Leadership

Leadership is defined by authors McShane and VonGlinow (2002) in their book Organizational Behavior as, “the process of influencing people and providing an environment for them to achieve team or organizational objectives.” (p.416). As organizations move toward flatter structures and knowledge-based management in a world of increasing competition and globalization, command-and-control styles of leadership are becoming things of the past. Today’s leaders need to look closely at what motivates their workforce, how they need to provide favorable working conditions, and to involve and empower employees to achieve organizational objectives. To be effective leaders they also need to understand the informal rules of communication that exist alongside formal structures within organizations and how these rules impact work processes. We take a close look at “leadership in action” in this week’s simulation that bears the title of the same name. To begin with, let us describe the organizational structure of Smith & Falmouth Company or S & F. S & F the parent company, a tele-shopping and mail order network is influenced by industry forecasts and an internal desire to change. It creates a new e-tailing division S & F Online, which is to be its Strategic Business Unit SBU--a divisional structure where employees are grouped around geographical areas, products/services, or clients. S & F Online is an example of a client structure. It has employees grouped into two teams. The six member web development team reports to the Project Manager--PM and the three member logistics team reports to the Logistics Manager--LM. A Marketing Manager--MM serves as coordinator of product lines, marketing budgets and promotional activities. Both LM and PM report to the MM. The MM in turn reports to the COO. The organizational structure at S & F Online is an example of a divisional structure, also called a strategic business unit SBU. Divisional structures are one of the forms of departmentalization--where employees and their activities are grouped together. Examples of two other organizational structures are: matrix structures and team-based or lateral structures. A matrix structure superimposes two forms of structure--usually functional and divisional, to leverage the benefits of both types of structure. This combined structure is unusual because employees have to report to two bosses--one for their functional team and the other for the management of the project. This structure is useful for project-based organizations that need to optimize skills and resources (McShane, 2002, p.520) Lateral structures are distinct in that they use self-directed work teams SDWTs. The teams are typically organized around work processes, such as customer support or specific product manufacture. These structures also have very flat hierarchies and very little formalization. Team-based structures although popular because they are flexible and cost effective, can paradoxically be costly to maintain. The reasons are: need for ongoing training, ambiguity in roles, need greater employee coordination, increased levels of stress, etc. (McShane, 2002, pp.521-523) As organizations grow more laterally, division of labor and coordination of work processes amongst employees assumes great importance. There are formal means--that are dictated by hierarchy, informal means--more flexible but vital means of communication, whereby employees share common mental models to streamline work processes, and standardization--characterized by predictable employee patterns of behavior or output. Informal means of communication are important in a few instances. Neck, Meyer et al (2004), in their article An Entrepreneurial System View of New Venture Creation state that “informal networks are critical to supporting and enhancing new venture creation.” (p.9). Furthermore, authors Graafland, Bert et al (2003), in their article Strategies and Instruments for Organizing CSR for Small and Large Businesses in the Netherlands, state Both large and small firms make least use of a compliance strategy that focuses on controlling and sanctioning the ethical behavior of workers. The size of the business is found to have a positive impact on the use of several instruments, like code of conduct, ISO certification, social reporting, social handbook and confidential person. Also being a subsidiary of a larger firm has a significant positive influence on the use of instruments. The most popular instrument used by small firms is to let one member of the board be answerable for ethical questions, which fits the informal culture of most small firms (abstract, p.45) We will discuss informal means of communication in greater detail because it is relevant to the simulation in question. The formal structure at S & F Online that is dictated by hierarchy is as follows: The teams are directed by their respective team leaders or managers, who in turn are directed by the marketing manager. The marketing manager who earlier was in charge of operations now reports to the COO. The COO receives his directives from the CEO of the parent company. We have seen a complex interplay of informal communication--the proverbial grapevine--that exists alongside the formal structure. In ground reality, each of the teams although strongly aligned to its respective leader also interacts with the other team’s leader. One team, the logistics team provides order fulfillment status directly to the marketing manager. The web development team however, does not interact nor socialize with the marketing manager. Furthermore, the logistics manager is not influenced by the decisions of the marketing manager with the opposite being true--strange! The COO on the other hand, interacts only with the marketing manager and is unable to interact with the teams or their leaders--signs of resistance. The COO in an effort to streamline online operations, increase the reach of the sales channel and make the SBU profitable must exercise his power judiciously. He must also understand the complex interplay of forces in the informal culture--sub-structure, and win over the team members’ acceptance of his vision and persuasive tactics by aligning one or more managers of the two teams. Power “is the capacity of a person, team, or organization to influence others.” (McShane 2002, p.356). For example, X has power over Y when X is able to control something that Y needs to achieve his/her goals. Organizational politics on the other hand, refers to the exercise of power to achieve or promote personal goals. The sources of power can originate from the power holder’s status--legitimate, reward, and coercive power, or from the power holder’s personal characteristics or traits--expert and referent power. Bieler, Morton et al (2004), in their article Unthinking Materialism' state Capitalist production proceeds historically from the formal subsumption of labor power, based on the simple exchange of labor power for wages, to real subsumption of labor in which the class relation embedded in this transaction is carried deep into the social organization of production (abstract, p.238) An effective leader does not merely exercise power but knows when to use his/her power and type depending on the situation--contingency. The consequences of power should not merely be compliance but more importantly, commitment. Abuse of power can also occur whereby the power holder is corrupted by the need for more power to further personal interests or organizational goals. Nations sometimes engage in power and politics. Aylin (2004), in his article The USA’s role on mediating the Cyprus Conflict: A story of Success or Failure, states It was the superpower politics and containment strategy during the Cold War years that determined the course of action in US crisis mediation and determined its success or failure. In the post-Cold War period, on the other hand, the success or failure of the USA's crisis mediation in Cyprus has been determined by the fact that it remained the sole hegemonic power in world politics (abstract, p.27) Organizational politics can take one or more of many forms such as attacking or blaming others, controlling information, forming coalitions, cultivating networks, creating obligations, or managing impressions. (McShane 2002, pp.370-372). Politics is considered unethical unless it satisfies three moral principles: utilitarian rule--the greatest good for the greatest number of people, individual rights rule--where the tactic does not threaten right to free speech or other rights, and distributive justice rule--treats all parties fairly. (McShane, 2002, p.370). At S & F, we see many power and political forces at play. In addition to the legitimate power that comes with hierarchy, we see examples of referent power--production manager over marketing manager and both teams, and expert power--logistics manager over marketing manager. We also see examples of organizational politics--logistics team against COO when the team members state that they would rather align themselves with the production manager to achieve organizational objectives; the web development team not aligning itself with the marketing manager. The production manager also demonstrates impression management skills, being a charismatic personality. And finally, both team managers do not align themselves with the COO--demonstrating organizational politics, as they have formed effective coalitions with their respective teams. The marketing manager in addition demonstrates weak leadership skills due to his limited reach and restricted scope of decision making. On the basis of all of the invisible forces at play, the COO, as the change agent has an unenviable task of seeking out an ally to achieve organizational objectives. He must demonstrate both transformational and task-oriented leadership styles. He must communicate his vision or superordinate goal to all the team members and their leaders to build commitment to that vision. Furthermore, he must be participative--encourage team member involvement, supportive--when team member morale is low at the end of the second quarter, directive--when he announces rewards for better performers, and achievement-oriented--when he empowers team members and instills confidence that they can achieve higher production. The COO must also demonstrate situational leadership skills, when he decides to recruit specialists to upgrade existing systems and offers to take a variable salary based on team performance. He must deal with the restraining forces of change from the existing employees by holding open house open door meetings to hear employee concerns, offering training to upgrade existing employee skills, and use communication as an effective tool to reduce employee hostility toward the hired specialists. Conclusion No leadership style can be deemed the best. Rather, the style of leadership is contingent upon the forces at play and given the dynamics of the change process. For example, a directive style hinders performance when the employees or team members are sufficiently motivated and competent. It is also hinders performance when employees have a high central locus of control--belief that they have control over their work environment. A directive style on the contrary helps when tasks are of a nonroutine and complex nature because this minimizes ambiguity. Leaders must use the supportive style when team member cohesiveness is low and to help employees cope with unfamiliar working conditions. Participative style and achievement-oriented styles are advised when employees demonstrate self-efficacy and an internal locus of control. The path-goal leadership theory proposed by Martin Evans, states that “effective leaders influence employee satisfaction and performance by making their need satisfaction contingent on effective job performance.” (McShane 2002, p.422). The theory thus, reinforces the concept that effective leaders alter their style with the situation. References Aylin, G (2004). The USA’s role on mediating the Cyprus Conflict: A story of Success or Failure. Security Dialogue (35) 1, p.27, 16+ Retrieved June 1, 2004 from EBSCOhost database Bieler, Morton et al (May 2004). Unthinking Materialism': British Journal of Politics and International Relations (6) 2, p.238, 3+ Retrieved June 1, 2004 from EBSCOhost database Graafland, Bert et al (Sep 2003). Strategies and Instruments for Organizing CSR for Small and Large Businesses in the Netherlands: Journal of Business Ethics (47) 1, p. 45, 16+ Abstract. Retrieved June 1, 2004, from EBSCOhost database McShane, & VonGlinow (2002). Organizational Behavior (2nd ed.). New York: McGraw-Hill Neck, Meyer et al (2004). An Entrepreneurial View of New Venture Creation: Journal of Small Business Management (42) 2, p.190, 19+ Retrieved June 1, 2004 from EBSCOhost