Effective Leadership Strategies for Small Businesses –


Last time I was on the Price of Business, Kevin and I discussed the importance of teamwork to an organization’s success.  In this article, I discuss the other side of that relationship: namely, leadership.

I have studied leadership in college, attended seminars on leadership, and I also took a class on leadership in graduate school, and while I learned a lot about important leadership traits, contemporary leadership studies, different leadership approaches, etc. – all of which are important in understanding leadership — I felt I was left without a practical leadership technique I could teach to small business owners and their managers.

The purpose of this article is to outline the leadership approach I teach to small business owners and their managers.

The approach I share with the businesses I work with is comprised of three- (3) simple steps: the first step involves the idea of “transformational leadership;” the second, the idea of “situational leadership,” and, the third, “three-(3) proven techniques for managing team results,” an area usually glossed over, in my opinion, when talked about effective leadership techniques.

The idea of transformational leadership has four-(4) steps that describe “what to do,” where the next two steps address “how to do it.”  The four- (4) ideas of transformational leadership outline the “big picture objective” of leadership and include:

  1. Creating an inspiring vision for the future;
  2. Motivating and inspiring people to engage with that vision;
  3. Managing delivery of that vision; and
  4. Coaching team members & building an effective team, so that the team can achieve that vision.

Situational leadership, the second step in the process, also involves four-(4) different approaches that depend on the competency level of the team member.  These four-(4) approaches include directing, coaching, supporting, and delegating.

 The situational leadership approach where an employee lacks competence but is both enthusiastic and committed,” is known as directing.  When directing these employees, the leader provides specific direction and closely monitors task accomplishments.  This step involves telling people “what to do,” “how to do it,” and “when to do,” then closely monitoring their performance.

When coaching employees, the second situational leadership approach, the leader continues to direct and closely monitor the employee, but also takes the time explaining decisions, soliciting employee input, and supporting employee progress.  One should coach employees when the employee has some level of competence but is lacking commitment.

Using the third situational leadership approach, supporting, the leader shares responsibility for problem-solving and decision-making while encouraging the employee’s efforts towards task accomplishments.  Leadership activities include listening, supporting and encouraging employees, and ensuring the employee’s involvement in problem-solving and decision making.  These employees are described as competent but lacking in confidence and/or motivation.

For employees who are both competent and committed, the leader delegates or turns over responsibility for decision-making, problem-solving and results.  The objective of leaders is to gradually increase the competence and confidence of all the employees on his or her team, by giving them more responsibility and holding them accountable for high-quality results, so that he or she is delegating to everyone on the team, the leader’s input is low, and the team produces outstanding results.

When managing teams, a leader needs to continually assess the team and make adjustments, as needed.  For instance, if the team were short on talent, switching out team members should be considered.  If motivation were an issue, incentives could be introduced, etc.

When the leader has provided a future vision for the team and has the team’s dynamics right, the leader’s focus needs to turn to managing team results.  Managing team results is the last part of the process.

The three-(3) best techniques for managing people I’m aware of are outlined in the One Minute Manager, one of the most influential and best-selling business books of all time.

The authors of The One Minute Manager, Ken Blanchard and Spenser Johnson, provide managers with three-(3) simple tools (each of which take 60 seconds or less) that can tremendously improve how to manage people, and keep them motivated, focused, and happy.  What they suggest is:

  1. “Setting three-(3) goals for each subordinate you can review in a minute or less;”
  2. Using “one-minute praises” to give employees positive feedback, when you catch the employee doing something right; and
  3. Using “one-minute reprimands” to express your dissatisfaction with an employee’s performance.

Blanchard and Johnson argue that managers are first responsible for identifying three- (3) one-minute goals and objectives for their subordinates that can be explained in 250 words or less.

Next, when the manager observes the employee doing something right, the manager should immediately praise the employee and recognize the positive behavior.  For example: “Sue, you did a fantastic job fixing that broken code this morning, I can always rely on you when we have computer issues!”

Conversely, if the employee does something wrong that should also be pointed out in a positive manner as soon as possible, as the authors, believe that all problems are preventable — if you communicate well, honestly, openly, and early.  For example: “I’m sorry Joe, but that company presentation was below par and didn’t present us in the right light.  Promise me you’ll do better next time, okay?  I know you can do better … Oh, I also want you to know you’re doing really well organizing that workshop for our clients, keep up the good work there!”

Blanchard and Johnson believe that this form of criticism works well for three-(3) reasons:

  1. Your employees feel that their mistakes are being treated fairly;
  2. You clear the air instantly, and avoid dwelling on bad feelings; and
  3. You remind your employee of his or her own worth, as well as the valuable part they play in the organization.

Put together these three-(3) steps: (i) transformational leadership, (ii) situational leadership, and (iii) one-minute management techniques, and you have the best approach I know for being an effective leader.

If you want to learn more about these ideas, pick up a copy of Leadership and the One Minute Manager, which focuses on situational leadership and these three-(3) proven management techniques.

About the Author

A nationally recognized small to mid-sized business (SMB) expert, Jim Talerico has consistently ranked among the “top small business consultants followed on Twitter.” With more than thirty – (30) years of diversified business experience, Jim has a solid track record helping thousands of business owners across the US and in Canada tackle tough business problems and improve their organizational performance.

A regular guest on the Price of Business, Jim’s client success stories have been highlighted in the Wall St Journal, Dallas Business Journal, Chicago Daily Herald, and on MSNBC’s Your Business, and he is regularly quoted in publications like the New York Times, Dallas Morning News, Philadelphia Inquirer, and INC Magazine, in addition to numerous, other industry publications, radio broadcasts, business books, and Internet media.

Increase your knowledge of the latest small to mid-sized business (SMB) trends by tuning into Jim’s regular appearances on the Price of Business !