Smal Business Leadership Styles
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Smal Business Leadership Styles
- 1. Transactional and transformational leadership style impact on small, single-owner business Small Business Institute 2012 Annual Conference San Antonio, Texas Blake Escudier, PhD Kaplan University February 17, 2012
- 2. Leader-Follower Paradigm Within the small, single-owner entity: • Leader’s (owner) personal goals are dependent on employees to carry out tasks • Followers (employees) are dependent upon a single decision maker who’s decisions are highly influenced by external situations. • The work-life balance must be flexible to allow for rapidly changing situations prevalent within small single-owner businesses.
- 3. Transactional Leadership Transactional leadership controls behavior through reward systems. This concept posits the owner as leader and employee as follower. Owner’s lead based on personal needs, which imply, business objectives. Employee’s individual situation is not considered.
- 4. Transactional Leadership Cont. Owners display the “carrot stick” so employees will satisfying the owner. Owners expect workers to have an initiative towards business goals – yet employees have more initiative toward receipt of rewards than consideration for the owner’s goals.
- 5. Transactional Leadership Cont. Transactional leadership restricts employee motivation to the basic task-reward concept. With changing tasks due to changing needs – conflict is the end result. Employees with no inducement, other than pay rewards, are not loyal to the owner or the business.
- 6. Transactional Leadership Cont. A business is central to the life of the single-owner. Employees of transactional led organizations are more concerned with their own utilitarian needs and personal well being. This issue has become obvious as social government policies are being put forward and instituted to force changes in the social contract between owners and employees – at the expense of the owner.
- 7. Transactional Leadership Cont. Transactional leaders are not usually aware of employee needs beyond the business task. Conversely A small, single-owner entity is an extension of the owner’s behavior and the objectives of the business are intricately linked to the owner’s personal and family needs and desires.
- 8. Need for more than transactions alone! Owners and Employees need trust and alignment of self-satisfaction objectives. Creation of Psychological Agreements based on organizational goals that result in mutual satisfaction. Employees that perceive owners understand about their lives outside of the business will increase productivity and have increased moral.
- 9. Transformational Leadership Transformational leaders include the attributes of transactional relationships. Transformational leaders invigorate initiative behavior. Employees look for inspiration and identification through leader efforts.
- 10. Transformational Leadership Cont. Leader (owner) consideration for followers (employees) builds a mutual respect and trust In small, single-owner businesses, the interests of the owner become the self-interest of the employees.
- 11. Transformational Leadership Cont. Employee perceptions of work/life quality increase through a reduced conflict with owner objectives And a positive owner-employee relationship allows the owner to better evaluate employee situation.
- 12. Transformational Leadership Cont. Thus, Transformational leadership employed effectively will increase moral, productivity and employee satisfaction. Leader effectiveness is usually measured in tasks being carried out. Small business stability and growth require more!
- 13. Transformational Leadership Cont. Growth and stability require effective leader (owner)/ follower (employee) relationships. Follower effectiveness becomes performance based on business goals as part of self-interest goals. Owners utilizing a transformational leadership style will motivate employees’ by increasing their perception of value in the business and the owner.
- 14. Transformational Leadership Cont. Interpersonal relationships and the psychological contract become stronger. The proximity of work increases behavior observance making obligations, inherent to psychological contracts, part of daily work life.
- 15. Transformational Leadership Cont. Workers will tend to model their own behavior after those of the owner. Employees are motivated to place self-interest priority on (or alignment with) business interests
- 16. Future Study Complete Employee/Owner Survey to compare using similar sized, and similar industry businesses: • Single-Owner, Owner-Managed • Professionally Managed, Corporate owned Operations Evaluate employee motivation based on perception variables of satisfactions within their work-life balance
Editor's Notes
- I reviewed leadership style theory in an attempt to find a pattern that might benefit Small Single-Owner businesses.My conclusion found that single owner businesses are so inherently controlled by the behavior of the owner, that employee motivation and work quality of life would be higher if the owner’s managed through transformational leadership.
- Leader’s (owner) personal goals are dependent on employees to carry out tasksFollowers (employees) are dependent upon a single decision maker who’s decisions are highly influenced by external situations.The work-life balance must be flexible to allow for rapidly changing situations prevalent within small single-owner businesses.
- Transactional leadership is primarily viewed as a means of controlling follower’s behavior through rewards that may be adjusted as leader’s need change.This concept posits the owner as leader and employee as follower. Owner’s lead based on personal needs, which imply, business objectives.Yet the situation of employees are not taken into consideration within transactional leadership, thus the employee may not consider the owner a leader.
- Owners evaluate personal and business situations congruently adjusting employee tasks based on employee expectancy of reward for satisfying owner expectations.Owners expect workers to have an initiative towards goals – yet employees are have more initiative toward receipt of rewards than consideration for owner’s goals.
- Transactional leadership restricts employee motivation to the basic task-reward concept.Due to changing market environments, Business owners are required to continuously adjust worker task activity yet do not always adjust rewards accordingly.Employees with no loyalty to the owner, working within a transactional relationship may find work elsewhere for perceived equitable compensation.
- The management tasks of a small single-owner business is central to the livelihood of the owner while employees of transactional leadership run entities are more concerned with their own utilitarian needs and personal wellbeing. In today’s environment the government is attempting to force changes in the social contracts between small businesses and employees – at the expense of owners. For every dollar provided to employees comes directly from the owners pocket!Ask an owner for something – and to comply they must reach for their wallet!
- The transactional leader is unaware of employee needs and does not comprehend that employee self-satisfaction does not come from the task-reward relationship provided by the owner.A small, single-owner entity is an extension of the owner’s behavior and the objectives of the business are intricately linked to the owner’s personal and family needs and desires.
- If owners and employees were to identify through mutual trust and each align their self-satisfaction with business objectives it is possible for a psychological agreement to evolve.Effective leadership requires actions of the owner towards organizational goals which result in both owner and employee satisfaction. Understanding the work-stress impact on employees goes a long way towards owner/employee relationship resulting in long-term productivity and increased morale.
- Transformational leaders include the attributes of transactional relationships.Transformational leaders may inspire followers towards organizational vision and invigorate initiative behavior to achieve.In transformational leader-follower situations, the followers look towards the leader for inspiration and value identifying with the leader’s efforts.
- Followers will tend to respect and trust the transformational leader who shows consideration for the needs of followers.While it may seem transformational leaders inspire followers to go beyond their own self-interest, in small, single-owner businesses, the interests of the owner become the self-interest of the employees.
- The ideals of the business become consistent with both the owner and the employee.Reduced conflict between work and lifestyle increases the employee perception of quality of life the business may offer.The positive owner-employee relationship allows the owner to better evaluate employee situation – making change adjustments more inline with the needs of employees.
- Transformational leadership employed effectively will increase moral, productivity and employee satisfaction.For small, single-owner organizations, the minimal measure for leader effectiveness is the extent to which the organization carries out tasks. Stability and growth requires more!
- Growth and stability require effective leadership which includes the relationship between owner (Leader) and employee (Follower). Follower effectiveness becomes the actions of employees in reaching the goals of the business and goes beyond simple transactions and includes their own self-interest.Owners with transformational leadership style will encourage employees’ perception of value to the business and the owner.
- Interpersonal relationships built through transformational leadership offer a stronger psychological contract between owner and employee.The proximity of small businesses increase behavior observance making obligations inherent to psychological contracts part of daily work life.The close working environment with effective leadership positively influences employee internal motivations.
- Workers will tend to model their own behavior after those of the owner. Through transformational leadership, employees may increase engagement with owners resulting in motivations of the employee to cause many self-interests of the individual to take secondary purpose to: leader inspired moral commitment; identification with, sense of obligation to, and loyalty towards the owner; and perceived benefits gained through the success,well-being and survival of the business.