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Leadership in Business

By Sonjui L. Kumar and Viraj Deshmukh Email By Sonjui L. Kumar and Viraj Deshmukh
April 2013
Leadership in Business

A lot has been written and said about leadership and the traits of effective leaders that are needed to run businesses in today’s challenging economy. In Time magazine’s recent cover story on Sheryl Sandberg, COO of Facebook, Mark Zuckerberg is quoted as saying that “she [Sheryl] has irreplaceable qualities.” The article went on to highlight how Ms. Sandberg brings many skills to the organization that were missing in the original leadership team and which were essential to the company’s growth.

Undoubtedly, great leaders build great companies. Yet most privately held companies rarely think about the strength and effectiveness of their leadership as they focus on the day-to-day of operations. Managers in every organization, large and small, should spend some time assessing their own leadership skills to determine how successful they are in achieving the needs of the organization. The qualities that may have been ideal to start and build a company may be strikingly different from what is needed to grow or sustain the same company.

Because of the overwhelming evidence that effective leadership can be the differentiating factor between two otherwise similarly placed companies, it is worth the analysis. At their best, business leaders provide a shared vision, motivate their employees, and provide the energy and creativity that fuels the organization. At their worst, an ineffective leadership team can stand in the way of a company’s success or make it harder for it grow or hire good talent. It is not a coincidence that most merger-and-acquisition transactions result in a change of the leadership team by the new owners. Often it takes an outside party to recognize the weaknesses that may be holding a company back.

As previously stated, organizations have different leadership needs during their life cycle, and smart companies adapt to those changing needs. Startups often need leaders who have the technical skills and knowledge related to the company’s core business. Nowhere is this truer than in technology-based enterprises where the core team usually comprises developers and software architects. However, a brilliant engineer may have no skills or training to manage the next wave of engineers who need to be assimilated into the organization. Astute founders will bring in managers who can fill these gaps in their teams early and continue to do so as the organization grows.

Leaders should also recognize their management style and its impact on their subordinates. A top-down management style can be an effective way to manage a new enterprise. Top-down managers are decisive and work well with people who respond positively to direction. As companies grow, managers may prefer to be more collaborative and inclusive, opening up certain key decisions to a broader group of employees, such as marketing goals. This style may be very effective in organizations that require combined creativity to build better products and services.

Understanding your own leadership style is as important as understanding the emotional and intellectual makeup of the people who are being led. Managers should consider what motivates individual employees not only for insight into how best to manage them but also to decide the best way to compensate and keep them. This insight can also be valuable to form better teams of people who complement rather than work against each other. In this area of resource management, effective communication is key and someone within the company should be good at getting the message out. Without effective communications skills, a management team will be unable to share its vision or hear what its employees are saying in response.

Successful leaders not only need to look ahead on behalf of the company but be ready to react when those plans don’t work out. The greatest leaders in the history of modern business have been people who sustained their leadership roles for long periods of time through many periods of uncertainty. Leaders who stay in position for decades, like Warren Buffett and Richard Branson, have led their companies through immense changes, from the internet boom to the housing bust. All these leaders have a common ability of being open to change and finding opportunity in the face of adversity.

Although the topic of leadership may be difficult to approach at first, it is better to consider it now rather than have poor leadership hurt the business in the long run.

[Business Insights is hosted by the Law Firm of Kumar, Prabhu, Patel & Banerjee, LLC. Sonjui L. Kumar is a corporate, transactional attorney and a founding partner of KPPB Law. She primarily focuses on serving as general counsel to privately held companies assisting them with all legal matters, including corporate governance, contracts, shareholder matters, mergers, and acquisitions.

Disclaimer: This article is for general information purposes only, and does not constitute legal, tax, or other professional advice.]

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