What is it that bosses actually do to be worthy of a higher wage than employees? Shouldn’t they be actively engaged in “productive, value-added work,” either instead of or in addition to their management responsibilities, in order to justify their compensation?

I frequently find that people new to the role of boss find it difficult to let go of direct labor with immediate tangible value. Leading and managing people is often seen as non-value-added work and is quickly neglected. An effective boss must understand how his work in leading and managing actually holds the potential for exponential value creation, which is exactly why a great boss can also make a great income – he is adding great value to his company.

The two primary responsibilities of a successful boss are to lead and manage those in his charge. These terms are frequently used interchangeably; yet they are quite different activities. That will become evident as we define these two distinct roles and then describe the primary responsibilities of each.

John Maxwell defines leadership at the most fundamental level as follows: “Leadership is influence, nothing more, nothing less.” This explains why people can be placed in a position of leadership but still fail to deliver the desired results. For a variety of reasons, they simply do not have and cannot garner the influence required to bring people along on the journey. Impactful and effective leaders, however, share some common traits that can be defined. These include the ability to clearly see an intended outcome, accurately define the present reality, and state a compelling purpose that results in an overall as well as day-to-day strategy. Based on this purpose and strategy, effective leaders will grow a culture that attracts people who can achieve that desired outcome. There are differing terms we assign to these tasks. Sometimes we refer to this task as creating and communicating the company’s vision, mission, and values that attract and inspire people. Other terms are core focus, core passion, and core values, which are then coupled with the basic strategy a company or organization pursues.

Distilling this just a bit further, leaders must first have an accurate perception of the current reality themselves. They must then be able to describe it to those they seek to influence in ways that resonate with them. Second, they must clearly identify a desired outcome that is mutually beneficial and desirable, along with a strategy by which people can move toward that future vision. The third piece that cannot be ignored is the basic rules of the game by which we will move together toward this future vision – often described as a company’s core values.

Leaders must work to create clarity at all times. This is not the same as answering in detail all the questions that may be on people’s minds; rather, leaders must establish clarity around shared expectations so all can act unitedly with confidence. Invariably, market conditions will demand a change of strategy, or a strategy may falter. At such times the culture must have a high level of trust to support a rapid but essential pivot. These pivots only occur successfully when the leader can restate with great clarity the intended outcome, define the current moment in ways that resonate truly with people and their experience. Only then will he be able to influence them to adopt the newly revised strategy. To quote Maxwell again, “Leaders know the way, go the way, and show the way.” In short, they answer three foundational questions for the organization: Where are we? Where are we going? How are we going to get there?

The role of the manager has a slightly different set of responsibilities. Managers have closer proximity to the daily tactical activities where the work is being done—where the defined processes for achieving the strategy are deployed. To be clear, nearly all leaders are also managers; and in some measure, all managers are leaders. The specific role differences will show up in areas where the majority of time is spent: those in leadership roles will focus on creating organizational clarity; managers, on executing the operational activities in consistent and disciplined ways. Leaders spend more time “working on the business,” while managers spend more time “working in the business.”

Managers are responsible to maintain a closer proximity to their specific areas of responsibility. They drive daily efficiencies and monitor quality controls. They ensure that people fit the core values of the organization and have the necessary skills and resources to be successful in their assigned roles. This requires a slightly different set of skills but is an essential complement to the roles of the leader. Managers oversee the disciplined and consistent execution of what will move the business toward the desired, envisioned outcome or goal.

Managers must be deeply in tune with the people and processes associated with their area of management, whether marketing, sales, operations, or finance. They must maintain adequate proximity to all their direct reports to ensure that the prescribed best practices are being consistently followed to defined standards.

Since these two roles are quite distinct from each other, it is not uncommon to see a good manager falter rather than succeed when he is promoted to a leadership role. Great managers don’t always make great leaders, just as great tradesmen don’t always make great managers. However, one of the most defining qualities of a great boss (whether his role is predominantly leadership or management), is that he doesn’t allow his personal ego to get in the way of always working for the success of the organization or business he serves. He always works for the greater good of the business rather than his own advancement or agenda. This also means that while a great boss works to win the trust and confidence of the people he leads, he readily recognizes that not everyone will be a great fit in the company and will seek to serve all – first by helping them to succeed in their roles; and second, if they aren’t suited to that role, freeing them to find another role in the company (or if necessary, in another business). This is true servant leadership. This is being a great boss.

This article originally appeared in The Shed Magazine and is online here.