A brief review of the Contingency Model of leadership (Fiedler, 1978) indicates that a weakness in the theory is the nature of its definition of situational favourability for leaders. An alternative approach to defining favourability is offered by O'Brien's(1969) derivation of a mathermatically based index of leader's potential influence. A small group, laboratory study is reported in which leaders whose LPC (Least Preferred Co‐Worker) score varied in situations that provided them with different levels of potential influence. It was found that in the moderate Influence condition LPC was positively correlated with performance (r=·43) while in the high influence condition it was negatively correlated (r=‐·28). When combined with findings from previous studies which have used this index, this result provides substantial support for the hypothesized curvilinear relationship between LPC and productivity. The results also support the view that potential influence is an index of situational favourableness. Some limitations on the use of the potential influence index are then discussed, as well as the need to differentiate between support for the Contingency Model and support for application of Contingency Model principles to leader tra