The efficiency of chief management depends on personal qualities of a manager, which determines success in certain activity. Psychologists distinguish specific skills and overall ability of the individual. However, the leadership in a certain enterprise also depends on manager’s experience, knowledge, and skills as well as personality traits. Leadership behavior is characterized by the ability to use management methods and techniques together with managerial skills.
Managerial skills involve ability to solve non-standard managerial problems without ready-made solutions associated with specific, and sometimes conflict, situations. One of the most important skills of the powerful entrepreneur is an ability to determine what kind of problems may arise.
Strong leader knows how to evaluate the effectiveness of subordinates. He or she tends to solve complex or important issues and understand the non-standard situations relying on autocratic methods of leadership. Sometimes, he or she can impose his or her authority on strong subordinates using democratic methods of leadership and focus on their abilities and skills.
Other important personality traits and characteristics of the manager include his ability to dominate in the team, confidence, emotional balance, and responsibility.
Main Characteristic of the Entrepreneur
An entrepreneur faces various difficulties in business spheres and management, therefore, an entrepreneur has to be a comprehensively developed person. On the one hand, an entrepreneur should have diversified knowledge in economics, psychology, politics and law; on the other hand, he or she should be able to organize the effective interaction of specialists in various professional fields, productively co-operate with scientists to develop new ideas, and involve the owners of capital and marketing specialists.
Having established a business, an entrepreneur should take responsibility for all spheres involved in it (Kuratko 2009, p. 32). He or she should be able to determine the most appropriate activity to invest in, find the required raw material suppliers, estimate energy consumption, produce consumer goods, rent the premises and examine the state of the market for goods or services, set the best price for products to obtain the required profit and compete with other producers (Zimmerer & Scarborough 2005, p. 18).
Therefore, an entrepreneur should satisfy the highest demands in the areas of business, ability to assess the results. It is important to strive for improving the quality of products and services, be able to accurately and efficiently calculate the cost of the goods, establish strict accounting of receipts and expenditure of resources.
Due to these demands, the entrepreneurs need to have proper skills, confidence in themselves and in their abilities. Individuals who are not confident in their entrepreneur activity cannot maintain their work.
An entrepreneur often puts his funds, prosperity and the future of an enterprise at risk (Okudan & Rzasa 2006, p. 197). The sufficient entrepreneur should look for new opportunities, forcing the folding circumstances (Ensley, Pearce & Hmieleski 2006, p. 14). Therefore, an entrepreneur should be active and easy to start everything from scratch again. However, success will accompany him only when he will have a plan of action. The plan has to include steps for achieving goals through the implementation of flexible tactics, conscious risk, the use of as much information as possible, constant analysis of financial results, the effectiveness of partnerships, customer orientation.
Entrepreneurial activity is associated with business ethics. Personal qualities of an entrepreneur influence his or her business qualities (Gibb 1993, p. 23). Along with the predisposition to the business activity, an entrepreneur can add more expertise by training and practice. The synthesis of these two principles enhances superior quality of one’s entrepreneur skills and their ability to make decisions. Making decisions, the entrepreneur is willing to be responsible for their consequences, not only to his or her partners, but also to the employees and society in general (Parks 2006, p. 34).
Effective work requires not only the presence of the entrepreneur’s capital, but also a rational disposition of money, material and labor resources for profit (Fayolle, Gailly, & Lassas-Clerc 2006, p. 715). The employer must clearly navigate the evolving market conditions and make the right decisions. It is much more difficult to determine the real demand for the product. Therefore, an entrepreneur needs to understand psychological and social needs among people in order to provide proper goods on the market.
Therefore, an entrepreneur begins with defining the priority sector, i.e. he or she needs to establish how the production of goods which he decided to supply on the market is consistent with its capabilities, availability of production resources, facilities, labor, and financial resources. It is necessary to consider the possibilities and conditions for the acquisition of raw materials, equipment, as well as other fixed and current assets, obtaining bank loans, networking sales of finished products, and the tax policy of the state. Due to the importance of these steps, an entrepreneur should understand the accounting sphere of business.
Main Characteristic of the Leadership
In the current essay, the role of leaders and managers in an organization will be considered and the roles of leaders and managers in the enterprise will be compared and contrasted. First of all, leadership is a psychological characteristic behavior of individual group members and leaders. However, it is also a social characteristic of behavior within the group, and especially in terms of the roles of governance and subjugation.
Secondly, there is a crucial difference between formal leadership, which is resulted from a formal position in the organization and natural leadership, originated in the recognition of other personal superiority of a leader (Nicholson 1998, p. 519). Therefore, it should be noted that leaders have qualities of excellence, and their supporters believe that they possess these qualities.
On the one hand, leader and the manager are dealing with the same type of problems associated with the stimulation of the organization’s personnel, targeting it at solving specific problems, concern about the means by which these objectives can be achieved. On the other hand, manager is a person who directs the work of others and takes personal responsibility for its results. A good manager brings order and consistency in the work performed (Nicholson 1998, p. 510).
A leader inspires people and brings enthusiasm for workers, helping them adapt to the new conditions, go through a stage of change. Managers tend to take a passive stance with respect to the objectives. Leaders, on the contrary, set their own goals and use them to change people’s attitude to business.
Officially, appointed head of division has advantages in capturing the leading position in the group, so he or she is more likely than anyone else to become a leader. However, we must remember that being a leader does not mean to be automatically considered a leader because leadership is largely based on an informal basis.
In addition, the behavior of the formal leader depends on whether he or she tends to move it up the ladder or is satisfied with his or her present situation and does not seek to to be promoted. In the first case the head, identifying him- or herself with the larger groups within the organization, is oriented on emotional attachment to the working group, which can become an obstacle in his or her path. Leader’s commitment to the group may interfere with his personal ambitions and be in conflict with his commitment to the governing group of the organization. Secondly, the formal leader identifies himself with his subordinates and tries to protect their interests.
Managers are mostly oriented on a strict order in collaboration with employees. They build their relationship with them accordingly, the roles coordinated with sequence of events or formal process of decision-making and implementation. It largely occurs because managers see themselves as part of a particular organization or members of particular social institution. Leaders are selected and kept of people who understand and share their views and ideas reflected in the leader’s vision. Leaders address the needs of workers, their perceived value and their emotions. Leaders tend to use emotion and intuition, invoke strong feelings of love and hate type in their followers (Eyal & Kark 2004, p. 223).
Leaders do not associate themselves with respect to the membership of a particular organization. In addition, leaders establish goals in response to each of their own visions of success in different situations. Moreover, leaders form their relationship with subordinates on trust, motivating and inspiring them. They lay the basis for trust in a group working together. Therefore, different abilities and skills of leaders are concentrated on their efforts in the field of decision-making. They are trying to narrow the set of solutions to the problem. Decisions are often based on their personal experience (Birley & Muzyka 2000, p. 56). Managers, on the contrary, constantly undertake efforts to develop new and controversial solutions to the problem, most importantly, after they solved the problem , the leaders take the risk and burden of identifying new problems, especially in cases where there exist significant opportunities to realize oneself .
It is important to distinguish between the notion of formal and informal leader. Non-formal leadership develops through a process of influence by abilities and skills or other resources people need. In this case, the effect comes from the recognition of the leader’s personal superiority. Formal leadership is the process of influencing the people from the point of the official position in the organization.
Formal leader has support in the form of delegated authority of official acts and usually assigned to him in particular functional area. Informal leaders are nominated by their ability to influence others, and thanks to their professional and personal qualities. In practice, as a rule, a perfect compliance with these two types of relations management is not observed. Studies show that a significant group of executives largely has leadership qualities. However, the reverse version is found less often in real life. Therefore, leadership is the process of impact on a group of people to lead them along towards the joint implementation of management decisions to achieve certain goals
Why an Entrepreneur Needs to Be a Leader
One of the undoubted positive personality traits of entrepreneur is his or her leadership qualities, as he or she distributes wealth and provides employment to hundreds of people. At the same time, leader stimulates progress in society and makes a revival in the economy, which gives rise to the evolution of society.
To meet the public interest employer should examine the interests of a certain group of people; suggest some ways to meet existing interests or solving actual problems; be able to help with business activity to extract their own benefit, allowing social problem (Cornwall, Vang & Hartman 2004, p. 18).
First quality of the leading entrepreneur is the independence in a global sense, which can be defined as the human desire to determine their own life, to choose their own goals and means to achieve them. The presence of such personality traits is one of the most important conditions for success. The reason why people become entrepreneurs in the first place is that they are not satisfied with their role as an employee lacking independence on their previous workplace (Fernald, Solomon & Tarabishy 2005, p. 17).
Ambition is also an important quality that helps novice businessperson who decides to overcome any obstacles in his path to success. It is interesting to note that people’s attitude to this personal quality is significantly different in different cultures. In the U.S., it is estimated as a virtue. Moreover, such people normally posses strong beliefs and convictions. Nevertheless, ambition together with an increased self-esteem and belief in success gives a person extra strength and helps to cope with difficulties.
Diligence as a personal quality characterizes many successful people in the business (Vecchio 2003, p. 14). They work not only to increase their profit, but also because they enjoy the process of work. Resistance to troubles in life and the ability to keep away from misfortunes consists of two components: the ability not to be discouraged if something goes wrong and the ability to extract the positive experience from failure (Timmons 1999, p. 43). Another important point about effective leadership is that a successful leader must always be able to find an optimal balance between the two extremes.
Modern prototype of a leader is mainly based on the contribution of individual and group psychological mechanisms in development. Implementing anti-crisis measures requires managers’ organization, flexibility and adaptation. Emotions and personal motives are not purely personal matter for a leader.
It is believed that success in business does not always correlate with the level of intelligence. At the same time, self-control , perseverance, understanding of emotions and reasons for the behavior of others, the ability to influence the motivation of others are of utmost significance.
Leaders have to know and take into account expectations about themselves by employees of the organization and the individual units. Knowledge and consideration of such expectations significantly contributes to the improvement of management style, performance and competitiveness of the organization.
Emotional competence is the crucial constituent of success in leadership and achieving results while working with people. Leaders with high levels of emotional competence are likely to lead the company much more efficiently than leaders that are prone to stress in difficult situations. Therefore, the higher the emotional competence of a leader is, the greater his or her ability to adapt in risky and stressful conditions will be, which is more effective in relation to employees. The psychological component requires more understanding and its significant contribution to economic processes.
The issues of leadership in a small group as well as in the system of management, is reflected in human psychology due to the fact that organization is built on personal relationships, social factors and communication.
Customary system of planning, budgeting, controlling, and streamlined business processes are becoming an obstacle to the implementation of organizational changes, therefore, the leader becomes a force that destroys the existing system of management.
Developmental psychology is characterized by the possibility of informal leaders to develop their organizational skills and become authoritative leaders in the organization or enterprise, not only for the members of a given community. Leadership is the result of actions taken by the individual.
In reality, a perfect compliance with these two types of relations, i.e. leader and manager, is not observed. A group of managers would normally demonstrate leadership qualities. However, organizational skills are not always inherent to the informal leaders.
Natural qualities that attract supporters to the leaders are very pragmatic as they meet the desire of society to look for a powerful decision-maker. Therefore, an enterprise, an organization, or a business need strong entrepreneur who possesses sufficient level of leadership skills.
Main Characteristic of the Entrepreneur Needed to Be a Leadership
Analysis of personality characteristics of the most successful business leaders of America shows that most of them have six pairs of these operating characteristics, which at first glance seem to be mutually exclusive: Ambitiousness, Modesty, Strategic Thinking, Attention to detail, Enthusiasm, Inner peace, the ability to take risks, Ability to benefit from mistakes. The most interesting thing is that any of these qualities in its development becomes balanced with its opposite.
Ambition is one the most important quality of an entrepreneur, which gives a successful leader enough energy to reach success in modern business. It should be noted that there is nothing that inspires employees, as much as a demonstration of their leader’s achievements.
Successful strategy is what distinguishes a successful company from a mediocre one, an outstanding leader from a copycat of ideas of others. The main strategic idea of many successful businesspersons is that they are not repelled by their desires and the needs of the people who are paying for the fulfillment of their wishes. Therefore, the desire of people to communicate with each other led to the increase in wealth of cellular companies, people’s desire for health enriched pharmaceutical companies and the thirst for fun brought profits to entertainment industry.
At the same time, trying to think big, the manager should understand that sometimes small annoying mistake can ruin the most ambitious venture. Therefore, a wise leader always thinks about the little things (Burns 2010, p. 32).
Enthusiasm is what can infect people with the desire to perform feats of labor. No great project was carried out only by virtue of cold calculation. Faith in the future, belief in success, pride in their organization, and the joy of common work are the factors that greatly increase the resource of the organization and it’s the leader they come from. When the time of inspiration and emotional rush ends, it’s time for logic and calm trust in the correctness of the entrepreneur’s business plan.
Doing business is not possible without risk, so an increased tendency to risky behavior is a normal feature of the entrepreneur. However, be aware that the risk can be justified and unjustified. In the first case, the person is ready to take some action in the face of uncertainty, if he or she sees that the probability of success is high enough (Taffinder 1995, p. 32). If the person did not appreciate the likelihood of an adverse event, or he begins an affair with an extremely low chance of success, the risk is not justified. Therefore, the entrepreneur should be able to take some risks, but he or she should be wise and careful enough to avoid risk in vain. Hence, it is extremely important for the entrepreneur to be able to calmly analyze each of his mistakes and learn from them in order to repeat them in the future.
Leaders are those who want people to entrust them their fate and their future. People become leaders voluntarily, because they possess certain moral and professional qualities. Leader’s authority is based on his ability to use his power in order to achieve group goals and express its value. Leader arouses enthusiasm in his followers through the creation of images of future that can be obtained through hard work and certain sacrifice. Huge motivating force is a beautiful dream fully utilized by a skillful leader to unite the group and increase its efficiency (Birley & Muzyka 2000, p. 129). The leader of the organization acts as a strategist who sees the future development of their organization for several years ahead on the basis of existing social conditions and resources.
Unlike the leader, manager performs mainly tactical tasks. He or she tries to fulfill tasks in order to reach the goal set by a leader, which requires implementing and monitoring their work. Ideally, the organization should be operated in cooperation, consisting of leaders and managers, each of which is strong in their own spheres. If the leader is oriented on proper goals, considering new markets, planning resources, developing a new structure of the organization, the manager makes these same things correctly (organizing a product launch, allocates resources and workload among members of the organization) .
Therefore, the entrepreneur usually combines the role of leader and manager, and therefore has a better understanding of what are the specifics of the entrepreneur and what qualities he or she should have.
In conclusion, it should be mentioned that entrepreneur needs to have leader’s qualities and requires a wide range of qualities. This quality is in categories of intellectual, communicative, organizational capabilities and a whole range of personal qualities. These include flexibility, originality, dynamic thinking, the ability to plan and design, flexibility, communication, ability to negotiate, self-reliance and responsibility in decision-making, willingness to change, etc.
The entrepreneur may need to order services on intellectual property rights and their protection. It should also be noted that at different stages of development of the company and in different situations, a certain combination of specific roles requires from the entrepreneur. These roles must serve as tools for a good artisan. Using the knowledge and expertise, they will allow achieving maximum efficiency and effectiveness.