Enterprise and Small Business Principles
Leadership development
As with entrepreneurship itself, there is considerable debate over whether leaders are born or made. While it is generally accepted that the natural, truly inspirational leaders are probably born, there is a growing acceptance that leadership capability, as in other areas, can be developed and/or enhanced. Indeed, Handy (1997) has suggested that leaders are grown, not made. Clearly, leaders need followers and in any organisation aspiring ‘leaders’ can secure the hearts and minds of their employees quite easily using a series of recognised ‘currencies’. These include buying support with:
■ economic currencies - rewarding loyal colleagues fiscally, with promotion and/or with perks;
■ political currencies - rewarding loyal colleagues through protection or patronage;
■ psychological currencies - using anger and threats to create a climate of fear that encourages loyalty;
■ empowerment currency - rewarding desired behaviour with increased authority and power.
Such ‘transactional’ leaders exist within most organisations and, while they continue to have a role to play in many successful organisations, their long-term effectiveness is somewhat limited and their days are probably numbered. Their strength lies not in their true leadership abilities but in the power transferred to them, often by their positions in the organisation. These are not powerful people in their own right but people who have either acquired power through, usually, the control of budgets or/and the misuse of their positional power. They have ‘led’ through fear and patronage rather than through trust and respect. Often they have not been agents for change in organisations but enforcers of the status quo, seeing their subordinates not as an aid to achieving their goals but as a threat. However, not only are the needs of organisations changing, but the contemporary workforce is very different. In an era of very rapid change, increasingly organisations require leaders with vision, who can empower their colleagues and release the creativity within them to move the organisation forward. Also, the workforce is becoming more sophisticated. Employees are becoming more independent, they are more knowledgeable and they are far more mobile than previously. Hence, they have to be managed very differently from in the past and under such circumstances it is the transformational, rather than the transactional, leader that is required and needs to be developed.
Whereas the transactional leader is process or means oriented and uses transactions to maintain performance and, often, the status quo, the transformational leader is innovative, enthusiastic and concerned to empower others in order to create and achieve his vision. Transformational leaders provide a new sense of direction. They are the change agents - the true entrepreneurs. As McKenna (2000: 383) recognises: ‘This type of leadership needs to be fostered at all levels in the organisation when the organisation faces... a turbulent environment where products have a short shelf life; greater international competition and deregulation of markets; technology becoming obsolete before it is fully depreciated; and demographic changes are anticipated.’
This is precisely the environment that most organisations (both large and small, private sector and public) find themselves in at the beginning of the millennium and it is for this reason that leadership training has emerged as a major growth industry, being provided by universities, private sector consulting organisations and specialist training centres. Numerous bodies have emerged to help create the leaders of the future. Perhaps the one most worthy of note here is the United Nations Institute for Leadership development based at York University in Canada (www. ildglobal. org). Founded in 1999, its mandate is to help define, shape and influence the critical issues concerning young professionals and young entrepreneurs (aged between 21 and 30) around the world. Using a variety of methods, it aims to develop positive attitudes, ethical understanding and a sense of responsibility in its participants, who come from diverse backgrounds, so that they become better decision and policy makers and socially responsible agents for change. Perhaps a more modest, but nonetheless valuable initiative is the UK’s ‘Common Purpose’ programme (www. commonpurpose. org. uk) founded in 1988 by a mother of five young children, Julia Middleton.
15.6.1 Forms of leadership development
Essentially there are three forms of leadership development, as follows.
Most formal training is conducted by training professionals, is time-fixed (e. g. a short course) and is away from the place of work. It includes such techniques as behaviour role modelling, case discussion, games and simulations which may be conducted inside or out. In recent years, outdoor challenge programmes have become increasingly popular but it is unclear how effective they are in improving leadership effectiveness.
These are usually embedded within job assignments and the emphasis is on learning from experience. They can take many forms and include coaching, mentoring and multirater feedback, as well as special assignments and job rotation programmes that provide new challenges and the opportunity to develop the requisite skills. Although the research on developmental activities is inconclusive, ‘the importance of learning from experience on the job is now widely acknowledged, and researchers have begun to map the relationships between specific experiences and specific leadership competences’ (Yukl, 2002: 397).
As the heading suggests, these are carried out by the individual on his own. The activities range from reading books, viewing videos, listening to audiotapes and using interactive computer programs. In some instances they are intended to be a substitute for formal training, while in others they are used either to supplement it or to facilitate learning from experience. Very little is known, unfortunately, about the effectiveness of such activities and there is scope for research into the extent to which such self-help activities can help individuals develop their leadership capability.
Interestingly, research conducted in the UK for the Council for Excellence in Management and Leadership (Perren and Grant, 2001) reported a wide variety of ways in which small firm entrepreneurs acquired their leadership and management skills, covering all three of the above methods. Most prominent, however, were informal methods, which ranged from observation to informal mentoring by business colleagues or a former lecturer. Examples were given of how more formal management courses had helped, though such courses were not portrayed as a substitute for the informal mechanisms. Again, when asked how the support for management and leadership could be improved, the respondents very much emphasised the need for informal fora, where experiences could be shared, and for mentoring and business coaching. On the basis of this evidence, the report concludes that while there has been an increase in the provision of formal support, there is little demand for such schemes from small firms, at least in the UK. It recommends, therefore, that leadership development activities should be an integral part of the entrepreneurial life and need ‘to tap seamlessly into the activities that they (the entrepreneurs) would be undertaking as a normal part of running their business’ (op. cit.: 16).
Although understanding is still very much in its infancy, contemporary thinking, therefore, is that leaders are best developed in their own work situations, where they can learn by doing. However, it is also recognised that if the leaders of the future are to learn from experience, they need skilled coaching and counselling as well as accurate feedback. Also, they need to be given the opportunity to widen their experience through broad job assignments, job rotation and lateral career moves and be put in positions where they have to move out of their comfort zones and take risks.
This suggests two things. First, perhaps the most appropriate form of leadership development is a formal programme of action learning (Revans: 1982). Essentially, action learning requires the learner to consider problems for which there are no obvious solutions but which can be resolved using prior experience. For Revans, action learning is a process that requires the learner to appreciate that the existing body of knowledge does not provide a solution to the problem under review and it is necessary, therefore, to rely on experience to provide questioning insights. Normally action learning programmes combine formal management training with learning from experience, the participants meeting periodically with a skilled facilitator to consider, and learn from, their experiences. Much emphasis is placed on developing cognitive and interpersonal skills rather than technical knowledge, though the value of action learning to the development of leadership skills is likely to be dependent on the project on which the learner is working. Unless the project involves considerable challenge, it is unlikely to provide much opportunity to develop the skills of leadership.
Second, the extent to which leadership competence is developed depends upon the conditions that prevail within the organisation. Leadership development needs, first of all, to be consistent with the strategic aims of the organisation and any developmental activity needs to be facilitated, supported and reinforced through a coherent and strong learning culture that emphasises the importance of continuous learning and development. According to Yukl (2002), numerous things can be done to create such an environment (see Figure 15.1).
