Understanding the Difference Between Leadership and Management: Key Distinctions

All too often, people use the words leadership and management interchangeably. They are actually very different positions with distinct responsibilities.

You’re not alone if you lump all supervisory positions, from team leaders to executives or the CEO, together under the “management” umbrella. Similarly, many people use “leadership” to describe characteristics or actions that inspire employees.

In reality, management and leadership are two halves of a whole that use different tactics to drive employees to success. Understanding the difference could be key to unlocking optimal productivity in your company.

What is leadership?

In general, leadership is the act of inspiring others to work together toward a common goal.

In the context of business, leadership is the creation of a vision and the actions that guide an organization’s or team’s strategy. Leaders develop a big-picture idea of what a business can accomplish and inspire others to carry out tasks to achieve success. They are the visionaries.

What is the difference between leadership and organizational leadership?

People often use the term “leadership” to describe the qualities of an individual who inspires a group of people to work toward a common goal. They have a big idea and rely on their managers to help bring it to fruition.

Organizational leadership is the act of setting strategic goals within a business. These motivate teams to contribute their best efforts to drive the organization toward success.

Employees at any level may display leadership qualities. But, an organizational leader develops big-picture ideas and decisions that create a business and lead it to success.

What is management?

Management is the act of controlling the functions that are key to achieving short-term goals. These functions come together to build the big picture of the company’s overarching mission.

We can break down the management role into five basic functions:

planning
organizing
leading
staffing
controlling

Managers organize the tasks required to reach specific goals and appoint individuals to team positions. They lead teams in collaboration and measure performance to ensure they are meeting company objectives.

How do you move from management to leadership?

Managers who perform well in their roles and have flawless communication skills and a talent for inspiring others may have the opportunity to move from management to leadership.

However, such a transition isn’t guaranteed. Not all managers aspire to lead an organization, and not all managers are leadership material.

Differences between leadership and management with examples

In the most basic sense, leaders and managers both work to align individuals to achieve goals that guide a company to excellence. However, they approach goals from different directions.

Leaders develop goals based on “why.” Managers develop goals based on “how.” In other words, managers develop the structure required to achieve a leader’s innovative vision.

So, what does this look like in the workplace?

Leaders set the direction for the company; managers flesh out the details

Leaders set big organizational goals that establish a company’s direction and mission statement. They envision innovative products and services designed for a specific audience and always keep their eyes on the horizon.

Managers take the big goals that leaders establish and organize the details of how they will be achieved. They flesh out details and develop and execute a strategy to meet company goals.

Leaders monitor engagement; managers monitor performance

Leaders are innovators who inspire others to follow their dreams. They monitor the level of inspiration or motivation among employees to keep a finger on the pulse of the organization.

Leaders must be self-aware and stay in their “lane.” It’s easy to want to do more, but remember that you chose your managers for a reason. They fit the role you intended for them.

Managers are detail-oriented organizers. They keep track of performance, budget and day-to-day changes. Managers depend on hard data and key performance indicators (KPIs) to ensure the company’s performance is on par with short- and long-term goals.

Leaders encourage buy-in; managers organize and staff

Company leaders develop a big-picture vision of the company and what it will achieve over time. They inspire investors and stakeholders to buy into their dream and take action to see it come to fruition.

A company leader’s ability to inspire participation doesn’t stop with securing investors. They continue to inspire employees to excel even as a business flourishes.

Meanwhile, managers organize the details that make a company work seamlessly. They handle job descriptions, review applications, make hiring decisions and oversee employee activity. They devise efficient onboarding programs and delegate tasks to yield the best possible results.

Crucially, your managers need to see and buy into your vision.

Leaders take risks; managers minimize risk

Leaders must constantly push boundaries to stay competitive in their industry. This means taking risks to try new things. Following their vision enables them to break down barriers and grow their business.

Managers are responsible for keeping things under control. They keep risks to a minimum by making sure workers are doing what they are supposed to do and aligning growth with the company’s budget.

Leaders answer; managers answer how

Leaders determine what products or services the company will provide and what the company will do for the world at large.

Meanwhile, managers determine how to achieve those goals through employee roles, processes and scheduling.

Leaders encourage; managers instruct

Leaders are visionaries who encourage employees to think outside the box to help the organization reach new heights. They rally employees together to support the company’s success and build enthusiasm for the future.

Managers, on the other hand, put guidelines in place to control different aspects of the workplace. They develop processes and rules to ensure everyone meets performance and quality goals. They interact directly with employees to conduct training, ensure team members understand their responsibilities and delegate tasks.

Leaders are free from boundaries; managers operate within them

Leaders are free to make choices with no real boundaries. They make the decision to take on the responsibilities and gather the necessary resources for moves they believe will further the company’s success.

Leaders set responsibilities and boundaries for their managers to follow. Budget and risk potential often dictate these boundaries.

Leaders have short-term visions; managers have long-term visions

A leader’s vision focuses on the business’s long-term direction. This usually includes decisions regarding upcoming products or services, statewide or international expansion and the company’s mission to serve the world at large.

A manager’s vision, on the other hand, is short-term. It involves processes, daily tasks, budget management and staffing.

Where do the responsibilities of leaders and managers overlap?

While there are many differences in how managers and leaders operate, their roles retain some of the same requirements.

Managers and leaders perform these crucial functions that can blur the line between leadership and management:

Establishing objectives

Leaders and managers both establish objectives to drive a company toward success. Leaders form big-picture objectives, develop strategies and employ teams that will use their blueprint to take care of the finer details.

Managers aren’t responsible for big-picture objectives, but they devise strategies that align with the company mission and meet short-term goals. Managers establish projects and processes that employees will carry out to achieve the leader’s overarching mission.

Communication

Leaders and managers share ideas, instructions and requirements through communication. They both meet with team members, provide guidance and offer feedback.

Leaders may communicate with employees in a group setting more often than one-on-one. As a leader, you need to have a good pulse on your teams. This sets a good example and instills trust.

You’ll need to share ideas to establish a mission and build a culture for the company. Leadership communication rallies employee engagement and enthusiasm by creating a culture of psychological safety and belonging.

Managers communicate with teams and individuals to provide instruction, encourage improvement, review performance and build morale. They are responsible for their actions and the actions of their team.

Managers are also on the ground, setting rules and measuring performance. Their aim is to ensure the company stays on track to fulfilling its objectives. They need to be able to speak to leadership and communicate the good and bad happening in the company.

Change management

The business world has always been fluid. Yet, emerging technologies and economic factors have accelerated unexpected changes, demanding agility from companies across all industries. Businesses may need to change direction multiple times as they grow and evolve throughout their lifespan. Similarly, a product that begins as an idea can change substantially from one iteration to the next to yield the best results.

Leaders look to the outside world to determine how external factors impact the business. They then make strategy changes accordingly. When necessary, leaders will adapt their vision to change with the evolving needs of customers and employees.

Communication is key here. Great leaders communicate the need for change as it arises, keeping employees aligned with the most promising goals for the future. They need to show confidence in going with the flow. Employees will take their cues from leaders.

Managers typically facilitate changes from within, altering daily processes and tools to adapt to big-picture transformations. They need to know how to adapt and communicate with each member of their team. Everyone is different.

During periods of change, managers are responsible for navigating employees through transitions, mitigating potential risks, securing resources, adjusting project scope, changing schedules, recruiting for new positions, upskilling employees and more.

Decision-making

Both leaders and managers constantly make decisions to secure a better future for the organization.

Leaders make decisions on an organization-wide level. They use industry, economic and company data to find solutions that will benefit employees and the company simultaneously. External trends concerning supply and demand and economic factors play a major role in leadership decision-making.

When all is said and done, companies aim to make money. Leaders have to make decisions based on what is best for the company and its shareholders.

Managers make decisions on a smaller scale, handling the impact of external changes by determining what’s best for each team and department. These are often day-to-day decisions that affect processes and operations.

Decision-making in management typically depends on internal KPIs that indicate performance, production, workflow and resource allocation.

Which is more important, leadership or management?

Leadership and management are both essential to reach company goals. While leaders and managers both inspire individuals to work toward a shared goal, there are some stark differences in how they operate.

A leader develops grand visions. A manager organizes the resources to make the vision a reality.

Great leaders engage employees in their roles and inspire them to reach peak performance. Great managers take care of the details, nurturing employees with effective training, delegation, ongoing support and performance measurement.

Potential conflicts between leadership and management

Organizational leaders keep their eyes on the future while managers focus on what’s happening right now. This basic difference creates fertile ground for conflict.

While managers and leaders want many of the same things, their roles occasionally require them to take opposing positions.

For example, imagine you want to expand your organization. The manager would break the news to you that such lofty goals are impossible with the company’s current budget or workforce. Together, both parties may develop a solution to move things forward.

Leaders’ and managers’ different viewpoints can also result in conflicts over performance. Conflicts may arise when performance or productivity is lower than projected. This is because managers are not only responsible for their shortcomings but those of their teams, too.

Conflicts are inevitable, so a conflict-resolution process is essential. Communication is key, and leaders and managers must be aligned on the company’s mission. This provides common ground for working out disagreements.

Can a good leader be a poor manager?

It’s surprisingly common for leaders to be poor managers. The roles require different skill sets. Someone who is a natural leader may have difficulty reigning in creativity to take on the organizing role of management.

Leaders must seek the best possible vision for the future and inspire others to chase that vision. This way of thinking rarely aligns with the methodical task of working out the details. Great leaders hire qualified and dependable managers to work these details out and decide how short-term actions lead to successfully reaching long-term goals.

Both leaders and managers are essential to reach the highest levels of success. Leaders and managers who work together capitalize on each other’s strengths and make up for each other’s weaknesses, building a dynamic team.

Want to learn more about the nuances of great leadership? Check out the Pip Decks Leadership blog.

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Understanding the difference between leadership and management