The impact of leadership on employee wellbeing in the workplace

The impact of leadership on employee wellbeing in the workplace

Wellbeing in the workplace, or lack thereof, can cause enormous economic loss if not addressed and dealt with effectively. Building wellbeing in the workplace requires leaders to be people-centred, communicate effectively, demonstrate strength of character and promote social support and diversity. But how do they achieve this? In this article, human performance strategist Dr Craig Duncan explores the impact that being self-aware and managing ego and impulsive behaviour can have on improving the wellbeing of a leader and their people.


Aug 30, 2022

6 mins read
The cost of workplace stress and a lack of employee wellbeing is a global problem, with direct and indirect costs above $221 million a year in Australia and more than $187 billion in the United States of America (USA). Workplace health issues create an economic loss that is equivalent to 4-6% of most countries' Gross Domestic Product (GDP). Workplace stress also appears to be increasing and has a significant, detrimental effect on employee performance and morale. In the UK, over 9.9 million working days every year are lost due to compromised wellbeing, with over 40% directly related to workplace stress. In the search to improve wellbeing in the workplace, there is increasing evidence of a link between leaders and positive wellbeing and performance in the workplace, which we will explore in this article.
When I was working for the Australian National Football Team (Socceroos) in 2015, I witnessed the positive impact a leader can have on the wellbeing and performance of players and staff. The Asian Cup was being played in Australia and all the top nations from the Asian region were involved. The pressure on our nation to perform was immense. Although we were not favourites, the expectations were high and it would have been easy for this pressure to negatively impact the wellbeing and performance of the players. However, Socceroos coach and leader at the time, Ange Postecoglou, inspired the players and staff by protecting them from negative external influences and ensuring everyone bought into the mission and knew what was required of them. The players and staff were committed to following the process and achieved outstanding success. Australia defeated South Korea that year to win the final in front of 85,000 people in Sydney and become the Asian Cup Champions for the first time in history. I felt this was a great example of how much a leader can directly impact the performance and wellbeing of their team or organisation. 
Leaders who provide support to employees and promote the value of wellbeing initiatives in the workplace create positive work environments that are more productive and effective. More broadly, people-centred leaders and organisations with sound communication strategies that promote diversity and social support improve employee wellbeing in the workplace.
Leadership style also has a significant relationship with employee wellbeing, with transformational, authentic and servant leaders all having a positive impact on their people’s health, productivity and work satisfaction. In 2019, I was fortunate to work with Carlos Queiroz, a world-famous coach who led the Iranian National Football Team at the time. Again, expectations were very high for the team. However, as an outstanding, transformational leader, Carlos inspired every player on the team and ensured that the wellbeing of staff and players alike was positively managed. Great leaders like Carlos create an environment where people feel safe and strive to do their very best because they know the leader has their back. Carlos’ approach led his team to the semi-finals of the Asian Cup, their best result in decades. 
Conversely, leaders can also be a significant source of negative occupational wellbeing, particularly when they have difficulties managing their own wellbeing. Destructive leadership, such as abusive supervision, has been shown to have a significantly negative or even detrimental impact on employee wellbeing. I have also witnessed destructive leadership on numerous occasions where people don’t feel safe to make mistakes, are uncertain about what is required of them and live in fear of the leader. In the context of sport, I have seen this leadership style lead to players and staff experiencing compromised wellbeing and creating a toxic culture that negatively impacts performance and, ultimately, their success. Leadership involving bullying, harassment and ostracising behaviour increases employees' burnout, stress and depression. High turnover and understaffing are significant worldwide issues, with workplace stress and burnout being the primary reasons. But poor leadership practices also play a significant role in this negative outcome.
In attempting to identify the components that affect wellbeing in the workplace, a link between leader wellbeing and employee wellbeing has been identified. When a leader demonstrates negative lifestyle practices such as workaholism, it can dramatically impact followers as they look to the leader as a role model. If a leader suffers burnout, the chance that employees will also burn out is increased. The leader-to-follower crossover impact has also been identified as a factor in depression, sleep, and overall life satisfaction. Therefore, it would appear the wellbeing of a leader is critical, as a lack of it can have a negative impact on their people.
As leaders are under extensive pressure to perform, wellbeing must become a priority in leadership development. Leadership positions have extensive work demands, and leaders continuously manage heavy workloads, organisational pressure and conflict. High job demands have been shown to predict poor health, and leaders who have compromised health have less ability to focus on employee health. The key attributes that leaders require to enhance wellbeing in the workplace are related to self-awareness, ego management and controlling self-serving behaviours. Developing skills such as communication and emotional intelligence in leaders is vital for maximising employee wellbeing. In my work coaching leaders, the first step is managing and maximising the wellbeing of each leader. 
Most leadership programs focus on building leadership capacity, but I have found that if we don’t work with the leader to manage the ‘noise’ such as stress and poor health, then any capacity-building exercise is wasted. In the work my team and I do at Performance Intelligence Agency, we have identified that leaders who demonstrate positive, supportive behaviours have also been shown to have employees with decreased stress levels, less burnout, higher levels of job engagement and superior employee wellbeing. Additionally, when a leader demonstrates the ability to manage stress and has positive lifestyle practices, this further enhances the wellbeing of employees. Ultimately, an emotionally intelligent and self-aware leader will enhance employee engagement and productivity.
When we train our human performance coaches at my organisation, Performance Intelligence Agency, we focus on developing a leader’s self-awareness of the physiological and psychological factors that may impact leadership. For example, leaders with poor sleep quality demonstrate higher levels of subordinate abuse, negatively impacting employee engagement. In fact, sleep has been identified as a major contributing factor in the overall wellbeing of humans, so it is imperative that employers realise the high cost of not prioritising sleep optimisation. Positive leader and follower relationships are beneficial and sleep is a critical component of this relationship. Sleep influences human interaction and the interpretation of negative emotions. When people experience poor or disrupted sleep, emotional regulation decreases. This decline in emotional regulation can have significant, negative consequences for human relationships, specifically the leader-employee relationship.

In conclusion, when employee wellbeing suffers, the financial cost for an organisation can be enormous. Absenteeism, presenteeism, workplace stress and loss of productivity all have a significant relationship with wellbeing. Leaders play a critical role here; how they manage their physiological and psychological health has been shown to positively or negatively impact employee wellbeing. Therefore, to improve wellbeing in the workplace at your organisation, start by raising self-awareness of your own wellbeing as a leader. If you can see value in this, the training we offer at Performance Intelligence Agency might be a good fit for your organisation. For more information, contact me at my profile page.
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