Good leadership is extremely important, especially in SMEs. This is because, unlike large corporations, there is no “staff reserve” that can compensate for inefficiency with more employees. Furthermore, it is expensive and difficult to get rid of inefficient employees.
What makes good leadership – the manager as a “coach“
The coach of a soccer team is extremely important. He sets the strategy, he lines up the team and it is his job to get the best out of every player. To do this, he has to know and develop the players, because they are the ones who have to score the goals. He has to reach out to his players and they have to have confidence in him. The best example at the moment is Bo Svensson from FSV Mainz 05. After a completely botched first half of the season, he managed to breathe life back into the team and even managed to keep the team out of the league before the last match day.
Making decisions – a core task
Many managers sometimes find this difficult. Especially when political motives are very important. If you don’t make a decision, you don’t make a mistake. If you don’t make a wrong decision, you get a promotion or a bonus. Suffering from this:
– The workflow – Everything stays as it is. If things go badly, they continue to go badly
– The employees – Confusion, uncertainty, frustration, fluctuation. The result: good employees look for a new job, the company has costs to fill these positions
– The processes – everything stays as it is. Good ideas are “sat out”. Consequence: Less business, inefficient organization, higher costs
The right management style
A basic distinction can be made between laissez-faire, democratic (majority decision), consultative and authoritarian. There is no one leadership style that is always right. The right management style is always situation-dependent and depends on:
– Employees’ competence and sense of responsibility
– Importance and urgency of the situation
– Need for employee commitment
“An example – company N.
Many processes in the finance department of company N. are suboptimal. The new manager has too high a management span. Result: The manager has no time to look after all employees in addition to their actual tasks. She does not know enough about what each employee actually does.
The employees are competent, experienced and responsible. That’s why things are somehow “running smoothly”. The manager is aware that things have to change. But they must cost little or nothing, because the company’s economic situation is not rosy and the shareholders are keeping a close eye on costs. In this respect, there is a lack of resources.
As the manager does not know exactly what everyone is doing, he/she also has little overview of capacities. She has decided to use a target agreement to direct the employees’ priorities to the urgent points. However, this approach takes little account of day-to-day business. Another weakness: solving the problems turns out to be more complex than expected.
Furthermore, not all employees have the same competence to solve the problems. The result: employees are caught between the project and day-to-day business, deadlines cannot be met and frustration is the result. The target achievement bonus decreases.
Another point: the responsible employee in Controlling knows that the business targets in terms of turnover cannot be met. The reason: new business is lagging far behind expectations. He informed the management. The decision was: We will definitely report the budget. The controller has to answer various queries from the shareholders. Of course, they also notice that something is wrong. The controlling employee is frustrated because he is caught in the middle and the trust placed in his figures is constantly being undermined.
Result: The planned liberation strike drags on like chewing gum. The employees are frustrated and the planned changes are lagging far behind expectations.
Leadership and organizational development
The example shows how weak decision-making and an inadequate management style create a situation that leads to fluctuation (a major problem for the company) and underperformance. Leadership seminars alone do not necessarily help here. Sure, they are useful, but what has been learned must also be implemented accordingly.
This is where it makes sense to engage an external consultant who can analyze the situation neutrally and provide valuable input on how to make better use of existing resources and what additional resources can/must be used to achieve the goals. Ultimately, nothing less is at stake than the economic survival of the company.
