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Leadership Development: An Important Investment for Startups

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Leadership is crucial for the success of any business. Top organizations put a high priority on it: according to a survey by Deloitte’s Global Human Capital Trends, 80% of business leaders rated leadership as a top priority. The importance of leadership development cannot be overstated, as growing companies require teams with effective leaders; and with the constant emergence of new teams and challenges, it’s important for companies to have a pipeline of professionals ready to take charge. When it comes to startups, however, the need for leadership development becomes even more clear and urgent.

Why Leadership Development is Key

It’s no surprise that VCs and platform teams now offer leadership development support beyond traditional recruitment. A strong leadership team can steer a startup towards growth and profitability, whereas the lack of strong leadership can cause stagnation and ultimately, failure.

Startups should invest in a leadership development program (LDP) if they want to avoid the common pitfalls that can result in failure. A staggering 65% of startups fail due to “people problems.” Just because someone is successful as an individual doesn’t necessarily mean they have the skills to be a successful leader, and team leaders in the startup community are often first-time managers. Without proper training, as many as 60% of them will fail within the first 24 months.

On the other hand, strong leaders can make a significant difference, with Gallup reporting that leaders account for 70% of the variance in global employee engagement—and high engagement leads to more positive outcomes for the business. While employees at startups can acquire a variety of skills, leadership skills are not one of them, making it crucial for startups to invest in their development.

Benefits of LDP

Effective leadership is not just about having certain attributes, it is defined by the results it delivers. Leadership development can be a real game-changer in terms of business growth and success. It helps create a pool of talented and capable leaders who can steer the organization through any challenges it may face and ensures that the business has the right mix of managerial skills and inspirational qualities to drive growth.

LDPs have been proven to have numerous benefits for both employees and the company as a whole. These benefits can range from increased competitiveness and increased profitability to better talent recruitment and retention. The improved workforce morale that results from investing in leadership development can be a huge draw for top talent, making it easier for the company to attract and retain the best people.

Moreover, succession planning and skills progression become smoother, ensuring that the company always has the right people in place to drive growth. A well-run leadership development program can help cultivate a positive corporate culture, making the company an attractive place to work and an even better place to do business.

On the other hand, the absence of leadership development can lead to low morale, poor productivity levels, a dysfunctional company culture, and a high employee attrition rate, factors which can significantly hinder a company’s growth and success.

What Does a LDP Look Like?

A good leadership development program should cover most, if not all, of the following areas:

  1. Problem solving: helps leaders to make informed decisions and tackle complex business challenges.
  2. Building trust: strengthens relationships with employees and boosts productivity.
  3. Emotional intelligence: enables leaders to understand and manage emotions in the workplace.
  4. Effective communication: improves communication skills, leading to more effective collaboration.
  5. Accountability: helps leaders hold themselves and others accountable, leading to increased accountability across the organization.
  6. Motivating employees: encourages employees to perform at their best and achieve company goals.
  7. Delegation: allows leaders to delegate tasks effectively and maximize productivity.
  8. Time management: helps leaders prioritize tasks, leading to better use of time and resources.
  9. Conflict resolution: enables leaders to effectively handle conflicts and resolve disputes.
  10. Feedback: helps leaders to provide constructive feedback, leading to improved employee performance.
  11. Hosting productive meetings: enhances meeting skills, leading to more effective communication and decision-making.
  12. Change management: helps leaders lead and manage change effectively, improving company performance.

A Strategy From Top to Bottom

To maximize the benefits and ensure the program’s success, it’s important to involve the entire organization in LDP. Clear parameters and goals should be defined, and frameworks should be adopted that work for the company, before identifying potential leaders. It’s important to integrate the program with the HR or talent management system and monitor the program’s progress.

To ensure success, leaders should set expectations and provide direction, and the organization should make self-assessments, define expectations, and track progress. A blended learning approach should be adopted, with a variety of on- and off-site training, mentoring and workshops, and this should be unified across prospective leadership candidates as well as current leaders. Leaders should be encouraged to put newfound skills into practice, ask for feedback, and make small marginal improvements over time.

By following these steps, a startup can ensure that their leadership development program will provide lasting benefits for the company’s growth and success. However, bear in mind that not every program will work for all companies, and an organization should remain flexible, as they may need to change strategies and methods later on.

A Valuable Investment

To paraphrase Einstein, when a business stops learning, it starts dying. Leadership development is critical for the success of all organizations but particularly so for startups, where leaders must continuously strive to enhance their skills and knowledge to remain effective and relevant in a constantly changing business environment.

Startups must be proactive in building a culture of continuous learning and development to support the growth of their organization. Investing in leadership development can drive growth, boost employee engagement, and enhance the overall performance of the business. As such, it is arguably one of the most valuable investments a startup can make.

About the author


Matt Eitner

Matthew Eitner is CEO of Laidlaw & Company, and has led the firm of 150+ employees from strength to strength since 2010. In 2020, Eitner accelerated the company’s growth by spearheading the acquisition of independent consulting firm Naples Wealth Planning. Specialists in the health sector in the UK and USA, Laidlaw is always looking for the latest innovative solutions.