Small and medium enterprises (SMEs) are the backbone of Kenya’s economy, employing millions and contributing nearly 40 percent of the gross domestic product.
Yet, while many thrive on innovation and ambition, a significant number struggle with leadership. Behind solid business strategies and promising growth lies a recurring problem: toxic cultures, poor people management, and leaders ill-prepared for the human side of business.
Take the case of Wario Waqo. Born in Sololo, Marsabit, and educated at a prestigious American university, Wario was ambitious and business-minded. He established a slaughterhouse in Nairobi to serve both local and export markets.
At its peak, the enterprise employed 150 staff, attracted significant funding, and appeared destined for success. His slaughterhouse was modern, a showcase to those in the industry. He was featured in local print and TV stations, featured in various industry, business donor bulletins.
But cracks soon emerged in his company. Employees began leaving. Quality standards dipped. Returns shrank as losses mounted. Labour officers and public health officials became frequent visitors.
A food poisoning scare nearly shut the doors of his company for good. Investors started demanding answers. Lenders started calling. Customers raised concerns, and some cut off orders. The local market was flooded with suspect meat and fierce undercutting.
What had gone wrong? The problem lay not in Wario’s vision or business model, but in his leadership. He carried the strategy and drove numbers aggressively, but failed to lead people.
Staff were hired and fired at will. Meetings were rare, and when they did happen, they turned into lectures. He openly berated managers, micro-managed every process from cold storage to finance, and dismissed professional advice.
Training was treated as a needless expense, even in a sector where compliance with health and safety standards was a top priority.
In time, his leadership turned toxic, eroding morale, driving away talent, and stifling creativity. Mediocre staff stayed, while capable employees exited quietly. The once promising business venture was struggling to keep afloat.
Wario’s case is not unique. It mirrors the struggles of many Kenyan SMEs where brilliant ideas falter under poor leadership in the midst of highly smart, skilled, and competent business owners and employees.
What is the cause of this gap? SME leaders often fall into two categories: the highly educated and the self-taught. The educated tend to be technically competent but lack training in leadership and people management – or fail to practice good leadership.
Most SME training programmes focus heavily on funding, growth strategies, and financial management, compliance, but rarely on leadership skills.
The second category, shaped by the “university of hard knocks”, relies on instinct, personality, or sheer willpower to lead. While admirable, this approach often results in authoritarian or inconsistent leadership.
In categories, the gap is clear; leadership is treated as secondary to strategy, yet it is the glue that holds everything together.
Poor leadership costs more than morale. It shows up in misconduct, pilferage, customer complaints and reputational decline. In Wario’s case, it threatened the very survival of his enterprise.
Employees who feel undervalued disengage and eventually leave. Customers notice. Research shows that for every dissatisfied customer, up to 10 more may be lost through negative word of mouth. In SMEs, where margins are thin and brand loyalty is fragile, the damage can be irreparable.
Why do smart and educated managers fail the leadership test? While managers in general possess excellent technical skills, and most perform well in their work, it does not automatically translate into effective leadership skills when they become entrepreneurs.
Some of the leadership skills often missing, and leaders must strive to intentionally develop emotional intelligence, problem-solving, delegation, relationship building, coaching and mentoring, active listening and strategic thinking. Without these, a smart manager risks being labelled a poor leader.
For businesses to grow and scale sustainably, good governance structures and effective leadership must go hand in hand. This means developing clear organisation structures with defined roles, accountability lines, and reporting systems, and establishing sound HR practices, fair pay, performance management, reward systems and good employee relations standards.
Staff engagement should be supported through open communication, participation in decision-making, and voicing ideas.
Investing in continuous training, mentorship and coaching for leaders and employees will offer personal and professional growth.
Initiatives like team-building and fostering workplace cultures that prioritise respect, inclusion and collaboration, which nurture high-performing teams and accountability, are proven ways of good leadership styles.
These small but deliberate steps compound over time, strengthening both people and performance. Poor leadership causes employee disengagement, high attrition and stagnant growth. Leadership growth should be viewed as an investment and not a cost.
Leadership learnt is practiced and refined. By prioritising leadership development, SMEs can reduce turnover, build resilient teams, and create brands that endure.
The writer is a HR Strategist and Career and Leadership Coach.
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