Professional Management and Leadership
Prepared by: Dr Nazatul Shima Abdul Rani (PhD)
Introduction to Leadership
Even established businesses need vigorous leadership to avoid stagnation or failure. As a business grows, it's crucial to integrate the efforts of employees and provide new direction. Leadership involves pointing the way and inspiring others to follow willingly, focusing on the destination more than the details of the journey.
"Leadership to me means leaning forward, looking ahead, trying to improve, being fired up about what you’re doing and being able to communicate that, verbally and nonverbally, in those around you." – Richard Barton, CEO, Expedia.com
Learning Outcomes
After reviewing this material, you should be able to:
- Discuss the entrepreneur’s leadership role.
- Explain the small business management process and its unique features.
- Identify the managerial tasks of entrepreneurs.
- Describe the problem of time pressure and suggest solutions.
- Outline the various types of outside management assistance.
Leadership Qualities of Founders
An entrepreneur is a trailblazer. Key traits for a new startup founder include:
- Tolerance for ambiguity: The ability to handle the uncertainty involved in starting a new business.
- Adaptability: Being able to adjust to unforeseen problems and opportunities.
What Makes a Leader Effective?
Effective leadership isn't about having a flashy, charismatic personality. It's about:
- The ability to take charge and inspire others.
- A strong determination to lead the company to success.
- Focusing on reaching business goals rather than personality.
Leadership Styles & Empowerment
Empowerment
Empowerment is giving employees the authority to make decisions or take actions on their own. This is often achieved through work teams, which are groups of employees with the freedom to function without close supervision.
Leaders Shape the Culture
A company's culture unfolds over its lifetime and reflects the founder's character and style. Leaders can deliberately shape this culture by:
- Using physical design to influence how people interact and what they achieve.
- Hiring for fit: Selecting new employees based on their attitude and compatibility with the company's personality.
- Fostering a positive "can-do" attitude, which is crucial for success.
The Small Firm Management Process
An entrepreneur's role changes as the business grows. They must transition from a founder to a professional manager who uses systematic, analytical methods. Small business managers are often generalists who may lack support in specialized areas like marketing or finance, but can overcome this by seeking outside assistance.
Organizational Stages of Small Business Growth
Stage 1: One-Person Operation
The founder does everything.
Stage 2: Player-Coach
The founder both manages and continues to do basic work.
Stage 3: Intermediate Supervision
The founder hires managers to supervise employees.
Stage 4: Formal Organization
The company adopts a formal structure with departments and procedures.
Key Managerial Responsibilities
Planning: Creating long-range (strategic) and short-range plans, including budgets.
Organizing: Creating a structure, often evolving from an unplanned structure to a formal chain of command.
Delegating: Granting subordinates the right to act or make decisions.
Controlling: Establishing standards and ensuring they are met through preventive, concurrent, and corrective controls.
Communicating: Fostering open dialogue between managers and employees.
Negotiating: Using two-way communication to resolve differences and reach agreements.
Personal Time Management
Business owners often work 60 to 80 hours per week, leading to time pressure and inefficient work performance. They can become too busy to see sales reps, read trade literature, or listen to employees.
Time Savers for Busy Managers
- Analyze how time is spent and eliminate wasteful practices.
- Create daily written plans or "to-do lists".
- Establish clear priorities and maintain self-discipline.
- Effectively use technology like cell phones, e-mail, and the Internet.
Need for Outside Assistance
Entrepreneurs often experience a sense of loneliness and lack opportunities to share ideas. Outside assistance provides:
- An objective point of view and new ideas.
- Knowledge of methods and solutions beyond the entrepreneur's experience.
- A way to overcome managerial deficiencies.
Sources of Management Assistance
- SMIDEC, MDEC, SIRIM
- Management Consultants
- Small business networks
- Business Incubators
- Other professional services (legal, accounting)
Case Study: Sarah's Media Sales
Background: Sarah's media sales business grew from a spare bedroom to nearly 200 employees in 3.5 years. She is now wondering if she has the talent to continue its success, as problems are becoming increasingly complicated.
Question 1: What practices or procedures will Sullivan need to adopt?
As the business grows, Sarah will need to shift from case-by-case problem solving to a more formal structure. This includes implementing formal planning processes, creating a clear organizational structure (like a chain of command), delegating authority to managers, and establishing control systems to monitor performance.
Question 2: What resources can Sullivan use for feedback?
Sarah can seek outside management assistance. This could include hiring a management consultant, joining a small business network or peer group, or creating an advisory board. These resources can provide objective feedback, help her assess her competence, and offer solutions for the challenges of her growing business.