Leadership
The Ghanaian business environment is lately undergoing series of difficulties mainly due to the mounting government current account deficit, the rapid depreciation of the cedi and the ongoing disruption in power supply.
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These hitches make planning by corporate executives and business owners very difficult simply because the business environment has become very uncertain with many factors affecting the way firms will have to cope and react to what is around them.
Amid these challenges is the issue of mounting competition threatening the very existence of firms, especially indigenous SMEs?
In such times, businesses should adopt various strategies that can help them deal with the increasing uncertainties, some of which are the preparation for multiple outcomes, finding and relying on the predictable elements of the situation, focus evaluation of initiative on the inputs not just output, and remaining agile.
In fact, despite these suggestions, the issue of leadership has often been neglected when conversations about dealing with business uncertainties are being discussed. What businesses must know is that during tough times, leadership is the defining factor since it is the building block of every success story.
Leading in good times is so much easier than leading in difficult times where the leader’s mettle is tried. Difficult times call for the combination of inspiring leadership and forcing authority to deal with the uncertain business environment.
The challenges in perspective
Often, during prolonged periods of economic challenges, risk-averse executives or business owners hedge their bets by making smaller investments in their businesses. For example, in periods of rapid currency depreciation, business owners turn to shy away from growth investment which can be risky, to risk-free investment, while they resort to ‘wait-and-see’ strategy until the future becomes clear.
Foreign companies in such turbulent times simply pack off from their host countries to other destinations where the environment can guarantee reasonable returns. Inflationary pressure, often a common feature of uncertain business environment, tends to affect the cost of import and domestic input supply.
To compensate for the rise in input cost, firms increase the prices of their goods and services which do not necessarily affect profit since inflationary pressure also affects the disposable incomes of customers.
Usually, many leaders in such trying times panic sometimes due to the relentless reporting of the latest bad news in the media and in the quest of surviving, resort to cost-cutting measures such as recruitment freezes, employee lay-offs, pay cuts, reduced product and service quality, as well as cut in corporate social responsibility (CSR) and research and development (R&D) budgets.
Though these reactive measures can induce some financial value, they are not in themselves fool proof remedies in periods of economic challenge. For instance, focusing entirely on employee lay-offs could result in the laying-off of some key staff which will cost the organisation the critical human resource when the challenges are over.
Companies which were single-minded in lying off employees would later realise that the very people they had fired in the name of cost-cutting were needed to fuel growth in buoyant periods.
Paradigm shift
With rising cost in the marketplace and the competitive nature of business today, there is a need for a paradigm shift in the nature of management and leadership required. The basic principle in a paradigm shift is based on the maxim that “if the world of business is changing constantly, leaders need to change with it.”
Businesses that operate in economies that are undergoing challenges require sophisticated leadership and management style that is different from what was done before the economic challenges.
During periods of crises, the leadership style adopted by managers should be aimed at creating a motivating work environment and challenging work opportunities for a more heterogeneous, diverse and flexible workforce. These attributes will be key to sustaining organisational performance.
In times of crises, “strong leadership” is essential, but strong leadership cannot induce change in employees unless employees want to follow them. This is the leadership paradox. What then should be the approach to leadership?
There should be a shift to a team-based knowledge work systems rather than the traditional and hierarchical modes of leadership where the leader is isolated from the day-to-day operations of the firm.
The way of work should rather be one that is based on teamwork and community-based systems with the leader “leading from within” – not the front or the back. This system of leading from within involves others in decision-making.
It is also based on ethics and care for the needs of members of the community. The “leading from within” is an extension of the “servant leadership” style.