Leadership Development in SMEs

Thesis

Leadership training in Portuguese SMEs consumes resources and rarely produces sustained change. The problem does not lie in the quality of the programmes—it lies in the disconnect between conceptual learning and changes to management rituals, accountability systems, and decision-making processes. A manager may return from a strategic leadership course with new concepts, but if weekly meetings still lack an agenda, investment decisions do not follow documented criteria, and the performance of middle managers is not measured against explicit objectives, behavioural change does not occur. The existing organisational culture absorbs and neutralises new behaviours because daily rituals remain unchanged.

This article argues that effective SME leadership development requires the simultaneous redesign of three structural layers: the management rituals that shape daily behaviour (meetings, reviews, communication), the accountability systems that make performance visible and consequential (metrics, incentives, talent reviews), and the decision-making processes that institutionalise governance (formal delegation, committees, decision documentation). Without this architecture, training is a time investment with no operational return.

The Portuguese context makes this issue particularly urgent. SMEs account for 99.9% of the business fabric and employ the majority of the workforce, according to INE. Family businesses—about 75% of the total, according to the Associação das Empresas Familiares (AEF)—face structural challenges of generational transition and management professionalisation. Leadership tends to be centralised in the founder or owner-CEO, with concentrated decision-making and informal management rituals. When these companies invest in leadership training, they expect behavioural change but rarely alter the systems that reinforce old behaviours.

This article develops six central arguments: (1) the genealogy of thought on leadership and organisational change, from Kotter to Kaplan & Norton; (2) international evidence on what makes leadership development programmes effective; (3) the specificity of the Portuguese SME landscape and its implications for development strategies; (4) four critical dimensions that distinguish training from transformation—rituals, accountability, decisions, and culture; (5) practical implications for CEOs, CFOs, and boards; (6) the limits of the argument and open questions.

Genealogy of the Concept

Modern thinking on leadership development emerges from three distinct traditions that converge in the 1990s. The first is the literature on organisational change, synthesised by John Kotter in Leading Change (1996), which establishes that sustained transformation requires creating urgency, forming a guiding coalition, communicating vision, and institutionalising new behaviours through short-term wins and system changes. Kotter argues that most change initiatives fail because organisations underestimate the strength of existing culture and overestimate the ability of new concepts to change behaviour without process redesign.

The second tradition is strategic management based on organisational capabilities, developed by Prahalad and Hamel (Competing for the Future, 1994) and refined by authors such as David Teece (dynamic capabilities). This school argues that sustainable competitive advantage lies not in products or markets, but in organisational capabilities that are hard to replicate—including leadership quality and execution speed. The implication is that leadership development is not an investment in isolated individuals, but the building of collective organisational capability.

The third tradition is performance measurement and management control, crystallised in Kaplan and Norton's Balanced Scorecard (1992). The Scorecard establishes that strategic management requires balanced metrics—financial, operational, customer, and organisational learning—and that leadership behaviour only changes when metrics and incentives change. Kaplan and Norton's decisive contribution was to show that measurement systems shape behaviour more effectively than training or value communication.

In the 2000s, these three streams converge in the literature on execution and operating models. Authors like Larry Bossidy and Ram Charan (Execution: The Discipline of Getting Things Done, 2002) argue that the gap between strategy and results lies in the absence of operational discipline—review rituals, clear accountability, structured decision-making processes. The central thesis is that effective leadership is not charisma or vision, but the ability to design and operate systems that translate strategic intent into coordinated action.

The most recent evidence reinforces this view. A longitudinal McKinsey study (2019) on organisational transformations in 1,500 companies concluded that successful initiatives share four characteristics: redesign of operational processes, changes to incentive systems, investment in developing middle managers, and persistent communication of priorities. Transformations that invest only in top-level training without changing management rituals have a failure rate above 70%.

What has changed in the last decade is the recognition that leadership development cannot be separated from organisational culture and the operating model. Early literature treated leadership as an individual attribute; contemporary research treats it as a systemic capability that depends on rituals, processes, and incentives. This shift in perspective has direct implications for SMEs: isolated training programmes are low-return investments; redesigning management systems with integrated leadership development is a structural investment.

International Evidence

Studies on the Effectiveness of Leadership Development Programmes

Academic research on the return on investment in leadership training is scarce and methodologically challenging—isolating the effect of training from other organisational variables requires experimental designs rarely feasible in business contexts. The most robust studies use quasi-experimental methodologies or longitudinal analysis of companies that systematically invest in leadership development versus control groups.

A 2015 study published in the Journal of Applied Psychology by Lacerenza et al. meta-analysed 335 studies on the effectiveness of leadership development programmes, covering more than 37,000 participants. The main conclusions: (1) programmes have a positive average effect on leadership knowledge and skills, but a reduced effect on organisational outcomes (productivity, team satisfaction, turnover); (2) effectiveness increases significantly when training is combined with individual coaching, 360º feedback, and practical application projects; (3) short programmes (less than 3 days) have a negligible effect on sustained behavioural change.

Research by Gurdjian, Halbeisen, and Lane published in McKinsey Quarterly (2014) on leadership development in business contexts concludes that only 11% of executives believe their companies' leadership programmes develop effective leaders. The authors identify four critical success factors: (1) alignment with real business context (not generic cases); (2) integration with performance evaluation and career progression; (3) impact measurement through operational metrics, not just participant satisfaction; (4) direct involvement of the CEO and executive team as facilitators, not just sponsors.

A 2017 study by Beer, Finnström, and Schrader published in Harvard Business Review analysed 15 years of leadership development programmes in Fortune 500 companies and concluded that most fail because they treat leadership as an individual competency rather than an organisational capability. The authors argue that effective development requires three conditions: (1) redesign of work processes that force new behaviours; (2) changes to reward and progression systems; (3) creation of communities of practice where leaders share real challenges and learn collectively.

Evidence on Management Rituals and Organisational Performance

Research on management rituals—recurring routines such as meetings, reviews, approvals—and their impact on organisational performance is more robust. A study by Bloom et al. (2012) published in the Quarterly Journal of Economics analysed management practices in over 10,000 companies across 20 countries using structured interview methodology. The conclusions: (1) companies with structured management practices (clear objectives, performance metrics, regular reviews, explicit accountability) have significantly higher productivity; (2) the variation in management quality explains more productivity variation between companies than technology or capital; (3) SMEs systematically have weaker management practices than large companies, even controlling for sector.

Subsequent research by Bloom, Sadun, and Van Reenen (2016) shows that family businesses—dominant in the Portuguese SME landscape—have weaker management practices on average, particularly in leadership succession, delegation of authority, and use of performance metrics. The authors argue that this reflects a preference for family control over professionalisation, not a lack of capability. The implication is that leadership development in family businesses requires a change in governance model, not just training.

Dissent and Controversy in the Literature

There is significant dissent about the possibility of "teaching" leadership. Authors such as Henry Mintzberg argue that leadership is a contextual practice developed through experience, reflection, and mentoring—not through formal programmes. Mintzberg criticises MBAs and executive programmes for emphasising analysis and frameworks over judgement and execution. His position is that effective leadership development requires job rotation, challenging projects, and continuous feedback, not classroom learning.

Another area of controversy is the transferability of leadership skills between contexts. Research by Groysberg, McLean, and Nohria (2006) on executive mobility shows that leader performance declines significantly when they move to a new company, suggesting that leadership effectiveness depends heavily on tacit knowledge of the specific organisational context. The implication is that leadership development should be designed for the company's context, not based on generic models.

The Portuguese Case

The Portuguese business landscape has structural characteristics that condition leadership development strategies. According to INE (Empresas em Portugal 2024), there are 532,174 non-financial companies, of which 99.9% are SMEs. The size distribution is heavily skewed: micro-enterprises (fewer than 10 employees) are the absolute majority, small companies (10-49 employees) about 5%, and medium companies (50-249 employees) only 1% of the total. This structure means that most Portuguese companies have limited resources for formal training investment and rely on leadership concentrated in the owner or founder.

Family businesses represent approximately 75% of the business fabric and 65% of GDP, according to the Associação das Empresas Familiares. IAPMEI data on the PME Líder 2024 status—which recognised 13,394 companies for management excellence—shows these companies have an average financial autonomy of 59.4% and an aggregate turnover of over €61 billion. The size distribution of PME Líder companies is revealing: 71.9% are small companies, 22.3% medium, and only 5.8% micro-enterprises. This suggests that management maturity correlates with size and professionalisation.

International comparison reinforces this interpretation. Data from the Bloom et al. (2012) study on management practices places Portugal below the OECD average in management quality, particularly in three areas: use of performance metrics, structured review processes, and performance-based incentive systems. The gap is more pronounced in SMEs than in large companies, and in family businesses compared to professionally managed firms.

Data from Banco de Portugal on productivity reinforces the diagnosis. Labour productivity in Portugal is about 35% below the European Union average, according to Pordata/Eurostat (2024). Research by Banco de Portugal identifies management quality as one of the explanatory factors for this gap, along with low investment in R&D, workforce qualifications, and technology adoption. The implication is that leadership development is not an isolated issue—it is embedded in a broader pattern of low intensity of professional management.

There are, however, signs of change. The PME Líder recognition by IAPMEI, which requires rigorous criteria for financial autonomy, profitability, and growth, has been expanding: the 13,394 companies recognised in 2024 employ more than 429,000 workers and export over €10 billion. These companies have significantly more structured management practices than the average SME, including the use of management dashboards, quarterly performance reviews, and formal strategic planning processes. The question is whether this vanguard can diffuse practices to the broader business fabric.

Another indicator of professionalisation is the growth of the management consulting and executive training ecosystem in Portugal. Data from APCE (Associação Portuguesa de Consultores de Empresas) shows sustained growth in demand for management consulting services by SMEs, particularly in strategy, organisational transformation, and leadership development. This suggests a growing recognition that management professionalisation is a necessary investment for competitiveness.

The Portuguese specificity lies in the combination of three factors: (1) predominance of family businesses with centralised leadership; (2) small average size, limiting resources for formal training investment; (3) a gap in management practices compared to international benchmarks, particularly in accountability and use of metrics. This combination means that leadership development in Portuguese SMEs cannot follow models designed for large multinationals—it requires approaches adapted to a context of limited resources, concentrated leadership, and the need for gradual professionalisation without loss of agility.

Four Critical Dimensions

Dimension 1: Management Rituals as Behavioural Architecture

Management rituals are recurring routines that structure leadership work: weekly team meetings, monthly performance reviews, investment approvals, internal communication, budgeting processes. Research by Bloom et al. shows that companies with structured rituals perform better, but most SMEs operate with informal or non-existent rituals. The problem is not a lack of meetings—it is a lack of structure: meetings without an agenda, without predefined metrics, without named decision-makers, without documented follow-up.

Redesigning management rituals requires three steps. First, map existing rituals and identify gaps: how many strategic decisions in the past 12 months were made in formal meetings with documented analysis? Is there an annual calendar of strategic reviews, talent reviews, budgeting? Second, design pilot rituals with explicit structure: agenda sent 48 hours in advance, predefined metrics, decisions documented with responsible person and deadline. Third, institutionalise through repetition and adjustment: a ritual only becomes part of organisational culture when executed consistently for at least six months.

A concrete example: monthly performance reviews. In a typical SME, the CEO meets informally with directors when problems arise. In a company with structured rituals, there is a fixed monthly meeting with a pre-distributed dashboard (sales, margin, cash flow, backlog, NPS, turnover), each director presents deviations from objectives and corrective actions, decisions are documented and reviewed at the next meeting. The difference is not the amount of information—it is visible accountability and institutionalised learning processes.

The most common resistance to structured rituals is the argument that SMEs need agility, not bureaucracy. This is a false dilemma. Well-designed rituals increase decision speed because they reduce ambiguity about who decides, with what information, and by when. Bureaucracy arises when rituals are designed for control rather than decision-making. The test is simple: a management ritual should produce decisions or learning; if it produces only documentation, it should be eliminated.

Dimension 2: Accountability as a System, Not a Value

Accountability is often treated as a cultural value—"here we are responsible for our results." But effective accountability is a system: clear metrics, defined deadlines, visible consequences for achievement or failure, structured review processes. Without this system, accountability is mere rhetoric. Kaplan and Norton's research on the Balanced Scorecard shows that leadership behaviour changes when metrics and incentives change, not when values are communicated.

Institutionalising accountability requires four components. First, management dashboards with balanced KPIs: financial (sales, margin, cash flow), operational (productivity, quality, deadlines), customer (NPS, retention, account growth), and people (turnover, engagement, recruitment time). Second, explicit individual objectives for each leader, aligned with strategy and measured quarterly. Third, incentive systems that align variable pay with strategic objectives—not just sales or EBITDA, but balanced metrics. Fourth, annual talent reviews that identify successors, skill gaps, and individual development plans.

The challenge in SMEs is that formal accountability can be perceived as distrust, especially in family businesses where personal relationships dominate. The solution is not to avoid accountability—but to design it as a learning system, not a punitive control. A well-designed management dashboard makes problems visible early, allowing correction before they become crises. Quarterly performance reviews with 360º feedback institutionalise continuous development. Incentive systems align interests without creating destructive competition if designed with team metrics, not just individual ones.

An example: an industrial SME with 120 employees implemented a monthly dashboard with five KPIs per director (sales, margin, cash collection, NPS, turnover). In the first three months, resistance was significant—directors argued that metrics did not capture the complexity of their work. The CEO maintained the system but adjusted metrics with directors' input. After six months, the dashboard became a daily management tool; after 12 months, directors requested additional metrics for their teams. The change was not cultural—it was systemic.

Dimension 3: Decision-Making Processes as Institutionalised Governance

Centralised leadership is efficient when decisions are simple and the context is stable. It becomes a bottleneck when complexity increases and the pace of change accelerates. Most Portuguese SMEs operate with decisions concentrated in the CEO or founder, without structured delegation or governance processes. This limits scalability and creates excessive dependence on one person. Leadership development requires transforming decision-making processes: from informal centralisation to structured delegation, from ad-hoc decisions to institutionalised processes.

Transforming decision-making processes requires three mechanisms. First, formal delegation of authority with clear limits: who can approve investments up to what amount, who can hire, who can approve commercial discounts. This accelerates execution and develops middle management leadership capacity. Second, decision committees for strategic issues: investment committee for capex above a certain threshold, steering committee for transformation projects, product committee for launches. This institutionalises governance and reduces the risk of impulsive decisions. Third, documentation of decisions and lessons learned: each strategic decision should have documented analysis, compared options, decision criteria, responsible person, and review deadline. This creates organisational memory and improves decision quality over time.

The most common resistance is the argument that formal processes slow down decisions. Evidence suggests the opposite: companies with structured decision-making processes make decisions faster because they have predefined criteria and clear responsibilities. Slowness arises when processes are designed for consensus rather than clarity of authority. A well-designed investment committee meets monthly, analyses pre-distributed proposals, decides in 60 minutes, and documents decisions. A poorly designed process meets without an agenda, discusses without criteria, and postpones decisions for "further analysis."

An example of planned leadership succession: a family-owned distribution company with 200 employees implemented an investment committee with three members (CEO, CFO, commercial director) to approve investments over €50,000. In the first six months, the committee rejected 40% of proposals due to lack of a structured business case. This forced directors to improve the quality of their analysis. After 12 months, proposal quality improved significantly and average decision time dropped from six weeks to two. The change was not just process—it was the development of the team's analytical capability.

Dimension 4: Organisational Culture as Outcome, Not Input

Management literature often treats organisational culture as an independent variable: "changing the culture" is presented as a prerequisite for operational change. Evidence suggests the opposite: culture is the result of systems, not the input. Stated values have negligible impact on behaviour; rituals, incentives, and decision-making processes shape actual behaviour. The implication for leadership development is that trying to "change culture" through communication or training is ineffective; redesigning systems that reinforce desired behaviours is effective.

This perspective is controversial because it contradicts the common emphasis on "values" and "purpose." But research by Kotter, Beer, and others shows that sustained cultural change only happens when new behaviours are reinforced by formal systems. For example: a company declares "accountability" as a core value, but does not measure individual performance, does not link incentives to results, and has no consequences for repeated failure. The stated value is irrelevant; the real system reinforces lack of accountability. Conversely, a company that implements a management dashboard, quarterly reviews, and performance-based incentives creates a culture of accountability without declaring values.

The practical implication is that leadership development should focus on system redesign, not value communication. This does not mean values are irrelevant—it means values only become operational when incorporated into rituals, metrics, and processes. A company that values diversity and inclusion but does not measure representation in promotions, lacks structured recruitment processes, and does not hold leaders accountable for diverse talent retention does not have a culture of diversity—it has diversity rhetoric.

For example: a technology SME with 80 employees declared "innovation" as a core value but continued to measure performance exclusively by operational efficiency. After redesigning the incentive system to include experimentation metrics (number of prototypes tested, development cycle time, percentage of revenue from new products), behaviour changed significantly. Teams began proposing experimental projects, tolerance for failure increased, and incremental innovation accelerated. The change was not cultural—it was systemic. The innovation culture emerged as a result of redesigned systems, not as an input.

Implications for Decision-Making

For CEOs, CFOs, and boards of SMEs, the implications of this argument are direct. First, investment in isolated leadership training has low or no return if not accompanied by redesign of management rituals, accountability systems, and decision-making processes. The relevant question is not "which leadership programme should we buy," but "which management systems should we redesign to institutionalise new behaviours." Second, effective leadership development requires direct involvement of the CEO and executive team—it cannot be delegated to HR or external consultants. Third, sustained change requires a 12-18 month horizon, not two-day workshops.

Diagnostic questions for boards are as follows. How many strategic decisions in the past 12 months were made with documented analysis, compared options, and explicit criteria? Is there an annual calendar of management rituals (strategic reviews, talent reviews, budgeting) formally followed? Do middle managers have clear delegated authority and performance metrics aligned with strategy? Does the company have a documented succession plan for the three most critical executive positions? If the answer to any of these questions is negative, the problem is not lack of training—it is lack of systems.

Strategic options are threefold. First option: maintain the status quo and accept that leadership will remain centralised, decisions will remain informal, and scalability will remain limited. This is viable for small companies in stable markets but creates significant risk of excessive dependence on the founder. Second option: invest in gradual professionalisation through redesign of critical systems—starting with a management dashboard, institutionalising quarterly reviews, formalising delegation of authority. This is the most common option for medium-sized SMEs that recognise the need for professionalisation but have limited resources. Third option: accelerated transformation with external support—hiring management consulting to diagnose gaps, design systems, and facilitate organisational change. This is the option for fast-growing companies or those undergoing generational transition.

The trade-offs are real. System redesign requires management time investment—typically 20-30% of the CEO and CFO's time over 6-9 months. Institutionalising formal rituals may reduce short-term agility while teams learn new processes. Implementing explicit accountability may create tension in family businesses where personal relationships dominate. The question is not whether these trade-offs exist—it is whether the cost of not professionalising is higher than the cost of professionalising. For companies aiming for growth, internationalisation, or generational transition, the answer is clear.

The uncertainty lies in the speed and sequence of change. There is no universal recipe: different companies have different starting points, resources, and competitive contexts. The most robust approach is rigorous diagnosis followed by a pilot in a critical area. For example: map current management rituals, identify the most critical gap (e.g., lack of structured performance reviews), design a pilot with the executive team, run it for three months, adjust based on learning, scale if successful. This approach reduces the risk of organisational rejection and allows iterative learning.

The role of external consulting is to facilitate diagnosis, design systems, and transfer capability—not to replace internal leadership. Consultants can bring sector benchmarks, tested frameworks, and change facilitation, but cannot operate systems day-to-day. The test of consulting quality is whether the company can operate systems autonomously after 12 months. If it remains dependent on consultants, the design has failed. Companies like Macro Consulting® work with Portuguese SMEs on management control diagnosis, operating model design, and organisational change facilitation, with an explicit focus on capability transfer to internal teams.

Where the Argument Is Weak

This argument has three important limitations. First, it assumes that management professionalisation is always desirable. This is not true for all companies. Micro and small businesses in niche markets can operate effectively with centralised leadership and informal rituals if their ambition is stability, not growth. Formalising systems has a cost—time, resources, complexity—that may not be justified if the company does not aim to scale. The argument applies to SMEs that are growing, undergoing generational transition, or in competitive markets where execution is critical.

Second limitation: the evidence on causality between management systems and performance is correlational, not experimental. The Bloom et al. study shows that companies with better management practices perform better, but does not prove that practices cause performance—it may be that successful companies invest more in management. Quasi-experimental studies suggest causality, but rigorous experimental designs are rare. The implication is that the argument is defensible but not irrefutable.

Third limitation: the argument emphasises systems and underestimates the role of individual leadership. There are exceptional leaders who can transform organisations through charisma, vision, and personal energy without redesigning formal systems. These cases exist but are rare and not scalable. The question is whether a company can depend on exceptional leadership or should build systems that work with competent leadership. For most SMEs, the second option is more robust.

Open Questions

Research on leadership development in SMEs leaves several questions unanswered. First: what is the optimal sequence for system redesign? Should one start with management rituals, accountability, or decision-making processes? The literature does not offer a clear answer; practice suggests it depends on context—companies with execution problems should start with rituals, those with governance issues should start with decision processes.

Second question: how to balance professionalisation with preserving agility? Successful SMEs often have decision-making speed and adaptability that large companies have lost. System redesign can create bureaucracy if poorly executed. The question is how to design systems that increase discipline without reducing speed. Research on hybrid team management and agile operating models suggests it is possible, but evidence is still limited.

Third question: how to measure return on investment in leadership development? Direct metrics (participant satisfaction, knowledge acquired) are easy to measure but weakly correlated with organisational outcomes. Indirect metrics (productivity, turnover, engagement) are influenced by multiple variables. Future research should develop methodologies that isolate the effect of leadership development from other organisational interventions.

Fourth question: how to adapt leadership development models to the context of digital transformation? The adoption of digital tools, automation, and artificial intelligence is changing the nature of leadership work. Leaders need new skills—managing remote teams, data-driven decision-making, orchestrating digital systems. The literature on leadership development has not yet fully integrated these changes. Leading companies are experimenting with programmes that combine traditional leadership skills with digital literacy, but evidence on effectiveness is scarce.

Diagnostic Checklist for Decision-Makers

Boards and executive teams can use the following questions to diagnose the maturity of leadership systems and identify investment priorities:

• Management rituals: Is there an annual calendar of strategic meetings, talent reviews, and budgeting processes that is formally followed? Do leadership meetings have a pre-distributed agenda, predefined metrics, and documented decisions?
• Accountability: Does each leader have explicit individual objectives, measured quarterly and linked to incentives? Is there a management dashboard with balanced KPIs (financial, operational, customer, people) reviewed monthly?
• Decision-making processes: Do investment decisions above a certain threshold follow a structured process with documented analysis, compared options, and explicit criteria? Is there formal delegation of authority with clear limits by hierarchical level?
• Succession and development: Does the company have a documented succession plan for the three most critical executive positions? Do middle managers participate in strategic projects that develop leadership capacity?
• Culture and systems: Are the company's stated values incorporated into performance metrics and promotion criteria? Is there a formal process for 360º feedback and annual talent review?

If the answer to more than half of these questions is negative, the priority is not leadership training—it is redesigning management systems. If the answer is mostly positive but operational results do not improve, the problem may lie in execution quality or strategic alignment, not in systems.

Next Operational Steps

For SMEs that recognise the need to professionalise leadership development, the next operational steps are as follows. First, map current management rituals and identify gaps against sector best practices. This can be done internally or with external consulting support. The output should be an inventory of existing rituals (meetings, reviews, approval processes) and a gap analysis (which critical rituals are missing, which existing rituals are ineffective).

Second, design a leadership dashboard with 5-7 balanced KPIs: financial (sales, EBITDA, cash flow), operational (productivity, quality, deadlines), customer (NPS, retention, account growth), and people (turnover, engagement, recruitment time). The dashboard should be reviewed monthly in executive team meetings with documented decisions. Digital tools can help—from structured Excel to BI platforms—but the tool is secondary; the discipline of monthly review is primary.

Third, pilot a new management ritual with the executive team before scaling. For example: implement quarterly performance reviews with 360º feedback for the top five leaders, run for six months, adjust based on learning, then scale to middle managers. This approach reduces the risk of organisational rejection and allows iterative learning. The pilot should have a clear executive sponsor (typically CEO or CFO), defined success metrics, and a review deadline.

Fourth, consider external support for diagnosis, process design, and organisational change facilitation. Management consulting can accelerate the process, bring sector benchmarks, and reduce the risk of design errors. The selection criterion should be demonstrated experience with Portuguese SMEs, focus on capability transfer (not consultant dependence), and verifiable references. Companies like Macro Consulting® work with SMEs on operating model diagnosis, management system design, and facilitation of structured leadership development programmes with a 9-12 month horizon and operational impact metrics.

Fifth, align investment in leadership development with other strategic priorities. If the company is in a growth financing process, management professionalisation increases credibility with investors. If undergoing generational transition, institutionalising processes reduces founder dependence. If in digital transformation, leadership development should include digital literacy and change management. Leadership development is not a standalone initiative—it is part of a broader growth strategy.

The realistic horizon for sustained change is 12-18 months. In the first three months, the focus is diagnosis and system design. In months 4-9, the focus is pilot and adjustment. In months 10-18, the focus is scale and institutionalisation. Companies expecting results in three months will be disappointed; those investing with an 18-month horizon and execution discipline will build sustainable leadership capability that becomes a competitive advantage.

Sources

Sources

• INE (2024), Empresas em Portugal 2024 (definitive data on the Portuguese business fabric), Instituto Nacional de Estatística
• IAPMEI (2024), Edição PME Líder 2024 (recognition of 13,394 companies for management excellence), IAPMEI – Agência para a Competitividade e Inovação
• Associação das Empresas Familiares (2024), Empresas Familiares em Portugal (estimates of representation in the business fabric and GDP), AEF
• Pordata/Eurostat (2024), Labour Productivity in Portugal (international productivity comparison), Pordata
• Kotter, J. P. (1996), Leading Change, Harvard Business School Press (8-step model for organisational change management)
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• Prahalad, C. K. & Hamel, G. (1994), Competing for the Future, Harvard Business School Press (organisational capabilities as a source of competitive advantage)
• Bossidy, L. & Charan, R. (2002), Execution: The Discipline of Getting Things Done, Crown Business (operational discipline and management rituals)
• Lacerenza, C. N. et al. (2015), 'Leadership Training Design, Delivery, and Implementation: A Meta-Analysis', Journal of Applied Psychology (meta-analysis of 335 studies on leadership programme effectiveness)
• Gurdjian, P., Halbeisen, T. & Lane, K. (2014), 'Why Leadership-Development Programs Fail', McKinsey Quarterly (analysis of critical success factors in leadership development)
• Beer, M., Finnström, M. & Schrader, D. (2017), 'Why Leadership Training Fails—and What to Do About It', Harvard Business Review (15 years of leadership programmes in Fortune 500)
• Bloom, N., Sadun, R. & Van Reenen, J. (2012), 'Does Management Really Work?', Quarterly Journal of Economics (analysis of management practices in 10,000 companies across 20 countries)
• Bloom, N., Sadun, R. & Van Reenen, J. (2016), 'Management as a Technology?', NBER Working Paper (management practices in family businesses)
• Mintzberg, H. (2004), Managers Not MBAs, Berrett-Koehler (critique of formal leadership programmes and advocacy for experiential learning)
• Groysberg, B., McLean, A. N. & Nohria, N. (2006), 'Are Leaders Portable?', Harvard Business Review (executive mobility and transferability of leadership skills)
• McKinsey & Company (2019), Unlocking Success in Digital Transformations (longitudinal study on organisational transformations in 1,500 companies)
• Banco de Portugal (2025), Boletim Económico Dezembro 2025 (macroeconomic projections and productivity analysis), Banco de Portugal
• Teece, D. J. (2007), 'Explicating Dynamic Capabilities: The Nature and Microfoundations of (Sustainable) Enterprise Performance', Strategic Management Journal (dynamic capabilities as a source of competitive advantage)