The Strategic Growth Project paper intends to discuss the leadership challenges in my own business, The Urbanists, a Small Medium Enterprise (SME), which commences a management buyout. The structure of the project paper provides an overview of leadership concerns; both internal and external, as well as the social and economic factors The Urbanists face, as it grows. Assessment of the leadership strategies of the current directors and the styles of leadership required to influence the future success of the company, forms a significant component of the paper. The act of selecting and cultivating on the growth of the future leadership team are vital to the company’s success. Succession planning and talent management provide a long-term competitive advantage for the growth of the business. The key is investing the right amount of attention to leadership to ensure that the best practices and policies are identified and nurtured. While many organisations can maintain extensive lists of employees, who could at a moment’s notice step in to the shoes of executive directors or senior managers, a considerable number of newly appointed leaders fail spectacularly, and are ill prepared to perform the jobs for which they supposedly have been trained.
The findings reveal that The Urbanists is currently in a state of flux and requires an immediate practical step change. The primary goal is to demonstrate significant leadership models that can be put in place in the running of The Urbanists to bring out a positive outcome. There is an exploration of literature studies and research findings on widespread concern for leadership styles and approaches in SME’s. The paper will also deliberate key steps of succession planning for the new leadership team to consider as part of the company’s overall growth plan. Succession planning is a small means and hidebound to uncover and correct the skills gap that is capable of derailing even the most promising young leaders. Research regarding the factors behind the success or failure of an organisation reveals that majority of the companies succeed as a result of combining the practice of compelling leadership growth, strategic planning and talent management.
Discussions on possible solutions, useful identification criteria of the company leaders, as well as using strategic management tools and leadership models, to guide The Urbanists managers on improving leadership skills, are also reviewed. Educational training, various leadership styles and approaches are explored, and thus company leaders are capable of using them to solve problems and conflicts. In summary, scholars and research help us to conclude that understanding the benefits of best practice leadership, would be a fundamental element in overcoming leadership challenges in The Urbanists and other SME organisations, enabling sustainable growth.
The Urbanists, the business under discussion in this paper, is a Small Medium Enterprise (SME). The Urbanists is a multi-disciplinary consultancy providing services of town planning, urban design, master planning and landscape architecture. The business has been established for just over eleven years. Challenges facing the current and future Directors are outside influences which are to a point, uncontrollable. The Urbanists; considered as a subsidiary of the construction industry; is heavily influenced by the UK economy. Inflation, economic climate and the current UK’s BREXIT plans, all are factors to be taken into consideration for stability and profitability of The Urbanists and its future.
The Urbanists clients consist of high volume housebuilders, hedge funders, development companies and landowners. Clients and the business, are constrained by UK and Welsh Government and includes local councils. Environmental concerns, land purchase restrictions, planning and utilisation of sites, are challenges substantially affecting and influencing The Urbanists and other SME’s.
Within eleven years, The Urbanists is experiencing a second management buyout. The more management buyouts are experienced by companies, the more diverse the leaders and hence the leadership styles. For instance, the Urbanists has been led by a board of directors in conjunction with another company and a managing director between 2005 and 2014. When it was joined by a minority equity director in the year 2008, the leadership became abate since every leader wanted to have the final say and decide on how The Urbanists as a company should be operated. At this juncture the first management buy-out (MBO) commenced.
“Management buy-out is a practice whereby a management team decides to acquire the large portion or even the whole of a company from the major organization or private business people” (Haddow, Bullock, and Coppola, 2017).
A management buy-out, it is an exit strategy when selling a company. The company’s management team buys the business and take full control, ownership and grows the business by applying the expertise gained as an employee manager. A business which is undergoing management buyout is assured of various advantages from the management team. The internal procedures of running the company, the transfer of roles and responsibilities remain confidential to external sources. The business is also assured of existing clients, business partners, and a smooth transition because the new owner(s) is familiar with all the processes in the company. Moreover, a management buy-out acquisition has the ability to receive funding from various sources. Although managers are unlikely to have some or all of the necessary capital for an outright purchase, venture capitalists, private banks or private equity investors, look favourably on management buy-outs and are keen to provide funds, providing the terms are favourable. Lending money from financial institutions is also a consideration to retain an existing customer, provided they are willing to take the risk.
The primary reason as to why a management team would want to buy a company is because of the financial benefits accrued in the future growth of the organisation more directly compared to what the managers would receive as mere employees. Besides, in a situation where the management buyout is funded by private equity investor, there is an excellent possibility that the dedicated management group would receive an attractive price for the asset. Acquiring a business also saves the management team the costs of registering a new company, shareholder servicing, and listing expenses. The new company owners face less stringent regulatory and disclosure requirements as it would be if they were to register a new company from scratch. However, undertaking a management buy-out is exceptionally demanding. The risks and leadership challenges are significant even for the well run and successful company. Because managers have more details regarding the company compared to the outside shareholders, conflicts of interest could arise if the future of the business can be predicted to be better.
In the case of The Urbanists, the management team know a considerable amount of company information, including financials and therefore are in a position to negotiate a tough deal. However, the management team and current managing director, must be aware that management buy-outs also fail, as existing managers know the business too well and are unwilling to meet the asking price. If the seller is unwilling to compromise on price or negotiate an acceptable exit strategy, the company may be under threat of demise. This is a potential business threat for the managing director and employees of The Urbanists.
Leadership becomes a significant challenge in a management buy-out company. The most prominent challenge is not having a leader, and the confusion between ‘ownership’ and ‘employment.’ Some members of the management group might think that every person should have an equal say as the other. It is not always the case. Even though MBO’s typically express better corporate cultures compared to the non-management buyout businesses, there is still the need for a capable leader. An organisation can only be efficiently run if it has an individual who can make firm decisions on behalf of the other team members and the company. Leadership challenges in running a business pose the threat of stifling creativity, lowering productivity thus crippling the firm to the point of being non-viable.
The problems arise from personal conflicts among the leaders leading to dysfunctional team dynamics. The significantly affected group of businesses are the small and medium-sized enterprises (SMEs). Low demand, increased competition, economic, social and environmental competitive pressures from around the globe present a harsh environment for running an organisation. Many businesses are operating in a global economy. Thus, an expansion of potential clients, business associates, internal team members, and outside suppliers need to be interconnected.
Much of the current Urbanists leadership is focused on individual accomplishments and achievements, rather than on collaboration which is key to advancing the growth of the company in the current economy. Leadership style should emphasise more on mentoring, training and empowering the whole team, rather than focusing on an individual who only aims at winning the battle. The key is investing the right amount of attention to leadership to ensure that best practices and policies are identified and nurtured. While many firms can maintain extensive lists of employees, who could at a moment’s notice step into the shoes of the executive directors or senior managers, a considerable number of newly appointed leaders fail spectacularly, and are ill prepared to perform the jobs for which they supposedly have been trained to do. This could be viewed as an immediate challenge for The Urbanists if the newly formed leadership team do not have the skills required. Succession planning by The Urbanists current senior directors could have assisted to uncover and correct the skills gap that is capable of derailing even the most promising young leaders.
Research regarding the factors behind the success or failure of an organisation reveals that the majority of companies succeed as a result of combining the practice of compelling leadership growth, strategic planning and talent management. Succession planning, as I will expand on further in the paper, is not merely replacement, in contrast it focuses on developing team members and strengthening The Urbanists potential growth.
Strategic growth, value addition and accruing of revenue benefits is a primary goal of every business and organisation. The main aim of this study is to investigate the significance of leadership in succession planning and team management for strategic growth of small and medium-sized enterprises (SMEs), especially when they are experiencing change. The primary aim of small and medium-based businesses, including that of The Urbanists, is to increase value and make more profit in the competitive market. However, more strategic goals for this paper is organisational and business leadership, team building, and management. It explores how managers and leaders in top business positions in companies and organisations attribute to effective practices for business success. For small and medium-sized enterprises to experience strategic growth and development, the following objectives were discussed:
At first, the leadership and organisational theories used to explain the relationship between the attitudes expressed by business leaders, companies and moreover, The Urbanists leadership team and employees will be examined. More specifically, the study will assess the leadership styles of the current team of directors, as well as the required practices that will influence the future of the company. Various types of leadership styles appropriate for managing human resources will also be explained further. Despite the many leadership styles and practices, not every technique can be applied in every problematic situation facing The Urbanists.
The second objective is to carry out an investigative research which would identify and explore the leadership challenges that are facing The Urbanists. Effective leadership is substantially associated with the significant growth of companies. Ways in which such problems are hindering business growth are discussed. Nevertheless, the study is only a first attempt and therefore, due to time constraints, it does not investigate or analyse the causal association between the resulting variables.
A subsidiary objective would be to analyse specific leadership problems which global organisational managers and business leaders are facing. The aspects of the challenges will include economic, social, environmental, demographic, and global issues. Such difficulties are the perceived barriers to the implementation of sustainable business and leadership practices in most companies and organisations and especially the small and medium-sized enterprises.
Having identifying various leadership theories, styles and the challenges in business, the last objective will be to discuss measures or the appropriate leadership approaches which can be used to address such problems. Leadership and management are critical roles which require skills and proper experience. The objectives would help to provide an insight towards the possible recommendations and solutions to minimise the leadership challenges and offer support to the main approaches for practical business and leadership practices. The Urbanists is a state of flux, and is about to commence a management buy-out, a situation which requires a radicalised change. Thus, the paper seeks to demonstrate the practical leadership models that will assist The Urbanists to move forward and achieve positive results from the competitive market. Some of the challenges facing the business are beyond the influence of the leadership team. For instance, advancement in technology and globalisation are constant changes that are uncontrollable, thus requiring a change in attitude for both the leaders and the followers. We need to understand the dynamics of the proposed leadership traits that should complement each other. The proposed management buy-out will aim to relieve the company of restrictions to progress, providing the four retained directors are in harmony and are complementary to the business vision.
The concept of leadership has been dated as early as 1970 by Greenleaf. Since the publication of Greenleaf’s thoughts about leadership in 1970, several authors have attempted to explore and explain the paradigm of leadership styles, development, and challenges. Following the challenges facing The Urbanists, the type of leadership depicted by the current managing director could be defined as “authority-obedience manager –low people, high task” method of leadership (Blake & Mouton, 1984). Over the decades, various scholarly articles and books have been written about the nature of leadership, with significant emphasis being directed to identifying the core characteristics and personality traits of effective leaders (Bass, 1990). Management has been perceived as the act of controlling and planning on the utilisation of resources, while leadership has more to do with the motivation of the employees (Bass, 1990). Leadership is more verbose and is revealed through an individual’s behaviour in a company.
According to Sadler-Smith (1997), a review of leadership shows that there are critical leadership behaviours and competencies. Such competencies include: demonstrating confidence, problem-solving capabilities, being a role model for living, talking and walking the job. Effective leaders can develop and articulate a vision, listen, empower, represent and protect the team being led (Sadler-Smith, 1997). Various research studies and works regarding leadership in SME companies highlights various issues concerning effective leadership.
Nonetheless, little information concerning servant leadership has been directed to SMEs. “Such scholarly reviews have established that there is a positive influence of servant leadership to job satisfaction, employee achievement and significant efforts to improve the behavioural culture in many business companies” (Laub, 1999). Majority of researchers and scholars of leadership styles and challenges recommend further studies to investigate leadership styles and alternative approaches for SMEs. Even though some studies are not as exhaustive as possible, a great percentage of scholarly articles identified present several inappropriate leadership approaches and challenges in businesses and organisations. The studies range from small scale investigations of training centres to broad scale surveys of business practices and leadership problems in the UK based SMEs.
My research led me to a report presented by Richard Bolden, Centre for Leadership Studies, at Exeter University (2001). The study was conducted to examine the leadership development and challenges in SME’s across the South West England region. Data was collected by means of face to face interviews with leaders across the region. In addition, and contributions from leading London Business School academic, Prof. John Hunt, CBE (1937-2015) were also reviewed. The report revealed that there was a demand for leadership development within SME’s, particularly amongst managers and directors. The interviews were attempts to obtain current thoughts on leadership in SMEs. Such interviews have succeeded to yield views on the most critical aspects on how leadership development could be addressed. More information gathered from management buy-out funders emphasised the need for effective leadership styles in all sizes of organisations and more specifically addressing leadership development in SME’s (Bolden & Terry, 2000). According to research information, current leadership support from the government and other relevant institutions rarely reaches the small businesses. The reasoning could be attributed to differences in public and private sectors agendas, as well as inappropriate modes of delivery or exclusions.
A greater part of the research shows that leadership nature is dependent on an individual’s ability to exhibit certain cores attributes such as the ability to encourage and motivate others, team worker, time manager, and delegation skills. Research outcomes reveal that reluctance of many managers to receive training on formal leadership development is a potential problem to SME’s. According to John Adair, several managing directors are still applying the authority-obedience type of leadership. Such leaders can be interpreted to be inflexible and belong to the old-school hierarchy. Qualitative analysis of literary works shows that many SME organisational strategies are driven by the concern for survival and the operational demands of the competitive market.
Senior managers are putting much more emphasis on the significance of leadership experience ‘in-situ’ and professional training, rather than academic qualifications. Despite many factors for leadership challenges arising from external sources, studies have revealed a conclusion that solutions should come from within the organisation. Managers should focus on improved management and control of human resources as well as strategic growth. Various styles of leadership can be used to solve both the external and internal factors of leadership problems. Situational theory of leadership states that businesses and organisational managers can choose the suitable solution act depending on the situation or circumstance at hand. For instance, in a situation which needs the manager to be more experienced in the team, authoritarian leadership style could be used, while in a circumstance that demands skilled team members, then the common style of leadership may be most appropriate.
A meta-analysis of research information shows that strategic planning and talent growth can be developed through professional development to gain the effective skills and capabilities required in solving critical issues hence well-managed companies. Theories and approaches have been extensively opined to describe the characteristics and behavioural traits that make for successful leadership. Leadership traits include: enthusiasm, intelligence, initiative, courage, originality, effective communication, fair play among others.
Transformational leadership theory (Burns, 1978; Bass, 1985) appeals the ‘high road’ in creating and developing social values and personal purpose. Burns argues that leaders are capable of transforming the life of employees by changing thinking perceptions, aspirations, attributes, values and beliefs. For leaders to solve conflicts, encounter challenges and influence employees, they should be trustworthy, honest, courageous and other strong traits. Such qualities would enable the leaders to transform the workers. “There are four aspects of the theory of transformational leadership” (Bass, 1985). Identified as the ‘4I’s’ , the aspects which the leader can use to influence others include:
Individual consideration: the aspect emphasises that the leader is a role model, a mentor, and an instructor to who should pull the employee or team member into the group and encourage them to take part in the group tasks.
Intellectual stimulation is usually granted by the leader through engaging the team members into challenges of current tasks and orders. The leader would then inquire for ideas and solutions from the team. Such a method helps the members to contribute to the concerning issue, learn and be independent.
Inspiration: the manager provides an objective, a goal, or a vision for performing the task or being in the team. Through this aspect, the leader employs a charismatic type of leadership where h/she creates eagerness within the group.
Idealised influence: the leader influences and mentors the employees by displaying typical behavioural traits for instance honesty, trust, hard work, courage, and enthusiasm.
Burns transformational leadership may be too demanding for the employees because they will not be able to see beyond their status quo. Workers have to embrace the life of the leader. Also, the theory has not enlightened on how a transformational leader should live with other managers. Bass also assumes that every leader should have decent attributes or set of ethics. Thus, in a situation where the leader does not possess good character traits, then transformational leadership would be disastrous. Research scholars have also put forth approaches that explain the efficiency of administration. The “power-influence” approach describes leadership concerning power possessed by a manager and the level to which it is exercised. ‘Behaviour’ approach identifies the actions of an individual that contributes to efficient leadership (Wesley and Yuki, 1984; Ile, 1999). Many pieces of research hold to the belief that leadership qualities such as intelligence are inborn and thereby passed from parents to offspring. Thus, a combination of encounters and conducive environments nurture such inherent potentials to competent leaders. However, as a leader within an SME, the leader should be mindful to continually balance the ‘needs’ of the task, the team and the individual, a prominent reminder given by Adair’s Action-Centred Leadership, when leading people. (Adair, 1973).
Interlinking with leadership and the will to sustain business, further research notes the importance of The Urbanists new leadership team to consider succession planning, not replacement planning, as a significant factor of business growth. Succession planning as defined by Rothwell (2005) “is perhaps best understood as any effort designed to ensure the continued effective performance of an organization, division, department, or work group by making provision for the development, replacement, and strategic application of key people over time.” To achieve outstanding results using succession planning, The Urbanists and SME’s should embrace and develop an effective and focused strategy. Further publications define “succession planning is a proactive attempt to ensure that leadership in an organization will be continuous by identifying how these positions will be filled as both planned and unplanned departures occur” (Schmalzried & Fallon, 2007, p. 169).
Interestingly, on reviewing Elizabeth Harrin’s (2010) article in The Glasshammer website, it is stated that ‘… the number of managers available to step into leadership roles will drop dramatically in the coming years’ according to a study by Egon Zehnder International. The study states that the average company will be left with just one half of its talents by 2015, due to the fact that there are just not sufficient people with the right skills and experience to take the reigns for the future.
(excerpt from http://www.theglasshammer.com/news/2010/04/27/developing-future-leaders/). Therefore, succession planning is a crucial element to ensure leadership continuity within an organisation, without which the organisation will have no capable leaders at the helm for the future. As we are now in 2017, it is clear to see that the study findings are reflected in the current climate. The global recession noted in 2008, when many companies immediately stopped recruiting, almost wiped out a whole level of middle management and ceased professional training. This in turn has caused considerable skills shortage at management level and a noticeable lack of leadership ability of future company leaders.
In summary, the literature review has uncovered a vast range of leadership theories requiring further analyse. However, for The Urbanists management team, the review offers possible leadership solutions to conclude that leadership training and business growth support would be practical in overcoming leadership challenges ahead.
This chapter sets out the techniques used to gather information for this methodology to assist in the findings used in the project paper. This involved a review of leadership literature as described in scholarly articles and publications. Qualitative methods were used to conduct preliminary findings with The Urbanists proposed new leadership team.
A SWOT analysis was undertaken, as a basic but effective strategic management tool. Identifying Strengths, Weaknesses, Opportunities and Threats involves being realistic in order to distinguish where The Urbanists are today, and where the company could be in the future. The SWOT identified the following :
- Strengths: The Urbanists greatest asset is the people and the vibrant spirit which binds them into a team. It is this team spirit which will enable The Urbanists to deliver great results for one another and ultimately for clients. To provide a more focused leadership team, demonstrating future leadership values with clear vision and clear objectives.
- Weakness: The leadership in situ, considered too autocratic, has not invested in its employees or team development and therefore the business has seen little growth or profits in return. Lack of vision for future growth.
- Opportunities: The Management Buy Out should be viewed upon as a window of opportunity. The new leadership team, as part, of their vision, will be able to accelerate growth and form a happy and engaged team. To establish a leadership model that contains elements of style and contingency to take decisions in The Urbanists best interests.
- Threats: The consequences of not taking that opportunity of the management buy-out could be the demise of the company. If the seller is unwilling to compromise on price or negotiate an acceptable exit strategy, the company may be under threat of failure. This is a potential business threat for the managing director and employees of The Urbanists.
Business and leadership experts have been used to provide insight regarding leadership styles, challenges, and approaches to resolving leadership and management problems facing businesses and organisations. Variety of necessary papers, books, journals and newspapers containing research information on efficient business practices, ranging from small-scale investigations of leadership training programs to broad-scale of management procedures, policies, and challenges. Feedback from the interviewees highlighted that there is a ‘three-circle’ model of leadership. (Diagram 1.) “For a manager or group leader to be practical, three aspects must be addressed: the leader, the group, and the task” (Adair, 1973).
Diagram1. Adair, J (1973)
Both Belbin and Adair believed that the major constraint and internal factor hindering strategic growth in SMEs is a deficiency of critical skills. They also added that wherever the shortages are found, only the business enterprise can take initiatives of addressing such challenges. “The main constraint on the growth of SMEs is staffing and what stops you from growing the business is people, not technology or ideas” (Adair, 1973). Addressing criticism and eliminating complacency, SMEs are capable of expanding. As entrepreneur’s venture into business or start a company, they are driven by creativity. As the company develops, the role of the entrepreneur also broadens. The responsibilities increase from performing the work himself to being a leader or a manager who can control human resources. The contradiction is that being a creative business person does not guarantee effective leadership qualities. “one of the significant challenges, as a company develops, is how to maintain the driving force, values and business culture while moving from being an entrepreneur to an organization” (Adair, 1973).
The SWOT session concluded by requesting the leadership managers to give their views and ideas on the practical leadership approaches that can be used to deliver professional growth, and manage employee talents for the growth of the business. It was believed that effective leadership attributes could be acquired or released through experience, succession planning, and strategic professional development, as a result of training. These results will be considered further, in the following chapter.
The Urbanists currently presents a type of leadership that has not invested in ‘in-situ’ training or professional development. Lack of enthusiasm for succession planning and strategic development, as well as a poor vision for future growth, has led to a small rate of returns regarding employees and profits. The leadership style revealed by the company is one of multiple stages with a pyramid type of structure. The leadership is autocratic because the managing director assumes complete power over the equity and operations’ directors as well as the other team members.
According to Kubler-Ross (1969), a leader of any company would encounter the elements or stages of the Change Transition Curve. (Diagram 2). The managing director is clearly experiencing elements of this Transition Curve, in relation to the management buy-out. A possible interpretation of this model is that he has experienced the ‘shock’ element from the request to depart from his business. He had a five-year exit plan in his own mind, now this has been challenged and the request for his exit reduced to 12 months. The next stage, ‘denial’. He had already concluded in his own mind that current directors were not ready to take on the company or of removing him from his position. The ‘frustration’ has been apparent in his change in attitude, becoming emotional, abrupt in conversation with directors. He has underestimated their capabilities and need for change and perhaps assume he feels, he is no longer in the controlling position. Having had time to review his exit from the company earlier than expected, he views this could be to his advantage. He has escalated the urgency and wants to see how the proposed leadership team respond to his expectations as he endeavours to regain control. Within time, it will become apparent that he will be at the ‘acceptance’ stage of the model. This will be the opportunity of ‘willing buyer and willing seller’ agreeing on a strategy and financial plan for his exit. This will be his focus to continue to commit to the business, in order to receive his final reward and relinquish his position.
Diagram 2. Change Transition Curve, Kubler-Ross (1969)
Approaches to solving leadership problems
We have reviewed the past and where we are now, however, what forthcoming leadership styles should the new leadership team consider and apply to transform the company?
Practical and flexible leadership by The Urbanists leadership team, is crucial to accomplishing the management change required in the company. Such changes occur in management policies and practices, workforce deployment, work design and flow to foster safety culture and effective organisational behaviour within the organisation. Therefore, the employees in top leadership positions rely on the traditional means of management and leadership, substantive changes would be hard to achieve and implement. The leadership team need to have the responsibility to frequently conduct ongoing and perhaps contradictory discussions with the employees regarding the rapidly changing internal and external factors in the workplace.
To review the adaptive styles of leadership required, we can review ‘Common Leadership Traits’ as documented in Harvard Business Review, Manager’s Handbook, (2017), it identifies that leadership is a learnable skill set. However, two of the new leadership team directors, will have a steeper learning curve than the equity director and the operations director.
The Urbanists is experiencing a significant change and strategic planning plays a vital role in the success of the company. The Urbanists new leadership team, must recognise it takes a team of individuals with varying traits and complimentary leadership abilities, to forecast the productive outcome. The leadership team should comprise of team leaders or managers who share the same vision for the success of the company. “Strategic managers are the executives responsible for the overall performance of the organization” (Stahl and Grigsby, 1997). Within a company, not just The Urbanists, strategic managers direct the company toward increased success of the business, based upon the culture and management style. Several strategic management styles can be identified to facilitate the success of The Urbanists overall vision, such as a Management by Objective (MBO) approach, or Management by Results (MBR), (Drucker, 1954). With this approach, the leadership team includes objectives or ideas from all staff members. It is a process that allows leaders and managers to review workloads, work more effectively and allows the team as a whole, achieve their objectives and appreciate their accomplishments. In turn, it re-enforces a positive work environment and creates a sense of achievement. “Never push loyal people to the point where they don’t give a damn.” Drucker, P. (1909 – 2005). A poignant quote I really think the new leadership team should embrace.
Further research led me to deliberate the benefits of a more democratic and charismatic type of leadership such as House’s Charismatic Leadership Theory. (House, 1976). A leadership team that is charismatic and democratic, engages the team members in decision-making and projects, and the manager inspires and motivates eagerness for the team members to move forward. The Urbanists are a team of 12 and there is a close relationship between leaders and followers. If the leadership team used the concept of this model, the result would see the whole team become part of a collective with common aim and purpose in which the business is able to thrive.
As mentioned previously in the project paper, transformational leadership approach majorly aims to attain a collective goal from the workers. Even though it has been difficult to practice the approach, the hyper-changing nature in businesses and organisations may present more opportunities rather than in calmer situations (Daft, 2014). It is an important measure to attract top-talent and respond flexibly to changes. It transforms all workers including the managers and thus efficient in achieving widespread and critical modifications significant in businesses and organisations. Practicing transformational leadership would call for the leadership team to involve managers and employees in decision making based on the commonly held goal of the company. Working as a team helps the leaders to communicate and teach the workers about the company’s common purpose. Managers can make use of this technique through articulating their aims and ambitions based on innovation and a developed organisational culture of change.
A considered initiative for the new leadership team would be to adopt a Transformational Leadership Theory, developed by Burns (1978) and later enhanced by Bass (1985, 1998). Reviewing the research of Bernard Bass, it is documented that he expanded Burns’ work by providing a more detailed version of Transformational Leadership Theory. Bass identified what he called the ‘4Is’ Bass & Bass (2008) as already reflected on in the literature review. The theories look to the leadership team to create a clear vision with clear objectives. Articulating a vision of the business without the current Managing Director will be a challenge in itself. It will be necessary for employees to see the benefit of this change, in order for them to ‘buy-in’ and remain loyal to the new leadership team. The leadership team will need to be mindful of the impact of this on their employees and be ready to overcome their fears, doubts and possible resistance. It will be imperative to focus on the benefits of empowerment and trust, making the future leadership values and beliefs concise and of high value. Demonstrating consistency of behaviour to the employees will increase trust, a key factor, and therefore make the transition easier. At a practical level bringing a link to the theories discussed and empowering the team, the project paper demonstrated the use of the SWOT analysis management tool. This tool could be used by the whole team to handle and manage the changing factors in the company more effectively. Task groups could be formed to be responsible for company objectives, for example, operations processes, IT facilitation, marketing and innovation projects. In turn the analysis would highlight strengths, weakness, opportunity and potential threats, yet these can be dealt with more intensely and task groups have confidence in presenting their findings without fear of repercussion, giving a sense of accomplishment and adding value to their positions and benefiting the company.
Looking at future business growth of The Urbanists, whilst embracing leadership approaches as a key area, talent management and succession planning must form part of their strategic plan. There are many opportunities for in-demand talented personnel in the world today. It is a challenge for companies to recruit and retain top experienced performers. The Urbanists leadership team would need to develop a robust succession plan which in itself presents another leadership challenge. They would need to motivate workers in a practical way, prepare and support the employee for their responsibilities. As presented by William J Rothwell, (2015) in his publication, he discusses Ten Key Steps to Effective Succession Planning, (Diagram3.)
Rothwell, W.J.(2015) Ten Key Steps to Effective Succession Planning
Succession planning is a complex task and must be viewed by the new leadership team as an ongoing process. Whatever the approach to be used, the basic steps of succession planning are almost always similar. This cyclical process is designed to provide continuity through timely, adaptive, and ongoing change. The Urbanists leadership team can work through each element and apply to the business future growth. Each employee can develop their career path and role to accomplishing The Urbanists mission which should bring potential new leaders to the forefront. This is vast subject that is deemed for further , future dated, in-depth discussion.
Whilst I have focused on The Urbanists and their leadership challenges, I am also mindful that global factors are all having significant influence on the business world and will at some level affect The Urbanists. Through my research to gain a broader perspective of challenges facing leaders in SME businesses and organisations, prominent factors include globalisation, diversity in the workplace, the developing world, sustainability, technology, virtual leadership among others:
Globalisation: a majority of businesses are turning global. The concept involves tapping into the human resources in multiple countries. The managers and leaders in automation organisations are faced with the challenge of controlling an extended workplace and the aftermath of acquisitions, which is seemingly a fact of life in the business automation sector.
Workplace diversity is a significant challenge to organisational leaders and business managers. Employee diversity is of two categories. The primary type is characterised by the major differences such as age, gender, and sexual orientation. The secondary dimensions are the unnoticeable traits such as religion, education and income level. Even though diversity in the workplace offers several benefits to the company, the leaders must, and managers must dedicate more of their time to solving diverse problems and creating a cohesive work environment for the employees.
Continuous change: Several activities are taking place to transform the world. Advancement in technology is occurring at a head-spinning speed. Globalisation and environmental problems are almost or have already reached the tipping point. The demographic transformations indicate issues to organisations and even countries with aging people and shrinking human workforce. Companies are introducing new strategies and business models all the time. The confusion, anxiety, frustrations, and over-personalisation brought by such changes are inevitable. Business leaders and managers should know how to adopt change and avoid the comfort brought about by status quo. Therefore, managers and leaders in the business industry should remain updated and on top of the business industry, stay open and flexible to adopt change. Reading business blogs, joining relevant groups on social media, participating in educational and professional development, are all key requirements for business leaders since the business world is consistently evolving and presenting new pressures each day.
In conclusion, it is apparent and without doubt, there are tough challenges ahead for The Urbanists leadership team. The management buy-out should be viewed upon as a window of opportunity. The consequences of not taking the opportunity could be the demise of the company. However, the consequences of rushing change with poor planning and not setting the foundations correctly would also be disastrous in the long term. The company could also risk failure.
As my research in creating this project paper has tried to demonstrate, leadership challenges are interconnected. Appreciating there are so many documented theories, so many management tools available, if The Urbanists leadership team are able to collectively agree aspirations for the success of the company, with clear vision and set foundations, a strategy process can begin.
Using the SWOT analysis to understand the current position, the leadership team identified, undeniably, that the current managing director is authoritative and commanding, however , noticeably becoming less able to influence others. The SWOT analysis identified that a starting point for the leadership team would be to use Adair’s Action-Centred leadership model. A model they could relate to simply, and put into effect almost immediately. However, for continued sustainable growth of the business, the new leadership team must recognise the benefits of the impact of the longer term transformational change model and the understanding of ‘4Is’. They will then be able to influence employee behaviour, reflecting a positive impact on the company. To complement the leadership styles, as the company diversifies, the leadership style must remain coherent and yet consistent. Effective leadership, with elements of influence as demonstrated with House’s Charismatic Leadership Theory House, RJ (1976), ensures both leaders and employees needs are met. Robust succession planning ensures that a company has the right personnel in place to sustain the company both now and in the future. Succession planning should not be static. It should be seen as a management strategy to take a business inventory, reviewing resources and better identify existing or preventable future gaps, as discussed earlier in the paper.
In global terms, SME’s and corporate organisations, often have their strength reflected through its leadership. Leaders and managers are the driving force towards the success of the business. Leaders create the milieu of enthusiasm, optimism, collaboration and inspiration among the workers by collectively pursuing the company’s joint goals. However, effective leadership has been the missing link in businesses especially SMEs encountering changes such as management buy-out. The outcomes of poor leadership are too critical for The Urbanists leadership team to ignore. As the paper explored on the leadership challenges affecting business and organisations, a conclusion can be drawn that decision making is an attribute of leaders that have a significant influence on succession planning, creativity and talent management thus influencing the strategic growth if the company. Findings indicated that the most exceptional leadership challenge facing The Urbanists is how to address change. Therefore, there is the need for creativity, innovation and strategic growth as a key for survival of The Urbanists. My perspective concludes, The Urbanists leadership team do have the strength of leadership traits and ethnicity, to overcome the challenges ahead, ensuring in continued business growth and success within the market place.
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Further Reading :
Franco, M. and Matos, P.G., (2015). Leadership styles in SMEs: a mixed-method approach. International Entrepreneurship and Management Journal, 11(2), pp.425-451.
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Ready or not, the future’s coming. [Cover Story]. ENR: Engineering News-Record, 259
‘Leadership is not about power or force, it’s about influence. You don’t want an army of conscripts as followers; you want an army of volunteers’ McGrath.J & Bates, B. (2013).
- Planning for the unknown or unexpected, is important to ensure that the business continues to grow and thrive as it was envisioned. My action points are proposed as follow:
- Evaluate leadership style – flexibility and the ability to adapt to change is critical for leadership success and the ability to alter leadership style to meet the changing needs of the business.
- Establish and share vision and values – the leadership team must be collective to convey vision, values and mission. Inspire, strengthen and empower the existing team and enthuse and attract new talent.
- Create a thirst for leadership – the new leadership team should create an environment where the team feel they can attain and exercise leadership responsibilities, not by hieratical means. Succession planning is not static, yet an on-going strategic process.
- Allow creativity to be expressed within the team – allow task groups to evolve and develop ideas for the business and working environment. Provide guidance for growth following mistakes. Mistakes provide opportunity for training and understanding individual and company development.
- Maximise opportunities for success – a primary responsibility of the new leadership team.
Equally, provide a measurement for success – realise the importance of a diverse, strong leadership team. Realise the importance of working smart, knowing it is not necessarily the quantity of work, but how well The Urbanists as a collaborative team, leaders included, do it.
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