How leaders influence organizational effectiveness

The flexible leadership theory explains how top executives and other leaders can influence the financial performance of a business organization. Three key determinants of financial performance are efficiency, adaptation, and human capital. A wide range of leadership behaviors, management programs, structural forms, and external initiatives can be used to influence these performance determinants. Management programs and systems are usually more effective when they are mutually compatible and appropriate for the situation. Effective performance requires a cooperative effort by the multiple leaders in an organization, and they must be flexible and adaptive as the situation changes. The theory provides a way to integrate findings from several different and largely separate literatures.