Leadership effects in Small Business

There are several types of leadership styles. The charismatic leaders exude vision, are willing to take risks to achieve that vision, are sensitive to both environmental constraints and follower needs and exhibit behaviors that are out of the ordinary. The transactional leadership style emphasizes rewards to influence motivations of the follower (Chaganti, Cook & Smeltz, 2002).

A transactional leader guides or motivates followers in the direction of established goals by clarifying role and task requirements. Transformational leaders provide individualized consideration and intellectual stimulation, and possess charisma (Robbins, 2003). The transformational leader inspires followers to work for reasons beyond their own interests for the good of the organization.

A transformational leader pays attention to the concerns and developmental needs of the individual employees; this leader helps employees look at problems in new ways (Robbins, 2003). Transformational leadership is built on top of transactional leadership and uses more charisma. The successful leader in a small business may exhibit behaviors and characteristics of each of the previously mentioned leadership styles.

The founder of the small business establishes direction by developing a vision of the future. By communicating this vision, it inspires himself/herself and employees to overcome hurdles during the difficult start up of the organization. The leader of the small business may act as leader and manager as well as many other roles during the start up phase. Leadership begins with vision and without a vision there can be no effective leadership. Four principles to implementing a vision make a small business leader stronger and more effective (Waddell, 1992). Sharing one’s private sense of purpose with employees is a vital principle to communicating vision.

The vision must be communicated to all employees (Waddell, 1992). Command and control are merely management styles, yet laying out duties and taking corrective action do not convey the vision of the leader. A leader must provide a clear vision of what the organization looks like in its ideal state. For a small business leader, depending on the number of employees in the organization, this can be communicated verbally, in written format or both. An effective leader understands that employees who know what they and the company stand for are more likely to be committed (Waddell, 1992). Committed people work as a team and produce quality results. Another principle is relaying a clear vision that covers all facets of the business (Waddell, 1992).

The vision covers more than the service and product. The vision uplifts, links customers to employee efforts, and internal processes. Employee talents are a part of the vision and the employees must be told this to understand it. The principle regarding change is essential to the leader’s vision. Everyone in the organization including the leader him/herself must embrace change; thus, the vision must embrace change (Waddell, 1992). During a firm’s startup and beyond, change exists. Communicating a vision to embrace change creates a culture that anticipates and causes change more often than reacting to change. Concrete examples of change within the context of the vision should be shared with employees to allow them to understand. Examples such as product launches, customer service issues, sales scripts and new employee trainings will get an employee to see that change occurs in all aspects of the company. This, in turn, solidifies a vision embracing change.

The final principle of sharing a eader’s vision is that the leader’s words and deeds must be consistent and honest (Waddell, 1992). The goal of sharing vision is to solidify commitment to the organization’s success. Inconsistency and lying destroy commitment. Employees must witness integrity at all levels within the firm in order to serve customers and the vision of the company with integrity. A good leader shares vision and does it consistently. It is critical for the small business leader to establish how each individual’s tasks, actions and commitment support the company vision.

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