Trust, Paradigm, and Knowledge Appreciation as Leadership Factors - Research Paper Example

Leadership One of the most critical skills in management is leadership. In an organization, persons in leadership positions direct the organization so as to make it more coherent and cohesive by utilizing their leadership attributes like skills, knowledge, character, ethics, values and beliefs. Leadership generally may be taken to be the ability to inspire people towards achieving certain goals. For organizational success to be a reality, several leadership factors should be applied. This paper seeks to identify and explore vital leadership factors and give examples of how some of the factors have been successfully utilized in various organizations. Leadership Factors Treatment of workers as assets is one important leadership factor. It is widely agreed among experts that the most important asset in the organization is its human resource. Human life value is made of, among other things, people’s intellect, integrity, character, knowledge, skills and personality. The human life value forms the true worth in any company or organization. Organizational leaders command more respect as leaders when they view and accordingly treat their workforce as true assets. The trust is another vital factor in success of any organization. Quite a number of definitions of trust abound. Fukuyama (1992), defines trust as rising expectations within a community of cooperative, honest and regular behaviour, based upon commonly allocated norms on the community members’ part. Generally, trust can be considered as one’s beliefs, assumptions and expectations in another person’s future actions will be favourable and beneficial to the person’s interests (Robinson, 1996). ‘Knowledge is power’ is a common phrase used especially in academic circles. Knowledge, in other words, is a practical leadership factor. It would be more accurate to state that knowledge is potential power as its true power is only experienced upon application. As such, the mere possession of knowledge without application cannot be beneficial to any organization. Yet another factor is the consideration of paradigm as a source of focus. Leaders’ paradigms can be defined as the way they view their world; which greatly influences their effectiveness as leaders. Leaders can either take the hero or the victim approach. Leaders who have the habit of blaming others and acting as though everyone else is against them are considered to be taking the victim approach. On the other hand, leaders who take responsibility for their actions and would go to any lengths to succeed are considered as agents of positive change. This makes them be viewed as heroes to their team members and those working under their jurisdiction. These leaders are said to have adopted the hero approach, as they perform more than what is expected from them and probably what they are paid to do. Decisions, which determine the future, are often made by leaders in organizations. In order to succeed in their field of business, leaders need to understand their markets well and sometimes find themselves in positions where they have to make tough decisions that may not be necessarily popular with the customers or even their team members. Effective leadership is said to demand a more aggressive, ‘hard headed’ and coercive approach (Knights and Willmott, 2007). Use of leadership factors by organizations Employees in some organizations are treated more like expenses rather than as valuable assets. This is evident when organizations try by all means to minimize staffing costs. In the same way light bulbs are switched on and off depending on whether light is needed or not, employees are hired and fired at the organization’s leadership will. This approach has proved to be not only a grave mistake but a misguided approach as well since it has led to poor service by the employees, high labour turnovers and employee dissatisfaction which eventually could lead to lower sales. According to Stambor (2006), industries in the U.S lose almost $300 billion annually due to employee absenteeism, medical, insurance and legal fees related and employee turn over. This figure translates to about $7,500 per employee, which affects overall profitability. These costs could be considerably reduced if a different approach to staffing is applied. The better way would be treating employees as assets and investing in training and education programs while giving incentives to more productive staff. Cascio (2002) in his study categorized top executives from different companies, small and large, into two categories. The first and seemingly largest category is that of downsizes. This cluster of leaders seeks to use the lowest number of personnel to get a job done so as to minimize staffing costs. The second category is that of company leaders who are responsible for many restructures; those who seek to run their organizations to be industry adjusted and independent. In a study carried out on the employees of S&P 500, the results indicated no significant evidence indicating improvement in financial performance due to employee downsizing (Cascio, 2002). Stable employers had lower pay offs compared to the downsizing companies. The study showed the smaller group of leaders viewing their workers as assets that needed to be developed while the majority of leaders viewed their employees as costs that needed minimization. It is a fact that employee downsizing in harsh economic times has in some companies contributed in improving the share value and profitability in some companies though there is evidence that companies that do not rush to lay off their workers perform better and are ranked better. Eighty percent of the top ranked companies in the Fortune Magazine’s 2002 and 2003 editions comprised companies that avoided layoffs. SAS Institute is an example of highly ranked institutions (Cascio, 2003). SAS has policies aimed at treating its workers with respect and dignity, and making the workplace a fun place to be. Treating workers well leads to the employees developing a more positive attitude towards work, increasing productivity and reducing cases of resignations. Employee turnover is low in companies that tend to value their employees more and this reduces costs that would have otherwise been spent training new employees. In the event that downsizing has to be carried out, it is important to address the potential reactions and concerns of the employees. Lay offs greatly impact both remaining and the laid off employees according to Tsai, Yen, Huang and Huang (2007). It is important to value the employees and treat them with respect to avoid a scenario where employees lose trust in the leadership of the organization. Whenever lay-offs take place, leaders need to treat the employees with respect by planning and implementing downsizing programmes that are designed to elicit less negative attitudinal and behavioural reactions from the workers (Hutchinson, Murrmann and Murrmann, 1997). This can only happen if the leadership treats the employees as assets and makes a step further to let them know so. If this is not done there is a likelihood of the remaining workers losing loyalty and eventually leaving the organization (Burke, 2003). The American Psychological Association (APA) credits organizations that foster psychologically healthy workplaces. In the period 2003-2005, APA identified some organizations that saw improved performance due to treating their employees as assets. These companies are ARUP Laboratories, IBM-TJ Watson Research Centre, The Comporium Group and Versant Incorporated (Stambor, 2006). All the above mentioned companies have policies in place that make them treat their employees as assets. ARUP Laboratories offers free medical services to its employees and their families. Whenever important decisions are to be made, employees are consulted through surveys as a way of making them feel important to the company. The end result of these efforts is that the employees have increased their productivity significantly in the recent years. IBM places high priority on the health and safety of its employees. As its way of showing the employees how much they are valued, IBM maintains a wide menu of employee resources including recreation facilities, lunch-and-run presentations, online tools and health screenings. IBM also offers its employees extensive education and training programs through its Global Camp Website (Stambor, 2006). The Comporium Group promotes a healthy communication flow between management and employees. The company has in place a joint management-employee committee whose function is to assess ideas for new products and services, this makes the employee connect more with the management and feel important to the company. These have resulted in lower employee turnover. Versant Incorporated is a marketing communications firm in Milwaukee. Versant Incorporated is committed to the enhancement of employee growth and developments in order to enable each employee realize their full potential at the work places. Important decision making in the company is not reserved to the top management alone. The culture of the company allows all employees to participate in decision making and hence chip in to the organization’s success. This encourages the employees to work harder and assume responsibility for the company’s results. In the period 2001-2006, Versant Incorporated’s productivity has increased by about 40% with the fees billed for every full time worker increasing to over 30% (Stein, 2007). Employees of Procter & Gamble in the 1950s were considered to be the company’s most valued asset. The chairman of the company stressed that the company could survive without its physical facilities, money but could not function without the employees who would put up the other assets (Bridges, Marcum & Harrison, 2003). He maintained that though capital is provided by the shareholders, it is the employees who generate returns on the capital. Former Starbucks Coffee CEO, Howard Schulz credited the company’s policy of putting the employees first with the growth of the corporation from a single storefront to being the largest chain of coffee shops in the whole world (Fenichell and Bedbury, 2003). He stated that unhappy employees make it impossible to make clients happy and willing to pay and consequently affect the generation of returns to the shareholders. People who value fellow team members eventually build trust among themselves. Trust between leaders and the workforce go both ways. At the work places, leaders of the organization need to perform their contractual obligations so as to enable the team members develop trust in them. Similarly, the leaders need to trust their team members not only to carry out, but also to correctly perform the duties assigned to them. Managerial integrity is one factor that can increase the trust of employees in them especially when changes are to be made (Turner, 2002). Employees happen to be the most affected whenever changes, like down sizing or the introduction of balanced score cards, are introduced. Indeed trust is the cornerstone in social order construction according to Luhmann (1979). Whenever big changes are to be effected, managers need to deal with the potential lack of trust in the change by employees. Special techniques need to be applied by the management that allow for coaching of the employees during the change. The managers, as leaders, need to understand employee needs and address their concerns while at the same time managing them through the change period. These supports on the part of the managers’ aids in building trust of the employees in the change taking place and increase the loyalty of the employees (Korsgaard, Whitener and Brodt 2002; Calabrese 2002). In 2003, employees in Continental Airlines’ baggage section faced eminent layoffs. These employees met and came up with a proposal for the management in which employees working full time would change their status to part time so none of them would be laid off. The sequence of events showed an extraordinary level of trust existing between the management and the employees. The employees came up with a positive proposal and trusted the management to listen to their grievances. This close relationship has led Continental Airlines be named in the top U.S companies list. Up to date, the positive relationship still goes on aiding to sustain a good working environment and ensuring loyalty to the company (Lyman, 2003). Superquinn is a Dublin based grocery retail shop. Employees at Superquinn take a lot of pride in their work since the retailer management involves employees when making decisions that affect the workplace. The management emphasizes in putting up measures that build up trust between the management and employees. This has led to employees being highly motivated to work and the retail shop being rated as one of the best in Ireland (Lyman, 2003). Companies dealing with technology are not the only ones that heavily rely on knowledge management. All companies that hope to grow and operate efficiently need to have the ability to acquire knowledge, efficiently store it, share ideas and application of the knowledge in improvement of performance, processes, products and services. In knowledge oriented organizations, employees have to meet requirements and expectations that are determined by the concepts of the organization. Nonaka and Takeuchi (1995) examined bottom up and top down theories and settled on a third method to be the most suitable for knowledge creation known as the middle-up-down theory. The middle-up-down theory involves top managers developing a vision with the middle management’s role being to elaborate clear concepts which are to be understood and implemented by trained employees and frontline colleagues. The middle management act as knowledge engineers by reconciling reality and vision. The models act as forms of knowledge transfer from creation to implementation. Tacit knowledge can be put in operation on an organizational level by making it complex and codifying it within written statements like manuals (Zander and Kogut, 2005). This prevents competitors or unauthorized staff from accessing the knowledge. The level to which knowledge that is to be transferred is tacit influences the transfer process. Multinational companies operate in an environment that keeps getting complex. Internal knowledge transfers within the multinational companies can be difficult. Bartlett and Ghoshal (1989) state that the multinationals replicate existing successful practices to enable them maximize their values. The multinationals utilize knowledge transfers in economizing their existing knowledge body and expansion of their competitive advantage base. In addition, the multinationals use knowledge transfers to confirm that all their subsidiaries are at the same level of success ( Zander and Kogut, 1993). Comparison with International Organizations Companies in Asia experience some of the highest employee turnover numbers in the world especially among those aged between 20 and 30. In the period 2001-2005, Chinese companies recorded the highest turnover numbers in the whole of Asia (Byman 2007). The low retention rates make it difficult to treat the employees as assets since most human resource manages do not expect an employee to remain with the company for long. In the hospitality industry word wide, employees are regarded as a very crucial asset and their value cannot be easily replicated. With the shortage of qualified personnel, industry leaders strive to retain their qualified employees. Shangri-La Hotels and Resorts is a Chain of hotels that operates in Asia including China. Just like in the examples mentioned earlier, the management of Shangri-La try to minimize employee turnover numbers. Great employees make great hotels and for this reason the hotel management takes serious commitment and makes plans for extensive employee training and satisfaction in order to retain them. The training equips the employees with vast knowledge on the nature of their work. The training also enables the employees be knowledgeable on how to perform their duties efficiently. There is a high level of transparency in the hotel and this helps to build a good level of trust between the management and the employees. South African Breweries (SAB) has about 9,800 employees in South Africa and more than 70,000 employees worldwide. SAB has five company values one of which is valuing its employees as very important assets. In business, being a self refreshing and a learning organisation is a priority for success, a fact appreciated by SAB. SAB has developed world class training programmes for its employees. With this kind of training, knowledge acquisition and transfer is made easy. Its type of leadership is similar to the earlier mentioned examples because of the world class training. SAB emphasizes strongly on good leadership and has designed the Global Action Learning Programme to equip the leadership with the best skills and strategies in leadership. These efforts are a good environment for trust development between the leadership and employees. Conclusion Many successful organizations across the world owe their success to charismatic and effective leadership as noted from the mentioned examples. 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