Small Business Strategies: Leadership Failure…Causes, Consequences & Cures

Effective organizations are led by individuals who have a clear strategic vision of who the organization is, what it is about, where it is going and how it is going to get there. They articulate their vision throughout the organization, in a manner that inspires everyone to enthusiastically buy in. When such leaders are seen as credible, asking of their people only what they are willing to do themselves, their people follow.

On the other hand, leaders who fail to communicate a clear vision inevitably risk losing control and endangering the organization.

As a business strategist who has worked with many organizations of varying sizes and across a broad spectrum of industries, I have a lot of experience with all  C-suite types of organizational leaders.  The one critical factor I’ve learned is that the results of our efforts are much more effective when the leadership goals are aligned; and, the executable plan to attain those goals are clearly communicated throughout the entire organization.  

In this second installment of my five-part series on small business strategies, we will look at the causes of leadership failure, the consequences of not correcting or replacing ineffective leaders, and what can be done to remedy leadership problems.

10 major causes of leadership failure

In his seminal work published in 1937, “Think and Grow Rich,” Napoleon Hill shared what he learned from interviewing and observing 45 of the most successful individuals of the day. I have read and re-read his book, and I highly recommend it for anyone who aspires to be a leader in business and in their personal life. Among his many findings and recommendations, Hill focused on 10 major causes of leadership failure, which I have excerpted here from his book:

  1. Inability to organize details: Efficient leadership calls for the ability to organize and master details. A leader should never claim to be too busy to change their plans or give attention to an emergency. The successful leader must be the master of all details connected with their position, including acquiring the habit of knowing which details to relegate to capable lieutenants in the organization.
  2. Unwillingness to render humble service: Truly great leaders are willing to perform any sort of labor that they would ask another to perform. “The greatest among you shall be the servant of all” is a truth that all able leaders observe and respect.
  3. Expectation of pay for what they “know,” instead of what they do with what they know:  The world does not pay people for what they know. It pays them for what they do or induce others to do.
  4. Fear of competition from followers: Leaders who fear that one their followers may take their position are likely to realize that fear. The able leader trains understudies to whom they may delegate, at will, any details of their position. Only in this way may leaders leverage themselves and prepare to be at many places and give attention to many things at one time.
  5. Lack of imagination: Without imagination, leaders are incapable of meeting emergencies and creating plans by which to efficiently guide their followers.
  6. Selfishness: Leaders who claim all of the honor for their followers’ work are sure to be met with resentment. Great leaders claim none of the honor. They are content to let it go to their followers because they know that most people will work harder for commendation and recognition than they will for money alone.
  7. Intemperance: Followers do not respect an intemperate leader. Intemperance in any of its various forms destroys the endurance and vitality of all who indulge in it.
  8. Disloyalty: Leaders who are not loyal to their trust and to their associates — those above and below them — cannot maintain their leadership for long.
  9. Emphasis of the “authority” of leadership: Efficient leaders lead by encouraging, not by trying to instill fear in the hearts of their followers. Leaders who try to impress followers with “authority” come within the category of leadership through force. Real leaders have no need to advertise that fact except by their conduct, sympathy, understanding, fairness and a demonstration of knowledge of the job.
  10. Emphasis of title: Competent leaders require no “title” to gain the respect of their followers. Leaders who make too much of their title generally have little else to emphasize. The office doors of real leaders are open to all who wish to enter, and their working quarters are free from formality or ostentation.

An organization whose leadership continually exhibits one or more of these traits can develop a toxic culture that infects its followers. People are products of their environment; and if subjected continually to this type of cultural failure, they will begin to adopt some or all of the same traits.

Consequences of ineffective leadership

Dictionary.com defines the verb “lead” as “to act as a guide; show the way.” We look to leaders in our lives to inspire, direct, understand and teach us, and to exemplify behavior we want to emulate. Leaders who do not possess these abilities can end up imparting the following negative influences on employees and the organization’s operations:

  1. Difficulty inspiring confidence: The ability to inspire confidence is associated with the values of courage, respect for others, and commitment; and it is demonstrated by taking responsibility for the consequences of decisions, creating a pleasant working environment, fulfilling professional obligations, and behaving in a manner beyond reproach. The more that people perceive their leaders to have such qualities, the more they grant those leaders credibility and legitimacy. Leaders who exercise poor judgment have much more difficulty inspiring not only employees but business partners, colleagues and stakeholders.
  2. Lack of a collaborative environment: Leaders need strong interpersonal skills that enable them to build bridges within and outside the organization. They need to be open to new perspectives and to permit co-workers and subordinates to question, analyze and discuss issues in a safe and welcoming environment that encourages engagement and creativity. A leader with an attitude of “my way or the highway” stifles creativity and discourages the sharing of ideas that could result in valuable insights, thereby undermining attempts at collaboration.
  3. Employee turnover: When employees are not permitted to put their talents to use, do not feel like their efforts are important, and are not able to make positive contributions to the organization’s goals, they feel unappreciated and stagnant in their careers. More than ever, people are looking for meaning in their jobs and need to know that their ideas and points of view are considered. Employees leave an organization when their needs are not served.
  4. Toxic culture: When “authority” overtakes “influence” in the workplace, a toxic culture develops. Leaders compound this problem when they resort to fear in order to achieve the organization’s goals. Leaders may be driven to blustering, threatening and pontificating so they can “hit their numbers” or bring a project within budget. However, such tactics leave employees feeling anxious, embarrassed and incompetent — like they are pushing a rock up a hill every day. Oftentimes, this can backfire and put the leader and the organization at risk.
  5. Consensus: Whether formal or informal, the ability to influence is the cornerstone of leadership. Leaders must be able to clearly communicate their proposals in order to persuade others to buy in. However, influence is conferred on leaders by those they lead — not by virtue of title or office. That’s why poor leadership systematically leads to the rejection of ideas.
  6. Fear of failure: A leader focused on perfection can create unrealistic expectations and miss opportunities for teachable moments. When people fail at a task, they can be overcome with feelings of disappointment, discouragement, inadequacy and even shame. Leaders who demand perfection breed a reluctance among their followers to take even the smallest of risks. In doing so, such leaders erode their employees’ willingness to tackle challenges through innovative and possibly unconventional methods.
  7. Poor financial performance: To optimize production, sales and efficiency, an organization needs employees committed to their jobs, the organization and their leader’s vision. Distractions generated by a toxic work environment, high employee turnover, and a lack of consensus severely handicap employees from making such commitments. And when you add up these consequences, they usually subtract from the organization’s bottom line.

As I have noted, poor leadership has major consequences, but too often it is tolerated by employees and organizations. Fortunately, new behaviors can be learned and skills developed. Making a leader aware of how their behavior is impacting the organization is the foundation for positive change.

Cures for ineffective leadership

“Failure is simply the opportunity to begin again, this time more intelligently.” — Henry Ford

Wisdom born of failure can make a person a stronger leader by providing them the perspective to develop a clearer vision and by revealing their humanity and vulnerabilities. This self-actuated epiphany enables a leader to grant permission to their followers to accept the same experience and, as a result, achieve more. Ultimately, it can allow a “fallen” leader the opportunity to re-establish their influence.

In a 2013 article for the Harvard Business Review, Jack Zenger and Joseph Folkman — authors of “How to Be Exceptional: Drive Leadership Success by Managing Your Strengths” — wrote about a study they conducted of 71 leaders, using 360-degree feedback data, to track issues on which the leaders had made the most significant progress during a 12- to 18-month period. Through the use of the feedback data, over 80% of the leaders were able to significantly improve upon their ability to execute the following nine leadership skills.

  1. They improved their communications effectiveness. This was the most common skill that the leaders improved. For many it was less about learning new skills than about using the skills they already had more often and with more people.
  2. They made an effort to share their knowledge and expertise more widely. By doing so, they could simultaneously impress and develop their direct reports.
  3. They began to encourage others to do more and to be better. When leaders challenged their direct reports to do more and be better than they thought they could be, the leaders were perceived to be better themselves.
  4. They developed a broader perspective. Getting leaders to stop and look at the bigger picture helped them see potential problems sooner and focus more on strategic issues rather than tactical issues.
  5. They recognized they were role models and needed to set a good example. Leaders frequently ask others to do things that they don’t do themselves — whether unintentionally or unknowingly. This never works. Many of the leaders were surprised to discover that they were perceived as hypocritical.
  6. They began to champion their team’s new ideas. Positive changes began to occur when the leaders shifted from discouraging new proposals to encouraging and supporting innovative ideas and thinking.
  7. They learned to recognize that change was needed. The successful leaders, by becoming more proactive, learned to willingly support and embrace change. They also encouraged others to do so.
  8. They improved their ability to inspire and motivate others. They did a better job of keeping people focused on the highest priority goals and objectives. In addition, they made a special effort to stay in touch with the concerns and problems of their teams. Providing support and assistance to an employee in difficult circumstances not only helps that employee, but also reassures others that they can expect to receive the same treatment.
  9. They began to encourage cooperation rather than competition. In the long run, internal competition causes every participant to lose. Leaders who find ways to encourage cooperation and generate common goals become more successful.

Note that nothing in this list of actions was extraordinary in any way. On the contrary, the actions were based on common virtues that we should all aspire to, but that the leaders were not putting into practice.

Which is why, if you desire to be a successful leader, it is imperative to strengthen your abilities through persistence, practice and feedback from colleagues or coaches.

Networking for Manufacturers: GovCon

This event was targeted at companies interested in building their network and will specifically target the government contracting market. Attendees learned about the importance of building that network and be given an opportunity to introduce their business and experience in the government market and share best practices. Hosted by CIRAS to provide manufacturers an opportunity to gather and network while learning about tools in their community they can use to grow.

Kevin Santry, of Santry360 shared with attendees an outline of changes made by the passing of the 2017 tax bill and offered an analysis of how these changes will impact small businesses. The discussion focused on changes in business deductions and how to financially plan for the year with these changes in mind.

Important Information to know moving forward through 2018.

HOW TAX REFORM WILL IMPACT MANUFACTURING:

With most of the provisions set to go into effect in 2018, it is important that the manufacturing industry review the changes that occurred with the tax reform to understand the impact to their companies. Below are a few summarized top considerations and implications:

Reductions of the Corporate Tax Rate

Reduces the top corporate tax rate from 35% to a flat 21% This is a huge win for manufacturers. The effective actual tax rate for manufacturers has historically averaged 22%

Immediate Expensing of Certain Capital Expenditures

Companies will be able o fully expense capital expenditures, including acquisitions of used property, in 2018.

This is to encourage more capital spending, potentially driving up sales for hardware manufactures of products eligible for expensing.  Applies until 2022 for purchases made after Sep 28 2017. The percentage of allowable expensing will be phased out at a rate of 20% per year:

  • From 2023 (80%) to 2026 (20%)

Pass-Through Tax Treatment / Section 199A

Pass-through entities may qualify for a 20% deduction on qualified business income under the new tax bill. This deduction is subject to certain W-2 wage limitations. Qualified business income is basically all domestic business income other than investment income, investment interest income, short term capital gains, long term capital gains, etc…


Interested in Learning More?

Successful Conversations: Quad Cities Big Table

Discovering Solutions Together

The event was arranged by Q2030 with the goal to have 500 conversations about a variety of topics. More than 5,000 people representing different backgrounds, neighborhoods and interest groups will participate in conversations to discuss and imagine the future of our region. These conversations will inspire new ways we can work together to make our communities and region stronger and more connected. This act of people coming together to discuss the issues that matter most to them has never been more important.  Progress will only result when residents and organizations collaborate to make contributions that add up to a greater solution.  Quad Cities Big Table will connect individuals and communities of diverse perspectives and backgrounds to do just that.

Workforce Development

Hosted by Santry 360, the Big Table encompassed 10 members of society from different parts of the community. The background of these individuals vary from members of a CPA/Consulting Firm, to High School Teacher, An HR representative, to a member of Iowa Works. 

Going into this conversation, we had done research by talking with local manufactures, attending Hub Huddles hosted by the Quad Cities Chamber of Commerce, and hosting tax seminars. With all of the information collected, and what we believed the pressing issues were, we were shocked that not only is there a skill gap but the lack of motivation to keep the jobs being offered.

The HR representative from Kraft-Heinz shared with us their are a large opening finding workers. Which was not the surprising part. The part that baffled the whole group that even though the average salary for an unskilled laborer is $72,000 a year. This includes overtime but not benefits. The issue is having staff to show up consistently for their jobs.

The argument against these types of jobs is that you cannot support a family, it is a dirty job, you are not compensated fairly. When you look at it from a businesses stand point, how con you expect these companies to take a chance on a person that might not show up after their first paycheck. The fact that a large mass will walk away from a job that has these benefits showed that a job is not chosen just because it pays you. Because of this we must look further into what their motivation is. 

In this meeting we discussed possible solutions. In order to arrive at these solutions, we must look at a few different variables:

  • Age Group
  • Parental Influence
  • Community Influence
  • Educational Involvement

These aspects are important because children are influenced at different points in their lives from several different aspects of life. 

Staffing

Right now there is a prevalent issue, working with students to motivate and showcase the different options available for them in the future is a solution for just that, the future. Right now we have issues with the current workforce. How do we motivate people that have have been living one way, for possibly generations? We are striving to develop the concepts discussed during this event.


Be Part of a Solution