How to define requirements for SME leadership roles

By Peter Meyer, Principal Consultant, Elkera Pty Limited

11 June 2025

In a recent article: “Selection biases affecting leadership recruitment in organisations and how to avoid them”, I explained how it is necessary to develop clear requirements for leadership roles to support a structured recruitment process that will help to avoid common selection biases.

In this article, I dig into how that should be done, with particular emphasis on small and medium enterprises (SMEs). Governments and most large corporates have well developed frameworks for their role descriptions. This article is not directed to them.

The requirements for any role are usually expressed in a role or position description. In this article, I use “position description” (PD) because that is likely to be more the more common term within SMEs in Australia.

A clear PD that is aligned with specific business needs is essential to recruitment of the right candidate for a role. It is an investment in leadership success. After recruitment, the PD is an important tool to support accurate performance expectations.

This article offers a practical approach to defining requirements for SME leadership roles to achieve those objectives.

To a business analyst, PDs for existing roles are a useful resource in the early stages of understanding an organisation’s business functions and the allocations of those functions. Unfortunately, when we examine the PDs, we often find that they are generic and imprecise.

That observation was confirmed in the course of some recent work where I observed the development of senior leader PDs in a medium sized not for profit organisation. Leaders struggled to define what they really needed in senior roles and turned to recruiters for help. Not surprisingly, the resulting PDs do not adequately target the candidates that the organisation really needs.

So, let’s go back to basics: What are the main functions of a PD? What is the best way to develop a PD so it performs those functions?

The functions of PDs for SME leadership roles

Without being exhaustive, the following topics identify the key functions of PDs for leadership roles in most SMEs.

Define expectations and accountabilities

The primary function of a PD is to clearly define the role’s purpose, key responsibilities and scope of authority. Those attributes must be defined to set expectations for the executive and also for those they interact with such as subordinates, peers and other stakeholders.

For a senior leadership position, the expectations and accountabilities must be clearly connected to the organisation’s goals and values.

Support recruitment

The object of recruitment is to identify candidates who have the capabilities that the organisation requires and who are genuinely enthusiastic about the role. That enthusiasm should not just be based on money or prestige but on a real commitment to the organisation’s mission. Most SMEs are striving to bring about change or improvements. An effective senior leader should genuinely embrace that ambition.

The PD should:

• Set out the organisation’s mission and challenges in a way that will appeal to the right candidates as a challenge or undertaking they can embrace.
• Provide clear selection criteria based on the capabilities and attributes required for the role. Those capabilities should cover matters such as cognitive or intellectual attributes, stakeholder or social attributes and leadership or psychological attributes.

Candidates should know what they must bring and the recruitment panel must be able to accurately assess and compare candidates without reliance on common selection biases.

Generic PDs that could be for any similar role in any similar organisation are not going to cut it. The PD should be very specific to your organisation’s needs.

Guide performance management and development

The PD should provide a foundation for ongoing performance evaluation, even at the most senior level of CEO. If the PD accurately reflects the needs of the business at the time of recruitment, it should be possible to assess if those needs were satisfied by the recruitment. However, it is useful to bear in mind that, in the case of CEOs, if the organisation is doing well or poorly, they are likely to be judged on that performance, even in the absence of evidence of causation. That is the halo effect (Phil Rosenzweig, “The halo effect, and other managerial delusions”, 2007).

To meet this objective, the PD should define the specific outcomes that the leader is to achieve and the criteria that will be used for assessment. Quantified KPIs should not be included. They are best left for periodical negotiations.

It’s also important to review and update PDs periodically as business needs evolve, particularly in fast-moving SME environments.

Help understand and coordinate and authorities and responsibilities

As an organisation becomes larger, it is more difficult for staff members to know the responsibilities and authorities of everyone else. Clear PDs can provide a valuable resource to avoid confusion and to facilitate better coordination between leaders and team members.

Satisfy legal requirements

If the organisation operates in a regulated environment, it may be necessary to impose certain qualifications or other requirements. If applicable, they should be stated in the PD.

It may be advantageous in some circumstances to have the employee sign off on the role description as evidence of their agreement to the expectations set out in the PD.

While not universal, these issues should be considered during PD development.

The requirements process for an effective PD

Defining a PD is really a requirements elicitation process. It is not unlike any other requirements gathering process for systems development.

I do not propose any particular format for PDs. The needs of SMEs across business and the not for profit sectors vary considerably. Not for profit organisations have their specific needs, based on their missions. SMEs in the private sector often have less structured approaches.

In simpler cases, requirements gathering process can be undertaken as the PD is written. However, in more complex cases, it is better to do the requirements gathering before writing the PD. Doing so will avoid the temptation to just follow what was done last time or to follow a template. If the organisation has a particular model for its PDs, apply it after the requirements analysis is complete.

The main steps in requirements gathering and PD development follow. These steps are summarised in the diagram that accompanies this article.

1. Assess the overall business needs

The more senior a role, the more the requirements for that role must be closely aligned to the current state of the business. For senior leadership roles, some focus questions might include:

• Is there a need to re-evaluate the organisation’s strategy? For example:
  • Is the organisation facing severe competitive threats?
  • Is the business in financial difficulty and if so why?
  • What must be changed to address the current circumstances?
• Does the business need to expand into new areas or develop a new product line?
• Does the business need to undertake a major culture change because of persistent unsatisfactory behaviours?
• Does the business need to undertake a major systems project?

Answers to those and similar questions will provide the foundation for defining the role requirements.

2. Define the purpose of the role

In the case of senior leadership roles, this step builds on the preceding step.

It is useful to distinguish between the CEO, operational leadership roles and support leadership roles.

Operational leaders manage core business functions, being those that directly contribute to delivering the products or services to customers. An operational leader’s role is to deliver specific outcomes based on the core functions.

Support leadership roles provide support for core business functions. Common examples include human resources, finance, facilities infrastructure, IT infrastructure and legal.

Support leadership roles tend to have fixed core requirements with additional requirements aligned to overall business needs and the operational teams they support.

In each case, clearly state the purpose or objectives for the role so that its overall scope is clear.

3. Determine the role’s relationships with other roles

The key questions to consider here include:

• Who does the role report to?
• Who reports to the role?
• Who are key collaborators?

Ideally, these questions should be answered in a functional organisation chart so the relationships can be clearly assessed. Doing so will help to avoid conflicts with other roles. Consult the PDs for related roles to help develop the functional organisation chart. You want to make sure that everything is covered and that there is no unwanted duplication of responsibilities.

If you have difficulty developing a functional organisation chart for relevant parts of the business, that is a strong indicator that a more thorough process analysis is required before you can accurately define the role.

4. Define key responsibilities and expected outcomes

The responsibilities of the role and expected outcomes (accountabilities) must be defined. This should be a list of high level or major activities and a statement of what is to be accomplished in each case.

Defining expected outcomes often causes problems. For example, personnel with particular sales and marketing responsibilities are unlikely to be responsible for profitability of the business. The expected outcomes should be specific to what they actually do, such as to deliver qualified leads or negotiate and close sales contracts.

Other matters to be defined include the specific decision making authorities or constraints of the role.

You want the PD to remain relevant over an extended period, subject to major organisational change. Short term activities and operational detail should not be included in the PD.

5. Specify competencies and qualifications

In this step, the goal is to define what the leader must know and be able to do, not who they are. This is a critical step to avoid biases in the selection process.

Separate qualifications and experience into ‘essential’ and ‘desirable’. Only include a requirement as ‘essential’ if the role cannot be performed without it.

For example, it is tempting to require that candidates have direct experience with specific software tools or processes in the expectation that will signal key capabilities. Unless those requirements are critical to the role, they should be treated as desirable only. Otherwise they may exclude perfectly capable candidates.

6. Review with key stakeholders

Once a draft PD is prepared, it should be reviewed by key stakeholders such as direct reports and key collaborators to ensure that it is clear and accurate.

Who should lead development of role requirements?

From the description of the requirements process, it is clear that the person leading the PD development should have a thorough understanding of the business, its challenges and its structure. They should have strong analytical skills to ensure accurate alignment with business needs and with other roles.

Conclusions

All too often, PDs are treated as a compliance thing in the human resources department. When planning a recruitment, an accurate and specific PD is essential to finding the right candidate for the role. Unfocused PDs are likely to lead to defective or biased recruitment processes that select the wrong candidates. Choosing the wrong candidate involves enormous costs to the business.

Once a role is filled, the PD is an important tool in performance management and in maintaining a coordinated and transparent business structure.

An effective PD for a leadership role can be developed only on the basis of a thorough understanding of the current state of the business, where it needs to go and how its internal structure aligns with its business functions. If the SME leadership is not confident in those understandings, a deeper analysis should be undertaken before starting a leadership recruitment process.