Critical Analysis on Importance of Leadership in Organisation - Term Paper Example

 Organisational Behaviour Contents Contents 1 Overview of leadership 2 Emotional Intelligence 4 Critical Analysis on Importance of Leadership in Organisation 5 Relevance in the Practical Field 7 References 12 Overview of leadership The performance and successes of the work we do, depends on our academic education, training from organisations and the knowledge we accumulate from practising these theories. Leadership is the same. Fundamentally, leaders are made, not born. They can be compared to athletes, where few have more inborn talent than others. But to develop their talents, both need to carry out constant practice. An example which is widely used is of the famous Michael Jordon. In his 10th grade, Michael Jordon was unable to make through the high school basketball team. This experience made Jordon to practice for many more hours. With practice, he made to the basketball team and the following year he made it to North Carolina. He then went on to score high achievements in NBA. Similarly, to develop their skills, aspiring leaders have to perform harder (Holberton, 2004). Years of research and development have produced a large number of insights and findings about leadership and leaders (Mackenzie, 2006). Leadership cannot be summarised in a particular definition. It is important to understand its different perspective and comprehend various theories and activities that influence its practice (Storey, 2010). Keith grind demonstrated four different ways to understand leadership. It can be the characteristic trait that makes a person leader, the achievements of a person that makes him a leader, the position from where the leader operates or the process through which leaders get things done (Dunkerley, 1972). Leadership has been a topic of historic importance as we have been fascinated by leaders since the beginning of history (Allio, 2013). A host of theories have been put up. While a thorough review of all approaches would be impossible, the progress of theory formation is important as it helps to relate the developmental processes in the area of leadership (Banner and Blasingam, 1988). To study leadership, trait approach was one of the earliest studied theories. Attempts were made to study the traits that made leaders ‘great’. The theories were identified as great man theories because they were mainly focussed on identifying the innate qualities of great leaders. These leaders were believed to be born with these traits. A detailed research on this approach has given a list of traits that individuals expect to posses or cultivate in order to be perceived as leader. These traits include determination, integrity, self-confidence, intelligence and sociability. The style approach has emphasised on the behaviour of the leader. It is different from the trait approach because the later gives importance to the leader’s capabilities. It focuses on how leaders act and behave with subordinates. A leader’s behaviour towards the task and relationship management can be considered as the two major frameworks that assess his/her skills. Another approach, which is more widely recognised to leadership, is the situational approach. It focuses on leadership in situations. Different situations require different leadership. To be an effective leader, a person has to adapt his/her style according the demand of the situation. Although there are many contingency theory of leadership, the most widely recognised is Fiedlers’s contingency theory. This theory explains that leader’s effectiveness is directly proportional to the leader’s style fitting into the context. Organisation needs leaders to perform in different situations. The major conceptual types of organisational leadership which is predominantly used now days are transactional leadership, charismatic leadership and transformational leadership (Popper and Zakkai, 1994). Transactional leadership is a pattern very common in organisational situations because it works on “exchange-relations’ mechanism. The transactional leaders follow an economic exchange and cost benefit exchange with followers. This relationship essentially satisfies the follower’s psychic and material needs (Sarros and Santora, 2001). Due to the circumstances that deviate from the normal organisational routine, crisis situation or major changes, charismatic leadership has seen a growth and development in organisation. High level of anxiety and uncertainty are the characteristics of these situations. This demands a strong psychological need of a charismatic leader. Transformational leadership depends on the understanding of a leader’s own role. In this type of leadership, the closeness to the leader is more likely as compared to charismatic leadership. It helps in lowering the anxiety level and helps in better development of the followers (Popper and Zakkai, 1994). Emotional Intelligence In the last decade, there have been a large number of unparallel studies in the field of emotion. Goleman (1998) suggested the association of effective leadership and emotional intelligence. Humphrey (2002) argues that particular aspects in leadership can be enhanced by the emotional skills which are involved in emotional intelligence. Brains imaging techniques and other innovative method have made it possible to analyse the brain while we think and imagine, feel and dream. This biological data helps us in understanding our emotions like anger, rage, and love and how they are channelled for worse or better. The term emotional intelligence was first established by Salovey and Mayer (1990). The framework for emotional intelligence was hypothesized by a set of skills. These included relevant and accurate appraisal of emotional expression in the individual and others, efficient monitoring of emotions, and the effective use of feelings to motivate, plan and achieving goal (Salovey and Mayer, 1990). To determine an individual’s capability in being socially effective, emotional intelligence has been considered as a key factor. In leadership literature, it is viewed as a major determinant of effective leadership (Stough, Saklofske and Parker, 2009). When it comes to effectiveness and quality of social interactions, the emotional intelligence of a leader plays a major role (Kerr, Garvin, Heaton and Boyle, 2005). Effective leadership is one of the essential requisite for the viability of an organisation. Organisations require people who will not only follow the management led objectives but cooperate by contributing their efforts in realising the goals of the organisation. When there is a lack of willing cooperation, the organisation will have to facilitate cooperation by other forceful means such as coercion, tyranny, and material exchange. Research suggests that the use of these transactional methods is not very successful in long term compared to methods that result in willing cooperation. Leaders, who are effective, engage in both professional and personal leadership behaviours (Mastrangelo et al., 2004). To become a successful leader and to enhance performance skills, a leader should have a good character. There should be clarity in the value and alignment in a leader’s personal goal and organisation’s vision (Speechley, 2005). When situation demands, leaders must enforce power. But coercion and autocracy and tyranny will only distance them to their followers. Good leaders should collaborate with employees, suppliers, customers and stakeholders and handle their conflicting interests at the same time (Klagge, 1996). The key to longevity is adaptability (Allio, 2009). A leader shows the most important leadership competency, by helping the employees adapt to change (Allio, 2009). Critical Analysis on Importance of Leadership in Organisation The business environment is evolving constantly in this dynamic world (Culpan, 2007). Changing markets, domestic and global advances in technology, regulatory change and competition are the drivers to economy. This has raised importance of leadership and its continuity to a different level altogether (Prosser, 2010). During the 2009 financial crisis, Gareth Jones and Rob Goffee, known for leadership writing, explained, as the world is struggling from the most devastating economic crisis, the landscape of business will be unknown when the economy finally comes out of recession. What is known to us, is that leadership will become more important than ever and well led organisations will have much more chances of survival in these turbulent times (Prosser, 2010). The major global companies across different sectors keep inventing in their present and future leadership talent (Speechley, 2005). Although this widespread interest in leadership can be termed as a commendable effort, there is a possibility that few of the managers will see leadership as the only solution to their problems. It certainly becomes a concern when leadership is treated as a quick fix and only solution to solve a host of organisational needs. A distinguished analyst and academic, Andrew Pettigrew (2010, cited in Prosser, 2010) provided an interesting insight on the importance of leadership in organisational performance. According to him, any organisation should not concentrate its full attention to leaders alone, even though leaders are essential and leader effects are quite crucial. To bring out change, performance and innovation, fixing the system should be the priority, not only the people. It focuses on a wider set of reasons on why changes happen and why performances vary. Easy assumptions regarding leadership effects must be avoided and the tendency to over-attribute should be discarded. Making a balance between the two is the key to effective organisational leadership. The criticality of leadership can be evaluated in terms of it impact on the efficiency of the organization that practises it (Dulewicz and Higgs, 2005). Ideal leadership needs commitment (Mostovicz et al., 2009). The ultimate evaluation of effectiveness of leadership is the capability to sustain superior results and high performance over a long period of time. While there are many evidences for the profound effect of leadership of employee satisfaction and organisational effectiveness, there have been studies which have led to many evidences which are quiet contrary to the above statement. According to a conference board study of around 400 fortune 1000 companies, in the late 1990s, it was concluded that 47% of managers and executives rated the overall leadership capacity of their company as poor and only around 8% of the employees rated their companies as excellent (Gill, 2012). Another survey in 1999, by Development Dimensions International, concluded that only around 36 % employees, including the higher management, had confidence in their leaders. Out of the 14 leadership skills surveyed, weaknesses were identified in 13 skills, by the employees. These included coaching, strategic decision making and facilitating change. Only 30% employees agreed that their leader were visionary, 49% perceived leadership empowerment in senior management and 25% of employees had a negative outlook on strategic decision making (Gill, 2012). The senior people in today’s environment are accountable to the people they lead, Good leadership cannot be described or developed, but many companies have yet to develop an elusive efficient leadership programme for all their managers (Gill, 2012). From the above discussion it is clear that though there has been a lot of research done on the field of leadership, there is still an ambiguity on best and most efficient leadership quality which is relevant and can be practiced by majority of leaders (Nienaber, 2010). There have been many theories which have been extensively researched and put into practise. Still, the field of research is constantly evolving. Continuous research and modifications in the practice of leadership development, relevant to the organisation and environment of the organization can be essential factor in determining the success of the enterprise. The next section will highlight various examples where companies have used the practice of leadership to help them achieve success. Relevance in the Practical Field It is a common perception that strategy is the soul factor in achieving success in business. Business strategy can be a vital part in the success of business but not the only factor. There are a lot of reasons that amount to the success of a business and leadership without any doubt is one of them. And effective leadership requires wisdom and sensibility (Page, 1983). It is also a popular belief that leaders are born. But many great leaders who take the business to successes are made, not born. Developing a culture of leadership, even in situations of chaos, crisis and economic discontinuity, helps an organisation to stand out and continue its progress in the rapidly changing environment. Here is an example showing how leadership developments helped Infosys in overcoming its talent management crisis and high attrition rate. Infosys has always been ranked among the best organisations in terms of leadership development. Few years ago, the leaders of the IT giant realised that the company was going through leadership crisis. People were ready to take up jobs even if they were unprepared. Infosys reacted by initiating an 18- month plan known as strategic change management initiative, that aimed to reorganise the business. There was a revision in job requirements and new job descriptions were created for new requirements. These included years of performance, role maturity and years of experience. Apart from this, the company had set up a world class training facility at Mysore. This corporate training facility has dedicated time and money in developing leaders through proper training in the field of motivation, corporate sustainability, constructive feedback mechanism and emotional intelligence. They have also implemented a talent risk management strategy to compensate any imbalances in the demand supply of the talent pipeline. The company is also involved in providing incentives to the leaders of the organisation, who, apart from performing, establish energised and committed teams (Ibscdc, 2010). Thus, through leadership development and talent management, Infosys was able to decrease its attrition rate and establish itself as one of the best companies for leadership and low attrition rate. Leadership is an essential factor in change management (Quang et al., 1998). Any kind of change in an organisation, merger, acquisition, transfer, takeover etc., are characterized by stress, anxiety and a pressure to complete the task within the given stipulated time. Here transformational and charismatic leadership comes into action (Starke et al., 2011). The following example shows how charismatic and cross-functional leadership helped AstraZeneca to successfully complete the transformation (Turunen et al., 2012). There was a significant change in the organisational structure, culture and geographical footprint of AstraZeneca in the year 2011 (Severinsson et al., 2012). The challenges included building up of a new organisation, transfer of equipments, staff and projects, shut-down of the R&D site in Lund, and transferring of the site including equipments to a new owner. It was very clear that to execute this programme, it was important to have a leadership team, which was local and cross-functional in nature (Jepson, 2008). This was necessary to co-ordinate and drive change activities occurring between the functions. The cross functional team from Lund composed of local representatives from support and research functions. A communicational model was set up with the cross-functional team disseminating the objectives though various channels such as weekly and monthly meetings, visual planning boards and face to face interactions (Clutterbuck and Hirst, 2002). The staff that was relocated to the new establishment source was provided with employee support, housing and schooling support in the new area. Redundant employees and early retirement plans were the key concerns for the staffs. This issue was resolved by helping and supporting them in finding new job opportunities, the activities included job fairs, education fairs, and search education teams. These functions provided necessary motivational support and recognition to the staff. Thus through proper communications and supportive leadership, AstraZeneca was able to achieve its objectives of motivated and engaged staff and successful relocation of the organisation In the following section, these will be a discussion on the leadership strategies of Apple, the company which is being studied here, which helped the company to become one of the most innovative companies and took it to the legacy of innovative leadership. In 1985, Steve Jobs was fired from his company. Reason was his highly visionary and pinioned approach towards leadership and management. However, he came back in 1997 and rescued the organisation, by applying the same tactics which made the management to sack him. There is a little doubt that Steve Jobs played a critical role in transforming Apple into one of the most admired companies in terms of technology and innovation. Steve Jobs took vital decisions on transforming apple from a company manufacturing computers to a multibillionaire giant. Steve Jobs was known for his charismatic and transformational leadership styles. During 1996, Apple had become almost bankrupt. After the arrival of Steve Jobs as CEO, apple not only recovered from bankruptcy, but also went on to become one of the most innovative and profitable enterprises in the world. The following discussion will throw a light on the unique leadership styles that was followed by Steve Jobs which helped Apple to achieve extraordinary achievements. Distant charismatic leadership Distant charismatic leaders are characterised by their presentation of vision. This is an idealised image of future leaders (Day, 2007). A vision for the technology industry was considered as Job’s most famous characteristics. He stood out from other leaders in his extraordinary qualities and was perceived as heroic figure. He was perceived as more courageous and persistent, in his decisions. Steve Jobs represented him as a unique leader as he was able to articulate a proper vision and present it in a manner that succeeded in exciting followers. Close charismatic leadership Competence, expertise and intelligence are the characteristic of a close charismatic leader (Shamir, 1995). Steve Jobs was frequently described using these traits. He was known for setting high standards which is another attribute of close charismatic leaders He was perceived as a close friend by his followers. One other effect attributed to close charismatic leaders was role modelling and Steve Jobs was known as a role model for success and hard work. Apple employees felt closer to him and felt that they had a personal and proximal relationship with him and were inspired by him. Even individuals, who did not know jobs at a personal level, felt an emotional connection to him. This nature of Jobs helped in motivating the employees and hugely boosted their morale during situations of crisis and transformation. Creating a youthful image The CEO and most of its employees are psychologically and socially distant due to a certain gap in seniority power and status (Razin and Kark, 2012). To minimise this social distance, Steve Jobs used a mechanism of emitting youth concepts and images. When Jobs referred and described himself as youthful, this framework implied that he was psychologically closer to his employees. The involvement of Steve Jobs in animated movies and Walt Disney Corporation helped in maintaining an aura of fun and youth. His informal dressing style and informal language he used to address his employees and customers further strengthened his image as a youthful leader. Innovative leadership Innovative leadership is the use of calculated outflows and inflows to increase internal innovation and diversify the market for the use of innovation in external markets (Rufat-Latre, 2011). Apple is also among the best design firms of the world. In all of apple’s accomplishments the most interesting is how apple diversified its business from computer to many new markets. The challenge Apple faced was to utilise its competency in solving issues in other industries, such as music. Today, apple successfully competes in the software hardware, video, music, and communications. It has also forayed into the electronic book publishing industries. Like the software industry, the music industry was greatly benefitted from Apple. With iTunes and iPods, Apple gave the common people an easy access to digital music (Ng, 2011). Thus, innovative leadership helped Apple to explore its customer’s demand and desire. Apple, through innovative leadership, achieved enormous growth both inside and outside the organisation (Rufat-Latre, Muller and Jones, 2010). Decision Making Capability In the last 25 years, the concept of leadership has changed (Avolio et al., 2009). He has also stated that the present generation leaders need to have the essential capability in taking critical decisions in order to achieve success. According to Pitcher (1997), there exist three kinds of leaders, 1. Artists- leaders who are visionary and people oriented 2.craftsmen- leaders who are wise and dedicated 3. Technocrats - leaders who have extraordinary academic records and take decisions on the basis of methodological manner. The decision making capability of Steve Jobs is highly justified by the vital role he has played in making apple one of the most innovative and respected enterprises in the world. Inspiring a vision for the future is one of the characteristics of great leader (Hartman, 1999). Steve Jobs was known for challenging the established process and inspiring a shared vision. Apart from helping the company by his critical decision making skills he also took initiative in matter which were non critical. He actively participated in the designing of the shuttle bus that transported the workers in and around the various cities of USA. Steve jobs had a gut feeling that helped him immensely, in taking the right decision in the right time (Cooper, 2001). From the above findings, it is evident that the present economic and organisational environment is highly volatile and ever changing. Technological change and globalisation has made the workflow of an organization much more complex. Today, the leaders of any organisation have started to realise that leadership methods that are traditional, such as control and command, are not adequate anymore. 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