Styles of leadership would only be applicable based on factors such as the culture

Executive Summary

There are various motivational theories and styles of leadership which are being practiced by organizations worldwide. Certain motivational theories and styles of leadership would only be applicable based on factors such as the culture within which the organization operates. Sri Lanka being a country where “power culture” has been dominant has to follow less flexible, more extreme motivational theories and styles of leadership such as McGregor’s XY Theory and Autocratic or Authoritarian Leadership style respectively.

It has been identified that there are various advantages and disadvantages of pursuing certain leadership styles. However, it is clear that independent of the style of leadership used, if the leader is an effective leader, this would be a great strength for an organization.

Standard Chartered Bank having reported seven successive years of record income and continuous expansion of market share, despite the existing global economic condition, has been recognized as one of the world’s leading banks. The success is entirely a result of the effort of employee groups and leaders of the bank who have been exposed to a unique culture which has been brought up at the bank.

Table of Contents

Table of Figures

Introduction

An organization can be defined as a group of individuals working together to achieve a common goal or objective. To achieve these common goals and objectives an organization would require leadership as well as motivation. There are various styles of leadership and motivational theories which are practiced by organizations in order to achieve the desired result. Above all, effective leadership could be identified as one of the best motivational factors.

An extensive analysis regarding Standard Chartered Bank has been done with the purpose of analyzing functions of groups, teams and leadership within organizations.

Standard Chartered PLC is a British financial services company headquartered in London, England with operations in more than seventy countries. It operates a network of over 1,700 branches and outlets (including subsidiaries, associates and joint ventures) and employs 80,000 people. Despite its British base, it has few customers in the United Kingdom and around 90% of its profits come from Asia, Africa, and the Middle East.

Motivational Theories and Leadership

Motivation could be defined as a psychological process where internal and external factors influence a person to be continuously interested in pursuing and achieving goals. It could be said that motivation influences a person’s behaviour at work and ultimately how he performs during the job. There are various motivational theories followed by organizations to motivate their employees and some of these theories are discussed below.

Motivational Theories

Douglas McGregor’s Theory X and Theory Y

Douglas McGregor has developed two models which are known as Theory X and Theory Y. These two theories were formulated through examination of theories on individual behaviour at work.

Douglas McGregor’s Theory X states that an average human being dislikes work, prefers to be directed, avoids responsibility, has little or no ambition, works for money and mainly security.

Theory X has given rise to two management approaches, which are the soft and hard approach. Under the soft management approach, managers seek harmony with the employees under the impression that employees would cooperate with them when necessary. Where, under the hard management approach an employee has to be coerced, controlled, directed and threatened till the expected result it achieved.

However, it should be noted that none of the extremes are suitable as employees require more than monetary rewards, they require fulfilling their higher order needs. It is understood the main reason for organizations to use this approach is to ensure that employees behave in the expected manner.

Theory Y, unlike Theory X looks at an average human being from a more optimistic angle. Theory Y states that an average human being likes work, directs himself, accepts and seeks responsibility.

Theory Y would be more valid and is used by organizations as this would result in higher levels of motivation for employees through matching organizational goals with personal goals. Further, this would lead to employee empowerment as creativity and opportunity to exercise initiative is allowed.

Maslow’s Hierarchy of Needs Theory

Maslow’s Hierarchy of Needs Theory speaks of five groups of basic needs which usually motivate behaviour in many cultures. These basic needs are Physiological, Safety, Social, Esteem Needs and Self Actualization.

Figure (Maslow’s Hierarchy of Needs)

In Maslow’s Hierarchy of Needs Theory, once a need has been satisfied, the desire to satisfy a higher need rises. Hence, a person would be motivated to perform better.

Organizations would use this theory to decide on what type of motivation needs to be given to its employees. Organizations use this theory by identifying,

Behaviour of an individual at a given moment depends on his strongest need

Physiological needs have the highest strength and a majority of employees would work to satisfy this level only

An unsatisfied need acts as a motivation factor

Once a need is satisfied the desire to achieve a higher order need rises

A satisfied need would no longer act as a motivation factor

ERG Theory

ERG Theory resembles Maslow’s Hierarchy of Needs Theory. ERG Theory has three groups of needs. Where the first group would be Existence Needs (i.e. physical and material wants), second group would be Relatedness Needs (i.e. desire for interpersonal relationships) and third group would be Growth Needs (i.e. desire to be creative and productive). However, unlike Maslow’s Hierarchy of Needs Theory, the ERG Theory states, if frustrated in trying to satisfy Growth Needs, Relatedness Needs will re-emerge (frustration regression process).

Organizations would use ERG theory to help them identify their employee’s dynamic needs and help the organizations to understand why employees have such dynamic needs (i.e. once satisfaction progression occurs the needs change and once frustration regression occurs needs change once again).

Herzberg Two Factor Theory or Motivation Hygiene Theory

Herzberg after carrying out many surveys concluded that to understand employee satisfaction or dissatisfaction work had to be divided into two categories.

Motivation Factors: Factors which are strong contributors to job satisfaction.

Hygiene Factors: Factors which are not strong contributors to job satisfaction but which must be present to meet an employee’s expectations and prevent job dissatisfaction.

Hygiene Factors:

Job security

Relations with others

Physical working conditions

Company policies

Pay

Quality of supervision

Motivation Factors:

Achievement

Responsibility

Recognition

Opportunities for personal growth

Promotion opportunities

Organizations use Herzberg’s Two Factor Theory firstly to identify if their employee’s hygiene factors are met through which an assessment could be made regarding whether the employee is satisfied with the job or not. If not, the organization can identify which factors need to be adjusted so that this may alleviate job dissatisfaction.

However, to motivate someone to perform better or to increase satisfaction motivation factors must be addressed by the organization. Using this theory, an organization would be able to identify which form of motivation would be necessary to motivate an employee as motivation factors relate to the nature of the work itself and the way the employee performs it. It should be further noted that this theory has a twofold approach of eliminating dissatisfiers and enhancing satisfiers.

Victor Vroom’s Expectancy Theory

According to Victor Vroom’s Expectancy Theory employees will work hard to achieve rewards that they values and that they consider obtainable. Further, Victor Vroom states that an employee will be motivated to exert a high level of effort to obtain reward under three conditions.

The employee believes that his or her efforts will result in acceptable performance.

The employee believes that acceptable performance will lead to the desired outcome or reward.

The employee values the reward.

(Karen Collins, 2007 cited in Flatworld Knowledge, n.d)

Figure (Expectancy Theory Model)

(Karen Collins, 2007 cited in Flatworld Knowledge, n.d)

Organizations would use this theory as it would help the organization to understand and interpret,

How employees decide to work

The effect of planned rewards programs

The effect of such planned rewards on the productivity of employees

Sri Lanka is a country within which power culture is dominantly seen not only within society but also within organizations. As a result of this culture which has not changed much throughout the years, work force of an organization would naturally await orders from the top and are not interested to take initiative in most situations even when given the chance. Hence, when considering motivational theories which are now widely practiced through the world where a technique of motivating employees in a natural manner is used, it could be understood that such motivational theories if applied within organizations of the country may not result in the expected outcome. Based on this information it is possible to arrive at the conclusion that the most suitable motivational theory to be used by organizations operating within Sri Lanka is McGregor’s XY Theory where Theory X assumptions have to be used.

Leadership

Leadership Styles

Leadership could be defined as a relationship through which one person influences the behaviour or actions of other people.

There are various factors which should be considered when selecting a style of leadership. For example, nature of task (i.e. Urgency, Complexity), type of people being led (i.e. Maturity, Technical Experience, Competence), etc. There are mainly three types of leadership.

The Authoritarian or Autocratic Style: A leader exercising this style would make decisions alone without advice from their followers and would state what has to be done and how. Such a style would be suitable in an occasion when all the required information to solve a problem is available, there is a lack of time and the employees are well motivated.

The Participative or Democratic Style: A leader exercising this style would involve employees in the decision making process. The leadership functions are shared with members of the group resulting in greater interactions within the group. “The group members have a greater say in decision making, determination of policy, implementation of systems and procedures.” (Laurie J. Mullins 2007, p. 371) However, it should be noted that the leader maintains the final decision making authority.

A Laissez – Faire (Genuine) Style or Delegative Style: A leader exercising this style would allow the employees to make decisions after observing how employees work on their own. This is done when employees are able to analyze a situation and decide what has to be done and how. However, the leader would still be responsible for the decisions made.

Beyond these leadership styles, it should be understood that leadership behaviour could either be directive or supportive.

Advantages and Disadvantages of Leadership Styles

Leadership Style

Advantages

Disadvantages

The Authoritarian or Autocratic Style

More group productivity while leader watches

Decision making process is quicker as the leader makes the decision individually

The organization may respond to danger quickly

The level of dependence on the leader increases

The level of hostility among employees may increase

Work force may dislike being ordered around resulting in employee de-motivation

The Participative or Democratic Style

A positive work environment could develop

Motivates creative thinking

Reduces employee turnover as a result of less friction between the work force and the leaders

Slower decision making

Arguments may arise

A Laissez – Faire (Genuine) Style or Delegative Style

Results in employee empowerment

Promotes independent thinking

Motivates creativity

Employees can misuse the freedom given to them and perform poorly

Figure (Advantages and Disadvantages of Leadership Styles)

Leadership and Motivation Distinguished

An authoritarian or autocratic leadership style is followed when employees are dependant and resist change. The efficiency of such employees would be low. Through high levels of supervision, command and control which is exercised by such leaders would motivate employees mainly in three forms. They are,

Peer Motivated: As employees would like to be like others

Authority Motivated: As employees would follow policies

Threat and Fear Motivated: As employees would react to force

When a participative or a democratic leadership style is followed there would be greater interaction within the group and hence the personality and efficiency of employees depends on the leader’s skills and the work environment which he has created. When following such a leadership style, employees would be motivated in three forms. They are,

Goal Motivated: As employees may recognize some opportunity

Reward Motivated: As employees would recognize some opportunity for some material reward

Recognition Motivated: As employees would recognize an opportunity for change in social status

A Laissez – Faire or delegative style is followed when employees take up leadership, thrive on change or opportunity, are independent and are achievers. Such employees would be very efficient compared to employees under other leadership styles. Leaders following this style would have limited supervision and would delegate decision making responsibility to employees. When following such a leadership style, employees would be motivated in two forms. They are,

Self Motivated and Team Motivated: As employees are allowed to practice creativity

When the above three types of leadership and motivation associated with them are analyzed, naturally a participative or a democratic leadership style is best to follow because in a team-motivated environment, dependant employees will be inspired and will strive to be acceptable with independent thinking co-workers.

However, as it was mentioned before, due to the culture element of the country work force of an organization would naturally await orders from the top and are not interested to take initiative. Therefore, a leadership style where high levels of supervision, command and control is practiced would be more applicable for such an environment meaning, the most suitable leadership style to motivate employees within organizations would be the authoritarian or autocratic leadership style.

Effective Leaders; A paramount to an Organization

It could be said that effective leaders are the key for success of any organization. There are many characteristics an effective leader should have. Based on the information given below it is possible to understand that an effective leader is strength to an organization in many aspects. Given below are five factors which make an effective leader a paramount to an organization,

An effective leader would be able to influence and inspire people to accomplish a goal, or an objective of an organization. It should be understood that leadership is not about power and has no relationship with driving employees to accomplish their tasks and duties out of fear. It should further be understood that an effective leader would help to encourage or motivate other employees to take up leadership, forming a successful and a powerful workforce.

An effective leader would be a visionary person meaning awareness of organizational goals, objectives and vision. Only if employees see that their leader is aware of the direction which he must head they will follow him. This could be an advantage to an organization as such a person would be able to lead the employees of the organization in such a manner that they would achieve organizational goals and objectives.

An effective leader would be a trustworthy person. It should be understood that trust if a leader is trustworthy his employees would have confidence in him even at tough times. Hence, it should be understood that if an organization has such a leader who has good relationships, is trustworthy and follows ethical standards that this would be a massive strength for the organization as this could be considered the base for an effective organization. Further, this would help the organization to develop a good impression through the community in which it operates.

An effective leader would be able to communicate the organizational goals, objective, vision, knowledge and technical expertise to the organizations employees. This would help the employees of the organization to become effective too as they would gain the required knowledge, skills and an idea about organizational goals, objectives and vision.

An effective leader would be able to make “successful” decisions based on intuition. This could lead an organization to success as at times there may be a need to make decisions quickly which maybe of very high importance and value when time for gathering information may be very limited.

Groups, Teams and Leadership

It is no secret that behind the success of Standard Chartered Bank, the staff of the bank has played a very important role. Effective leadership and well motivated staff has been the key for this excellent performance. To support and improve leadership development within the bank, Standard Chartered Bank now has seven core leadership development programs along with feedback programs such as the 360 feedback tool. Standard Chartered Bank gives special consideration not only for leadership but also for aspects such as employee relations, team building, culture and values, etc.

Nature of Groups and Team Roles

Nature of Groups

A group could be defined as a collection of people who interact with each other over time in order to reach goals. These groups can either be formal or informal, where both types of these groups are seen at Standard Chartered Bank. One note worthy feature of these groups at Standard Chartered Bank is that the groups consist of individuals who come from various backgrounds, cultures and have different skills. However, Standard Chartered Bank has made sure that no conflict among bank staff occurs but instead understanding and development in multiple fields occurs; great example for this will be the employee exchange program (first time in 2008, between India and China) which the bank launched recently. Through this approach, Standard Chartered Bank has been able to,

Align teams with business vision and objectives

Build staff engagement and commitment

Create opportunities for open and courageous conversations

Clarify dependencies

Accelerate high performance by leveraging strengths

Team Roles

A team role is, “a pattern of behaviour, characteristic of the way in which one team member interacts with another whose performance serves to facilitate the progress of the team as a whole.” (Laurie J. Mullins 2007, p.332)

As Belbin has stated, even though there are nine team roles, it is rare to find members who are strong in all nine team roles. Standard Chartered Bank too has recognized this and in order to build up teams who are skilled in multiple ways the bank follows job rotation programs and also as it was mentioned above employee exchange programs. Through the employee exchange program or rather the talent exchange program the bank expects to forge stronger working relationships and cultural understanding between the two strategically important markets

“All our development is based on the philosophy of being a strengths-based organisation. We encourage individuals, managers and teams to identify and focus on their distinctive talents, and constantly challenge them to achieve more with them. We recognise that individual strengths are unique, and that each employee will deliver in a role in a different way.”

(Standard Chartered Bank, 2009)

As it is quoted above, the bank encourages recognition of individual strengths through which the bank expects to achieve greater strengths. Through the interaction of individuals of such nature the bank expects to develop a highly talented work force through team work. Even though an individual member may not be highly talented he will be motivated to achieve and develop new strengths when he would be allowed to interact with people talented in multiple fields. Therefore, it could be understood that team roles play a vital part in the development process of the bank.

Stages of Team Building

Given below are the stages of team building or team development,

Forming – formalities are preserved and members are treated as strangers (polite but untrusting).

Storming – members start to communicate their feelings but probably still view themselves as part of their parent department rather than part of the team. They attack others insular attitudes while guarding their own (testing others).

Norming – people feel part of the team and realise that they can achieve work if they accept other viewpoints (valuing other types).

Performing – the team works in an open and trusting atmosphere where flexibility is the key and hierarchy is of little importance (flexibility from trust).

(Carter McNamara, 1999)

The above four stages of team building or development are very evident at Standard Chartered Bank. The initial two stages would be very clearly seen at the beginning when an employee would be newly selected and/or when they switch branches (consider the employee talent exchange program for example). However, as time passes by (a period of three months for the employee talent exchange program) employees would learn about each other, would value each other especially their culture and would be able to perform with flexibility which would build up from trust. An example for the last stages of the team building process would be when top executives frequently fill in for one another, whether leading regional celebrations, representing Standard Chartered Bank at key external events, or initiating internal dialogues with employees. They make their collaborative behaviour visible through extensive travel and photos of leaders from varied sites working together.

Beyond the above mentioned four team development stages, there is one additional step which is known as adjourning. This would mean disbanding of the group due to completion of a task, members leaving the organization or moving on to other tasks.

Team Cohesiveness

It is one of the main responsibilities of a leader to ensure that the members of his work group cooperate so that the work group would be able to achieve the expected results. It is clear that cooperation among members of work groups is likely to be greater in a cohesive group resulting in beneficial effects for the organization. There are many factors which affect group cohesiveness. These factors could be categorized under four major headings as shown in the diagram below.

Figure (Factors Contributing to Group Cohesiveness & Performance)

(Laurie J. Mullins 2007, p.307)

Even though it is stated that there are disadvantages of cohesive groups such disadvantages have been minimized at Standard Chartered Bank through the unique culture which has been bread. The disadvantages of cohesive groups have been overwritten by the advantages of cohesive groups at Standard Chartered Bank resulting in an overall positive outcome. These groups have helped the bank through increased interaction between members of diverse cultures and ethnicities, growth of skills and knowledge of members through mutual help, lower turnover as the member feels that the organization has become a part of him, etc.

Motivational Tools and Techniques

Standard Chartered Bank follows a range of methods to encourage or motivate their employees. Motivation at Standard Chartered Bank takes place through,

Learning and Development: Learning and Development process at Standard Chartered Bank starts once an employee joins the bank and this will continue till the employee resigns the organization. Standard Chartered Bank uses advance new technology to make this process an interesting one and gives encouragement for members to participate. Examples for Learning and Development at Standard Chartered Bank: Right Start, Job rotation, Talent Exchange, Core Leadership Development, 360 feedbacks etc.

Employee Relations: Standard Chartered Bank follows an approach where it would deal with employees on an individual basis rather than a collective basis. This approach focuses on direct communication, managing organisational change and involving and motivating employees.

Reward and Recognition: There are two elements to remuneration within Standard Chartered Bank; an annual salary and a performance based element. At Standard Chartered Bank performance would not mean just “achieving goals” instead it means how employees demonstrate the bank’s unique culture and values in their working lives. Employees would receive individual ratings but those with lowest values of ratings will not receive any performance related bonus even if they have achieved their final targets.

Great Working Environment & Other Facilities: Standard Chartered Bank has an environment which could be stated as one of the best environments to work at. The structures have been constructed according to expected standards and latest technology has been used where possible. Further, the bank provides other facilities, such as the day care centre where various forms of education would be given for the children of the employees, freeing the employees from the burden of worrying about their children during working hours.

Impact of Technology on Team Building

It is clear that technological changes have enabled Standard Chartered Bank to achieve new heights in many fields. When considering team building, as it was mentioned above in the previous section, Standard Chartered Bank uses technology right from the beginning of an employee’s career. “Right Start” is the new induction process which the bank uses for new employees. It is clear, that even this simple step will help the organization to develop better teams within shorter time periods resulting in more effective outcome. Hence, it is understood that technology has a massive impact on team building process.

“Our induction process for new employees was enhanced during the year with the launch of a new online virtual world. The Right Start Learning Journey offers access to critical information about our history, core businesses and supporting functions, sustainability agenda and much more in a fun and interactive way. New employees can visit the site, which was created by our Learning and Development Team, as often as they like while a discussion forum allows them to communicate with other new recruits.”

(Standard Chartered Bank, 2009)

It should further be understood, that this same process of new employees getting to know other employees and building up successful teams would have been a very slow process causing possible inefficiencies for the organization in indirect ways.

Even though technology has had its positive impact on the team building process it could be said that there are drawbacks if excessive technology is used as it may decrease person to person interactions resulting in lower awareness or understanding regarding one another. However, this situation is not yet seen at Standard Chartered Bank as the bank arranges certain social events where employees can get to know each other better, independent of their position at the bank.

Conclusion

Due to the strong cultural effect persisting within Sri Lanka, employees would naturally require high levels of supervision, command and control resulting in the usage of leadership styles such as authoritarian or autocratic leadership and extreme motivational theories such as McGregor’s XY Theory (Theory X assumptions), neither of which could not be considered as the best choice. To overcome this situation, changes to the culture within the organization could be done through an eventual process and in such a manner that employees would not feel threatened. Further, it could be understood that an effective leader could bring about the desired change even in such a culture.

Behind every successful organization there would always be a highly talented and committed work force as at Standard Chartered Bank. Based on the information which was stated in the body of the report, it was possible to arrive at the conclusion that due to the unique culture which has been brought up at Standard Chartered Bank where technology and many other elements have played an important role, every employee would have an opportunity to either be an excellent team player or to be an excellent leader. To further improve, the bank can integrate more team based discussions and such activities where technology could be used in a balanced manner.