Leading light

One essential and least-understood ingredient to building a successful business from scratch is leadership.
Leaders attract followers. They do not exert power but have reciprocal relationships with these followers and influence team behaviour. Individuals tend to prefer working in teams with a clear leader rather than without one.

But leadership is not management, in my view. Leaders set a vision for the business that team members readily follow. Management directs people and controls resources to facilitate the objectives set by the leadership. Managers can maintain a status quo whereas leaders facilitate change and are therefore essential to building or saving a business.

Today’s corporate wisdom suggests the most effective business leaders tend to have very strong qualities in one area rather than being of average ability in a number of areas. Therefore high-performing businesses need leadership teams with collaborative networks.

Typically, well-known historic figures were natural leaders. However, these skills can be acquired. I’ve seen individuals who were once wallflowers develop effective leadership qualities rising through their organisations with the support of those around them. Each one of them following a particular style:

• Authoritarian leaders rely on their position to direct their team. They are autocratic and highly controlling. This style is more about managing than leading and does not build sustainable teams. It may be appropriate when dealing with a crisis.
• Transformational leaders are charismatic and inspire their team, exercising less control and encouraging ideas from others. They looks at the big picture and need support from others who look after the details. This leader is most likely to influence the growth of a successful entrepreneurial business with a loyal workforce.
• Participative leaders take a consultative approach and seek consensus, so their team members feel involved. The disadvantage
  is that decision-making can be slow and overly cautious thus limiting growth.

Whatever style suits the business or situation, the best leaders always focus on an individual’s talent, celebrate differences and work hard to avoid unconscious bias.

Paving the way Whether innate or learned, the best leaders need the following key attributes: Trust: effective leaders are trusted and consistently truthful. Fairness: this works with trust. Team members respect leaders who take tough decisions but are fair in how they treat individuals. Absent ego: leave arrogance at the door. Unassuming, quietly confident individuals make their team members and visitors feel comfortable. They are not threatened by other leaders and welcome challenge. The leader uses ‘we’ not ‘I’. Strong listening skills: actively listening rather than instructing is time well spent. Sensitivity: understand others’ feelings and offer empathy. Strong leaders enjoy nurturing others. They will take time to get to know every member of their team from the receptionist to the senior manager, regularly spending a few minutes at the water cooler or photocopier getting to know the team. Initiative and courage: be brave and consistently show initiative, even in difficult situations. Show you’re willing to take tough decisions and have a sense of urgency.  Open-mindedness: stay open to the views of others. Keep your opinions to yourself until you have heard those of others, and be flexible. Strong leaders are willing to change their view and strategy. They seek regular feedback from colleagues. Positive nature: be consistently productive and positive; believe in others.

Geraint Jones is private client partner at Reeves

He writes the regular in-practice article on doing business for Private Client Adviser