How do I increase leadership?

By leveling up of course! There are only two ways to level up in Steel and Flesh 2, by hiring trainers or killing enemies. Both are good ways to level up but I suggest the latter if you just started the game as trainers will require some money to maintain. If you just started the game, you should throw in all your points into leadership. This will give you an army huge enough to eliminate bandits. The more bandits you killed, the faster you level up! You can even obtain better equipment so that you can fight better. Good luck!