Why is Leadership Important in Business?

Leadership is important in business because all people are silently asking to be led. If you want to learn how to make money, learn how to lead. Business is a collection of people working for the same cause, and a leader is required to define that cause. Growth of a business will only come through the time and talents of others. As small business owners and entrepreneurs, the sooner you realize this, the better. Using the time and talents of others will allow you succeed in larger projects faster and with a higher degree of quality.

This lesson hit home with me when I hired a full-time drafter to take over drafting obligations. Previously I liked working designs out from start to finish so I knew everything about a new design or product. The trouble was that sales began to demand more and more of my time. So, I hired a full-time drafter to take over all of the modeling. It didn’t take long for me to see that he was 10 times better at putting together drawings than I was. On top of that, because he began working more closely with the product line, he began to notice inconsistencies that I glazed over. A good leader understands that specialized tasks are better facilitated by people with specialized training. I initially fought the push for more help, but once I relinquished the reigns, both the company and I were in a better place.

Culture

The leadership of an organization will also dictate the culture that a business operates in. Businesses often have a top-down management structure, and as such the leading authorities set the tone of the work environment. Authoritarian leaders will rule with an iron fist, creating a military-style environment, while laissez-faire leaders will promote a more laid-back culture. Each style is arguably more effective in different situations, but the point is that leaders are the ones responsible for the business culture. A good leader recognizes this dynamic and tailors the environment to best meet the needs of his or her workforce. This metric alone can result in the retention and recruitment of premium talent.

Direction

It is important not to confuse leadership with management. To manage is to make sure things are done right–to lead means determining the right things to do. Leaders define the direction and market placement of a company. They decide how to establish a competitive advantage and who to partner with in order to meet the needs of the customers. The leader has his or her sights set on where the company should be headed, who needs to be on the team in order to make it happen, and how the idea will ultimately be executed.

How to Be a Quality Leader

No organization operates without someone steering the ship, so if running a business is something you are currently doing, or looking into, understand that leadership is vital to your success.

People want to be led by sincere individuals. It may be temping while in a leadership position to have all the answers all the time, but the truth is, no one has all the answers all the time. In fact, it is possible to build more loyalty with your workforce by admitting you don’t have an answer when you truly don’t. Employees will see through any attempt you make at giving an answer when you don’t have one.

Fit a position to an employee, not the employee to the position. Employers often miss the mark when fitting employees to positions. They start with a fixed position that needs to be filled and fill it with the person that most closely aligns. There are times when this approach works, but a good leader understands that molding obligations to fit the strengths and aspirations of an employee will result in a happier employee and a more profitable bottom line. People that hate their jobs perform significantly worse than those that enjoy what they do. Be flexible and listen to the voice of your workforce.

Be teachable. We already addressed the fact that you don’t have all of the answers, so listen when others talk. This falls in line with sincerity–people don’t like to work for someone who never listens and only dictates. The owner of a business should be the employee’s greatest advocate.

What Happens Without Leadership?

The best analogy that can be drawn here is a ship without a captain. Not leading an organization is a sure-fire way to make sure it sinks. Even with good middle management, if an organization lacks good leadership, the business will suffer. Eli Goldratt, the author of the theory of constraints, maintained that he would not work with second-generation companies. The idea was that poor leadership is not worth the trouble. I could give a specific example of an organization that thrived under the leadership of a father yet crumbled under the leadership of his son. Dad understood what it took to keep the business alive and well, son did not. Dad knew who to talk to when he didn’t have the answer, the son did not. Within two years of the company being handed over to the son, the business went belly-up.

No matter who you are, or what your position, to some extent you are a leader to someone. Remember this while you pursue your endeavors.