SME leaders need different management skills for different stages of their business’s lifecycle. You need to know when to be an enabler and when to be a motivator, says Valentina Lorenzon, project manager and consultant
Leadership is an essential element in the management of any organisation. But it is even more crucial when it comes to small and medium enterprises.
In particular, both the structure and specific stage of development of an SME determine the need for an evolving style of leadership.
Unlike their counterparts at larger organisations, SME leaders usually have a higher level of hands-on involvement across multiple areas of responsibility including strategic decision making and financial management, as well as team leadership and motivation.
Some key leadership skills, such as having a clear vision, communicating successfully across all business levels, leading by example and keeping the team engaged, are shared by all enterprises, regardless of size and nature.
But it is critical for SME leaders to understand that each stage of an organisation’s lifecycle brings with it different opportunities and challenges that should be dealt with by adopting different leadership techniques. A ‘one-size-fits-all’ approach will not work and could even become detrimental in the long term.
During an organisation’s early days, a leader’s main role is to inspire the individuals they work with by sharing their vision and purpose without the need for formal management processes.
Their work is based on more flexible structures and collaborators are more likely to be engaged and motivated without the need for a great effort on the leader’s part.
SME leaders and growth
Leadership styles need to evolve with the business, especially during its growth phase. This is when finding the right balance between operational and strategic tasks is key and it requires the leader to focus their efforts on keeping the team motivated while working towards their business goals.
Management and planning processes should be formalised along with specific roles so that responsibilities can be easily identified and delegated.
In preparation for losing touch with more junior members of the team and operational tasks, SME leaders need to adopt a coaching and collaborative approach by providing the right training and support to junior collaborators so that they feel empowered and prepared to carry out their tasks autonomously.
When moving into its consolidation stage, an SME requires even more formalised procedures and policies so that leaders can delegate operational tasks within specific business areas.
Leaders need to make sure that they promote awareness and buy-in around strategic goals among employees at all levels. The increasingly high level of formality could otherwise be perceived as a threat to the daily work and the level of autonomy of the workforce.
Established SMEs need leaders who mainly act as enablers and ‘guardians’ of the culture and the values of the organisation. Their priority is to make sure that day-to-day activities across different functional areas are aligned with the strategic direction and long-term targets of the business.
Generally, for SMEs to succeed, leaders need to understand their specific needs and, above all, be willing to develop with the organisation and adapt their style to the new context. Though challenging, this approach is what makes leaders more effective and inspirational.
Valentina Lorenzon is a member of IoD Central London