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Vision: key to leadership in small companies.

No one can deny that leadership in America's top companies affects us all. How well they are led determines their ability to compete internationally, new products and technology, number and quality of jobs and the prices of their products, to name just a few effects. When leadership fails, markets are lost and laid-off employees become dependent on public assistance.

But what about small business? How important is leadership there? The fact is that small business is big business in a sense. Fifty percent of the civilian non-farm work force is employed by firms having from one to 500 employees. The 5.7 million firms in this category account for 42 percent of total business sales. (There are less than 7,000 independent firms employing more than 500 employees.) During recessions small business is likely to be the only source of new jobs. From 1980 to 1982, companies with less than 20 employees created an astounding 98 percent of all new jobs in business. Yes, leadership is vital in small companies too--and not just for them, but for the economy as well.

Small Business Slows

Small-business has not been the engine of job creation in the 1990s as it was in the 80s which explains the unemployment figure's being stuck at better than 7.5 percent. In fact its employment share has edged down from 51.2 percent in 1984 to 49.8 percent in 1988 (latest data available). To be sure, the state of the less than robust small business sector of the American economy cannot be blamed on a deterioration of leadership. More likely malefactors are government regulations, product liability exposure and the government-induced skittish lending policies of banks. However, this is not to say that stronger leadership in small firms can't make a difference; it can.

Vision is Key

Leadership begins with a vision and without a vision there can be no effective leadership. Every great leader in history has had a vision. King Solomon stated pithily, "Where there is no vision, the people perish (Prov. 29:18)." Small-business leaders generally have a vision. It drives them to overcome obstacles. Yet a small survey of my knowledgeable acquaintances and my own experience lead to the conclusion that small-business owners often fail as leaders because they do not comprehend the power of managing with a vision. Merely following the four principles below could do much to elevate their performance.

1. The vision must be communicated to all employees. In a "first person" Harvard Business Review story, Kye Anderson related how her poor leadership almost cost her the business. The turnaround came when she shared her "own private sense of purpose" with her personnel. She found a mentor in a successful entrepreneur who told her a "leader's greatest obligation is to preach."

Small-business leaders are kidding themselves if they believe they can operate by command and control. Just laying out duties, checking on employees and taking corrective action will get nothing more than mediocre results, if that. Raising up the vision gives employees an understanding of how they contribute to the company's future, how the desires of customers and their jobs are linked, and how their efforts promote the image and mission of the company. Employees who know what they and the company stand for are more likely to be committed. Committed people back each other up, much as baseball players, to make sure that work is done and there are no gaps. It is impossible to make foolproof plans and give all-inclusive commands. Committed employees are the best bulwark against Murphy's Law.

2. The vision should not be a pie-in-the-sky, and it ought to cover all facets of the business. I hesitate to say that it must be realistic because that may convey to some that it cannot also be idealistic. There is nothing wrong with reaching for the brass ring. On the other hand to have meaning the vision must be tempered with reality--yet a reality that uplifts, that induces dedication, that defines a purpose, and that inspires harmony and teamwork. It must cover more than the product or service. The organization and its internal processes must be visualized. The people, their talents and the financial underpinnings are a part of the vision.

3. The vision should embrace change. No company can exist for long without changing as circumstances change. A firm may react to change, anticipate change, or cause change--but change it must. This means that launching new products, reorganizing, adding employees with new skills, and introducing new technology are the norm, part of the vision, and not the exception. They are steps along the way to fulfilling the vision.

4. The leader's words and deeds must bespeak consistency and integrity. Inconsistency and mendacity destroy commitment. Glib rationalizations of actions that conflict with the vision such as shipping a product known to be faulty (and I have seen this happen) make a farce of the vision itself and totally undermine the effectiveness of the leader.

An Ongoing Obligation

To leaders with integrity, the challenge is to reconcile the elements of the vision, the changes that are made and the imperative of consistency. The pitfall to be avoided is introducing change in a way that appears to be inconsistent with past pronouncements and with the vision itself. It is critical for the small-business leader to establish in the minds of all how measures that have been, or are about to be, taken are in consonance with the larger vision. And this is far from being a one time task; it's an ongoing obligation and the very essence of good leadership--the kind of leadership that is sorely lacking in all too many small companies.

WILLIAM C. WADDELL, D.B.A., is a professor of management at California State University, Los Angeles and executive editor of BUSINESS FORUM.
COPYRIGHT 1992 California State University, Los Angeles
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:Waddell, William C.
Publication:Business Forum
Article Type:Editorial
Date:Sep 22, 1992
Words:968
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