By Mark Perrin is an advisory partner at accountancy firm, Menzies LLP.
As business leaders prepare for yet another economic downturn, driven by rising inflation, skills shortages and ongoing supply chain disruption, it is more important than ever that they adopt a positive mindset to optimise their financial performance and productivity. But do they have the positive energy leadership skills to navigate their way to a brighter economic future?
The current economic instability and political turmoil has pushed the importance of management best practice to the top of the corporate agenda. However, even well-managed businesses will struggle to fulfil orders and maintain good standards of customer service if they are shedding skilled staff, or they are unable to attract the right people to the right roles. At a time when many industries are facing skills shortages, employers are finding it increasingly difficult to recruit and retain talented people.
Practising positive energy leadership behaviours can help businesses to retain and motivate staff and maintain outputs during challenging trading periods. However, with so many day-to-day challenges to deal with, some business leaders may feel they are stuck in fire-fighting mode and lack the time to dedicate to improving their leadership skills.
To make matters worse, rapidly rising energy and fuel costs are forcing many employees to make difficult decisions about how to manage their household income, and consumer confidence has dipped. The Bank of England has warned that the UK economy is heading for recession and as many business leaders know, this can encourage feelings of job insecurity and impact workplace morale. Demonstrating positive energy leadership can help to improve business resilience by creating a strong workplace culture where individuals and teams can thrive, while strengthening stakeholder relationships and improving cashflow management.
Positive energy leadership involves encouraging individuals and teams to be the best that they can be by promoting positive, team-focused behaviours and encouraging a positive attitude led from the top. These techniques can be used to influence all areas of business, from sales teams through customer service, as well as cashflow and supply chain management.
Whilst positive energy leadership should ideally be practiced all year round, the true test comes when the business is facing challenges and things aren’t necessarily going to plan. How leaders respond in these circumstances can have a lasting impression on the management team and the workforce as a whole, and help to nurture a dedicated, motivated group of people.
For business owners or managers looking to build positive attributes into their processes and procedures, it is important to consider their impact on all areas of business. Creating a strong communication network within a business is one way that leaders can ensure information is getting to and from the right people, as efficiently as possible. For example, positive energy leadership could involve reaching out to the workforce for cost saving ideas and implementing them. It could also involve setting up cross-functional teams to discuss pricing strategy, deciding how much cost can be passed on to customers or identifying opportunities to push for a keener price from suppliers.
This focus on positivity can also be applied to business data. For example, sharing sales data transparently across the organisation can generate opportunities to celebrate success. When staff see others doing well, this can motivate them to behave similarly and find their own way of having a positive impact on the business.
When applied to financial management, positive energy leadership will enable management teams to take a proactive and forward-looking approach. Strong working capital management based on three-way cashflow forecasting, allows business leaders to see what the future looks like using a range of scenario-based models. Positive energy leadership also means a rigid focus on cash management in areas such as credit control and pricing, protecting margins and delivering value to the bottom line.
Another way that business owners can promote positive behaviours is to make it part of their business model by demonstrating a commitment to Environmental, Social, Governance (ESG). This will help to attract talented people to the organisation. It is also important to ensure employee benefits are aligned to what workers really want. For example, putting a focus on wellbeing can be achieved by offering flexible working options, which have become a staple expectation of many employees. Promoting diversity and inclusion and embedding this into recruitment practices is also important when building an engaging employer brand.
To ensure positive energy leadership becomes part of the business and the way it operates, it is important to measure the difference it makes and establish some Key Performance Indicators (KPI). This can help to identify areas that still need focus, at the same time as giving managers a deeper understanding of the benefits it can bring to all areas of the business. For example, staff engagement surveys can provide a useful insight into what motivates staff to stay with the business.
As they prepare for 2023, business leaders must ensure they have the right mindset to get the best out of workers and achieve the best possible outcome financially and in terms of building a more resilient operating model. Leading from the top and applying the principles of positive energy leadership will mean businesses are better placed to deal with the challenges that lie ahead, while being ready to react quickly to commercial opportunities.