The University of AkronSurveys of both academics and practitioners indicate that leadership is the most important topic within the realm of organizational behaviour. This chapter elaborates on the implications of a perceptual viewpoint for explaining the indirect effects of leadership on performance and presents a comprehensive and explicit theory of leadership perceptions that is derived from recent work in the social-cognitive area. This provides a more precise view of leadership perceptions than work derived from everyday experience with leadership. The chapter argues that leadership perceptions depend on both recognition-based and inferential processes and that both of these processes can occur using automatic or controlled modes of processing. It then examines the differential application and implications of this viewpoint to lower and upper hierarchical levels, elaborating on the fundamental role of perceptual processing at each of these levels and how perceptions relate to performance.