The Effect of Challenge: How Great Leaders Build Confidence, Growth, and Performance

Our team members are often capable of more than they realize. Effective leaders recognize that potential and intentionally create opportunities for team members to expand their capabilities, build confidence, and achieve more than they thought possible. In turn, team members gain opportunities to grow, develop new skills, and make meaningful contributions.

Challenge isn’t about creating pressure or unrealistic expectations. It’s about setting team members up for growth by encouraging them to take on new responsibilities, stretch their skills, and pursue higher levels of performance. Leaders who effectively challenge their team members create environments where continuous improvement becomes part of the culture.

Data from our Coaching Effect Survey (CES) shows that Challenge is one of the leadership behaviors most closely connected to confidence, engagement, retention, performance, and overall perceptions of leadership effectiveness.

 

How Managers Are Performing Today

CES data shows that the average Challenge Theme score across managers is 77%. Even so, nearly half of team members report opportunities for improvement:

• 24% indicate their manager demonstrates Challenge behaviors at just a moderate level.
• 21% rate their manager’s Challenge skills at 50% or lower.

In other words, more than half of team members currently experience the benefits of a leader who encourages growth, provides stretch opportunities, and helps them move beyond their comfort zones. The other half — about 45% — report to a leader who struggles to effectively challenge and develop their team members. These team members may miss opportunities to build new skills, gain confidence, and reach higher levels of performance.

 

The Measurable Impact of Challenge

When leaders are highly effective in the Challenge theme, their team members are:

• 8.8x more likely to rate their manager highly overall. Challenge is one of the strongest predictors of overall leadership effectiveness.
• 5.4x more likely to indicate their manager builds their confidence. Leaders who challenge effectively help team members recognize and develop capabilities.
• 3.5x more likely to rate the organization positively overall. Growth-oriented leadership influences how employees experience the workplace.
• 3.4x more likely to report being happy in their current work situation. Team members are more positive about work when learning and growing.
• 3.2x more likely to see themselves working at the organization a year from now. Development opportunities encourage commitment and strengthen retention.
• 3.0x more likely to report being highly engaged in their work. Leaders who encourage growth create investment and energy in day-to-day work.

 

Challenge by the Numbers

CES outcomes show the impact of the Challenge theme is especially evident in two areas: performance attainment and team members’ perceptions of their own growth and development.

Challenge and Performance

Team members who met or exceeded their performance goals reported leaders with an average Challenge score of 80%, well above those without clear goals or unsure whether they met them:

• Met or exceeded goals: 80%
• Did not meet goals: 72%
• Did not have goals: 53%
• Unsure if goals were met: 52%

Challenge is most effective when paired with clarity. The largest gaps appear when goals are missing or unclear, reinforcing the importance of helping team members understand what success looks like.

Challenge and Personal Growth

Team members who rated their own skills highly (9–10 out of 10) reported leaders with an average Challenge Theme score of 80%, compared to lower scores among those with moderate or low self-ratings:

• High self-rating (9–10): 80%
• Moderate self-rating: 76%
• Lower self-rating: 67%

Team members are often capable of more than they realize. Leaders who effectively challenge their teams help individuals discover that potential, build confidence, and achieve more than they thought possible.

 

What Team Members Are Saying

“He allows me to be who I am but yet pushes me when I need to get out of my comfort zone.”

“Helps us get outside our comfort zone. Gives achievable tasks with a timeline for completion.”

“I truly appreciate how he takes the time to guide and mentor me. His coaching skills have helped me grow professionally and given me the confidence to take on new challenges.”

“He is open and offers opportunities to stretch my abilities. I feel that I am valued as a human.”

 

Why Challenge Matters

Challenge reflects a leader’s ability to encourage growth, expand capabilities, and help team members achieve more than they believed possible.

Strong Challenge scores are associated with leaders who:

• Encourage learning and development
• Create opportunities for growth
• Establish accountability and performance expectations
• Build confidence through achievement
• Push people beyond complacency
• Help team members recognize their strengths and potential

 

Not Just a Development Strategy, But a Performance Strategy

Many leaders focus on managing today’s work. Great leaders focus on developing people for tomorrow’s opportunities.

Challenge creates the conditions for growth by helping team members stretch their abilities, build confidence, and pursue higher levels of achievement. The result is stronger performance, greater engagement, higher retention, and a workforce that continues to grow rather than remain comfortable.

The data is clear: leaders who effectively challenge their people do more than improve performance. They help people become more capable than they thought possible.