Who’s The Boss

by

Joan M. Gruber Ridley, CFP®, CEPA®

Most founders of privately held companies established their enterprise because they wanted to be in charge. What they were doing before they took command is often a clue as to what drives their leadership style. Some grew up in the family business and were groomed for the position of leadership without ever considering other options. Others came from the corporate world. Some were born with the entrepreneurial gene and never really fit well in the corporate world. Some are truly visionaries and can clearly see what they wish to create. Regardless of where they came from or why they established their own company, all need to develop quality leadership skills in order to create and sustain an enterprise with real lasting value.

This short article cannot examine all types of leadership. We will take a look at a few leadership styles that have a direct impact on the success of lower midmarket privately held businesses. I will reference some excellent books on the subject for readers who wish to learn more. They provide great information in an easy-to-read format that even the busiest business owner can find time to read.

The Under Delegator

This style is easy to spot. He or she might hire people to do a job, and might even delegate responsibilities. The problem is he micro-manages everything or will not delegate the really important tasks that ought to be delegated according to the employee’s job description. One downside of this style is that employees get discouraged, demoralized, and remain unchallenged to further develop their skills. They are often denied an opportunity to feel a real sense of accomplishment and career growth. This leadership style is often seen in family owned businesses where parents or other key people do not give younger family members an opportunity to grow. This is an important part of the grooming process for the next generation of leaders. This leadership style can undermine the future viability and value of the company.

The Erratic Delegator

This is the hesitant leader who might easily delegate, but then sometimes gets impatient and does the job himself or herself. One short-coming of this leader is that he sometimes fails to tell an employee exactly what he wants or how he wants the job to be done, causing hesitancy on the employee’s part. The employee sometimes reads the lack of direction from the business owner as an invitation to take charge, but when he takes charge, he makes incorrect decisions. Because of this leader’s erratic and inconsistent leadership behavior,he or she will sometimes often meet with resistance from employees when he tries to reclaim his power. This leadership style is a morale killer that creates an unstable chain of command. It also invites quality control issues due to potential gaps and overlaps in service or product delivery. It often results in inefficiency and profitability issues. Valuation suffers as a result.

The Dive Bomber

This style might not be so easy to spot. The business owner appears to be totally in control. He or she thrives in the world of ideas, often dreaming up new services, products, and company direction and operations. He drops these ideas from 30,000 feet to employees, giving them major latitude to develop and implement these ideas. He over-delegates the direction of, and the running of, his company. In some cases perhaps he has promoted himself prematurely to Chairman of the Board. In a large enterprise, delegation of this magnitude can work. Unfortunately in a smaller company, when these ideas are dropped like bombs in rapid fire, this style can be a disaster. This is especially the case when there is no well-thought-out written strategic business plan that lays out a clear direction for what and when initiatives will be implemented, what resources will be allocated, what quality control mechanisms will be installed, and how initiatives will be monitored against well - defined measurements for success. What ensues is a company out of control because the owner is out of control. He either has no control over his erratic energy, or, sometimes he is just plain burned out. This business owner is often moving too quickly from being a business owner to the role of investor, as described by Robert Kiyosaki. When the company does not have a clear direction and the owner over-delegates his responsibilities of company oversight, employees will fill the vacuum and attempt to take control by setting company policy and decision-making. Employees will often get into a power struggle between themselves. Without a stable organizational chart, clear job descriptions, and a strong leadership function at the top with effective oversight, this company is very unstable. Value will not be sustained unless major changes are made.

Characteristics of Strong Leadership

Here are some behaviors exhibited by entrepreneurs with good leadership skills:

Knows how to tactfully solicit input from key people, reserving the final decisions about company direction and method of implementation for himself.
Leads the data gathering and development of a sound written strategic business plan (with assistance from a professional business strategic planner) that he overseas the writing of, and then presents to the employees. He does not delegate the oversight of the development of the plan to employees
Is clear about the initiatives he wants to accomplish, when, how, what resources will be needed and the measurement of a successful outcome before delegating the implementation of the initiative of the plan to employees
Is clear about what services and products will be offered: when, and to what market; what profitability to expect; and how to compensate the sales people for their efforts based on the profitability anticipated from each product and service
Is skilled at understanding the different communication styles of key people and communicating with them in an appropriate way to maximize their productivity and contribution
Is more than just a thought leader. He oversees all aspects of the company, with appropriate direct reports to himself and to his management team

How to Develop Strong Effective Leadership Skills

Mentors can help groom a future CEO. Sometimes members of the Board of Directors can be good mentors, but they must be chosen carefully to be certain there is no destructive hidden agenda. Another good resource for the business owner is a CEO or Business Coach. Coaches come from different backgrounds and possess different skill sets so select one whose expertise is to develop leaders. One way to find a coach is to search on the internet, and then interview a few coaches and their clients to be sure you have found the right one for you. Be prepared to humble yourself and make changes because a quality coach will hold your feet to the fire. Without quality leadership, it is unlikely that any organization can grow in the long run, but with the right information and guidance, leadership skills can be developed and improved.