieve them. They plan initial processes, as well as make adjustments in the course of work.
  2. Controlling and problem-solving
    Managers control what employees do, and how they do it, and then perform evaluations to optimize and improve.
  3. Organizing and staffing
    Managers hire the right people to do the job and make efforts to retain talent, through the policies of pay rises, benefits, and training programs.

Management is about efficiency and effectiveness. It is about completing tasks within specific timelines, problem-solving, and bringing results.

Managers work closely with their teams and provide guidance. They set goals and give positive and negative feedback - the best of them do it immediately, in a one-minute fashion, not waiting till there are too many appraisals and reprimands to take care of.

"A manager’s job is to build a team that works together, support members in reaching their career goals, and create processes to get work done smoothly and efficiently." Julie Zhuo, The Making of a Manager

The difference between leaders and managers

In a way, the question "Are all managers leaders?" sounds a bit  like "Are all fruits apples?"

A manager can be a leader, but this is not necessarily a given. Their focus may be more granular, procedural - more focused on tactical processes and on the nuts and bolts of how things get done.

Likewise, a leader can be a manager. But it can also be anyone else on the team, if they step into that role.

Both leaders and managers make a valuable contribution to an organization – but this contribution is different. Leaders advocate change and new approaches, looking for new ideas. Managers focus on stability and maintain the status quo. Leaders see a forest, and managers see the individual trees.

"Whereas leaders are concerned with understanding people’s beliefs and gaining their commitment, managers carry our responsibilities, exercise authority, and worry about how things get accomplished." Fred C. Lunenburg, the Merchant Professor at Sam Houston State University

Let’s discuss the main key differences between these two concepts:

leadership vs management

Vision vs. Execution

Leaders are visionaries. They analyze the current state their organization is in as related to other organizations, and create a vision of the future, developing a strategy for getting there. They communicate their strategic vision to people, and make the picture of the future desirable for them.

By developing vision and purpose, leaders create value. In his book “Start With Why,” Simon Sinek mentions a concept of the Golden Circle – a formula for success that consists of three components: what, how, and why. Sinek explains that while people usually know what they do and how they do it, they typically lack understanding of why they do it, in the first place.

Leaders discover and communicate the why – because only when people know why they do something, they will be truly passionate about it. For example, the Why of Southwest Airlines was to become a company for everyday people. The Why of Starbucks was to recreate a coffee shop with Mediterranean culture in the United States. These companies had a purpose, and their leaders were able to communicate it.

A manager's role, however, involves working with an organization as a system to make it function effectively. Managers control all the processes and make sure that a good or a process is produced on time and within a budget. They focus on how things need to be done and when.

This way, while leaders are future-oriented, creating an image of future success, managers focus on the present, working on implementing processes here and now. A leader challenges employees, and a manager accepts a status quo.

As we can see, the roles of leaders and managers are correlated: a leader creates a company's vision, and a manager transforms that vision into reality:

"What leadership does is it creates, in a sense, the systems that managers manage, or it takes them and it changes them in some fundamental ways to adapt to changes outside an organization, to grab opportunities, to duck hazards, to raise standards." John Kotter

People vs. Processes

Leaders inspire and motivate, sharing a common goal and giving team members a sense of purpose. This has a couple of important implications for an organization's success.

Metlife study, conducted in 2019, showed that 88% of employees who feel a strong sense of purpose at work are satisfied with their job, and 89% are more productive. This way, an organization which has a great leader can significantly increase productivity and happiness at work.

For a business, it means lower absenteeism and less turnover. Happy employees don’t leave. They are more committed and work better. The quality of goods or services they produce increases. And an organization doesn’t have to spend money on hiring or training new employees.  

So what about management? It is focused on managing people, processes, and things. Managers break down goals into tasks and organize resources to achieve a desirable outcome. They implement a decision-making process. They allocate resources and tasks. They promote, hire, and fire employees.

Their responsibility is to reach organizational goals, making sure that the daily work of employees contributes to the overall company's mission.

Position vs. Status

“Manager” is a title that means a specific role on a certain organizational level. Managers have people reporting to them, and they’re in charge of those people and their results.  

“Leader” has nothing to do with titles. Leadership is not tied to any position – an employee of any hierarchical level can demonstrate leadership skills and cause change to happen. 

"A great leader’s courage to fulfill his vision comes from passion, not position." John Maxwell, author and speaker. 

A simple way to describe the difference between position and status would be to say that while managers have subordinates, leaders have followers. Subordinates report to managers because they’re required to by their work duties. Followers come to a leader because they choose to.   

This way, to govern people, leaders use influence. Managers use authority, granted to them by the title.

The overlapping responsibilities of leaders and managers

There is a reason why the concepts of management and leadership are often used interchangeably, despite the key differences. Some things can be conducted by both managers and leaders, and this might be confusing. Let’s analyze the areas of responsibility which overlap:

• Communication

Through communication, managers execute control over their teams. They regularly meet with their employees during team meetings or one-on-one conversations to review assignments, express concerns, or discuss expectations.

They provide feedback, helping team members understand if they’re working well and improve their behavior. They ask for feedback, too, trying to figure out what they can do to make the work process more productive. 

A leader communicates with people to inspire and empower them. Even more, an effective leader creates cultures that support the mission and increase employee engagement. These cultures can be cult-like – there’re based on some ideology and often possess features of elitism, like the cultures at Disney, Nordstrom, and IBM. IBM, in particular, placed the names and pictures of employees who best exemplified the corporate ideology in company publications.

True leaders build trust within a company and encourage psychological safety, since a fearless work environment is a crucial condition for success.

• Change management

There is a high probability that during a project life cycle, there will be unexpected changes. For an organization to stay afloat, it needs a strong change management policy.

Leaders scan the outside world, figuring out what needs to be done for their company to survive in a rapidly changing environment. Assessing the current situation, they identify if a change is needed. If it is unavoidable, leaders develop a new vision. They communicate the need of change to people, empowering employees to successfully go through the change.

A manager’s task is to enable employees to adapt to the change. A change will affect many things – scope, schedules, resources, staffing, costs, and risks. Handling these changes is a manager’s responsibility – they must ensure that all changes are monitored, considered, and approved, and that only approved changes get implemented.

• Decision-making

Leaders take decisions on a company level. Long-range strategic decisions concerning issues like industry trends, supply and demand, and economic swings are the responsibility of leadership. A good leader must analyze both external and internal factors to find a solution that would benefit team member and the company in the long run.

Managers make decisions on the level of teams and departments. Their task is to implement strategic decisions, finding tactics to achieve the strategy. This way, the decisions made by managers affect day-to-day operations too. Managers are in charge of staffing needs, workflow processes, and resource allocation.

Top leadership and management skills and how to develop them

Since the concepts of leadership and management are not identical, the skills, needed for leaders and managers, are not identical either. It’s important to differentiate them, otherwise you risk hiring the wrong person who will not lead your company to success.

So, first of all, decide whom you need – a diligent manager who would organize work processes or a passionate leader who will create a sense of value and direction. Then, picking a person, pay attention to the skills this person has. Let’s see what skills you need to look for in a potential manager and a potential leader.  

The leadership word is coming up more. There it is, in the performance appraisal. And I look at the items underneath it – half of them are management items. So because of the lack of clarity… [organizations are] promoting more people who are good at management.. and they’re not solving the real leadership problem that can help them deal with this increasingly turbulent changing environment. - John Kotter

Key leadership skills

• The ability to formulate a vision

A leader must be able to clearly see the picture of future success, creating an image of the future and the role and place of his or her company.

 How to develop a vision:

According to Jim Collins, the author of "Built to Last," vision consists of two major components – core ideology and envisioned future:

Core ideology is the company’s self-identity, consistent through time, the “bonding glue that holds an organization together.” It consists of two sub-components:

  • Core values – guiding principles important to those inside the organization. These principles should be truly fundamental – something you will still stick to even if it’s not rewarded, even when it becomes a competitive disadvantage. They don’t come from a market requirement. For example, Disney’s core values are imagination and wholesomeness.
  • Core purpose. This is the organization’s “reason of being”. This reason is deeper than making money. For example, the purpose of Mary Kay is “to give unlimited power to women,” and the purpose of Wal-Mart is to give ordinary people a chance to buy the same things as rich people.

Envisioned future

Envisioned future consists of two parts as well:

  • “BHAG” – Big Hairy Audacious Goals. BHAG is not just a regular goal. It’s a huge challenge that makes people focused and inspired – like, for example, landing on the Moon. Success is measured by whether this goal is achieved or not.
  • Vivid descriptions of what the future will be like once the BHAG is achieved.

• The ability to inspire people

Because of their passion and faith, leaders inspire and motivate people to move forward. Their enthusiasm is contagious. This is how leaders get people to follow them.

To be an inspirational leader, communicate the vision to your people so that everybody is on the same page. Having a clear understanding of why we do what we do is very motivating and inspiring.

So speak about the vision and goals at meetings, on the company website, and on social media. Discuss it with individual team members at one-on-ones.

Implementing values, lead by example to make sure your actions are consistent with what you preach.

• The ability to recognize change

Good leaders are very attentive and “sniff” the wind of change. They realize staying in comfort zone when changes are about to happen is dangerous – pretend that nothing is going on, and you will fall behind. This is why leaders scan the business environment and change the company course so that it fits the new reality.

Noticing small changes early helps you adapt to the bigger changes that are to come. - Dr. Spencer Johnson, “Who Moved My Cheese?”

Changes may concern different things. It can be an acquisition or a merger for the sake of keeping the company, implementation of diversity initiatives, new technologies, or health crisis response plans. No matter what the change is about, a leader must be cautious enough to notice it on time and take action for the company to stay afloat.

The first step is to do research to understand if the change needs to take place. Then, a leader should lead the team through the change.

There are different change management models to deal with the change – for example, McKinsey 7-S model used to evaluate the company’s productivity and ensure the systems, processes, and values of the organization will remain functional.     

The model consists of 7 elements that require analysis:

  • 3 hard elements (strategy, structure, and systems);
  • 4 soft elements (shared values, skills, style, and staff.)

Reviewing these elements, a leader can find out whether the organization works coherently and what needs to be improved to achieve organizational goals. 

• Strategic thinking

Strategic thinking is the ability to analyze the current situation and foresee the future, predicting possible challenges and anticipating opportunities. It’s the ability to see a big picture and understand what consequences can be caused by particular decisions. It involves both analytical and creative skills, to analyze information and identify patterns, as well as to think out of the box and find innovative solutions.

A leader who thinks strategically develops long-term plans – and also contingency plans, in case the primary ones fail the tests of the changing environment.    

How to build a strategy:

According to Richard Rumelt, an American emeritus professor at the University of California, there are three things that constitute a strategy – diagnosis, guiding policy, and coherent action. Leaders are responsible for developing each of these:

  1. Diagnosis: a leader analyzes strengths, weaknesses, risks, and opportunities. Diagnosing a situation lets leaders see similar situations which happened in the past and may help find the right approach to the current problems.
  2. Guiding policies: these are approaches to overcoming obstacles.
  3. Coherent action: consistent actions that need to be taken.

The problem of many leaders is that they do not have a strategy at all. They think grasping opportunities or getting 360-degree feedback is a strategy, but that's not it.

Key management skills

Organizational skills

Organizational skills are about establishing structure to increase productivity and resourcefulness. Using available resources like time, money, and personnel, managers organize activities – outline tasks, create schedules, and give assignments. This way, they create a plan to achieve a major goal set by a leader (or by themselves, if they’re leaders, too).

How to develop organizational skills:

Strong organizational skills are developed over time, on an everyday basis. Basically, to stay organized, you will have to keep track of what’s going on, make to-do lists, allocate resources properly, and prioritize tasks. But there is more to it.  

We should mention that organizational skills basically fall into two categories, which complement each other:

  • Physical organization skills. These concern keeping physical order in your workplace. Carefully documenting goals and purpose, keeping records of meetings, events, and business transactions, and, of course, proper organization of the office space are things that help a manager to not get lost in the chaos of paperwork, and also easily access information when needed.
  • Reasoning organizational skills. These are skills like time management, analytical thinking, planning, delegation, and communication. They make it possible for a manager to organize a smooth work process, creating conditions for people to collaborate and finding the most optimal ways to achieve the goal. Establishing rules and standards also belongs to this category.     

Let's discuss some of the reasoning skills in more detail:

Delegation. It’s impossible to do all the work by yourself, and for this reason, managers delegate. This means a manager must know the people on the team well, to be able to assign tasks to the right people, based on their skills.

Conflict-resolution skills. Managers must be able to address problems quickly and find solutions. They need to listen carefully to all parties involved to understand different points of view. This would allow a manager to make a fair decision.

Collaboration. Managers work with teams, so team-building is their responsibility. To work well as a group, employees need to know each other – personalities, professional goals, and skills. A manager creates conditions for people on a team to collaborate, synchronizing their efforts.

Time management skills. Assigning and controlling activities, a manager has to know how much time each activity might take. It involves setting time limits on tasks that need to be conducted, as well as setting priorities.

  • Technical skills

Even though people get promoted to managers because of their good results in the technical part of work, managers do not always perform technical tasks. However, the ability to step in and help team members with a purely technical assignment is a good thing.

Camille Fournier, the author of “The Manager’s Path,” explains that even though new responsibilities like meetings, planning, and administrative tasks take much effort, you as a manager should still stay technical and keep a balance, otherwise you risk “making yourself technically obsolete too early in your career.”

Which is more important – leadership or management?

Of course, both leadership and management are necessary for a company’s success. Leaders set the course of an organization and create value. Managers are in charge of organizational structuring and set the plan in motion.

Yet, it would be fair to say that the role of leadership is more special. Without effective leadership, a company risks losing its direction and purpose – or will not develop them at all. Besides, it is leadership that helps companies live through tough times. And this is why it’s so important to differentiate between these two concepts.

Every organization needs a combination of both management and leadership skills, though. What matters is that inspiring others and organizing work processes are separate things that should be done concurrently.

Just remember that not every manager is a leader, and not every leader is an authority figure.

How leadership and management work synergistically to enhance organizational success

When an open-minded leader possesses a clear vision and strategic thinking, and a manager has strong organizational and technical skills, their combination creates a powerful synergistic effect. This effect surpasses the impact of each individual approach.

Both leaders and managers seek to meet the same organizational goals, but their methods are different. Let’s see how this works:

  1. Both managers and leaders care for effective teamwork – but while managers coordinate, leaders inspire.
  2. Both managers and leaders are focused on achievements – but while managers reduce risks, leaders look for opportunities.
  3. Both managers and leaders empower their people – but while managers provide resources, leaders provide vision and autonomy.
  4. Both managers and leaders try to achieve effectiveness – but while managers control people, leaders motivate them. 

It’s like two sides of the same coin – one cannot exist without the other.

Not everybody is a leader by nature, and not everybody likes creating structure. Yet, to be successful in a senior position, you will have to learn to synergize the two functions - management and leadership.

You will need to understand the difference, and then integrate the two roles, balancing between two extremes:

  • Authority (to control the team) and sensitivity (to understand the needs of team members).
  • The whole (your organization and its purpose) and its parts (individual team members).
  • Internal issues (workplace environment, psychological climate, culture and values, current work processes) and external issues (the place of your company in the market, communication with customers and investors).

Trying to combine management and leadership is challenging as it requires continuous hard work. But now when the tendency of employee empowerment becomes more and more popular, and risks need to be taken, it’s not sufficient to stay in a merely managerial role.

Besides, maybe you’re a true leader, but you just don’t know it?

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