Are leaders in SMEs keen on developing leadership skills?
I wonder if SME' leaders are keen on developing their leadership skills? I've been reading various SME reports to government and they say that people management skills are wanting in SME's, and SME leaders don't generally 'do' leadership development and are not keen. Is that right? (I admit I think it's nonsense, only this morning I was reading Sun Tzu...!) Perhaps we just do it differently?
When one looks at the statistics available on Australia's 2.0 million SME's the one that always worries me the most is that 95%+ of SME's do not have a business plan. As savvySME members we mostly fit into the second largest SME category of "Professionals" which includes everything from the corner store consultant through to heart surgeons and as such we tend to think issues through in more detail than those in the other 6 categories and most of us think about business plans, leadership etc.
In answer to the question I do not believe most SME's consider leadership at all.
SME's employ 71.4% of the Australian work force, represent 99.7% of trading entities and have the highest level of female CEO's at 31.5% (compared with 3% in the corporate world) and yet the majority of SME's are lacking in core business skills and "flying blind" without a business plan.
Giving assistance, skills and education to SME operators is a way for the "Professional" category to make a game changing difference.
Louise, thanks for your comments. Your questions closely follow our thinking at Wardour Capital and we are in the process of finalising two new SME business products for the Australian market. The first and closest to launch is "Tooliers" a system of on-line buisiness diagnostic tools and the second CG - Create Growth, is a range of simple yet comprehensive SME templates and tips for planning and accounting. Both of these products will be supported by webinars and podcasts. To see more have a look at our web site. I apologise for turning this into a "plug" it wasn't my intention.
Hi Louise Here's a dumb but genuine question. What exactly is meant by the term 'leadership'? It's bandied about so much by politicians, media, big business etc. and I really don't understand why. My rule of thumb has always been that natural leaders emerge only out of crisis. It happens when a group of people start seeking someone to steer a path out of their current problem. Other than that specific situation, all we're often talking about is a steady hand on the rudder. If so, then it's simply good management and a skill which can be learned. So in answer, perhaps SMEs simply don't see a need? 'Leadership' is the solution to a problem that doesn't exist.
Not a dumb question at all, people have been arguing about that for decades. The definition I like best was written by Yukl: leadership is "a process of influence". I like to add something about driving business performance in there too. That 'natural' emergent leader thing is not so natural, I know it looks that way, but those who emerge are mostly male, extroverted and aggressive. Often, these are not the best people for the job. Someone who takes charge in a crisis is usually given responsibility by the group - i.e. it's a bit like "I don't want to make these difficult decisions as it's going to be difficult and painful, i'm happy to let you fall in to that trap, sink or swim". So crisis is different to regular life when we really want someone we can believe in, someone who will communicate with us and someone who can get the best out of us. I suppose, in the end, it's that ability to martial people towards a common goal over the long term, and to get the best out of them. It surprises me that anyone would see it as someone that was not needed.
Louise, I guess my dumb question was in part prompted by the seemingly interchangeable nature of the two phrases in your post: "developing their leadership skills"; "people management skills." Again, please pardon my ignorance if I see them in a business context as both being the latter. Meaning, a business owner is "the leader" by default. He/she has the vision and the drive to achieve a goal. Whether that person is also a good manager doesn't necessarily follow – creating a system, getting the best out of their team etc. – what John refers to below. Getting the people and processes to work without them (eg. the Mcdonalds method) is what I would call management and something that can be taught/learned. Perhaps the reason SMEs are not keen on "doing leadership development" is they don't recognise the question. Instead, ask them if they want to have a more efficient business that returns them more profit and you'll get a resounding yes. That's the time to point out they need only learn how to manage better and you'll have made your point.
Management is about measuring how often people do what you say, leadership is where they've done it without you mentioning it. Many small business owners only see the need to be a manager... Small businesses often start with a 'technician' who makes money by being good at what they do and selling it. As they grow, they hire more 'technicians' to do what they have been doing so they can sell/deliver more. As they get more technicians, they start to employ 'administrators' to take some of the load of the technicians. Now the owner must becomes a manager not just a technician in order to make sure people are doing what they are supposed to. Many small business owners struggle to make the transition from technician to manager, but it's the next stage that (sadly) most small business owners never make... For a business to be successful in the long term it needs to be able to operate when the founder/owner/original technician isn't around - a good business is a successful system, usually with people operating that system. When this is happening well, you have created a business that is worth something to others (customers, suppliers, potential buyers/investors, the next generation of family etc.). BUT, for the business to become a system the owner needs to move from being a manager, to becoming a leader. The people and processes need to work without the owner being there....leadership make this happen. Hence., "leadership is where they've done it before you mentioned it". Small Business Owners will remain just, that without becoming Small Business Leaders and building a business with real value.
What a great summary of organisational growth John! I see that too, it's quite a leap to go from supervisor to manager to leader, and people often struggle. I wonder if this is a factor of amount of experience here too, we don't have the governmental policies that promote entrepreneurialism like, for instance, that found in silicon valley so the amount of people who have experience taking an organisation from one person to hundreds is pretty small. We often also don't have consistency there either so you don't have many teams of leaders or partners who do this, instead people hire and fire the team based on need or time or what feels good at the time (the whole partner business relationship or family business is a mine field). This means there are significant knowledge gaps without succession links. We also have big diversity issues that make that worse in certain sectors. I'm really aware of my own gaps and actively seek mentors at the levels I missed along my development, so i'm personally a fan of leadership development - constantly learning!
Dr Louise Metcalf, Associate Lecturer at Futureproofology
Ah yes, I often say this to my students, if they need a good business idea, go out and write business plans for small businesses, essential but hardly ever done! This whole strand indicates that for SME's leadership is a very practical thing. I wonder if there are some short cuts in there though, things that we've learned and would never do again, or things that we now realise are essential. i'm a serial entrepreneur and I often wonder what I would tell myself as I opened my first business (a signwriting company over twenty years ago now), I would certainly run it differently now, but there are all those practical things you still have to consider - because in the end you still have to make stuff and collect money! So where is the balance, can we do the 'management' stuff more efficiently and actually have the time to lead better?