Leadership – Building Business Value
Leadership is the most important job of a business owner. It’s easy to get stuck in the day to day and forget what adds value to the business. This adds value to the business only if it is not dependancy. If you are constantly reacting to the events of the day, you aren’t leading. And if you aren’t leading your team, who is?
Timpson’s – a Leadership Example
Here in the UK there is a business that provides a positive employee experience. And not just because of the example shown below. Timpsons, a key-cutter and cobbler. It is still family run by James Timpson, who is following in his father’s footsteps of being a great boss!
Timpsons’ employees enjoy several benefits including use of staff holiday cottages and never having to work on their birthday. It’s also a company that takes social responsibility to another level. They offer ex-offenders a chance to show they have reformed. About 40% of their employees have served custodial sentences. One employee particularly will agree she has a great boss. When she asked to borrow his Rolls Royce for her wedding day, he replied of course!
Direction not dictatorship
Being a great boss is not just about giving into every whim of your employees. In fact many times it’s about not bending to your employees demands. Employees expect leadership and direction for the senior management team whether they are the business owners or not. And leadership is not the same as dictatorship.
Ask any entrepreneur who in their business cares about the company as much as they do and there will be a resoundingly consistent “no one!” That’s not to say that your employees don’t care. It just recognises that they don’t have as much skin in the game as the owners so. So how do you maximise the passion within your workforce?
Being a good boss and a good leader starts with the four C’s:
- consistency and
Is your team are clear about what they are doing? Do they know where they are headed? Can they explain why a particular course of action is being followed? If they are more informed they will be able to add more value. When they are working towards a common goal, they anticipate the needs of the business better. Share the vision of where you want the business to be and why. This helps your team to buy into that future. It gives them the opportunity to align their personal goals with the business.
Use visible targets to show how employees own personal rewards align with growth and profitability. Inefficiencies created by working against each other are highlighted and more easily removed. An example of this is paying commission on revenue generated without making sure that the sale is ultimately profitable.
I have seen many a sales man leaving a trail of destruction behind him as he forges forward generating sale after sale. If these sales have such low margin and high customer service costs they don’t contribute to overheads. They consume any sliver of profitability in the deal. This results in cash flow challenges, higher debtors, poor financial performance and higher staff turnover in the whole business.
Whilst many an entrepreneur has a high tolerance for ambiguity and risk, most people do not. Employees work for a company because they like the certainty of a regular income. They lack the appetite for risk associated with business ownership. It’s worth reiterating the definition of certainty. It is “the quality of being reliably true” or “a general air of confidence“. Confident employees will lead to happier employees. This always leads to improved customer confidence and happiness. And directly translates to increased sales and reputation.
Giving your team the visibility of your plans for the future allows they to understand and commit to the achievement of certain outcomes. It also helps them to understand and react when things go a little off course. This means they are more likely to stop and question any off-course activities. They can bring things back into line quicker. They recognise when something is not working towards the long-term goals and respond accordingly.
Certainty also means letting your staff know that they are doing well so they keep on doing it. Equally where they are not doing what you need them to do, you redirect the activities that support the company’s goal most effectively. Leadership is consistency.
Imagine if you woke every day and didn’t know for certain that the sun was going to rise? It’s hard to imagine but it is an example of how some business owners behave towards their businesses and their employees. If the team don’t see consistent behaviour from the leadership then they won’t be encouraged to perform that way too. This makes it very difficult to maintain standards or to scale your business. Ultimately this increases the running costs of the business,. Poor customer service unnecessarily reduces profitability.
COMMUNICATION = LEADERSHIP
What might seem obvious to you as the business owner might not be so clear to your team, no matter how closely you think you are working. Clear and frequent communication is one of the easiest, quickest and most effective method of unlocking the value in your employees. Just tell them in simple straightforward terms what is expected of them and more importantly what they can expect from you.
Employment contracts are promises that cut both ways and it’s not just about pay. The employee promises to give you and the company their best efforts in return for a salary and fair treatment. Shine a light on your vision for the company future and the immediate goals. Show how they are to be achieved and the rewards expected. When employees can see the impact of their actions on business growth, their personal development and job security they perform better. Giving additional direction to your team and show them the long-term outcomes for the business and themselves allows them to get on with the day to day tasks. It frees you up to work on the strategic elements and adding value to the business.
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