The Importance Of Leadership In SMEs

Does leadership in SMEs have a limited capacity or can it become the axis of growth for a modest company? In essence, the role of the leader in both a large corporation and a more austere enterprise is the same. That is, to effectively influence the behavior of collaborators to achieve the objectives.

However, it is evident that the results of leadership in large companies tend to be perceived in terms of presence in the market. That is, in the positioning of the brand, its national and international expansion, its employer branding and, without a doubt, in the sales figures achieved.

Some Factors To Consider

Obviously, with the exception of sales, the indicators to measure the effectiveness of leadership in SMEs should be different. Specifically, it would be convenient to adapt them to the current level of development of the enterprise and its future growth goals. Based on this, disappointment and frustration would be avoided both in the board and in the team members.

As we will see below, the importance of a well-focused leadership within small and medium-sized companies must be focused on the achievement of realistic objectives. But also, that these goals express a balance between productivity and a motivating work environment.

From Family Business To Company: The Objectives Of Leadership In SMEs

Of course, every company must have objectives that justify its existence , no matter how small. In general, many of them are born from the initiative to establish their own business, with some more or less ambitious expectations. In any case, a project of this nature will have a future if its director does not cling to extreme positions.

In this sense, a condition of leadership in SMEs is the ability to set real, relevant, specific, measurable and achievable objectives within reasonable time frames. In this way, it is much easier to motivate the work team to put their knowledge and efforts towards those goals. Because when team members understand and internalize clear and logical purposes, they focus more effectively on their work.

Communication, Feedback And Closeness Of The Leader: Essential For Leadership In SMEs

And, along with the specific objectives, another essential leadership skill is associated: the ability to communicate them. Paradoxically, although there are fewer levels of hierarchy in the SME environment, it is still common to limit communication to the assignment of tasks. As we said, it is important for collaborators to work motivated by purposes.

At this point, it is crucial to have the ability to assertively contextualize goals and actions. In other words, it is essential to convey to the work team the objectives and the actions linked to their fulfillment, in a clear and respectful manner. In this way, it is possible to go beyond simple orders and achieve greater commitment from the staff.

Close, Fluid And Efficient Communication

Likewise, constant feedback and closeness to the leader are complementary and very useful aspects to reinforce effective communication with human talent. In fact, in the simplified structure of small and medium-sized companies, these attitudes should be frequent and effective. 

For this, it is important to acquire and put into practice soft skills such as empathy and emotional intelligence, essential for leadership in SMEs . Because, through these, it is feasible to channel proposals, expectations and needs of the members of the staff; which becomes an effective motivational tool.

Misunderstood Trust And Other Leadership Mistakes

At the other extreme, there is a common phenomenon in family businesses and companies with few employees: overconfidence and lack of discipline. Indeed, such attitudes are often justified by family ties and the absence of hierarchies.

Therefore, leadership in SMEs must correct this type of errors that seriously threaten the operation and permanence of the business. Based on this, it is necessary to reiterate the use of assertiveness and emotional intelligence in communication.

Limitations In Motivation And Professional Growth: A Challenge For Management In SMEs

Undoubtedly, part of the greatest challenges for those responsible for new projects or very traditional businesses lies in the ability to offer their collaborators economic incentives and opportunities for advancement in their careers.

The effects Of Leadership In SMEs: More Visible Than In Large Organizations?

Certainly, the organizational structure of SMEs allows the effects of leadership to be verified more directly. On the one hand, if they are positive, they will be reflected in the fulfillment of production and profitability goals. Ideally, they will also manifest themselves in a harmonious and proactive work environment, as well as in the attitude and commitment of each worker.

If, on the other hand, the directors are not successful in running the company, the consequences do not take long to appear. Immediately, the symptoms begin with a lack of organization and prioritization of tasks, coupled with a drop in productivity. In addition, the relaxation of the discipline and the lack of motivation of the staff becomes evident.

The Importance Of Leadership In Small And Medium Businesses

Logically, in the case of negative consequences, SME leaders cannot hide behind the hierarchies or bureaucracies typical of large organizations. The collaborators perceive and are directly affected by the results of the directive management; so they might consider looking for other opportunities.

Also Read: Use Franchising To Expand Your Business