The crucial skills small-business leaders need to drive employee engagement

One of the biggest challenges SMEs face is finding a happy medium between meeting the strategic needs of the business and the needs of employees.

As the backbone of the organisation, employees have the power to make or break a business. Many SMEs don’t have the budget to fund an HR team, so employee engagement often falls into the hands of the CEO or managers.

A new leadership survey conducted by the Australian Institute of Management (AIM) of over 2000 of their peers and team members has identified 72 per cent of Australian workers had left jobs due to poor leadership.

With the success of any organisation dependent on the engagement and commitment of employees in moving the business forward, it is crucial to provide the best leadership you can.

How can leaders improve?

Having a leadership role is more than just a title, it’s important to understand what employees want and expect from you and your business.

There are distinct qualities that need to be developed or learnt entirely if someone is to be a true leader.

The survey revealed the three skills respondents believed their leadership teams could strengthen were:

  • Communication – 35.7 per cent of responders.
  • People management – 25.7 per cent of responders.
  • Leading by example – 22.9 per cent of responders.

While financial incentives and bonus schemes can play a big part in motivating employees, it is often a well-communicated and established, common vision that brings people together.

Respondents also noted the value of leaders who lead by example. Leaders should always have this approach when turning strategic vision into reality, as employees are more likely to be trusting of leaders who are willing to put in the work themselves.

The value of investing in leadership development

Rather than investing in recruiting new talent, it is of more financial benefit for SMEs to invest in leadership development that tackles critical skill gaps.

Leaders need to develop strategies for expressing ideas and break down barriers to effective communication to boost employee retention rates.

By bolstering communication skills, leaders are more capable of expressing ideas in the workplace, actively listening to others, and giving and receiving appropriate feedback. It is this approach that fosters motivation, engagement and retention of employees.

Understanding employees

Emotional intelligence has come back into the spotlight for SME leaders. An understanding of emotional cues vital in making sure employees feel like they are valued in the workplace.

The survey uncovered 48 per cent of respondents believed their leaders were somewhat or not at all competent in displaying emotional intelligence.

Leaders need to step their game up in showing empathy and understanding the needs of employees to create a more positive working environment.

The link between leadership and engagement

Undeniably, there is a strong link between leadership and engagement. Yet, many leaders fail to address this correlation. You may have a strong strategic plan for your business, but without the support of your employees, this vision is unlikely to come to fruition.

To boost employee engagement and secure retention rates, small-business leaders must recognise critical skill gaps in their own leadership and prioritise the needs of employees.

Ben Foote, CEO, The Australian Institute of Management

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