Leadership Development in Small and Medium Sized Enterprises: Phase 1 Report

Abstract

Discussion with experts and a review of business and leadership literature reveals an urgent need to address leadership development issues in small and medium sized enterprises (SMEs). This research, based upon interviews with 20 SME directors, is the first part of a three phase programme and goes some way towards meeting this need by identifying the main challenges faced by SME leaders and a framework for the delivery of relevant training and support programmes. Qualitative analysis of the interviews revealed that SME leaders face a range of challenges arising out of the need to survive in an increasingly competitive, fast-changing environment with limited resources. Although many of the difficulties experienced appear to arise from factors external to the organisation, there is a general realisation that solutions must come from within and, more specifically, through the improved management of human resources and the freeing up the leader to focus on strategic development.

The fact that SME organisational strategies tend to be driven largely by concerns for survival and operational needs, may often result in SME leaders placing a greater emphasis on the importance of leadership experience ‘in-situ’ and on-the-job training rather than formal education and qualifications. To this extent the SME director, him/herself, is rarely formally trained in management or leadership, rather learning through his or her own experience. Whilst this approach may well be effective for some, it may also pose a number of potential difficulties, most notably the effective development of future SME leaders and the diffusion of a congruous ‘leadership culture’ throughout the organisation.

An exploration of the research findings in a group workshop environment revealed widespread agreement that one of the primary leadership concerns in SMEs is succession management and that any leadership development programme should address this issue. A discussion of possible approaches highlighted a need for two types of provision: firstly, help for current SME leaders in identifying and selecting potential candidates; and secondly, offering a fast-track scheme for selected individuals to help them rapidly develop their leadership skills. Such an approach would require a variety of methods matched to the different needs of participants, although likely elements would include in-house and external facilitated workshops and seminars for current and future leaders.

In summary, the research has indicated a need for the provision of leadership development training/support tailored to the requirements and operating environment of SMEs. The Centre for Leadership Studies proposes piloting such a programme in the South West in early 2001 with a view to the eventual national implementation of outcomes.