SMALL BUSINESS SOCIETY

The ability of a leader to positively influence and motivate an individual and a team largely depends on their management style and personality. 

While there are many different types of leaders across businesses, teams, and industries, there are some key elements that make a good leader in any situation. There are also two major management styles that exist — proactive and reactive — and managers tend to use one style more than the other in interacting with their teams.

According to data on Australian Leadership Trends from Swinburne University, evidence shows that there are still large gaps between what we expect of leadership performance and how institutions lead, with large gaps in place.

The good new is, effective leadership and awareness of management styles are skills that can be learned!

Let’s start by understanding two key terms:

1. Leadership

Leadership refers to an individual’s ability to lead, influence, or help others to be the best version of themselves, building individual skills and achieving business goals. It also extends to the ability to accomplish this for teams and businesses.

We are not all born leaders, but it is a powerful skill that can be developed over time through training, mentoring, and observing others in leadership positions.

2. Management Style

Management styles refer to an individual’s ability to coordinate a range of resources, including human, financial, and material resources, to deliver an outcome or goal. The management style refers to how the individual interacts with the resources to get what they need and can be proactive or reactive.

So, What are proactive and reactive management styles?

Proactive management style

A proactive management style involves anticipation and preparation for future events or problems before they occur. This style focuses on prevention rather than reaction and emphasizes planning, foresight, and taking preventive measures to avoid potential issues or, where possible, reduce the impact of potential problems.

Reactive management style

A reactive management style is based on responding to problems or situations after they occur. It involves addressing issues as they arise and finding solutions to resolve them. This style focuses on fixing problems rather than prevention and emphasizes short-term focus and dealing with things along the way.

Are Proactive or Reactive Managers better?

In short, not necessarily. A leader will need to understand both reactive and proactive management styles. They may have a natural tendency towards one style but need the skills to know when to apply each style. 

Identifying the difference between proactive and reactive management styles will assist leaders in making decisions about which style is required in different situations.  

Comparing Proactive and Reactive Management Styles

Proactive Management Style Positives

There are four key positives of a proactive management style; including

• Strategic planning
• Better resource allocation
• Enhanced innovation
• Develop preventative measures

Let’s take a closer look at each.

1. Strategic planning: promotes long-term planning and strategic thinking. It encourages leaders to set clear goals, develop comprehensive strategies that respond to changes in the business and industry environment, and allocate resources effectively to achieve those goals.
   
2. Better resource allocation: helps leaders to plan and allocate resources efficiently and effectively. By anticipating future needs and challenges, leaders can appropriately allocate resources such as finances, personnel, and equipment to achieve business goals.
   
3. Enhanced innovation: encourages innovation and creative ideas. By anticipating future trends and market demands, leaders can foster a culture of continuous improvement and innovation. Teams and individuals will have input into developing new products, services, and processes to help businesses and teams stay ahead of the competition and drive growth.
   
4. Develop preventive measures: improves leaders’ ability to assess situations quickly, mitigate risks, and minimise negative impacts before they lead to bigger problems. By assessing future events and changes, leaders can develop measures to reduce the impact on operations, customer satisfaction, and profitability.
   

Proactive Management Style Considerations

There are three key considerations of a proactive management style; including

• Resource-intensive
• Uncertainty
• Unnecessary concern

Let’s take a closer look at each.

1. Resource-intensive: requires dedicated time, effort, and resources to anticipate, plan, and implement preventive measures. It may involve conducting market research, risk assessments, and scenario planning. 
   
2. Uncertainty: Despite proactive measures, the future is still uncertain, and businesses and teams may only sometimes accurately predict or prevent all potential problems. External factors such as changes in the market, regulatory environment, or resourcing disruptions can still cause an impact.
   
3. Unnecessary concerns: are likely to appear through the process of trying to anticipate future events and challenges and putting in place a plan for scenarios that may not eventuate.
   

Reactive Management Style Positives

There are four key positives of a reactive management style; including

• Quick response
• Short term focus
• Flexibility
• Reflection

Let’s take a closer look at each.

1. Quick response times: allows leaders to respond quickly to problems or situations as they arise. It emphasizes finding solutions to address issues promptly and minimizing their impact on operations, customer satisfaction, and profitability.
   
2. Short-term focus: it can be advantageous when short-term actions are needed to resolve immediate issues. It may not require extensive planning or resource allocation, making it more feasible and practical for specific problems.
   
3. Flexibility: allows leaders to be more flexible and adaptive to changing situations. It enables leaders to respond to unexpected events or challenges and make decisions on the spot without being constrained by pre-planned strategies or processes.
   
4. Reflection: allows businesses and teams to reflect on how they respond to a problem and situation. Documenting the allocation of resources such as finances, personnel, equipment, and innovation will enable teams to increase responsiveness.
   

Reactive Management Style Considerations

There are three key considerations of a reactive management style; including

• Lack of foresight
• Higher Costs
• Unnecessary Concerns

Let’s take a closer look at each.

1. Lack of foresight: focuses on addressing issues as or after they occur, which may result in missed opportunities for prevention or early intervention. Leaders may find themselves constantly firefighting and repeatedly dealing with the same issues without addressing the root causes.
   
2. Higher costs: may result in higher costs due to unplanned expenses associated with problem resolution. Businesses and teams may need to invest in emergency measures or rush to find solutions, which can be costly and impact profitability.
   
3. Unnecessary concerns: are likely to appear through addressing events and challenges as or after they occur. It can cause unnecessary concerns mentally and physically amongst employees for scenarios that could have been anticipated. Employees may find themselves in a situation where they are operating under pressure and stress, which frequently can cause burnout.
   
   

   Examples of Management Styles

Now that we understand the benefits and constraints of using a proactive or reactive approach let’s look at some examples.

What are some ways to be a proactive leader

• Developing a Human Resources Strategic Plan that supports your business plan will enable your business to have the right resources to support your business goals.
• Regularly meet with your employees, get to know each other, build trust and support each other.
• Address performance management early to support your employees to perform their best and set clear expectations on what is expected of them.
• A robust reporting framework will enable leaders to identify trends and roll out initiatives in advance.
• Care for your employee’s health and well-being and invest in what engages and motivates them to be in the best frame of mind to perform their role.

What are some of the ways to be a reactive leader

• Unanticipated customer or support needs increases may occur during peak times of the day, month, or year. A leader’s ability to make quick adjustments to resourcing can improve the experience for everyone.
• Emergency or incident may occur, and a leader’s ability to assess the situation, reallocate resources and provide the necessary support can make all the difference. 
• Developing a structure or template for reflecting on reactive situations can help to gather the necessary information and to provide insight into future events and challenges.

If we were to put some of these into practice, this is what they would look like.

Poor employee performance

Poor employee performance can be caused by various factors, including lack of motivation, insufficient training, personal issues, or simply a mismatch between the employee’s skills and job requirements. In this scenario, let’s assume that an employee consistently misses deadlines, produces low-quality work, and has received negative feedback from clients or colleagues.

A proactive manager would take a more preventative approach and address the issue before it becomes a bigger problem. They would start by setting clear expectations and goals, and providing feedback and coaching.  They would offer additional training or resources if needed, and providing support to help the employee improve their performance. A proactive manager would also actively seek to understand the root causes of the poor performance and work with the employee to address them.

In contrast, a reactive manager would wait until the situation has escalated and may take a more punitive approach. This includes issuing warnings or terminating the employee’s employment. A reactive manager may also focus more on the negative consequences of poor performance rather than addressing the underlying issues.

Ultimately, a proactive approach to managing employee performance can prevent issues from escalating and foster a more positive and productive work environment.

Unplanned resignation

An unplanned resignation can have a significant negative impact on small businesses. It can create a sudden gap in the workforce, leading to decreased productivity, increased workload for remaining staff, and potential loss of business opportunities. 

A proactive manager would have contingency plans to address such a situation. This includes cross-training employees and maintaining a pipeline of potential candidates for key positions. They would also communicate regularly with employees to detect potential issues early and address them before they escalate.

A reactive manager, on the other hand, may panic and make hasty decisions that could exacerbate the situation. They may scramble to find a replacement, neglecting to consider the cultural fit and skillset needed for the role. They may also fail to provide adequate support to the remaining employees, leading to a higher risk of burnout and turnover. 

Ultimately, a proactive approach is more likely to minimize the negative impact of an unexpected resignation and ensure the continuity of operations can have a significant negative impact on small businesses.

Unplanned ill customer

In the event of an unplanned ill customer in a restaurant, a proactive manager and a quick-thinking, trained reactive manager would be able to respond effectively. 

A proactive manager would have policies and procedures in place.  They would also have staff training, to ensure they are equipped to handle medical emergencies calmly and professionally. They would take swift action to assist the customer, ensure their privacy and comfort, and contact emergency services as needed.

A quick-thinking, trained reactive manager would use their experience and training to assess the situation and take appropriate action quickly. They prioritize the customer’s safety and well-being, communicate effectively with staff and emergency services, and make decisions calmly and effectively. Ultimately, both approaches can effectively respond to an unplanned ill customer in a restaurant, provided that the manager is prepared and trained to handle such situations.

Apply a blend of Management Styles

For a leader to positively influence and motivate an individual and a team, individuals need to understand reactive and proactive management styles. They need to have the skills to know when to apply each style. 

As a leader, you can’t always accurately predict future events and challenges before they occur, and you must be able to respond to unexpected events and scenarios. By applying a blend of management styles and fluidly moving between the two, a leader will increase their effectiveness and trust with their teams and the individuals within them.

 

Contact Small Business Society to develop a plan for your leaders.

The information provided in this document is for your guidance only and is general in nature. It does not constitute as legal advice. It is the responsibility of the individual to seek legal advice where required.

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