Business Case Studies

How Leadership at all Levels Makes the Difference with SMEs

Smaller organisations rely on their team to bring it home. The leader in the organisation who might also be the founder too, isn’t going to be there for every minor issue or problem. Leadership from team leaders within departments up to individual department heads and upper-level management must be capable, efficient and prompt in any action they take.

Unlike huge organisations with a workforce that dwarfs most SMEs, companies in the first few years of their existence don’t really have the option to throw 50 people at problem – they might not have 50 people in the office. It’s a challenge that’s unique to smaller organisations that must do more with less and are more reliant on their leaders to deliver when needed.

Can an SME Operate Using a ‘Promote from Within’ Policy?

When there’s a smaller pool of high-quality staff already employed by the company, is it possible to have a stated policy of seeking to promote from within the organisation wherever possible? The honest answer to this question is: it depends!

It’s certainly much quicker than going outside the business to recruit someone. It’s also cheaper in many cases because recruitment agencies are expensive with placement fees and other costs levied. At least promoting internally and then filling a vacant junior position is the less expensive way to go because some recruitment fees are calculated based on the salary.

There is also some degree of truth in that interviewing someone for a job and checking their previous references still doesn’t really tell you what they’ll be like on the job. They might not fit in with the culture in the office or bump heads with people. However, when someone has already made their bones in the company and is a known quantity, it’s easier to see them at a more senior level because their natural talents, abilities and personality are already quite obvious.

Where is Leadership Most Crucial for SMEs?

It’s a fact that most SMEs don’t have easy access to financial capital. They have a much tougher time walking down to the bank and asking their not-so-friendly bank manager for a business loan. There are many hoops to jump through and it’s highly questionable whether the company will get approved. The owner will often be expected to give personal guarantees against the loan which breaches any limited liability protection with a UK limited company too; if the business loan isn’t repaid, the bank can come after their house.

Not only is access to capital not as easy for smaller businesses, but there are greater risks. When an employee at the departmental or upper-level leadership position messes up, the financial cost to the company could be a game changer or a game ender.

Smaller businesses simply don’t have access to emergency funding, or if they do, it’s sometimes insufficient to weather a financial loss from a bad business decision by a junior manager. Larger businesses have access to a variety of funding which allows them to trade their way out of difficulty. It’s not a level playing field out there.

How Can Department Heads Be Better Prepared for Management?

For SMEs, it’s difficult to attract the high calibre of staff that their larger brethren are able to. When working for a huge organisation, moving to a much smaller one is a tough sell in a future job interview. Recruits are aware of this, so once they’ve worked for big household brands, they tend to stick with that level of organisation or one with an even higher profile.

Understanding this reality in recruiting with management positions should encourage the company’s leadership to invest in managerial training to a greater degree. Simply put, if the higher calibre people aren’t willing to work for smaller organisations, then it’s incumbent on the head of the organisation to ensure managers grow within their role to become more than they are. It’s also more economical for the company – top calibre staff are very expensive to recruit and employ long-term

What Training Makes Sense for Managers Who Shape Their Team?

The ILM Level 7 Coaching course from thebcfgroup.co.uk is a good example of the type of training that would be extremely useful for managers. These ILM Level 7 Executive Coaching Courses span a year and cover many aspects of managing and learning to coach lower-level staff to eventually become leaders in their own right.

The idea with ILM Level 7 Qualifications in Executive Coaching and Mentoring is to embolden managers by giving them the skills to be a mentor and coach to their team. They will learn to individually encourage and shape the personal growth of members of staff who wish to eventually move up into more senior roles within the company.

Unlike with shorter courses run at local colleges, a commitment of 3 hours a week to the ILM Level 7 Certificate in Executive Coaching and Mentoring program provides something for both the manager and their direct reports too. With an ILM Level 7 Coaching Certificate on their wall, the manager feels a sense of pride and accomplishment while staff get better mentoring to feel more worthwhile.

Doubling Down on Training is a Win-Win

When the leader of an SME doubles down on the talent they already have at the executive level, they serve their interests well. Deftly handling the reality that recruiting the best isn’t yet possible, they seek to make strides by improving the workforce they already have. This is an excellent approach because staff can see that there are ongoing training initiatives and definite plans in place to provide people at all levels with the chance to become more than they are today.

Staff feel heard when they talk about their growth at their annual performance review and know the company is investing right alongside them.  For company owners, it’s a win-win that’s difficult to ignore.

Leadership matters in SMEs. A better educated and talented workforce performs better with fewer mistakes. This protects the interests of the shareholders because it lowers costs while reducing the risk of a fatal mistake by an undertrained staff member.