Top Traits of an Effective Leader [for Startups and Beyond]

7 min read
Concentrated african american male team leader leaning over table, explaining project details or discussing startup working results reports with group of millennial mixed race colleagues at office.

In business, everything starts at the top. What a company sells, who it hires, what the culture is — all decisions are made by leadership. For startup companies, this is especially true as the founder (at least initially) makes all of the decisions that drive the company.

A study from Zippia found that most organizations recognize the importance of leadership – 83% believe it’s important to develop leaders at every level of a company – and yet that same study found that 77% of businesses found their leadership to be lacking. 

So, what does effective leadership look like within a company? More importantly, how can current and future leaders recognize their own traits and how they can improve?  

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What Is Effective Leadership 

Peter Drucker, a pioneer of people-centric management theory and the guru of gurus for effective management, said that “efficiency is concerned with doing things right. Effectiveness is doing the right things.” (This is often misattributed as “management is doing things right; leadership is doing the right things” – which is the same sentiment, though admittedly more memorable.) 

One of the keys to effective leadership is recognizing and working towards what’s “right” – which itself is a complicated balance of ethics, responsibility, collaboration and innovation. Leaders define the pace and the culture of their teams: what they do, others will follow. In startups, the CEO is uniquely positioned as the figurehead of the entire company, their leadership is what secures buy-in from partners and employees and sells the value of the company and its products/services to customers. 

When leadership is effective, it will:

  • Set the tone and culture of the entire company
  • Create aspirational goals and plans for the future
  • Secure and manage necessary resources
  • Make corrections or improvements to processes and direction
  • Absorb uncertainty to keep morale high 

However, a critical misstep that a lot of leaders and startup founders make is that they succumb to the temptation of micromanaging. While there are some moments that require direct intervention, the most ineffective thing leadership can do is get bogged down in all the details. 

Ultimately a leader needs to focus on executing a vision while putting their trust in everyone else to succeed in their specific responsibilities. CEOs in particular need to understand that they have to let go of some of their responsibilities to let others in the organization succeed. 

6 Traits of an Effective Leader 

As a leader, the first question you must ask is “what needs to get done?” This should be immediately followed up with “what am I uniquely able to do?” This isn’t just about the leadership position, but also the skills, experience and capabilities you possess as an individual leader. The most fundamental trait of an effective leader is to be self-aware

If you’re able to effortlessly engage with others, then perhaps your focus should be on securing funding and managing personnel, while trusting other elements like product development and accounting to your partners and employees. If you’re a numbers person, then make that area your concern and put skilled, trusted professionals in place to ensure your human resources needs are being looked after.

Effective leadership is an understanding that you fall somewhere along a spectrum of styles: from blunt and direct to nurturing and supportive. As the leader, your most important task is to recognize your unique style and be true to it. You set the tone of the company and everyone will look to follow your example.

The caveat is that you understand there are benefits and drawbacks to all the different approaches. You will need to find partners and employees that will balance out your style. Avoid a company culture that is entirely personable and accepts every suggestion, as it will struggle to settle on a definitive path. At the same time, a culture that is only driven by a singular mind will be too rigid and closed-off to make necessary adjustments.   

As you continue to hone your leadership style and shape your company, there are other common characteristics of effective leadership that you should always bear in mind. 

  • Be Ethical — Let’s be clear that the “right” thing isn’t just what is in a company’s best interest, but what adheres to accepted values, ethical practice and civic-mindedness. The entire company derives its behavior from the leadership, so when there’s a tradeoff between matters of self-interest (such as the company revenue) and doing the right thing (such as a defective product recall), know that your employees are watching.
  • Be Open — Even a strict leader should strive to be an open and honest communicator. Someone who provides constructive feedback should be one who asks for and receives constructive feedback. This is not only an effective way to recognize and empower others, it’s an important requirement to stay innovative and open to new ideas.
  • Be Collaborative — If you want your employees to work together successfully, then you’ll need to embody that spirit of collaboration. Work with other members of your team and delegate responsibilities to ensure success. You’ll need to foster collaboration as well, which sometimes means having to resolve personnel issues. Most of the time when someone is fired it’s due to unresolved interpersonal conflicts. If you don’t want morale to tank, then you’ll need to work with your team to figure out the best way forward.
  • Be Strategic — Being effective in all of these other ways requires you to think and act strategically. You understand that not everyone will get along on a personal level, but it’s possible to manage things so that they can work effectively together. There will be considerations of how to proceed when self-interest is weighed against ethics. There may be times when you need to hold something back to protect morale, even if that means not being as open or transparent.
  • Be Responsible — Once you’ve approached things strategically, the next step is to take responsibility and make the difficult decisions. Maybe an employee needs to be let go for the betterment of your team. If there’s uncertainty in making payroll, how far will you go to keep things on track — and how will you address your employees when there’s no other option? You are the one responsible for balancing the needs of all of your constituents — employees, investors, partners and your customers.

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How to Set Your Employees up For Success 

A Gallup poll found that 70% of the variance in how employees feel engaged or disengaged with their jobs comes down to leadership. Strong, supportive leadership can make all the difference on whether employees feel engaged and motivated, or frustrated and disillusioned. A review of studies by found that good leaders increase employee engagement and reduce turnover rates.

While effective leaders will embody those six traits as much as possible, there are a few specific steps you can take to encourage and support your employees. 

  • Find a good balance between being transparent and absorbing uncertainty. You should try to be open about developments that will directly impact your employees, but you’re not obligated to share news on every ongoing lawsuit or financial concern. 
  • Build strong teams that play to individual strengths and provide support. The people you hire don’t come just as their job descriptions – their working style, approach and capabilities all have nuances that can’t be initially accounted for. Don’t be afraid to adjust and adapt teams according to individual needs and personalities of the team. They don’t all need to be best friends, but they do need to see the benefit of working together.
  • When there are higher-level personnel issues or conflicts, don’t wait too long to address them. This is one of the most important situations where you’ll need to take responsibility as a leader. Hoping things will “work themselves out” is just letting problems fester. Be sure to hear all sides of an issue, but don’t avoid making a decision just because it’s uncomfortable.
  • Don’t isolate yourself, engage with your employees as much as possible. Participate in team building activities to get to know them better. Find positive aspects of issues they are dealing with to help them focus on solutions. Not only will this help them in their day-to-day responsibilities, it is a vital component in recognizing and nurturing the next set of company leaders.

How to Improve Your Leadership 

Arguably the hardest part of being a leader is allowing yourself the vulnerability you need to properly evaluate yourself. One case I came across involved a startup CEO who had raised a lot of money from their connections and, as a result, proceeded to build up a massive level of stress about needing to get everything right. Everything had to be perfect and so this person became a super-micromanager who could not take input from anyone. It was a recipe that resulted in a toxic mix for them and for their company.

Don’t make the mistake of taking everything on yourself, and that includes evaluating your own leadership performance. It’s hard to evaluate yourself, you often need an outside perspective to see things that you might be overlooking. Questions that you’ll need to ask include: 

  • Are you taking too much responsibility for every mistake and failure?
  • Are you communicating with your team in a consistent manner?
  • Are your stated values consistent with your actions?
  • Do you need to be more open-minded to feedback and suggestions?
  • Are you insistent on doing too much and not letting others succeed?

Being an effective leader means that you’re confident enough to receive critique about where you could improve.  

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Learn Effective Leadership at MITE

Every leader goes through different growth phases that require different skills, specialized approaches and a level of introspection to make successful transitions. Most of the time, that experience comes with time, effort and more than a few failures. While there are no shortcuts to this process, there are ways you can gain a head start. 

We started the Master of Science in Innovation, Technology and Entrepreneurship program at USD to help current and future business leaders discover and hone their own strengths and abilities. It’s why we’ve developed our capstone project as a lab to bring students through a team building process. It’s why our classes utilize industry case studies to show leadership issues in action, explore how different people reacted, and then review the results.  

Our goal is to provide our students with an understanding of what their natural leadership style is, recognize their skill sets, and find those important balances that can result in truly effective leadership. To learn more about how our innovative, online master’s degree program can help you develop as a business leader, visit our site or contact us directly.