Crisis of Leadership in Current Global Environment - Essay Example

? In the current environment of rapid globalization and recessive environment, the survival of businesses has become critical issue within the wider framework of organization’s goals and objectives. The bankruptcy of General Motors, AIG and American Banks or the big time scams like Enron, WorldCom and the recent media baron, Murdoch’s News of the World have all raised the pertinent issue of crisis of leadership within organizations. They highlight many aspect of failing leadership within the organization: poor leadership; lack of leadership; or even unethical leadership. Indeed, while various facets of leadership have strong influence on the organization, good leadership is undeniably becomes the major element of organizational success. The challenges of the current times necessitate dynamic leadership that can take risk and exploit situations to gain competitive advantage. It is important to analyze and evaluate the role of leadership of the organizations which have not only survived but have also been able to increase their revenue. Wal-Mart, McDonalds and Logitech are few of the firms that have maintained their niche market position through the volatility of the market. Indeed, the organizations fail because they are not able to evolve innovative strategies to compete or are not able to anticipate the changes. An effective organizational leadership becomes the vital enabling element of success by exploiting adverse situation to gain competitive advantage. Tough situations demand hard decisions and managerial leadership that responds to challenging situations with fortitude and creativity tends to motivate workforce towards new goals of success. McShane and Glinow (2005) strongly believe that leaders have vision, perseverance and great capacity to inspire others. They can anticipate changes and are capable of exploiting them to suit their objectives and goals. They believe in collective goals and shared vision. Participatory approach of leaders inculcates confidence and stability amongst the workers, resulting in higher productivity. Most importantly ethical leaders empower their followers so that they can make decisions based on informed choice. This is critical factor which can significantly influence the outcome of seemingly difficult situations. Shapiro, Slywotzky and Tedlow (2000), stress that strong leadership is the main reason that enables companies to sustain their performance through hard times. They are able to foresee the changes and face the unfavorable circumstances with a sense of urgency and innovative measures. They do not have to wait for the warning bell to ring before getting prepared for the changes. They turn failure into success because they anticipate changes and start exploring alternatives and strategies that can cope effectively with the changes. Drucker (1999) says that external environment significantly influences business performance. In such case, leadership should strive to identify and exploit their potential for improving organization’s performance. Indeed, participatory approach by the managerial leadership facilitates in adapting to the strategic changes that are brought about transforming business dynamics. People become vital links for change and inculcating confidence and mutual respect amongst the workers become one of the most important aspects of leadership initiatives. Good leaders ensure that workforce adapts to the changes with more informed choices and equanimity. Mintzberg (1990) asserts the need to exploit the informed choices that is gained through the accumulated knowledge regarding the changing trends and preferences of the people and market conditions. In the competitive business environment, exemplary leadership evaluates data, information and knowledge so as to correlate it effectively within the organizational goals and objectives to gain competitive advantage. Dynamic strategies equip the leadership with strong tools to transform adversities into business opportunities. Sull (2000) gives a new perspective to so called problems within an organization. He says that that often the problem is not an inability to take action but an inability to take appropriate action. He says that people are caught into active inertia where they are inclined to follow the established pattern even during traumatic situations rather than evolving new ways to meet the challenge. Good leadership allows failure but only to learn from it. It uses flexible approach to mitigate its impact and evolve new measures to gain leverage. McDonalds is prime example of exemplary leadership which was able to maintain its niche position by exploiting the changing preferences of the customers. Rather than sticking stringently to its menu of hamburgers, McDonalds’ leadership ensured that its products and services were customized to meet the changing requirements of the people. Citigroup is prime example of strong organizational leadership (Paine et al., 2008). When Prince became chief executive officer of Citigroup, it was under huge pressure from the Federal Regulation Authority. At the same time, it was reeling under the massive demoralizing repercussions from the event of Japan and MTS. Under his stewardship, he created visions and realistic goals and motivated the employees to work towards achieving them. He introduced unique Citigroup culture of shared responsibility by improving communication and evolving strong culture of accountability. Schwenk (1997:4) claims that employee’s ‘absolute commitment to a shared vision of change is seen by many leaders/ change agents as very important for their organization’s continued survival’. Prince promoted shared visions to inculcate strong sense of commitment. He used effective communication to disseminate information and empowered the workforce to make decisions based on informed choices. He was able to re-establish the credibility of Citigroup as one of the best financial institutions of the world. Most important trait of good leaders is their ability to accept failures and learn from them. Field (2008) says that leaders must reassure workers that failure that results despite careful planning and conscientious work, is an opportunity to learn from. Risks are intrinsic part of long term success and people should temper success with failures so that they can continuously learn. Indeed, critical evaluation of the failure is vital to long term success and strong leaders teach their followers the need to take risk without the fear of failure. One can therefore conclude that crisis of leadership significantly contributes to the failure of businesses. Strong leadership not only provides sustainable solutions to the chronic problems but they often become major elements of competitive advantage of the firm against their competitors. Dynamic leadership initiatives provoke responses from the people who may have surrendered to the situations and jolts them to take look into situations with fresh perspectives. In short, leadership exploits hidden competencies of the people to fight against odds and promote sustainable performance. (words: 1046) Reference Drucker,P. (1999). Management Challenges for the 21th Century. Harper, New York. Field, Anne. (2008). Cultivating a Healthy Appetite for Risk. Harvard Management Update, Harvard Business School Publishing. McShane, S. L., and Glinow, M. V. (2005) Organizational behavior: Emerging realities for the workplace revolution (3rd ed.). New York: The McGraw-Hill Companies,. Mintzberg, H. (1990). The Design School: Reconsidering the Basic Premises of Strategic Management. Strategic Management Journal, 11(3), 171-195. Paine, Lynn Sharp., Knocp, Carin Isabel and Sesia, Aldo Jr. (August 2008). Leading Citigroup. Harvard Business School. Schwenk, Charles, R. (1997). The Case of Weaker’s Leadership. Business Strategy Review, 8 (3), 4-9. Shapiro, Bensen P.; Slywotzky, Adrian J.; and Tedlow, Richard S. (August 2000). Why Bad Things Happen To Good Companies. Strategy and Business, 2nd quarter. Sull, Donald N. (2000). Why Good Companies Go Bad. Harvard Business Review. Read More