Positive leadership undeniably has an effect on the success and experience of employees working at a business. But crucially, it also makes for a more effective and efficient business. A recent report from the Enterprise Research Centre claimed that, irrespective of sector, a key characteristic of high-growth firms is "transformational and inspirational leadership".[1]
In this article, we outline four ways that will help you improve business efficiency by implementing a positive leadership style. We also include expert insights from SME owners who have managed to grow their margins using some of these strategies.
The importance of business efficiency
Business efficiency is vital because it underpins profitability; the greater the output, using the least amount of time, money, and other resources, the greater your margin. In order to maximise business efficiency, a business must identify and cut down the biggest time, money and resource-wasters in its daily operations. This is where a positive leadership style can help.
Three ways positive leadership can improve business efficiency
Being a good leader is not just about being inspirational, it’s about identifying strengths in your workforce, driving growth through operational efficiencies, and saving money by minimising employee turnover.
1. Identify individual strengths and weaknesses to build more efficient teams
Creating an environment where your staff can be as authentic as possible helps you to identify their strengths and weaknesses and, in turn, find out how to build teams containing complementary skillsets. Speaking on the Business Class: Money Minutes podcast, global strategist, executive coach, mentor and former Microsoft Europe Chairman Jan Muhlfeit discussed his belief that a great leader understands their own strengths and weaknesses and encourages others to discover their own.
Muhlfeit used a strength finder test on all employees in his region to explore how they could best use their strengths to achieve their individual goals and, in turn, improve business performance. This helped Muhlfeit take the Central European region at Microsoft from a below-average region to the best-performing region worldwide in three months.
PWC’s most recent CEO survey [2] revealed that 70% of UK employers are planning to drive growth through organisational efficiencies. But identifying inefficiencies can be hard when you’re at the helm of your business, which is why your team’s input is crucial.
UK-based boiler business Heatable’s CEO and co-founder Sam Price found ways to uncover his team’s strengths to inform where to direct his key players across the business. "Tracking employee performance and peer reviews are two of the most effective methods of identifying employee strengths," he says. "For instance, in the sales department, it's quite easy to see who is making the most sales and receiving the most positive feedback from customers and colleagues.”
Price also implemented a range of systems including peer reviews and learning modules to track employee performance, particularly among those who are hesitant to shout about their own successes.
“The way in which performance is assessed varies between departments, but we always have some way to measure it," says Price. "Peer reviews provide an accurate view since it's from the perspective of those they engage and work with on a daily basis. We also have an employee-of-the-month programme, where employees can provide positive feedback on colleagues in their department. Monitoring performance and feedback is a useful way for us to maintain a positive focus and create an atmosphere where trust and motivation thrive."
Workplace assessment tools are increasingly becoming a management staple today. Many use a subscription model to help you check in regularly with new and existing staff. Consider using an American Express® Business Gold Card to pay for these investments. The Card offers up to 54 day payment terms¹, giving you additional time to manage your cash flow.
2. Empower your employees to be accountable for business outcomes
Once you’ve identified the strengths of your employees, you can redirect their efforts to relevant tasks, and build an efficient team where roles and outcomes are clearly defined. Help them see a direct correlation between the work they do and the impact it has on the bottom line.
London-based clothing brand Banana Moon uses a unique process to build holistic performance targets that benefit areas of operations beyond just sales. “We created an easy, simple to use metric for the whole team to see how we're tracking against our targets in a snapshot," says Managing Director and owner, Alex Grace. "This encourages responsibility and awareness of outcomes among every team member.”
Grace uses the PSQCD process, which stands for People, Safety, Cost, Quality, Delivery. Targets across these metrics include one-hour training in any department per day (People), making one health and safety improvement per week (Safety), receiving one 5* Trustpilot review in a day (Quality), achieving zero business errors or spoils in production per day (Cost), and ensuring 90% of orders per day are ‘on time in full’ (Delivery). Results are shared on the office wall, as well as on team members' computer and tablet screens, so everyone in the business is conscious of overall results, according to Grace.
3. Invest in your employees
High employee turnover can be particularly costly top companies. According to a 2021 report from Advisory, Conciliation and Arbitration Service (ACAS), staff turnover is the single largest expense to employers; replacing employees costs UK businesses up to £2.6bn a year [3]. The report also found that the most efficient way to cut turnover costs is to keep your current staff happy.
Beyond verbal recognition, rewards such as vouchers and cash bonuses are in high demand. An American Express Business Gold Card makes rewarding employees for their hard work easier. For every £1 you spend, you’ll earn 1 Membership Rewards® point² ,which you can use to redeem a wide range of perks and gifts to show appreciation for your team.
- The maximum payment period on purchases is 54 calendar days and is obtained only if you spend on the first day of the new statement period and repay the balance in full on the due date. If you'd prefer a Card with no annual fee, rewards or other features, an alternative option is available – the Business Basic Card.
- Membership Rewards points are earned on every full £1 spent and charged, per transaction. Terms and conditions apply.
- If you'd prefer a Card with no annual fee, rewards or other features, an alternative option is available – the Basic Card.
Sources
[1] ERC, State of Small Business Britain 2020
