Autocratic business leadership in a recessionThis essay will address the question of whether the autocratic style ofleader is the best type to have in an economic recession. After givinga definition of what an autocratic is, and what an economic recessionentails, the reasons why this is the best style of leadership willbe addressed. The points in favour to be examined will be; that quickdecisions are reached, there is efficiency, a clear chain of commandand a lack of sentimentality. Also, one good example of an autocraticleader will be included. Then the reasons why this leadership stylemay not be good will be looked at. These will be; the over dependencyon one person, the frustration and resentment caused to the workforceand the modern trend towards employee participation in decision making.
There will then be a brief look at three other leadership styles, whichwill lead to the question being answered as a conclusion.
An autocratic leader in business terms is a person who keeps most orall of the key authority for themself. They are very dictatorial orauthoritarian and tell their employees exactly what to do. They tendnot to delegate very much or share information willingly with theirsubordinates, and they assume responsibility for all operationalAn economic recession seen through the cycle of an individual businesscan follow this process; falling sales, intense awareness of competitors,customers becoming very price sensitive, a cut in output, making workersredundant, not implementing expansion plans, postponing capital investmentand cutting under-used capital equipment.
Efficiency is a quality inherent in a successful autocrat. They will, ina recession, exploit all the resources available with no sentimentality,and as a leader they will have insured there is a minimal levelof bureaucracy and middle management tiers to interfere with this.
There is likely to be a high output per worker and a low level of costper business unit output. Overall, the efficiency of the autocrat willbe vital in streamlining operations during a recession.
Quick decisions are needed in every size of business at one timeor another. Seeing a market gap or spotting a take-over opportunityare areas where this is especially relevant, the autocratic leader in atime of economic downturn can use their attributes very profitably here.
Being in some ways both a gambler and a dictator by nature, they willback their own judgement and impose their will on their employees.
They will often follow their hunches, and although this has inherentrisks, the opportunities that are open in a recession can lead to themsuccessfully exploiting their rivals weaknesses through being confidentenough to aggressively move in on their market share or even launch atake-over bid. Also, there will in some heavy industries, be excellentopportunities to purchase cheap heavy plant, and use the fact that landand buildings are cheap in a recession to obtain improved or differentbusiness premises. For these and many other reasons an autocratsspeed of decision will give their business an edge. Having a clearchain of command is another advantage of having autocratic leadership.
This leads to centralisation in an individual organisations structure,with the autocrat at the top taking most or all of the key decisions,ensuring tight financial controls and clear targets. There willbe coherent policies for production and marketing. Although ratherone-way, communication channels throughout the business will be plainand instructive. These tight structures will hold firm, and I believewill be an asset when faced with the realities and problems associatedwith recession. An autocrat will strongly maintain the form of thebusiness, whether it is large or small, and will not lose sight of theneed for forward planning, even when their organisation is sailing inThe autocratic style of leader has advantages over other styles in oneother important way crucial in an economic recession: They have a lackof sentimentality. When downsizing becomes necessary, the unpleasantissue of staff redundancy becomes unavoidable. The autocrat seemsparticularly suited to making these hard decisions. Employees will belaid off in a fashion that is least expensive to the business, and thistype of leader will use this as an opportunity to lay off any deadwood.
Also, recession is likely to lead to redundancies in rival businesses,and there becomes a chance to cherry-pick from the newly available talent.
Wages can be cut too, and contracts with weak business partners can becomemore exploitative and profitable. This unsavoury side of business wouldbe best carried out by a ruthless autocrat.
One example of a successful autocrat is Alan Sugar, whose companyAmstrad is particularly prominent in the personal computer and satellitedishes field. In this company there is a power culture dominated byone individual. Here, the company structure can be seen as a web, withall the key decisions coming out from the centre. The clear advantageto Amstrad in being run this way is that Sugars speed and clarity ofaction enables the firm to tie up deals rapidly in an ever changing andexpanding market. Few decisions are taken collectively or by committee,and the whole organisation works without many of the bureaucratic,hierarchical middle management layers of its rivals. There is insteada dynamic central force exercising a wide span of control. During the1980’s his star soared because he had caught the personal computer marketat exactly the right time. At the start of the 1990’s recession Amstrad’sshare price plunged, but Sugar bounced back and de-merged successful!The autocratic leader can be bad in one area that is particularlyrelevant in times of recession: They are likely to cause frustrationand resentment in their workforce. Some workers can be left to monitortheir own work and use their initiative profitably for their company 2Laying down the law and imposing their will are two behavioural traitsof the autocrat. They will by their habit of overruling the decisionsof their underlings, trample on the egos of key workers. For exampleif they change marketing strategy without consultation they upset aline of people from the marketing director to the lowest operative inthis section of a business, they will feel undermined and powerless.
This may lead to a general frustration and a sense of a lack of worthfor individual and collective groups of employees, causing these workersto lose motivation at a crucial time in the business cycle.
Over dependency on one person is a negative aspect for any size ofcompany. The autocrat takes and holds onto power ruthlessly, and isnotoriously bad at delegating key authority. There are many potentialdangers with this. One is that some physical problem may arise,such as illness or a major stress problem, putting the leader out ofaction for a short or prolonged period. New figures will have to takeover the running of affairs and because the autocrat organises thingsin an authoritarian way, no logical replacement(s) can step into theautocrats shoes. A period of confusion in the command chain will ensueand there may even be a potentially damaging internal power struggle.
There is a modern trend towards worker-participation in company decisionmaking, indeed this is a mandatory requirement of the European SocialChapter that Britain signed up to in 1997. The intention here isgive workers the opportunity to discuss common concerns such as jobsecurity or health and safety.3 The autocrat will quite likely run intoproblems here, because they usually take decisions without consultationwith others. Another potential problem is with Trade Unions. Althoughthese are in decline in membership numbers and are under-representedin many new high-tech and service industries, they still have a biginfluence in many areas. The autocrat must surely be less likely toreach satisfactory conclusions in any negotiations that they may havewith the unions than less confrontational leaders. Their authoritarianand often confrontational personality could lead to numerous potentialdifficulties, possibly even causing strikes or employees working to rule!Three other leadership styles of leadership are; the bureaucratic style,the democratic style and the free reign style. A bureaucrat managesstrictly by the rulebook. The advantages of this are that there ispredictability and consistency, and every person knows exactly wherethey stand. The disadvantage is when problems arise that are outsidethe rulebook, such as economic recessions, then the leader is paralysed.
The democrat works well with experienced and confident employees whocan join in with group discussions and decision making, this would seemparticularly good in a small company. On the negative side decisions cantake too long to reach, which is very bad in a slump, and the leader canlose overall control and evade their responsibilities at crucial times.
The free reign leader sets goals for subordinates and clear parameterswithin which they should work. 4 This can work if employees are capablein their field. However, there is a high risk with this sty! le becauseof the total reliance on the abilities and motivation of the workers.
In conclusion it seems, on the balance of arguments used here, that intimes of economic recession, the best leader for any size of businessis the autocrat. In a troubled period for a business, speed of action,decisiveness and a lack of sentimentality become a necessity. Decisionsin a recession become tough, laying off employees for example is astressful business. Also, having less bureaucracy in the organisationis helpful. The dictatorial autocrat will impose their wishes clearlyand ruthlessly, and their dynamism is likely to give their business aBibliography:
