People are happier and more productive when their leaders show strong morals, a clear vision and commitment to stakeholders, a new study has found.
The growing importance of what is being described as 'purposeful leadership' for the modern workplace is outlined today in a new report for the CIPD, the professional body for HR and people development.
When modern managers display 'purposeful' behaviours, employees are less likely to quit, more satisfied, willing to go the extra mile, better performers and less cynical, according to the researchers at the University of Sussex, the University of Greenwich, the IPA and CIPD.
Professor Catherine Bailey at the University of Sussex said: "Our study shows that the modern workplace is as much a battle for hearts and minds as it is one of rules and duties.
"People increasingly expect an organisational purpose that goes beyond a mere focus on the bottom line, beyond the kind of short-termist, financial imperatives that are blamed by many for causing the 2008 recession.
"In turn, they respond to leaders who care not just about themselves but wider society, who have strong morals and ethics, and who behave with purpose."
Not much is known about what causes purposeful leadership or what impact it has - this new study is an attempt to fill this gap.
Laura Harrison, Director of Strategy and Transformation at the CIPD, said: "Building on a number of studies on trust, decision making, and corporate governance, this study begins an examination of an under considered facet of leadership, purposefulness.
"Much has been discussed about the critical nature of invoking and 'living' purpose in an organisation, but little around the alignment of this purpose to the internal, perhaps hidden, moral compass of an organisation's leaders.
"The challenge now is how we enable and support the development of leaders that people actually want to follow."
The research found that just one in five UK bosses describes themselves as a 'purposeful leader', highlighting a largely untapped opportunity for modern organisations to improve performance by reshaping the role of managers.
The researchers suggest that there is much that organisations can do to foster purposeful and ethical leadership, including the adoption of relevant policies, leader role-modelling, alignment around a core vision, training and development, and organisational culture.
Dr Amanda Shantz at the University of Greenwich says: "If organisations are serious about acting on the rhetoric of business purpose, and are to invest in achievement of their purpose, they have to reconsider the ways they select, develop and assess leaders.
"The traditional focus on leader behaviours only goes so far as to develop their ability to perform in a role. Instead, what is required is a development of the whole person, while accepting that it is impossible to mould all individuals into a uniform model of morals and ethics.
"The real challenge is not in trying to achieve perfect match between leaders' and organisational values, but in ensuring that they complement each other in ways that best suit organisational circumstances at a given time.
"This includes supporting leaders to successfully recognise and negotiate the differences between what they stand for and what the business intends to achieve, without detriment to the individual leader or the company's operations."