Why Good Leadership Fails in the Wrong Environment and How to Fix It
Michael Smith is an executive coach and the founder of MS Consulting Solutions, a leadership and team development consultancy. Shaped by his service in the British Army and more than 20 years of leading major programmes at BAE Systems, Network Rail and BT Openreach, he helps leaders close capability gaps and build teams that deliver.
You can train a leader brilliantly and still watch them fail. After more than 20 years of leading teams in the Royal Engineers and at BAE Systems, Network Rail and BT Openreach, Michael Smith has seen how the environment around a leader can make or break everything they have learned. Here is how to tell a positive leadership environment from a negative one and what organisations can do to help good leadership flourish.
What is a leadership environment?
A leadership environment is everything around a leader that shapes how they behave. It includes what the organisation rewards, who holds power and how they use it, how mistakes are treated, and whether people feel safe to speak up. It is the unwritten rulebook that tells a leader what really matters, whatever the values on the wall say.
After my recent Brainz Magazine interview, “Michael Smith Interview on Why Great Leaders Are Made, Not Born,” a reader with a background in organisational research sent me a thoughtful challenge. Leaders can develop their skills, they said, but whether those skills translate into meaningful change depends on the systems they operate in. The more interesting question goes beyond how leaders are made and asks what enables genuinely good leadership to flourish. I agree, and it is a question I have lived from both sides.
Why developing leaders is not enough on its own
Most leadership development focuses on the individual. We coach people to listen better, delegate more, handle difficult conversations and build trust. All of that matters. But a leader does not operate in a vacuum.
Gallup estimated that managers account for at least 70% of the variance in employee engagement scores across business units. That tells us how much leaders matter. What it does not tell us is what shapes the leaders themselves. In my experience, the answer is usually the environment they work in.
Put a capable leader into an organisation that rewards only immediate results, punishes honest mistakes and concentrates power at the top, and you will often see them drift back towards the behaviours the system rewards. Not because they are weak, but because they are human.
What a negative leadership environment looks like
Negative leadership environments are rarely created on purpose. They build up over time through small signals about what is valued. Here are some common signs.
Only the numbers count. Performance conversations focus entirely on targets, and nobody asks how those results were achieved or what they cost the team.
People are promoted for technical skill alone. The best engineer becomes the manager, with no support to make the shift from doing the work to leading others.
Mistakes are punished instead of being treated as opportunities to learn. People hide problems until they become crises because raising them early feels dangerous.
Power sits with a few and is rarely challenged. Decisions are made behind closed doors, and those who question them quietly lose influence.
The stated values and the rewarded behaviours do not match. The organisation talks about collaboration but celebrates individual heroics.
That last point has a name in organisational research. In his classic paper, “On the Folly of Rewarding A, While Hoping for B,” Steven Kerr showed how organisations regularly reward one behaviour while hoping for another. Leaders notice what gets rewarded. Over time, that is what they do.
What a positive leadership environment looks like
A positive leadership environment makes good leadership the easy choice rather than the brave one. These organisations have a few things in common.
Results matter, but so does how they are achieved. People and delivery are discussed together.
Leaders receive support to develop both before and after promotion.
People can raise concerns, admit mistakes and challenge ideas without fear. Project Aristotle, Google’s study of its own teams, found that psychological safety was the most important factor in team effectiveness.
Senior leaders model the behaviours they expect, and the behaviours the organisation says it values are the ones it actually recognises.
A team shaped by its environment
Early in one of my leadership roles at Openreach, I took over a team that was thoroughly demotivated. The previous manager had focused almost entirely on delivery results. The numbers were all that mattered, and the people had stopped feeling seen, heard or valued.
It would have been easy to blame the team. But they were simply responding to the environment they had been given. When every conversation is about targets and nobody asks how you are doing, people protect themselves, keep their heads down and do what they are told.
My first job was not to change the plan. It was to change the environment. I made it clear that delivery still mattered, but so did they. I backed them when things got tough and asked what was getting in their way. Once people felt supported, they started taking ownership again, raising problems early and solving them together. Delivery improved because the team wanted it to, not because they were told to. Same people. Different environment. Different result.
Where leaders learn what leadership looks like
During my time in the Army, I worked with a soldier who changed completely when he was put in charge. He became aggressive and shouty because he believed that was what leadership looked like.
Where does a belief like that come from? Very few people invent their leadership style from scratch. Most of us copy what we see around us, especially early in our careers. If the leaders we watch get results through volume and fear, we learn that this is how it is done.
Through coaching, he learned to find the balance between being firm and being inspiring. But the lesson for organisations is bigger than one person. The leaders you have today are role models for the leaders you will have tomorrow. If you want different leadership in five years, look closely at what your current leaders are teaching by example.
Power dynamics: The conversation most organisations avoid
The hardest part of this conversation is power. Who makes decisions, who is allowed to challenge them, and what happens to people who do?
In many organisations, a leader can attend an excellent development programme, return full of good intentions, and then sit in a meeting where the most senior person shuts down any challenge. That leader quickly learns which lesson really counts.
Good leadership cannot flourish where power is used to silence rather than to enable. That does not mean removing hierarchy. Clear authority and accountability matter, especially when the pressure is on. It means asking senior leaders to use their power deliberately to make it safe for others to lead well.
5 ways organisations can help good leadership flourish
Reward the how, not just the what. Consider how results were achieved in performance conversations and when deciding whom to promote or recognise. If you measure only output, you will get only output.
Prepare people before they step up. Give new leaders development and coaching before they take on the role or as they step into it, not years later when habits have formed.
Make it safe to speak up. Senior leaders should actively invite challenge, thank people for raising problems and respond to bad news calmly. People watch what happens to the first person who speaks up.
Align values with behaviour. Audit what your organisation actually rewards. If the rewards do not match what you say you value, change the rewards, not the poster.
Develop the system as well as the individual. Leadership development works best when it runs alongside changes to the environment. Coaching an individual leader is powerful. Coaching a leadership team to change how they work together is often transformational.
Questions every senior leader should ask
If you lead an organisation or a senior team, these questions are a useful starting point.
What behaviours do we actually reward, and are they the ones we want?
What happens to people here when they raise a problem or challenge a decision?
How do we prepare people for their first leadership role?
If our best leader joined a team in a different part of the business tomorrow, would the environment help them succeed or hold them back?
Build the environment, not just the leader
Great leaders are made, not born. But they are made somewhere. The environment they work in determines whether their skills grow, stall or slowly disappear.
If you are developing leaders in your organisation, invest in the environment as much as in the individual. And if you would like to explore how to build a leadership environment where people and performance both thrive, I would welcome the conversation. You can find out more about my work at MS Consulting Solutions.
Read more from Michael Smith
Michael Smith, Founder of MS Consulting Solutions
Michael Smith is a leadership consultant, executive coach and founder of MS Consulting Solutions. Before founding the consultancy, he spent more than two decades in senior programme delivery, most recently as programme director for BT Openreach’s Reach26 fibre build across the North East and Yorkshire. He has also led delivery at BAE Systems and Network Rail, giving him firsthand insight into how leadership behaviour shapes results in complex environments where the pressure is high. An Insights Discovery Practitioner, Michael now coaches senior leaders and works with their teams to build leadership capability and stronger client relationships. His focus is on empowering leaders, strengthening teams and delivering results.
