By Tommy M.Onich BBA, CTP
Presently the Canadian Business environment is facing exceptional challenges. At the time of this writing:
The official inflation rate was recently reported as 8.1%, which is a 40 year high.
The Bank of Canada increased its over-night borrowing rate to 3.75%,making interest rates the highest since 2008. Inflationary pressures may well see this rate increase.
This rise has contributed to a shock in the all-important real estate industry with some dire predictions of devaluation.
Our American neighbors are also facing challenges with high inflation and rising interest rates.
Internationally there is tremendous instability. The war in the Ukraine will have an impact internationally. It is now estimated at 4.25 trillion dollars and it is far from over.
The Bank of Canada predicts that Canadians will have a “rough winter”.
While financial experts may speculate about outcomes, this is certainly a setting for an economic perfect storm.
In a custodial environment the Small Business can continue with good administration and management throughout its hierarchy, complemented by competent leadership at its top.
The distressed organization must have competent leadership at all levels. This is because they face an environment that is harsh, unforgiving, and ambiguous. This environment is much different than the already demanding custodial environment.
A transformation from crisis to prosperity is indeed possible. Such a metamorphosis has pre-requisites: financing for recovery, a viable core product and leadership.
In over two decades of working with small business as senior officer, financier, or advisor I have come to learn that leadership is paramount, it is the sine qua non of recovery.
Leadership is the ability of an individual to lead, guide, or influence other groups of people in a business or organization.
It entails a clear and communicated vision to stakeholders and team members, the ability to organize effectively and efficiently, to provide motivation and inspiration towards goal achievement, and to balance the inherent conflict of interest in all stakeholders.
Leadership is the essence of recovery. Only with leadership can the core of the business be leveraged, wise use made of scarce resources, threats made effectively, morale and motivation restored, and an essential culture of performance management be established.
The leader is both the architect and implementer of strategy.
A leader’s ability to influence others is huge to the success of any turnaround. Successful execution of any plan is entirely contingent upon the consent, anticipation, and agreement of others even while they face the real possibility of impairment to their interests.
Without a doubt this ability is governed by what we now call emotional intelligence. Whatever name we ascribe to this quality it has five components.
1. A sense of self. This is a deep understanding of one’s weaknesses, needs, emotions, strengths, and drives. People with this characteristic are honest with themselves and others. They know their path and are open and honest with both themselves and others.
2. Discipline or self-regulation is the component of emotional intelligence that prevents us from being prisoners of our feelings. A leader with this quality can create an environment of trust and fairness. Most of all it reinforces the notion that the leader has both strength and integrity. The leader who “walks the walk and talks the talk “demonstrates both.
3. Drive is especially important in distressed organization. The leader with drive is driven to achieve beyond expectations with tenacity and energy, again serving as a an example to others.
4. Empathy. This is the ability to identify and understand another person’s feelings. Empathy is of particular importance. It is necessary to understand the effects that change, and compromise will have for all stakeholders before the leader can solicit their cooperation.
5. Social Skill is the culmination of the other dimensions of emotional intelligence that we have explored. It integrates the sense of one’s self, discipline and empathy to form a synthesis allowing the leader to gather consensus and build rapport.