A study from the O.C. Tanner Institute found that organizations “that treat every employee as a leader create the best leaders – and the best cultures.” These companies have higher scores across 10 different metrics, such as engagement, inclusion and employee experience. And burnout levels drop.

Why does this happen? Because treating everyone like a leader delivers a fundamental shift that gives people “greater autonomy and opportunity” and broadens development opportunities, the report explains.

Here’s what it looks like in action:

Encouraging innovation and risk taking

To make this system work, you need to establish what leadership means in the organization. For example, you can make it clear that leaders have the responsibility and accountability to make decisions. Not only do they have permission to create new projects and try out new ideas within their scope, they are expected to.

As Livia Martini, chief people officer at Gympass shared in Fast Company, “Across my career, I’ve often seen fear hold back innovation. People are afraid that their idea might fail, that they’ll come across as ‘rocking the boat’ unnecessarily, or that they’re overstepping their bounds. They think that if they simply do things the way everyone else is doing them, they’ll avoid all these problems.”

When this happens, employees either don’t speak up or they ask their managers to sign off on it first. In these companies, managers often then ask their higher ups, and so on, until ideas just fall through the cracks.

According to Martini, when you establish that everyone is a leader, employees are more willing to take risks. It becomes an everyday norm. Along with this innovation comes accountability for results. Employees need to pay close attention to the consequences of their choices, correct what goes wrong, and keep looking for ways to refine and improve.

Calling everyone a leader empowers employees to experiment with changes. And Martini has found that these changes often work, adding that this type of freedom helped Gympass weather the pandemic because a staff full of people unafraid to take the lead in trying new things was able to deliver new solutions.

Broader leadership model

Gympass also tells its staff that being a leader means more than just creating new ideas and projects and seeing them through. We have a leadership model with three pillars that we apply to all employees: Build trust; inspire and empower others; and drive performance.

In career conversations and performance reviews, employees are made aware of the pillar and encouraged to demonstrate actions in keeping with each category. What have they done recently to build trust with fellow employees and/or customers? How have they inspired or empowered colleagues? How have they affected organizational growth?

These pillars are also included in the hiring process by asking candidates about moments in which they demonstrated these abilities. The first two pillars in particular serve as powerful reminders that leaders are not “lone wolves.” Team members must be collaborative, helping each other achieve goals while also giving each other the space to accomplish their tasks in their own ways.

The talent pipeline

Establishing that everyone is a leader also helps to ensure that there are plenty of terrific, capable internal candidates for promotions to management positions.

Promoting internally is often better than hiring from the outside. Internal candidates have organizational knowledge and relationships. Promoting them increases longevity at the company overall, while rejected internal candidates are likely to leave. Yet in one study, 40% of managers were nevertheless hired from the outside. Such a high figure suggests too many companies are failing to build enough internal talent.

Martini believes that when you establish that everyone is a leader, you make sure that all employees are getting some form of leadership experience – for example, running meetings or overseeing a cross-functional project, which helps them build those skills.

And surveys show that employees express a greater sense of purpose and connection to the company. More people than ever say they work in a place that genuinely cares about people.