The topics of skills shortages and the rising cost of doing business have been in the headlines for a while. Many SMBs have struggled without success to find enough people to keep work flowing, forcing them to reduce opening hours or offer inflated salaries. With inflation continuing to rise, businesses’ ability to tempt workers with above-average pay is increasingly unaffordable, even as the tough economic climate makes it more important than ever to boost productivity.

So, how can you make the people you have happier and more productive? It might be as simple as changing your approach to leadership. Appointing new leaders who aren’t well supported can quickly increase the attrition rate at a business. A Seek poll found that poor leadership is the number one reason people leave their jobs, followed by lack of development opportunities. As we all know, one person can affect the whole dynamic of the team – especially when they’re the manager.

Traditionally, businesses have promoted the people who are best at their jobs, but that doesn’t always translate to being a good leader. IQ and EQ (also known as Emotional Intelligence) are very different things. Some new leaders may have been a peer of the team and can’t make the transition well.

Other businesses seek out external high-flyers, without making the effort to recognise and identify the talent within the business already. That may indeed be the best option. Promotion should never be awarded as of right, simply because someone’s “been here for a long time”. However, it’s important to provide opportunities for growth within your teams, as well as to know you’ve explored your internal options before going through the rigours (and expense) of the recruitment process.

Here are some tips to get the most out of your business, by better harnessing the talent you already have:

Go back to the middle

It’s essential to have the right structure for growth. Back in the 2000s, many New Zealand businesses went through a "rationalisation" process, restructuring for leaner, flatter organisations without that layer of middle management. These days, things are going back the other way. Cutting out middle managers was a false economy, meaning that GMs are trying to do the strategic work – which enables growth – as well as run things day to day. We’re now seeing more roles for ops managers at mid-sized businesses, recognising how essential people management is to your bottom line.

Coach for success

Small businesses can’t always support that extra management layer, and owners often don’t have the time to mentor team leaders, which makes getting in leadership coaches and experts worth considering. For example, everyone has different communication styles, meaning they respond to certain ways of working and giving feedback differently. Coaches can train managers to identify how members of their team like to be communicated with, and how to deliver constructive criticism in a way that resonates best with each person, so there’s less confusion and conflict.

Test for talent – then back it

As the saying goes, DIY is in our DNA, but so often, businesses prefer to hire someone external who ticks all the boxes, buying “ready-made” without investing in someone within the business who has potential but might need a bit of support to gain management experience. This is where psychometric testing isn’t just useful for screening new hires. It can also be used to identify the people within the business with the best leadership skills, who are good at managing emotions and understanding how to get the best from people. Instead of trying to find the perfect manager in the open jobs market, it’s often easier to train someone with the right aptitude up and recruit for their (less senior) replacement instead, especially in the regions.