Leadership is a word often misused and misunderstood. Many of us know what it means, and can spot it when we see it, but there is an element of intangibility that comes with what makes people great at leadership, or not.
Some believe leaders are born not made, and there is much psychological and neurological evidence to support this.
On the other hand, Vince Lombardi claimed the opposite, and this was in reference to the fact that he believed anyone can achieve if they work hard enough.
But do great leaders stem from a mix of both?
Here Jim Thomas, Managing Director of PDW group discusses how to unearth great leadership potential in your business.
HowDo Businesses Properly Nurture Their Leaders, Both Present and Future?
Nurturing an environment that fosters leadership can be a big challenge, particularly for owners managing a business where their focus is typically on the day job. Figuring out how they grow sustainably, attract, retain and nurture top talent, all whilst ensuring the ongoing succession at senior level can be a huge conundrum.
Ironic in some ways, the obvious solution starts with setting the right example. There are many businesses that want to have good leaders for the future but are not being effectively lead in the present to bring this about!
Here are the top three critical principles great leaders do well:
- They set clear goals and paint a compelling picture of the future (often called the ‘vision). If properly communicated, this means that everyone in the business knows where the business is headed, why and how, and is motivated to be involved in that journey.
- They properly resource the business. In order for a business to achieve its short or long-term goals, it needs to have the right people in the right roles, the right processes and tools, and the right investment. Great leaders are responsible for understanding what is required here and providing within reason the resources to achieve the aims of the business.
- They ‘enable’ far more than they ‘disable’. This is about day to day behaviour and it covers many areas but includes key values such as being driven and humble, having integrity and building trust amongst the workforce, as well as key competencies such as all aspects of communication, empowerment, planning and decision making.
There is also much recent research around the importance of emotional intelligence as a key attribute of successful leaders, and their ability to flex effectively for the person and the situation at any time.
So, if your business seems to have a number of leaders who demonstrate the above functions and behaviours, then you will likely be in a good place. A business like this will probably already have its ‘radar on’ to develop potential in its people.
No leader is around forever though, so always being on the lookout for potential is a key leadership attribute in itself.
A truly great leader is committed to finding people better than themselves, and Jim Collins highlighted this in his iconic book, Good to Great.
How to Spot Leadership Cracks in Your Business
The issue for many SMEs and owner managed businesses is that leadership is often not consciously thought about. That doesn’t necessarily mean that the one or two people who started the businessor who run it now are not good leaders – it just means that it may result in working too much IN the business, as opposed to ON the business.
Too much working in the here and now, and not enough focus on the future.A lack of awareness of just how much impact the behaviour of the senior people has on those around them.
And finding someone better than the current leaders? That’s often not even on the radar at all, and the thought of that being the case is quite a scary thought and is often just ‘swept under the carpet and forgotten.
Solet’s assume that you work in a business that is probably part of the majority as described above. Leadership will be ‘there’ in some form, but there will probably be limited focus on it for the future.
The first loophole is to define what you want from your leaders. In other words, what does great leadership function and behaviour look and feel like at XYZ Company? Like anything in life, if you are clear on what you are looking for, this will make it much easier to find.
Your current leaders have a job to do as well here. They must be honest with themselves about how much they are walking the walk, and be humble enough to admit (openly) that there are gaps in their behaviours. After all, they are most likely the ones who will need to lead the business through whatever cultural shift is needed.
A greater focus on leadership capability and fitness for the future is like any change, not necessarily easy to do. Once you have clear definitions of leadership attributes, you can begin assessing people against them, and actively looking for them.
Whilst some use formal assessment days, others use a well-honed performance management process which results in potential being spotted in individuals and across the business. Others use a more informal and unofficial approach or just keeping their eyes and ears to the ground.
Whatever your method, the key point is that you must be able to measure and establish wherever possible how well individuals perform against your criteria and demonstrate the behaviours you ideally want.
If it’s potential you are looking for then this needs to be taken into account, as this is more subtle. People will not be ‘fully formed’ and you’ll have to dig beneath the surface. You may have to take some risks, put people under pressure, and maybe give them a project to lead when you’re not convinced they will succeed, and so on.
You’ll need to have some proper mechanisms for developing them, of pulling out their real potential. There are several avenues for this including job shadowing and secondments, formal mentoring, workshop solutions and having 1:1 coaching.
Whatever approaches you use to define, assess and develop, consider the following suggestions…
- The more robust you make your definitions, the more likely you are to find what you are looking for and the more likely they are to stand up to scrutiny
- The process and mechanisms for measurement, identification and selection of potential must be universally understood. 360-degree feedback is a very robust way of doing this for leaders, if properly managed.
- It must be real, a meritocracy and not just a front of smoke and mirrors
- Development must be personalised and targeted, and the impacts properly measured and assessed
- When it comes to developing behaviours, people need practise and feedback in a way that feels real. Theory alone rarely cuts it.
In summary, there is no ‘one size fits all’ in terms of what to look for, but there are definite traits that set great potential leaders apart from all others. So if you want to ‘back the right horses’ and invest effectively for the future, make sure you keep these traits in mind:
- Are team players but can equally stand alone, and have the confidence to be in the minority
- Have high self-belief and deal well with pressure
- Are excellent and considerate communicators
- Enjoy talking to people and seem comfortable about talking about their feelings
- Are curious, and seem far more interested in talking to others than talking about themselves
- Typically raise other people’s status by going out of their way to praise and thank them, rather than raising their own status by putting others down
- People who seem OK with taking slightly more of their share of the blame when things go wrong, and slightly less of their share of the fame when things go well in favour of congratulating others
- Don’t have an overly prominent ego, and are generally humble
- Are driven and committed to the company and the people
So if you find people in your organisation with a number of the above traits, if properly nurtured, they could be the next great leader of your business, and fundamental to securing the next ten or twenty years of successes.
About Jim Thomas, Managing Director Of PDW
Jim is a co-founder and co-owner of PDW Group, a Nottingham-based business that works to transform the behaviour and performance of people, teams and organisations. Prior to forming PDW group, Jim had 13 years of major brand corporate experience in senior management roles.
An unprecedented Black Friday: How can retailers prepare?
Retailers must invest heavily in their online presence and fight hard to remain competitive as a second lockdown stirs greater uncertainty
With an unprecedented Black Friday and Cyber Monday weekend on the horizon (27th – 30th November), eCommerce hosting and consultancy expert, Sonassi, advises retailers to strengthen their online presence and make the necessary preparations for a fatigue in consumer spending.
James Allen-Lewis, Development Director at Sonassi, explains: “This year’s golden quarter has squeezed together three of the biggest sales periods like never before, meaning retailers will have to fight harder than usual to remain competitive this Black Friday. With greater discounts over a longer period of time, alongside the fact that a second lockdown has moved everyone and everything online, retailers will be battling it out for a share of decreasing consumer spending.
“However, this sense of uncertainty should not deter merchants from implementing their sales strategies this Black Friday and Cyber Monday weekend. Instead, they must go further than simply providing online discounts and tackle challenges head on by re-focusing their efforts on creating a highly competitive user experience. Successful merchants will make the necessary preparations for a change in consumer demand and invest more heavily in their eCommerce infrastructure.
“One way in which retailers can do this is by using last year’s Black Friday as a case study to inspire their future response. For example, retailers should take note of the key consumer behaviours that transpired throughout last year’s mega peak in discounting and plan accordingly for the upcoming Black Friday and Cyber-Monday weekend.
“Tactics such as providing the ultimate online delivery service and secure payment methods will also be pivotal for retailers looking to survive a fatigue in online spending. Consumers will look to retailers who do not overpromise on items like next-day delivery and ensure their checkout process is safe and frictionless for all. It is the retailers who embrace this fact and meet the needs of the conscious consumer that will win their share of consumers wallets.
Allen-Lewis concludes: “With Black Friday and the build-up to Christmas just around the corner, retailers must adapt to changing consumer demand, invest more heavily in their eCommerce infrastructure and focus their efforts on creating the ultimate online experience. The only way to plan ahead amid challenging times is to listen to the needs of the customer.”
Optimistic outlook for 2021 public M&A
Optimism is returning and the outlook is positive for the Australian M&A market in 2021 after a COVID-induced crash in deal activity in 2020, according to Corrs Chambers Westgarth’s tenth M&A 2021 Outlook report.
The special report reveals that an environment of historically low interest rates positions M&A as a significant means of achieving growth and generating returns, including for private equity firms looking to deploy capital and strategic buyers focused on complementary acquisitions.
With the unprecedented challenge of the COVID-19 pandemic, global political instability and arguably the greatest economic challenge since the Great Depression, M&A 2021 Outlook details somewhat surprising trends emerging for the next 12 months and analyses a number of common COVID-19 myths and their influence on future M&A deal making.
Corrs’ detailed examination of the Australian M&A market draws on data taken from the firm’s proprietary database of transactions combined with in-depth research for the 12-month period ending 30 September 2020.
Key trends identified in the report include a rapid escalation in M&A levels and an increase in creativity in pricing and speed in closing deals, while also highlighting the critical need for support from target shareholders. Conditions also appear to be set for a continued rise in equity prices as a result of the ongoing influx of capital into Australian equity markets, making it imperative that bidders employ strategies to move quickly on M&A transactions.
Discussing the M&A 2021 Outlook, Corrs Head of Corporate, Sandy Mak, said “Despite a challenging year, our research indicates that 2021 could well see the volume and value of deals continue to grow. We are already witnessing this uptick in activity and while some industries and sectors are seeing a faster rebound than others, early indications are that the wider public M&A market will continue to strengthen over the coming months.”
Based on its detailed research, the M&A 2021 Outlook report discusses further key findings including:
- Deal volume and value is the lowest since 2016, however volumes have shown significant recovery since June 2020.
- More than 50% of deals in 2020 were ‘hostile’ and not recommended at the outset.
- 71% of deals over A$500 million were structured by way of a takeover – a significant increase from prior years – largely as a result of increased competition for assets through rival bids.
- Despite border closures and the tightening of foreign investment regimes, the percentage of deals with foreign bidders has increased materially since April 2020.
5 steps for SMEs to budget properly for the coming year
By Fabio Comminot, Head of Dealing, Switzerland at Ebury, one of Europe’s largest Fintechs, has provided a five-step guide to make sure budgeting is done on time.
During the challenging times of COVID-19, it is difficult to forecast orders and costs. This is especially true for SMEs that operate internationally and therefore are exposed to currency fluctuations and market movements. So budgeting is immensely important.
Autumn is budget season for most companies. Upcoming project costs, sales and fixed costs must be defined or forecasted. Budget planning should be as accurate as possible right from the start of the process to avoid unexpected consequences at the end of the year..
With the effects of the COVID pandemic it has become difficult for all companies, no matter their size or history, to plan and make sales forecasts. Early planning and hedging are especially important for companies that work internationally and are therefore particularly exposed to currency risk.
These five steps will help SMEs take the right measures for the coming financial year, in time for budget season:
Step 1: Estimate your costs or sales in foreign currencies
As difficult as it may seem, every company must estimate its expected fixed and variable costs for the coming year. Most companies can forecast their revenues based on experience or existing orders.
However, start-ups or young companies should also be able to at least estimate their costs including rents, insurance, wages and production costs. Special attention should be paid to costs or revenues that are spent or received in a foreign currency.
Step 2: Profit or cost assurance – define the strategy
As soon as an approximate plan for the coming year is in place, the company should consider the importance of currency management. Regular earnings or expenditures in foreign currencies are exposed to movements in exchange rates. If costs in a foreign currency are to be forecasted until the end of the year, the company needs to minimise volatility. This means that the exchange rate should be fixed so that there are no unexpected negative consequences at the end of the year.
Another option would be to protect the operating profit. Fluctuating exchange rates can rapidly ruin intended profit margins. In this case the company could aim to define the forecasted sales in the foreign currency and fix the margin based on this.
Step 3: Fix your budget rates
The budget is set, the currency management goals are defined, the major part is done. Now it is a matter of defining the budgeted rates for the various currencies based on the current exchange rate. A buffer of about 5% can be useful when doing this – for example. instead of fixing the exchange rate from US dollar to Swiss franc at the current 91 cent, a rate of 95 cent could be budgeted. In this way, the minimum budget rate is defined and any negative exchange rate movement can be at least partially compensated for.
Step 4: Define the hedging strategy
With the targets and the budget course set, the next questions are: What currency developments can be expected? What is the industry outlook? Is the order situation relatively secure? Or is there practically no empirical data?
This step is where Ebury can support the company. Our experts in FX markets help answer these questions and begin to define the individual hedging strategy.
Step 5: Ensure a flexible fit
It’s done: the measures have been defined, now it’s time for implementation.
Ebury will implement the previous steps and , so that the company focuses on its core business. In contrast to traditional financial services providers such as banks, Ebury constantly monitors international trade and political events in order to assist clients with strategy adjustments. The Ebury team is supported by state-of-the-art technology and international currency analysts. It makes no difference whether the changes are driven by the currency market or whether the company’s order situation itself is changing. This allows the SME to focus on its operational business, which is worth a lot in uncertain times like these.
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