Leveraging Informal Leadership in the Workplace

Meet Jane, an IT technician at a mid-sized tech company who is go-to person for all her colleague’s tech needs. She has extensive tech knowledge, knows what software her company needs to grow, and supports her team whenever they have IT issues. Although Jane doesn't have an official leadership title, like CEO or senior director, she holds an incredible amount of influence in her workplace. 

She's what's known as an informal leader. 

Informal leaders like Jane are influential because of their credibility and stellar reputation. They understand their organization deeply and know how to build genuine relationships with people. Identifying informal leaders in your own company — and then leveraging their skills — can be a valuable HR management strategy for boosting team productivity and creating a more positive workplace culture. 

How to Identify Informal Leadership in Your Company

Formal and informal leaders fulfill different roles within an organization. 

Formal leaders like CEOs, VPs, and managers exercise authority at work because of their positional power. They fall within a known hierarchy of decision-making and authority.

Informal leaders, on the other hand, gain their colleague’s admiration through their actions and interpersonal skills. Influence comes naturally from these positive relationships. They’re reliable and a fountain of knowledge. They often have informal networks and a strong capacity to motivate the people around them. For example, by showing their co-workers how to use a new platform in their workflow to increase productivity, they influence the organization organically. 

The Impact of Informal Leadership on Organizational Performance

Informal leadership can positively affect organizational performance in several ways.

Influence

Informal leaders greatly contribute to company culture through their skills, maturity, and influence. They can interpret and understand group dynamics, making them extremely valuable. 

Inspiration

Individuals who assume informal leadership roles naturally contribute to enhancing team cohesion and productivity. They are often good at connecting people across a business and building valuable internal networks. With their ability to foster positive relationships with team members, informal leaders inspire everyone to work toward the same goal. 

Instruction

People often seek informal leaders out for guidance and advice. Even without official status, an informal leader guides and shares their knowledge freely with others. They contribute to building a positive workplace culture by supporting their peers and helping them overcome complex work challenges. 

Innovation

In addition, informal leaders are often early adopters of emerging trends and new fields of knowledge, as reported by Financial Management. That might encourage innovation in the workplace and help solve problems within teams. 

Nurturing Informal Leaders

After recognizing informal leadership traits in someone, why not encourage these skills through mentorship and recognition programs? This can boost employee growth and professional development. Ways to do this include:

Mentorship 

All the major players leverage mentorship programs: 100% of the top 50 Fortune 500 companies in the U.S. have them, according to MentorCliq. These initiatives let natural leaders share their knowledge and experience with others, and mentorship can cultivate employees' potential. 

Employee Recognition 

You can also nurture informal leadership with employee recognition programs. Organizations with these programs have nearly 15% higher employee engagement, productivity, and performance, according to a Deloitte report. 

Leadership Training

Informal leaders can benefit from training that either helps them better fulfill their current role or prepares them to move into formal leadership. The ROI for businesses that invest in leadership training is high, reports Forbes. Whether the employee moves into formal leadership or not, they will be better equipped to inspire and instruct their team, and the benefits to the organization are great. 

Overcoming the Challenges of Informal Leaders

The most obvious challenge of informal leadership is the danger of overburdening an employee with duties and responsibilities. Their pay may not reflect the level of their efforts, and job creep may lead them to struggle to balance doing the job they’re supposed to do with their informal role.

The roles and responsibilities of an informal leader may be ambiguous because they don't have the positional power that formal leaders have in an organization. An informal leader's influence could inspire jealousy among team members, which can lead to conflicts. 

A formal leader might also feel threatened by an informal leader's perceived authority or status, resulting in a power struggle. Either due to lack of training or lack of authority, they may demonstrate inconsistency in leadership style, which might create confusion or misalignment in the team.

However, there are things you can do to minimize these challenges.

• Recognize and compensate these leaders for their efforts, either with bonuses, salary increases, or other gifts that reflect their value to the company.
• Monitor the workload of informal leaders carefully to help them avoid burnout.
• Clarify their roles and responsibilities to protect them from more responsibility than they need to take on.
• Offer mediation and conflict resolution, encouraging an open door of communication among employees.
• Train and develop their leadership skills.
• Formalize their job enlargement with a promotion

Overcoming challenges can result in even more successful informal leadership in your company. Building a culture that fosters informal leadership lets you develop leaders from within the organization.

Build a Positive Workplace Culture

Informal leaders drive their organizations forward. Their can-do attitude improves team cohesion and ups productivity. They model the power of constant growth, a powerful contributor to a positive work environment and a competitive edge for any company.

You can also boost your productivity and culture with an employee wellbeing program. These initiatives give employees the tools they need to feel their best so they can do their best. That’s why 90% of companies that track their wellness program’s impact see a positive return on investment.

Let Wellhub help you build a happier, healthier workforce — speak with a Wellbeing Specialist today!

References:

• Cook, S., & Senior Content Manager and Employee Engagement Researcher. (2024, February 2). 40+ definitive mentorship statistics - 2024 research updates. MentorcliQ. https://www.mentorcliq.com/blog/mentoring-stats
• Daunt, V., & Menzies, V. Recognition Programmes – Are They Important?: Deloitte Ireland. https://www2.deloitte.com/ie/en/pages/deloitte-private/articles/recognition-programmes.html
• Den Hauter, K. & Maese, E. (2023, April 13). Mentors and Sponsors Make the Difference. Gallup https://www.gallup.com/workplace/473999/mentors-sponsors-difference.aspx
• Espeland, M. (2023, February 27). Council post: The roi of executive coaching: A comprehensive guide. Forbes. https://www.forbes.com/sites/forbescoachescouncil/2023/02/24/the-roi-of-executive-coaching-a-comprehensive-guide/?sh=5a98dbe659e1
• Kate Den Houter and Ellyn Maese. (2024, January 18). Mentors and sponsors make the difference. Gallup.com. https://www.gallup.com/workplace/473999/mentors-sponsors-difference.aspx
• Indeed Editorial Team. Formal vs. Informal Leadership: Definitions and Differences. Indeed Career Guide. https://www.indeed.com/career-advice/career-development/formal-and-informal-leadership
• The State of Work-Life Wellness 2024. Wellhub. /en-us/resources/research/work-life-wellness-report-2024/
• Venkataraman, R. (2023, September 20). How to develop as an informal leader and influencer. FM Magazine. https://www.fm-magazine.com/news/2023/sep/how-to-develop-as-an-informal-leader-and-influencer.html