Effective Leadership Is A Tool To Organisational Performance Management Essay

Leading people in the course of accomplishing certain goals and objectives needs certain skills; amid them is the leadership skill. Leadership is a process by which a group of people are inspired and influenced to achieve organizational objectives and long-term goals. This essay is aimed at examining critically, some of the main theories of Leadership and will be structured into two parts. The first part will focus on leadership and evaluation of the leadership theories. The second part will be linking leadership to performance and giving examples of some organisations that have succeeded through good leadership practices.

The concept of Leadership has no universal definition. It is imperative to understand the meaning of leadership before going into the different theories of leadership. Leadership has been defined as the relationship that exists among leaders and their followers in expressions of power relationship, here leaders through their power effects change in others, the skills and knowledge a leader possess to effect this change through others makes effective leadership possible (Northouse, 2004).

Although leadership, has been defined to mean different things to various authors. It is thought to be unknown and mysterious (Adair, 2006), but to have a general conclusion, it is seen as an important ingredient to achieve effective management and mainly about the ability to influence people, driving them towards achieving organizational goals, objectives and aims. Roger (1997) suggests that leadership is not necessarily the same as management, that although managers have authority, they may not have power. Hackman (2002) argues that leaders can also control personnel resources by creating a situation for team effectiveness, enabling structure. Enabling structure which can be formed through the manner within which work is considered, the encouragement of core norms of conduct and team work is organised. Bernard (1926) posits that anybody who is ordinarily efficient in delivery psychological stimuli to others and hence effective in cultivating cooperative responses can be called a leader. This means that a leader must have prestige, know which stimuli that is adequate to response to the purposes and device a procedure for presenting the stimuli.

Despite the diverse ways by which leadership has been conceptualized, there are central components that can be identified as fundamental to its phenomenon.

Key Elements in leadership definition

Just as there are many definition of leadership, there are also approaches to leadership that has help to in-depth understanding of leadership.

Trait Approach

Trait theory asserts that certain qualities of being an effective leader may possibly be inherited; these traits can be intelligence, social status, physical traits like weight and strength, or personality traits like self-honesty, self – confidence, and creativity (Mullins, 2005; Northouse, 2004; Rogger, 1997). Most Scholars that take the trait approach attempt to categorize physiological, demographic, personality, self-confidence, and assertiveness, task-related and social characteristics with leader effectiveness. Whitener (2007) suggests that these lists of traits are what potential leaders should aspire to have in other to be seen as an effective leader. Trait approach has been seen to be incoherent, as there are no traits that differentiated leaders from non- leaders in that a leader in one situation may not necessarily be a leader in another position, instead of the qualities that individual have, leadership was reconceptualised as a relationship among people in a social situation (Stogdill, 1948).

Trait explanation of effective leadership has been regarded with little esteem by leadership researchers, although some steady relationship were found, the discovery suggest that leadership is not just a sheer possession of mixture of traits, situation specific analysis took over if not dominating( Zaccaro et al, 1991; Stogdill, 1948; Bass, 1990). Conger et al (1998) saw trait approach as being too simplistic, House et al (1997) concluded that there were few, if any common trait is linked to leadership effectiveness. Trait approach gave rise to the question whether leaders are born or made and whether is an art or science. Even if they are born it still needs to be developed through training and encouraged and if it is an art, it still requires the application of certain special skills or techniques (Mullins, 2005).

Furthermore, researchers have found that there is no one and only trait or leadership style to lead effectively and that it all depends on organizational culture, employee behaviour, readiness to achieve and tasks to be performed or aspects of the situation. This is in conformity with the situational leadership model according to Hersey & Blanchard (1969) which basically suggest that the knowledge of employees is vital in effective leadership.

Although trait approach have a century of research to back it up and has given us a benchmark on what to look out for if we want to be a leader, it failed to define ultimate list of leadership traits, take situation into consideration and has resulted in highly subjective determinations of the most important trait (Northouse, 2004).

Behavioural Approach

The Behavioural approach believes that leaders are made and not born and to be a leader needs to be learnt and develop through observation and creativity. This school of thought concentrates on the kind of behaviour of people in leadership situations, how they treat their subordinates and its result on performance (Mullins, 2005; Antonakis et al, 2003).

The Michigan University and Ohio State was used in the study of this approach, the survey acknowledged two scope of leadership referred to as consideration which is employee oriented leadership and structure which is production oriented leadership (Antonakis et al, 2003). McGregor recommended that a leader’s behaviours depend on his assumptions about people and the human nature. For instance, if a person is appointed a manager and he see people as being naturally lazy, reluctant to take responsibility, resistant to change the theory -X employees the leader may adopt autocratic style of leadership and if he see employees who works hard, quick to change and seek responsibility rather than avoid it the theory- Y employees he will adopt a participative leadership style (Roger, 1997). This approach to leadership is contradictory because the type of behaviour a leader enacted depends on the situation.

The Leadership styles

The leadership styles can be attributed essentially to the philosophy of the leaders. Mullins, (2005) suggest that leadership style is the way within which the functions of leadership are carried out and the way managers typically behaves towards their subordinate. In this regards three styles can be distinguished via: autocratic, participative, and laissez-faire.

The autocratic style also known as authoritarian style of leadership can be termed “tellers”. They feel that they know best what they want and tend to express those wants as direct orders to their associate. This style according to Roger (1997) can be dictatorial or paternalistic. Dictatorial in the sense that the leader tells the followers what to do without comment. Reward and penalty for poor performance becomes the order of the day. While the paternalistic style, imposes close supervision and control.

Although this type of leadership is looked upon as negative, many autocratic leaders have been successful in accomplishing goals. Its strength can be seen when employees are submissive and prefer not to be responsible for participating in planning and decision making, autocratic leaders are effective since they keep decisions and control to themselves. However autocratic leadership style has number of disadvantages. Here employee ideas are not fully applied, it suppresses workers idea, and staff cannot be developed to their maximum potential Roger (1997).

The participative leadership style encourages the feeling of involvement, being relevant, valued, team work and part of the decision making process. It involves the employees in the whole process towards implementation and effecting change. Here workers like to feel that their ideas are important and feel more committed, they also tend to develop greater feelings of esteem and are therefore better motivated, there is also high quality decision and productivity, it also encourages team work and interpersonal exchange and finally eliminates feelings of hostility Roger (1997). This style can also be disadvantageous in that decision making can be slow because of the time taken to consult the employees, it also works on the principles of consensus and lack of positive direction, may prevent the achievement of the objectives and employee participation in minor operation rather than the major decisions which may lead to resentment.

The laissez-faire also called the free rein. Here the leader observes that the members of the group can work well on their own. With the goal of the organisation in view, the leader presents task to the group members who then work out their best own techniques for accomplishing those goals within the frame work of the organizational objectives and policy, this is to allow them freedom of action to think best but ever ready to help when the need arises. Although there is freedom of action, it can degenerate into chaos, decision making is performed by the dominant peers in the group, work generally is sloppy and productivity low Roger (1997).

The Situational & Contingency Approach

The situational and Contingency emphasises that in leadership study in organization, certain variables and situations should be put into consideration as there could be unforeseen situation which can emerge anytime. That flexibility and dynamic styles should be used in different situations. This approach emphasises that situation is the dominant feature for determining an effective leadership as situation is one of the main forces influencing managerial behaviour and the contingency model assumes that there is no one best way or style of leadership(Mullins, 2005). Although this approach is appealing there are some managers who have the knowledge and skill and appear to be the most appropriate leader in given situation but do not appear as effective leaders (Mullins, 2005).

The Functional Approach

The functional approach concentrates on the roles, functions and responsibility of an effective leadership, what the leader do and the character of the group (Mullins, 2005). This approach sees leadership as distributed function. The most important ingredient of this leadership approach is its attention on how rather than who (shead, 2010). John Adair’s “three circles” in his action centred leadership deeply influenced the functional leadership approach. These three circles symbolize the areas where leadership functions take place. Those areas are: task, team, individual. This approach believes that the skills of leadership can be learnt, developed, and perfected through training and development (Mullins, 2005). In recent times most organization does not wait for leaders to look for them but search for those who have leadership potential to develop them and expose them to their careers (Mullins, 2005). This model encourages team work, considers the changing role of leaders and followers in organization and can help in selecting team leaders. Although it encourages team work it does not offer a specific situation for team leader and the direction for leadership training is unclear, compound and demoralizing (Northouse, 2004).

Transformational Leadership

Transformational leadership is quite appealing and emphasizes on the most effective way to use human resources to achieve result, which has led management concentration on how leaders transform organization (Mullins, 2005). Leadership should not just be about an elite few that distributive leadership should be among the key factors to effective organisational success (CIPD, 2010a). Burns in his writing upon ‘transforming leadership’

Posits that the transforming leader shapes, alters, and elevates the motives, values and goals of subordinates attaining considerable change in the process.

Transformational leaders may; develop a follower’s needs, change a follower’s self-interest, enhance the confidence of followers, promote followers’ prospect, enhance the value of the leader’s intended outcomes for the follower promote behavioural change, motivate others to higher levels of personal success Bass (1990). Tichy & Devanna (1986) in Bolden et al. (2003) propose that transformational leadership cannot just be attributed to charisma but also as a behavioural process. All this can be achieved through employee involvement, motivation and engagement because a charismatic leader is the one who inspires their followers with the idea that they can accomplish great task through extra exertion. Transformational leadership has seen to be effective in most of the organisation that has succeeded through effective leaders.

This leadership approach is individually considerate in that it considers the difference among their employee and acts as mentors to the employee who need help the leaders also through stimulation shows their follower’s new ways of tackling problems by making them understand difficulties as problem solved Bass (1998). An illustration of this leader is Lorenze Iversen, a former president of Mesta’s Machine Company, who said to the employees, “we got this job because u re the best mechanics in the world”. This president believes in walking around inspiring his employees and he is known for instilling pride and commitment. Although Transformational leadership has intuitive appeal, treats leadership as a process that occurs between followers and leaders, lays emphasis on followers needs, values, and morals and as effective form of leadership, its functions connect with each other and it is elitist and antidemocratic (Avolio, 1999; Bass & Avolio, 1993). Yukl, (1999) in Northouse, 2004 argues that transformational leadership suffers from heroic leadership and also likely to be abused.

Evidence that effective leadership is a tool to organisational performance

It will be important to define what we mean by organisational performance and success before delving into the way it is affected by leadership practices.

Richard et al (2009) posits that organisational performance consists of three main areas of firms outcomes which includes; financial performance involving (profit, return on assets, and return on investment etc.), shareholder return (total shareholder return, economic value added etc.) and product market performance (sales, market share etc.). Richard went further to explain that many organisation have tried to manage performance using the balance scorecard method in which performance is tracked and measured in multiple ways such as; financial performance, customer service, social responsibility (corporate citizenship and community outreach) and employee stewardship.

Organisational success differs from one sector of business to another. Nevertheless organisations use key performance indicators (KPI) to determine their level of success. For instance key performance indicator (KPI) for a sales or retail sector could be profit, customer’s loyalty. Also for service sectors their success could be measured by key performance indicators (KPI) such as employee satisfaction, customer’s satisfaction and achieving the goals and objectives set by management (Forsaith & Hall 2000).

However, when we talk about high performance it is not enough to say that an organisation is performing high during the short-term or during economic progression periods, organisation that can be recorded as a high performing organisation is the one that can face both of the internal and external challenges (CIPD, 2010b). Darwin E. Smith who was appointed the CEO of Kimberly Clark a paper company whose stock had fallen from 36% is a typical example of a leader who can thrive in economic challenges and progression. Smith created a transformation at Kimberly Clark turning it into the leading consumer paper products company in the world and beating its rivals Scott paper and Procter & Gamble. In so doing he generated a cumulative stock return of 4.1 times greater than those of the general market outpouring companies such as Hewlett-Packard, 3m, Coca-Cola and General electric (Collins, 2001a). Effective leaders, understands that high performance in organisation is not all about instant success but long-term feasibility and they tend to also focus on training and development programmes that is linked to high performance. They tend to concentrate more on on-the-job training (Ashtons, 2002).

Leadership has been seen to be central to individual, team and organisational performance. Many factors both internal and external have a posture on sustainable performance and employee engagement lies at the heart of organisational performance, leadership can be said to be inexplicably influential in terms of its impact on employee engagement and performance(Collins, 2001a).

To lead effectively, leaders ought to know that it takes the inspiration, commitment and engagement of their employees and they should know how to influence them towards achieving organizational objectives. Engaging employees is quite vital as leadership is very much about it (CIPD, 2008). Engagement could be said to be the sum of effort an employee is willing to apply in their work. This can be influenced if the engaging leadership scheme is assumed and this is can be illustrated using its model:

Figure 1: The Structure of the Engaging Transformational Leadership Questionnaire

Engaging Individuals

Showing genuine concern

Enabling

Being Accessible

Encouraging questioning

Personal qualities and core values

Acting with integrity

Being honest and consistent

Engaging the organization Inspiring others

Focusing team effort

Being decisive

Supporting a developmental culture

Moving forward together

Networking

Building shared vision

Resolving complex issues

Facilitating change sensitivity

Adapted from www.cipd.co.uk/shapingthefuture

This chart shows that engaging leadership has a key role on employee motivation, job satisfaction and commitment and can reduced work-related stress which will in turn lead to high performance in organisation.

Therefore, in other for organisation to compete effectively and achieve competitive edge that will ensure long-term success and survival of business, there is a need to foster a leadership that takes into consideration human relations, and it’s responsive to the dynamics of the business environment McGunagle (2010). Various authors have proposed several forms of leadership that will enhance performance in organisation. These forms of leadership range from Transformational, charismatic and participative leadership styles. Transformational could be said to be linked with adaptive behaviours which has to do with getting the employees to think creatively and learn new skills, it also takes into consideration the need and ability to manage and control challenging situations while accommodating different social factors (Han & Williams, 2008; Pulakos et al, 2000; Rosen et al, IN PRESS), (Moss, Dowling & Callanan, 2009).

Transformational leadership is seen to be effective because it presents a leader who focuses on challenging visions as such input commitment into the employees, this kind of leadership favours and empowers teams in achieving organisational goals (Shin & Zhoug, 2003). Several authors have identified transformational leadership to function at both team and individual level (Kirkman, Chen, Farh, Chen, & Lowe, 2009; Liao & Chuang, Zohar & Tenne-gezit, 2007). Very importantly at the individual level transformational leadership assumes the position of discretionary stimuli that arises as a result of different relationship between the leader and the lead (Wang et al., 2005). While at the team level transformational leadership creates an atmosphere where team members are creative and they willingly share ideas capable of transforming the organisation (Chen & Bliese, 2002). Bass & Avolio (1994) posit that transformational leaders engage more with their colleagues. They behave in different ways to attain superior result using the Four I’s which is idealised influence, intellectual stimulation, inspirational motivation & individualised consideration (Avolio, Waldman & Yammarino, 1991).

However in achieving effective organizational success, leaders who adopts bottom-up strategy rather than top-down system seems to be more effective. The top-down system is rule from above, with little or no involvement of those at the bottom, who are highly needed for the execution of tasks. It blocks flow of information in an organisation which will lead to misinformation to the employees. Bottom-up strategy promotes employee involvement, help free flow of information and feedback, ideas and suggestions from the employees (Wright & Taylor, 1994).

Good to great leaders do not start from vision and strategy rather they start from people first and then strategy second. They get the right people on the bus and move the wrong people off the bus, then ushers the right people on the seats and then figure out where to drive it (Collins, 2001a).

Collins, (2001b) also identified some factors of moving from a good to a great leader. The prime is the level 5 leadership which emphasises that leaders should be an epitome of humility to be able to do what’s best for their organizations by accomplishing advantageous outcomes. Examples of leaders in this class are Yun Jong-Yong of Samsung Electronics, Japan, Makesh Ambani of reliance Industries in India etc.

Jong Yong Yun, Samsung Electronics’ chief executive officer since December 1996, has restructured Samsung by challenging traditional Korean corporate culture of hierarchy and lifetime employment. Yun inculcated a sense of ‘perpetual crisis’ among his employees and encouraged them to come up with innovative products that according to him, were essential for Samsung’s survival. His emphasis was on quality products with unique designs and effective brand promotions. In 2004, Samsung surpassed Sony to earn profits of $9.4 billion over revenues of $72 billion 34. Roopa & Chaudhuri (2005) in 2003-2010 IBS Case Development Centre

Effective leaders understand the importance of employee empowerment which in turn leads to organisational success. This can be made evident in the case of Sao Paulo in Brazil. When Ricardo Semler, became the Chief Executive Officer, Semco expanded into other businesses like banking, environmental services and e-business. Ricardo preferred to change Semco into a democratic organisation for which he adopted the philosophy of employee empowerment. Ricardo was against the autocratic style of management, and was for participative management. Under Ricardo, Semco’s revenues rose from $35 million in 1990 to $160 million in 2003. Semco soon came to be known as the ‘unusual kind of workplace 25. Kiran, B. & Chaudhuri , (2009) in 2003-2010 IBS Case Development Centre.

However, many organisations have succeeded through good leaders who understand the need to invest in their people. An example of this can be seen from Vineet Nayar, CEO of Indian IT service giant HCL Company who likes to rock the boat. When Vineet was asked his greatest legacy, he responded without missing word “That I have destroyed the office of the CEO” his company has 55,000 employees and a market cap of $24 billion which is growing faster than Indian’s red-hot economy. He also led the charge that gave rise to the company’s motto,” Employee first, customer second” an idea that gave many managers hives (Cappelli et al., 2010).

In an interview with the senior executive of the Indian company’s like the Tata, Mahindra & Mahindra, and Infosys etc. on how they derive their organisation to high performance none of these leaders said that they succeeded because of their own cleverness at strategy or top team effort. These leaders said that their source of competitive advantage lies deeply in their companies, in their people (Cappelli et al., 2010). This entails that when employees are made the epitome of performance in an organisation they will be willing to contribute effectively to the organisational success that is to say good leadership cannot be separated from organisational success.

A leader that takes the loyalty of their employees for granted jeopardises the collective foundation of that organisation, while this leaders go in one direction, the rest of the organisation will be trapped in another way. The High Commitment High Performance leaders’ (HCHP) such as Tim Solso of Cummins, Jorma Ollila of Nokia, Russ Fradin of Hewitt Associates, Allan Leighton etc. focuses attention on involvement with their people and operations; they try to create a link between the people who do the job and the performance they deliver (Russell et al. 2008). These leaders were able to achieve a greater height by combining four strategies such as earning the trust of their organisation through their openness to the unadorned truth, they were greatly engaged with their employee, were also able to assemble their people around a determined agenda and finally they realised that they can only succeed as part of a committed team and endeavoured to make their firms collective leadership capabilities (Russell et al 2008).

Allan Leighton practiced management by working around; before he became the CEO of Royal mail they were losing £1.2m. Mr Leighton has already had some success in turning the company around. In May, the company posted its first improvement in trading performance for five years. By then, it said, it was losing “just” £750,000 a day, down from an average of £1.2m a day the previous year (Russell et al., 2008).). These HCHP leaders believes that investing in people is a means to achieving their goal because achieving a greater organisational height depends highly on how an employee is happy enough and feels committed to contribute effectively to attain high performance (Russell et al, 2008).

Leaders in High performance organisation are inspiring and accessible; they do this through effective communication, high employee involvement and engagement, training and development. In fact they believe in their people, this can be made evidence through Stella David of Bacardi-Martini UK, she not only shaped various phase of the Bacardi-Martini work practices and performance systems, but was also known by all employees at Bacardi-Martini as “inspiring” and “accessible. To the employees, she is highly discernible with the day-day operations of the business. Through her leadership style the company had £400m turnover with 550 employee each earning £35,000 p.a.; 19% (Ashton, 2008).

Also Chris Galanty the managing director of Flight Centre UK said their company have built up a reputation as a people-focused business and their culture is about cultivating personal and career development, which gives their employees a strong degree of empowerment (2010 Flight Centre (UK) Limited). This company has a Turnover rate of £19.4m with 550 employees earning £35,000 p.a.; their business strategy is Shared high performance and profit – one big global family and “One Best Way” (Ashton, 2008)

In achieving sustainable organisational success one can see that distributive leadership plays an important role because it encourages line managers and employee empowerment which results to positive effect on performance. Caroline Sharp the director of HR and Workforce Strategy at Dumfries and Galloway NHS Board in her interview on distributed leadership pointed out that the traditional hierarchical form of leadership was not working well for their organisation in terms of making their teams changeable to enhance performance and the need for distributive leadership aroused which made them to deliver a leadership programme called Delivering Dynamic Improvement, this programme was a success because it helped the organisation to restructure their general management team (CIPD, 2010a).

In summary successful leaders concentrate on the factors that derive profitability which revolves around investment in people, technology that supports frontline workers, serious recruitment and training and compensation which is related to performance for employees (Heskett et al, 2008). From the above explanation and examples one can see that effective leadership cannot be separated from high performance in the organisation, the both term are linked together and for organisation to attain a greater height there is need for distributive leadership and employee satisfaction (CIPD, 2010a).