Leadership Challenges and Solutions in Small to Medium Enterprises

This report delves into the crucial aspects of leadership within Small and Medium Enterprises (SMEs), emphasizing the significance of human resource management (HRM) practices. It highlights the importance of effective communication, employee engagement, and the adaptation of leadership styles to suit the evolving needs of the organization. The report underscores the necessity for SME leaders to foster a culture of continuous learning, encourage creativity, and provide opportunities for employee development. It also addresses the challenges faced by SMEs, such as limited financial resources and the need for flexible leadership development programs. The report provides recommendations for leadership development, emphasizing the importance of understanding the organization's specific needs, considering various leadership styles, and recognizing the limitations of the study. The report concludes by acknowledging the limitations of the study and suggesting directions for future research in this area. This report serves as a valuable resource for students and professionals seeking to understand and improve leadership within SMEs.

Running head: HUMAN RESOURCE MANAGEMENT
Human Resource Management
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Table of Contents
Chapter 5: Conclusion.....................................................................................................................3
5.1 Introduction............................................................................................................................3
5.2 Summary................................................................................................................................3
5.3 Recommendations:................................................................................................................6
a. Nature and Shape of changes in leadership as organization matures:.................................6
b. No right no wrong in leadership style:................................................................................7
c. SME leaders need to think in creative manner about practices of people management:.....7
d. SME leaders should not be having all the answers:............................................................7
f. SME leaders do not know what they do not know:..............................................................8
5.4 Limitations of Study:.............................................................................................................8
5.5 Directions for Future Research:.............................................................................................9
Reference:......................................................................................................................................12

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Chapter 5: Conclusion
5.1 Introduction
The enhancement of leadership in SMEs is built on the personal involvement of the
managers and the owners and that they should be passionate about their business, making use of
the approach called, ‘tough love’. A tough love generally describes the situation when the leaders
should not be tolerating people who are not equipped in contributing to the business success. On
the contrary, a leaders should be prepared in looking after the people with issues, so long as the
action of the employees would not be killing the business. The leaders or the managers should be
able to recruit an enhanced workforce having a better work ethic and then enhancing the
workforce through proper training, pathways of career and apprenticeships (Romanowska,
Larsson & Theorell, 2014)..
5.2 Summary
As per the findings of the researcher, it can be stated that communication is one of the
essential parts of enhancement in leadership in SMEs. For a leader, communication is generally
stated to be an association and inspiration and not just a diffusion of the information.
Communication is stated to be complex for structuring configuration and implementing strategy.
It is often been stated to be the most challenging skills as it is easy to say but while doing it does
not seem that easy. A leader who does not communicate with their employees on regular basis
generally jeopardizes the overall process. Sharing of information is stated to be a critical factor.
A leader needs to communicate clearly on the strategies of the organization, direction and speed
along with the outcomes. However, other important things include the way the leaders actually

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communicate and the manner they present themselves to their subordinates, like humbly,
confidently and passionately.
As an effective leader it is important to inspire others through the actions and words and
leaders should have the habit of listening and observing before they speak anything to anyone.
Communication has the ability to guide and convince along with inspiring others. A leader must
be willing to disclose more of him, letting others see the soul. If he restrains himself, he will be
undermining his effectiveness as a leader with his followers should be drifting towards the
sidelines.
Leadership in SMEs is stated to be one of the awkward domains as it needs one to
participate as a leader and boss at the same time. Formalized sort of leadership in SMES requires
being concerned along with working towards the vision designated for tomorrow (Arend, 2014).
However, it can be concluded that even the leaders of SMEs required a dependable and talented
bunch of people that believes in the organizational values and is eager in defending them. The
way a company would be performing in the short and long-term can rest on the SME individuals
that requires the decisions to be taken in care along with proper understanding, particularly when
the organization is experiencing growth. It can also be concluded that the job outline of a leader
in SME might come packed with concern and work for many things like allocation of resources,
talent, finances and engagement. Once these SMEs are able to recognize their style of leadership,
and are much willing to acclimatize and evolving with the job issues, enabling much consistency
driving of a business that can be heartily educative, satisfying and knowledgeable.
In a SME it is the people who are the business, so recruiting of right people becomes an
imperative factor. However, it has been seen and can be concluded that SMEs often work with

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restricted financial resources and limited material and one in four of the businesses highlight the
fact that recruiting of skilled staff as one of the barriers to development. Moreover, it has also
been seen that the strictness of the leaders, especially in SMEs is not always good for the
employees and the organization. Employees tend to go into a shell and do not always express
themselves for the betterment of the organization. As per the survey being conducted by the
researcher, it can be concluded that employees want their leaders to be open in conversation and
the way he feels about going along with the business (Winit et al., 2017). It is important for the
leaders to set themselves as examples so that the employees are able to look up to them and
idolize them for a better show.
It can also be concluded that the environment of SMEs differ from that of the bigger
organizations and as such, various departments need to be positioned on the factors of training
and sustaining provision. Any sort of program that is to be targeted at the SMEs requires
flexibility, having a stronger practical foundation, coming from a realistic source and having a
assessable impact within the organization. The SME leaders needs to be motivated in
participating through the process of recognition and making use of their existing skills along with
the experience element. The provision of leadership development for SMEs needs to frame upon
the present skills and preparing the present managers for the improvement of the next generation
of leaders. The main emphasis should always be on the development of the skill factor like time
management along with strategic thinking where the delivery of training should be elastic and
informal (Leitch, McMullan & Harrison, 2013).
For employees it is important that their leaders give them suggestions from time to time.
It is important for the leaders to get involved with his employees and provide them suggestion on
regular basis so that his employees understand the importance and attention the leader provides

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on the work proceedings in SMEs. SMEs have the ability in nurturing the talent that is based on
the growth factor through encouraging of the creativity along with learning by its employees. It
has been found that SMEs would be providing it employees with many opportunities for stepping
out of their regular jobs in developing the skills of the leadership, not through attending
workshops and seminars, but through fostering of the development of collaboration across the
various departments, disciplines and functions in which the invention of the idea is the main
schedule.
SMEs often find themselves in situations where they lack any sort of financial resources
and they become generally unenthusiastic to invest in those sort of projects unless they are
having any sort of lucid understanding of the advantages. Successful leadership development
programs need to be an integral part of the SMEs. For such programs to be thriving, the SMEs
need to persuade attendance of their employees to attend such programs. Certain ‘quick win’
rudiment has the aptitude in showcasing direct benefit of the agenda along with the commitment
of low finance. It is, therefore preferable for the SME leaders to go for programs that are of low
cost or even free , during the preliminary stages, even that becomes a matter of self-funding.
5.3 Recommendations:
a. Nature and Shape of changes in leadership as organization matures:
The nature of the effectual leadership is generally fluid, based on the size and transition
period of the organization. The things that can be attained through the process of inspiration
along with the factor of charisma of the individual leader at the stage of entrepreneurial of the
growth of SME would be formalizing in gaining the strategic focus (M. Stoffers et al., 2014). It
is important for the SME leaders along with the other people responsible for the management of

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people in SMEs need considering the sort of leadership style their organization requires at every
stage of transition (Arham, 2014). Furthermore, other factors are also to be considered like the
capacity of the SME to support the leadership. It is important to understand the true meaning of
leadership in the context of the organization.
b. No right no wrong in leadership style:
Effective leaders of the SMEs state that leading others has been a balancing act. Various
contexts would be requiring them for applying of the various styles of leadership, and it is an
essential factor for taking in the standpoint of the business and that of the people in making a
decision that does not hamper long-term presentation (Suriyankietkaew & Avery, 2014).
Effective leaders under all circumstances would be taking in every possible opportunity in
stepping back and facilitating their people in taking the lead.
c. SME leaders need to think in creative manner about practices of people management:
It is significant in learning from the experiences of the other people, not all the accessible
practices of people management needs to be simulated. SMEs need to avoid structuring of the
empires of the corporate world and using the solutions of the innovative people management for
retaining the suppleness of their organizations (DeKrey & Portugal, 2014).. Certain factors that
need to be taken into consideration are the present barriers to alertness in the organization. It is
important for the leaders in identifying the key or important influencers in the business who have
the ability in overcoming the challenges or the barriers.
d. SME leaders should not be having all the answers:
Taking the nature of leadership on whole, the responsibility of the individual or the team
at the organization top develops, needing application of various skills. During the initial stages of

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growth of the SMEs or during the crisis hours, it is easier with those having the responsibility of
the formal leadership in adopting the hands-on approach, mainly if they are proverbial with the
task at hand. However, it needs to be understood that one of the important roles of leadership or
leaders is in transferring knowledge and growing leaders within the boundaries of the
organization, needing a bigger emphasis on the empowerment factor. In this the factors that are
required to be considered are the skill-set required at the top of the organization and the ways
those skills can be urbanized from the outside of the organization.
f. SME leaders do not know what they do not know:
The findings have been showing that with the growth of the organization, the leaders
have been discovering fresh challenges or issues of the leadership along with the management of
people that they might not have experienced before. It is significant in considering the external
standards of the business and learning from other SMEs that are performing better in
understanding the leadership style and the particular organization (Laforet, 2013). The factors
that are required to consider are the opportunities available for gaining the perception of what the
other companies are being doing. It is also important to identify or recognize the challenges
instead of learning about the quick fixes.
5.4 Limitations of Study:
All research has its own limitations. The capability of the study to recognize its
limitations is part of the research undertaking’s strength. There have been various limitations
with due regards to what has been accumulated, evaluated, accessible and discussed within this
study. These sorts of limitations have been recognized in this part.

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The study has been relying on the self-reported data from the single sneaks. The
informants within this study might be exaggerating their assessment of the behavior of leaders
along with the performance of the organization. According to the current literature review, the
self-assessment of the behavior of leaders generally tends to be more exaggerated than the other
relevant sources. This study has been much generalized though SMEs does boast of various sub-
categories. An in-depth analysis of the other industries along with the major differences between
those sub-categories existing within the industries in respect to the behavior of the leadership
along with the performance of the organization might be able to provide an opportunity for the
purpose of future research.
Another limitation of this research study has been the time factor and the cost factor. Due
to limitation in time the research could not be conducted in-depth and moreover the cost factor
played its role in limiting the research work of the researcher. If the time and cost factor would
have been dealt with the research would have been more fruitful, enabling the researcher to take
more time and look for other factors in evaluating the enhancement of leadership in SMEs.
SMEs have been encouraging and rewarding the risk factor by its employees while undertaking
such major projects. SMEs are required to reevaluate the conventional approach in development
of talent where a company has been recognizing a pool of leaders who would come well in future
is basically being driven by the trait theory. It signifies the fact that if the organizational leaders
or management people are being able to recognize people having skills of inherent leadership,
one can even guide them into the roles of the leaders.
5.5 Directions for Future Research:
The research findings of this particular research study would be offering various
opportunities for the purpose of future research. It has been hoped that despite the limitations, the

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study findings would be able to indicate directions for additional research study. The key
suggestion for the future research crops up from the improvement of the proposed framework for
the organizational accomplishment of SMEs. Other future possibilities of research might arise
from the study limitations as has been formerly been conversed.
A longitudinal study would be enabling a bigger understanding of the process of
entrepreneurial along with leadership as it could be measuring the effects of the leadership along
with the improvement of the entrepreneurial ventures during certain times. Thus, it can be stated
it would be providing key information about the possible variations in the performance as an
organization makes its move through the various phases.
It is also being recommended that the exploration of the applicability by the future
research of the framework of entrepreneurial success within the context of various industries and
country, especially in case of another developing nation. The findings of such research would be
further testing the applicability theory of John Kotter. Another thing that can be recommended
for future research work is considering exploration of the leaders of SME from the perspectives
of the managers. A comparative analysis of the efficient leadership between the results accessed
from the leaders themselves along with the perception of the employees might manufacture a
better understanding of the ways the SMEs could perform which can be further improved or
developed.
Finally, an examination of the behavior of leadership as the factor stage has the ability to
augment and develop a healthier understanding of the factorial possessions of the leadership on
the performance of the organizations. In this study, it has been found that certain factors like
motivation, communication along with idealized influence have been professed to be

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accomplished more than some of the other factors by the SME leaders. Therefore, a detailed
study at the extent of the factor could offer empirical findings with the implications for detailed
leadership that is to be offered for the development if the entrepreneurship within the country.

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Reference:
Arend, R. J. (2014). Entrepreneurship and dynamic capabilities: how firm age and size affect the
‘capability enhancement–SME performance’relationship. Small Business
Economics, 42(1), 33-57.
Arham, A. (2014). The relationship between leadership behaviour, entrepreneurial orientation
and organisational performance in Malaysian small and medium enterprises.
DeKrey, S. J., & Portugal, E. J. (2014). Strategic sensemaking: Challenges faced by a new leader
of an SME. Procedia-Social and Behavioral Sciences, 150, 56-65.
Laforet, S. (2013). Organizational innovation outcomes in SMEs: Effects of age, size, and
sector. Journal of World business, 48(4), 490-502.
Leitch, C. M., McMullan, C., & Harrison, R. T. (2013). The development of entrepreneurial
leadership: The role of human, social and institutional capital. British Journal of
Management, 24(3), 347-366.
M. Stoffers, J., IJM Van der Heijden, B., & LA Notelaers, G. (2014). Towards a moderated
mediation model of innovative work behaviour enhancement. Journal of organizational
change management, 27(4), 642-659.
Romanowska, J., Larsson, G., & Theorell, T. (2014). An art-based leadership intervention for
enhancement of self-awareness, humility, and leader performance. Journal of Personnel
Psychology.

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Suriyankietkaew, S., & Avery, G. C. (2014). Leadership practices influencing stakeholder
satisfaction in Thai SMEs. Asia-Pacific Journal of Business Administration, 6(3), 247-
261.
Winit, W., Winit, W., Kantabutra, S., & Kantabutra, S. (2017). Sustaining Thai SMEs through
perceived benefits and happiness. Management Research Review, 40(5), 556-577.