Executive Education

Why emotional intelligence is the critical component of an SME leader

By John Lightfoot, Head of Relationship Management & Client Service at Ultimate Finance
Executive Education
Published: 14 May 2018

UK SMEs constantly find themselves battling against the same headwinds and many could say we’re on the verge of a full blown storm. In fact, Barclays’ ‘SME Hopes and Fears’ report this year found rising inflation and cybercrime are two of the biggest worries for small businesses, while there will undoubtedly be headaches caused by the introduction of GDPR.

While some SME leaders may react to such issues with stress and pulling their hair out in frustration, a strong business leader will react to the headwinds effectively to find a solution, rather than buckling under the pressure. This is only possible for those who embrace what I believe is THE most critical component of an SME leader – emotional intelligence. Without it, they may be completely unaware of how its words or actions impact the workforce and its customers, which can have a catastrophic impact on a business.

So how can SME leaders transform their business by embracing emotional intelligence?

Time to change your mindset
Emotional intelligence is made up of five key areas: self-awareness, emotional control, self-motivation, empathy and relationship skills. Each of these elements is key to a successful, long-term customer relationship and should be at the forefront of every SME leader’s thoughts.

Take face-to-face meetings for example. The standard approach is to produce an agenda, share it with customers in advance and stick to it rigidly for the 90 minutes you’re talking. If that sounds familiar, ask yourself what value you’re adding to that customer during the meeting. How much would they be willing to pay you for that visit if you were paid per visit? Not a lot.

An emotionally intelligent leader will remove agendas from the vocabulary of the workforce, instead focusing on meetings which aim to solve issues the customer is struggling with. If you can leave a meeting having resolved one or two of their key problems, not only will the customer be in a better position, but the relationship will have been improved too. The next time they have an issue, it will be you they turn to. That’s true added value thanks to emotional intelligence.

Transforming the workplace
It’s not just customer relationships which can be transformed with emotional intelligence – it can have a vast impact on a business internally too. Take David Brent from ‘The Office’ for example, potentially the perfect example of a business leader without an ounce of emotional intelligence. When tasked with telling the workforce redundancies are being made he makes it about himself, telling them that the bad news is there will be job losses and those who stay will have to relocate. The good news? He’s getting a promotion. Unsurprisingly, it went badly.

The most successful SME leaders will have an acute awareness of what motivates their workforce and how their actions impact colleagues. Something as simple as running a regular satisfaction survey can prove invaluable, giving direct insight into what’s working and what can be improved. It’s the ability to act on this data which truly sets leaders apart however.

For example, if career progression is a key motivator for staff, building a learning culture is a clear way to show you respect the wants and needs of the workforce. I believe this is key, as people who embrace the culture will continue to progress and by running knowledge sharing sessions, the learnings of one person soon equates to a more well-rounded team. People benefit on a personal level and will quickly become more loyal as a result. The team will become more close-knit, productivity will increase and the company will grow – strong relationships lead to strong businesses.

Understanding emotions
Whether managing employees or speaking with customers, emotional intelligence is the most important skill an SME leader can have. Taking a “one size fits all” approach to management is no longer acceptable as both the working environment and customer-base are as diverse as ever. Assuming how one person reacts in a particular situation will be mirrored by all other employees or customers is very short-sighted and can be the difference between success and failure in the long run, whether it’s an angry customer or an employee leaving due to what they feel is unfair treatment. Embracing emotional intelligence can directly diminish the likelihood of such issues arising, while creating a business people want to work for and engage with.

For more information vist www.ultimatefinance.co.uk