SMEs make up over 99% of all business in the UK and are responsible for 60% of all private sector employment. Yet, according to the Federation of Small Businesses, a quarter of SMEs have never undertaken management training and only one fifth have ever invested in external leadership and management training.
A parliamentary report examining the UK SME sector describes this as a ‘leadership and management gap’, with ‘weak management skills across the board… impacting on overall UK productivity.’ According to the report, bad management is a ‘significant barrier to growth’ and many small businesses don’t have the necessary measures in place to implement management best practices.
Hardly surprising, then, that according to official Parliamentary figures, 2017 saw the equal highest number of businesses failing since the series began in 2001. The failure rates for 2017 were on a par with the number failing in 2009 as a result of the global economic crisis.
Evidence submitted to the parliamentary report found that more than half of business failures between 2011 and 2014 were attributed to bad management. As such, it's clear that leadership coaching isn’t just an exercise in self-development – although that is an important aspect. It’s essential for long-term business health.
What's stopping SMEs from training their leaders?
One of the reasons SMEs gave for this lack of investment included not having the in-house capability to identify management and leadership training needs. When overheads are tight and every employee is working to capacity, it’s easy to understand why areas of operations that deliver tangible results are given priority.
But this is all the more reason to bring in external coaching support. SME leaders are often catapulted into a role they have little or no training for. They may have inherited a family business, become the head of a start-up because they’re an expert in their field, or been promoted because they shone in a previous role which didn't involve any leadership. As such, providing leaders with relevant training will mean that they're better equipped to lead their teams to success and have a positive impact on the overall business.
Another reason SMEs gave for failing to invest in leadership coaching was a lack of evidence of its success. A leadership and management development program offered by Goldman Sachs resulted in a multitude of benefits for those who took part, including growth revenue 25 times faster than other similar SMEs and job growth 23% faster. Of those who took part, 97% said they were more effective leaders and 94% said they were more confident about managing growth.
Why coaching is key
For a leader in an SME, there’s often a much higher level of personal investment. Leading a business that has been built from scratch, been in a family for generations, or is the main employer in a small community, can result in personal feelings clouding what's best for the business overall.
Coaching can help leaders to identify potential problem areas and fix them before they get out of control. An impartial observer who can help a leader to reflect, admit when things aren’t working, and then identify potential solutions can help keep a business and its leaders healthy and growing.
An executive leadership coach can help to identify the skills leaders need to get the best out of a workforce, to conduct intricate negotiations, to navigate cultural differences in international deals, to deliver change and to make difficult choices. These are all skills that can be learned and improved with ongoing professional coaching.
Tailoring leadership to team needs
Leadership coaching is like any area of development – we all have our own styles of learning. As well as helping to identify which skills need to be enhanced, an executive leadership coach will ensure learning is delivered in a way that will be beneficial to the individual, whilst still keeping the wider goals of the business in mind.
A coach can work with leaders to identify the type of coaching that’s needed to meet the goals of the business and how it should be implemented. This may be one-to-one sessions for senior leaders, peer-to-peer support for managers, or mentoring for junior talent earmarked for progression.
As well as helping leaders to focus on their own development, external support can help the coached to become coaches. This means that those being coached can themselves go on to mentor their colleagues as they rise through the ranks.
Strong leadership isn’t just about making tough decisions; it’s about ensuring that people’s roles are connected to the objectives of the business and giving them the tools they need to perform effectively. By investing in coaching and mentoring for your department heads or team leaders, you can ensure that your employees have all the tools they need to make your business thrive.
About the Author
Since establishing Hunter Roberts over 10 years ago, Susy Roberts has repeatedly demonstrated her ability to improve the commercial performance of organisations. She has achieved this by helping leaders, senior executives and HR professionals to get employees to think and act in new ways that drive the business forward. A fully accredited business coach and Fellow of the Chartered Institute of Personnel and Development (FCIPD), Susy has become internationally-renowned for her work with luxury brands such as Gleneagles, Four Seasons, Dunhill and Louis Vuitton.