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Leadership Challenge: Strategy is the Key

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    Letter of Appreciation

    To

    The Members of the Board

    XYZ Company.

    Respected Seniors,

    I’m feeling excited at being chosen to serve you as a consultant, and I believe this honor will definitely bring out the best in me. Therefore I would like to express my gratitude to you for giving me this opportunity to serve your esteemed organization, and at the same time earnestly solicit your guidance and cooperation to make our joint effort a success. Therefore, attached with this letter, please find my observation, analyses and recommendation towards solving the problem.

    With sincere regards

    Mr. A

    Leadership Challenge: Proper Grooming Gears Growth

    Introduction

    The cumulative impact of globalization and digital revolution has been continuing to revolutionize the entire concept of human existence, where each layers of human activities are facing radical changes that range from survival threat to the beckoning of prosperity. Therefore, from the perspective of an established company like XYZ, this state of affairs commands total attention, where its management should be equipped to match with the dynamism of the situation.

    The word “equipped” carries a different connotation here, pointing at the engagement of specialists to deal with special situation. As for example, now induction of HRM in an organization of XYZ’s stature is a must, because the shift of business capital from financial and technological assets to human capital is now complete and this human asset needs specialized attention, because they are live object!

    Next comes the issue of vision and mission, which now should be built with human development at its center – because if humans are now considered as capital, then it’s only but logical to go for its development. Fortunately, this company has already its vision centered around humans (It should be a family), now all this company needs is a well-crafted mission, which will tie all the loose ends to add momentum in company proceedings.

    With this idea I proceed towards the main part of this report, where it starts with a snapshot of company background, then reviews its earlier vision and the new CEO’s vision, before analyzing new CEO’s effectiveness and recommendation for the future.

    Company Background

    According to the information, this company had been under the supervision of its founder for 20 long years, where his strategy and creativity had fueled its tremendous success during that period. The fact that he could take the company public speaks of his class as a leader, who not only successfully handled the changes around, but also made change a vehicle of prosperity. 250 employees and $30 million in sales echo this fact too.

    The second phase of leadership in the company has covered only three years so far, which is definitely a short period to arrive at any conclusion. Yet, considering the future of all people associated with the company, periodic evaluation of leadership is extremely important. According to the reported instances and facts, the changes introduced by the new CEO could not bring desired results and instead incurred staff-resentments due to several reasons. One this should be kept in mind, that the workforce of this company has all along been part of success and that speaks volumes about their ability. Thus their views should be attended first to review the situation.

    Employees’ Version: The essence of the employees’ report on their CEO goes like below:

    1.      He maintains double standards

    2.      He keeps distance from employees

    3.      He spends less time in mainstream operations

    4.      He operates through a chosen team

    5.      He lacks vision and direction

    6.      Employees are confused with his style of functioning.

    The above feedback does not augur well for the company especially when each point carries proven instances and each of them belong to one or the other vital faculties of leadership. Therefore the situation commands immediate remedial measures to start afresh.  For that matter, the first thing needs to be discussed is the state of current leadership within the basic framework.

    Evaluation of Current Leadership

    The basic elements of leadership are, Vision, Effective Communication and Application.

    1.      Vision: The leader should be able to see, draw and frame and finally unearth the big picture. Vision is the invisible ladder for the leaders to climb up to the hill of success! While the performance of the former CEO proves the above idea, the current CEO fails to create any impression, as his vision of “strong technological organization in the industry” resulted in “diluting the leadership and creating a feeling of instability among the employees”.

    2.      Effective Communication: Leadership is all about influencing people, obtaining their obedience and directing them in the chosen direction (Leadership, 2008). If the reports like “changes were the result of a series of meetings between him and a select group of managers” has anything to do, it surely points at the ineffective communication of CEO.

    3.      Application: While effective communication and quality vision happen to be the leaders’ car and its engine, then its wheel should be named as application, as it is the ability to apply the ideas effectively eventually makes a leader coming of age. On the other hand, the report on current CEO says, “Some of the changes gave the employees more control over the day-to-day operation, while others reduced control. The CEO introduced a matrix-type organization in which some employees report to as many as three managers. In other cases, managers have too many employees to oversee”. This is certainly not a reflection of any effective application.

    Next the CEO’s performance can be evaluated in the light of the researchers’ prescriptions.

    According to Stephen Covey, “leadership is all about direction and goal”, so he stated in his book “Principle-centered Leadership” (Covey, 1992). And the report on CEO says, “Employees seem to be confused”. This certainly points about lack of direction.

    John Maxwell views it as a “set of principles, which can be learned and applied” in his book “21 irrefutable Laws of Leadership” (Das, 2006). The report on CEO says, “The CEO claims to use a democratic leadership style. The organizational changes do not seem to support this claim”.  It shows that the new leader of XYZ does not follow any such set of principles.

    Houston and Sokolow (2006) presents an eight-point of charter of leadership like below:

    1.  Intention: The leaders should be able to clearly state their intentions behind their actions, which would be logical and morally acceptable to all of their followers. The report observes, employees are ” uncertain about their responsibilities because of these changes”. Thus the new CEO has so far failed to convince the employees about his intention.

    2. Attention: Leaders should be attentive to the needs and benefits of their followers, and for that matter they must possess the ability to visualize and create such benefits. Here the report records, ” His alleged hands-on style is not evident because he devotes much time to foreign customers and issues with stockholders”.

    3. Unique Qualities: Leaders should be able to prove their superiority in some spheres of life, be it natural talent or acquired skill – it is this difference in ability that enhances the scope of leadership practice. The report in discussion doesn’t mention about any such quality of the new CEO.

    4. Sense of Gratitude: Commands are for the action, but reverence should be the guiding force for that command, as that would always remind the leaders about their special role in the society as leaders, besides lifting their interpersonal communication skills to a good height and making room in their hearts to appreciate others’ contribution. The new CEO has so far failed to impress on this account, as the report says, “employees are uncertain of where they fit in the process”. This definitely points at the void in interpersonal communication.

    5. Usage of Real-life Lessons: The leaders should be able to learn from life and share that experience with their followers. The power of this practice can be understood from the practice of great leaders like Lord Buddha or Holy Christ, who had created tremendous impact on the minds of their followers through simple stories that carried strong messages. The report does not mention about such qualities of the new CEO.

    6. Holistic Viewpoint: All endeavors of the leaders should stem out of this perspective, as the leaders’ actions are expected to bring all the good things for the society. However, the report cites contrasting instances, like when the CEO “claimed to have the pulse of the employees” and when it was known that “CEO drives a foreign car while purporting to support U.S. manufactured products”. These are shocking instances.

    7. Openness: Transparency is an important element to become better leaders, where Leaders should utilize the scope of masterminding or brain-storming through such attitude and derive more force to hone and implement their ideas. However the reported act of the CEO (most of the changes were top down and did not consider employee input) seemingly walk in the opposite direction.

    8. Trust: This happens to be the platform of the leaders. Trust remains to be the core reason needed for the leadership skill, as observed by Houston (2006), while suggesting that the leaders should apply trust to harp on the progressive idea on how to lead a certain group. The essence of the report, “The result has been an increase in anxiety and turnover, and a drop in motivation and productivity”, clearly shows that no such bridge exists between the new CEO and the workforce.

    A short analysis of CEO’s performance with the help of the five- point of program of from the book “Leadership Challenge” written by Kouzes and Posner (2002) would be appropriate to narrow down the situation further.

    1. Model the Way: Leaders should be role models for other members of the group. For that matter, they have to have certain inspiring characteristics.  New CEO has failed in this respect.

    2. Inspire a Shared Vision: Leaders should be able to act like a spark plug, which would unite the entire workforce behind them, each holding same dream in their heart and same resolve to realize that dream. New CEO failed in this respect.

    3. Challenge the Process: This refers to the flexibility of the leaders, on the contrary it asks for the necessary courage to take the right step at the right moment, even if that looks revolutionary under the traditional belief and practice. New CEO did challenge the process at the outset (vision of incorporating high technology), but could not handle it (changes resulted in diluting the leadership and creating a feeling of instability among the employees).

    4. Enable Others to Act: It is the leaders’ responsibility to make every follower feel equally important towards achieving the collective goal, this in a way, a process of enabling the followers to act in their way, where the leaders feel convinced about the efficacy of such act.  The new CEO has failed again (Some of the changes gave the employees more control over the day-to-day operation, while others reduced control).

    5. Encourage the Heart: Leaders ought to encourage their members through making them realize of their worth to the group, and for that matter, they should be able to rouse the positive emotion in their followers. That would empower them to perform better not only for the organization’s sake but for their own benefit as well. Here too, the new CEO has failed (The company is U.S. based and prides itself on using all US components and assemblies for its products. The employees are fiercely loyal to the US. The CEO supported these values in his vision statement. Lately, we have received a few unsolicited comments that the CEO drives a foreign car while purporting to support U.S. manufactured products).

    Summary of the Situation

    The employees are strained to a great extent and there are several reasons for that.

    1. The leaders intentions are not clear: While the CEO publicly supports the vision of his predecessor, in practice he is far away from it, as he spends less time with the “family”(company as perceived by former CEO) This approach provides no direction to the employees.

    2. This leader’s vision is incomplete, as his attempt to thrust on technology never included employee training, and consequently that caused stress to the employees.

    3. He is more reliant on extrinsic reward (forming a privileged ring of managers) has divided the employees into groups.

    4. His perspective is not holistic: While boasting about the idea of being nationalistic, he is practicing just the opposite by riding foreign car. This act has diluted leader’s stature as a role model and cost his accountability to the followers.

    5. His failure to convert the employees into a unified and potent workforce: His reward policies, and operational techniques have divided the employees and thus they are now deprived from earning collective joy. This is an isolation process and accordingly the employees are gradually losing their esteem as an individual and submitting to despair. Insignificance brings insecurity and this trait now prevails in this company.

    Thus, the above evaluation with the help of general and specific frameworks clearly shows that the new CEO is not up to the mark in terms vision, communication and application and this is only but natural that he has failed to make his ground as a change agent.

    With this view this report moves on to analyze the leadership style of the new CEO.

    Analysis of the Leadership Style of the New CEO

    Observing his style of functioning from the company report, some salient features of the new CEO’s Leadership Style can be jotted down like below:

    1. His leadership style looks like a hotchpotch of participative leadership (democratic vision statement, delegating responsibility to some of the employees, willing to accommodate HR hint about that) and transactional leadership with a touch of LMX (Leader-Member Exchange) theory (forming a select group of managers hints about that).

    2. The report does not reflect any mentionable leadership strength of the CEO. However, this is not possible, as it is rare to find anyone totally devoid of any qualities. This perhaps reflects another fact: that the employees are at present very upset with this new CEO and thus the report mostly focused on CEO’s faults.

    3. This leader is influenced by material desires (he could have easily changed his car to raise his esteem among employees, but he didn’t do that).

    4. Knowledge-wise he is not equipped. It is for this reason his decisions are looking like autocratic (implementing new technology without arranging employee training to handle that)

    Overall, the leadership style of the new CEO does not provide any specific pattern like participative, situational, entrepreneurial or transformational leadership, but vaguely follows them at times – for instance, his frequent engagements with the stockholders might remind someone about entrepreneurial leadership, but in reality he doesn’t seem to be influenced by it or any other model of leadership.

    However, there is no less instance of making it big after a disastrous start, and  this is a situation that is barely three years’ old,. Therefore this CEO can still be tried under guidance and supervision of advisors belonging to the rank of accomplished HR personnel and accomplished leaders.

    Therefore, this report now proceeds towards recommendation section.

    Recommendations
    Suggestions to the Board regarding leadership issue from a transformational perspective:

    At the outset, following facts should be considered:

    1. The CEO is young and inexperienced and three years’ performance cannot be a yardstick to dismiss him, especially when the Board itself selected him.

    2. The CEO needs training and support from a group of specialists, who can guide him towards mastering the art of communication, creative thinking and application.

    The above two points boil down to the suggestion with justification.

    The Board should incorporate Strategic Human Resource Management (SHRM) in the company, at best in the mold of HPWS (High-Performance Work System).

    Justification of the Suggestion
    Human resource management has taken stronghold since when the reign of financial capital and technology made their way for the human capital. This radical change of focus has brought in a magical change in the mechanism of human resource management too – where it is now regarded as the guiding engine in determining, organizing and implementing the intellectual and human capital, besides providing knowledge and e-commerce management. A broad classification of HRM thus stands like below:

    HRM = Manages people and the business of organization;

    HRD = Develops Human Resource to derive the best possible result for the organizations.

    In another perspective, HRM starts with two wings like ‘Planning Aspects’ and ‘Change Aspects’ as the diagram shows below.

    Figure – 1: HRM in brief

    (Adopted from Biesalski, 2007)

    21st century researchers are more bent on digging the relationships between specific organizational variables and firm level performance. Carmeli and Tishler (2004) have examined “intangible” sources of competitive advantage including management capabilities, human and organizational resources and skills, and the firm’s external reputation.

    The trend of considering human capital as a factor in the firms’ financial performance, had gained momentum in the last lap of 20th century with Barney’s (1991)

    “Resource-Based View” of organizations. Later Barney and Wright (1998) argued

    that the firm’s most important asset in the race to achieve competitive advantage is the firm’s human resources. They were not alone. Wright and McMahan (1992) opined that human resources could provide a unique source of competitive advantage that is difficult for competitors to imitate.

    HRM solely deals with the complexities of human capitals, which arise from the situations listed below:

    i) Advent of global workforces with growing state of skills all around.

    ii) Lightening speed of data transmission, coupled with plethora of options in dealing with any subject.

    iii) Limitless business opportunities through the unlimited gateway of networking.

    iv) Advent of knowledge based economy, where intellectual capital can drive the value of products.

    v) Democratized and decentralized state of power, where an individual is empowered by the virtual Information bank and one’s own network;

    vi) An open environment free minds, free markets and free trade. In short, an open door for anyone to enter from anywhere.

    vii) Less dependency on financial capital for success.

    viii) Boundless scope for an individual to create and sell any product all by one’s own, and to a high degree, thus radically shifting from the earlier culture of  “mass production, mass marketing and mass media” (Isaacson, 1997).

    Above situations seem like owning a stable of wild horses and to direct them towards chosen direction and it is truly difficult for a CEO to single-handedly deal all of them. Right here the HRM steps in to do that job for the organizations. This perhaps helps in imagining the enormity of the role of HRM in the modern world. Managing intellectual capital with ‘living strategy’ is actually tougher than managing the horses, as the researchers say, “Companies will set themselves apart in 21st century by how well they optimize the human-centeredness of their technology” (Moore-Ede, 1993:191).

    Thus the two figures below depict the evolved state of HRM and its modern face:

    Figure – 2: Evolved State of HRM

    Figure – 3: New Face of HRM

    HPWS in Brief

    High Performance Work System, popularly known as HPWS is a specific combination of HR practices, work structures, and processes that maximizes employee knowledge, skill, commitment, and flexibility (Bohlander, 2004). Its system design looks like below:

    Work Flow
    HRM Practices
    Support Technology

    These are fed with Linkages to Strategy and Principles of High Involvement. Then the process is implemented and the outcome is observed in Organizational and in Employee levels. In short, this package of strategy aims “create an environment within an organization where the employee has greater involvement and responsibility” (Brown, 2006).

    According to the researchers, this new avatar of HRD started shaping up in the late twentieth century “amid the crunch period of United States manufacturing environment”, when it felt the heat of global competition and realized the need of rejuvenating their manufacturing process (Barnes, 2001).

    Underlying Principles of HPWS

    HPWS started with three pillars at the outset, like involvement, training and incentives¸ before adding the fourth, support technology; to take off as a full fledged system. Overall it looks like below:

    Figure –4: Skeleton of HPWS

     Components of HPWS
    “Involvement”, provides employees an “increased opportunity to participate in decisions” (Barnes, 2001). “Training” thrusts towards developing the knowledge and skill on the subject employees deal with. “Rewards” or “Incentives aligns the employee goals with the goal of the organization. “Technology” exploits the advantage of modern technology to make the system further effective.

    The Diagram below explains the basic structure of HPWS

    Figure –5: Basic structure of HPWS

    HPWS works on two layers, viz., internal and external – where it ensures ‘Internal fit’ and ‘External fit’. Internal fit refers to the situation where all the internal elements of the work system complement and reinforce one another. In the case of External fit, it refers to the situation where the work system supports the organization’s goals and strategies. It looks like below

    Figure – 6: HPWS in action

    Figure – 7: Four pillars of HPWS

    The above discussion provides justification of incorporating HPWS in XYZ and I believe that would solve the crises of it.

    Suggestions to the CEO regarding leadership issue from a transformational perspective:

    The ups and downs amid constant change is a common affair and it never denotes that there is no room for improvement. Accordingly my suggestion to the CEO stands as one-liner:

    1.      Adopt Servant Leadership Model

    Justification of the Suggestion
    An intense desire to serve the followers rules this model, where the leaders maintain a fixed and untainted focus on serving others (Greenleaf, 1977).

    Stone et al, (2004), has termed servant leaders as Type S leaders under a framework, where servant leadership is considered as Theory S, which is distinctly different from three other theories viz., X, Y and Z as earmarked by McGregor (1967).

    The briefest description of them looks like below:

    Theory X: Considers workers lazy and thus need to be monitored and governed.

    Theory Y:  Considers workers as self-motivated and responsible and have deep interest in their work.

    Theory Z: Applies both the ideas as and when necessary.

    Theory S: Takes care of leadership motivation and ensures the creation of a bridge of trust between the leader and the workers, where the workers respond to the situation with a belief that the leader is actually trying to empower them.

    Servant leadership model is the improvised form of transformational leadership, where approach of instruction turns into guidance and spiritual sparks.  The diagram below would brief the differences between two major leadership models.

    Figure – 8: Comparison between Transactional and Servant Leadership

    The essence of servant leadership contains the following powerful set of words:

    Figure – 9: Servant Leadership at a glance

    Servant Leadership

    A comparison chart between servant leadership and other models would further explain its efficacy:

    Servant Leaders
    Other Leaders
    MOTIVE
    Use their power to develop the followers
    Use their power to control the followers
    PREFERENCES
    Prefer inspirational and transformational power to influence and transform the followers
    Prefer position, political and coercive powers to rule and control with total authority
    MECHANISM
    Less stress on control and more focus on influencing the followers.
    Maximum stress on control and less attention on influencing the followers
    ORIENTATION
    Relation-oriented. Sensitive to individual and situational needs with the urge to serve.
    Power-oriented. Sensitive to any loss of power. Taskmasters and directional.
    SKILL
    Need a total set of positive inner qualities besides interpersonal skill.
    Need to garner total loyalty; enforce obedience and conformity
    ATTITUDES TOWARDS VULNERABILITY
    Risk-takers by trusting and empowering the followers.
    Refrains from taking such risks.
    ATTITUDES TOWARDS HUMILITY
    Rises to the connotation, servant leadership by serving all the way
    Busy in feeding their ego.

    Adopted from Wong, (2003), which have been prepared from a large base of literature.

    I believe above discussion amply justifies the suggestion given to the new CEO and he would adopt the same to start afresh.

    Conclusion

    The entire practice of evaluation and recommendation has proved to be a nice experience for me too, and thus I take this opportunity to give thanks to the member of the board once again for giving me this opportunity. As for the essence of the entire situation, I’d like to conclude by saying, “every cloud has a silver lining”.

    Ends

    References

    Barnes, W.F. (2001). “The challenge of implementing and sustaining high performance   work system in the United States: An evolutionary analysis of I/N Tek and Kote.       Doctoral dissertation: University of Notre Dame.

    Barney, J.B. & Wright, P.M. (1998). On becoming strategic: The role of human resources           in gaining competitive advantage. Human Resource Management, 37, 31-46.

    Barney, J.B. (1991). Firm resources and sustained competitive advantage. Journal of      Management, 17, 99-120.

    Biesalski, E. & Abecker, A. Human Resource Management with Ontologies. Pdf.           Retrieved on Nov 27, 2007, from      http://www.fzi.de/KCMS/kcms_file.php?action=link&id=588

    Bohlander, G. & Snell, S. (2004) Managing human resources (13th ed.). Mason, OH:      Thomson/South-Western.

    Brown, E. (2006). “Implementing a High Performance Work System Article. Retrieved 7           July 2008, from http://browncg.wordpress.com/2006/08/28/implementing-a-  high-performance-work-system/

    Carmeli, A., & Tischler, A. (2004). The relationships between intangible organizational   elements and organizational performance. Strategic Management Journal, 25,    1257-1278.

    Covey, S. R. (1992). Principle-Centered Leadership : Strategies for Personal and                        Professional Effectiveness. Fireside.

    Das, S. Leadership Lessons from Bhagavad-gita. Pdf file. Retrieved on 23 July 2008,    from             http://www.atmayogi.com/files/Leadership%20Lessons%20from%20Bhagavad- gita_0.pdf

    Greenleaf, R. (1977) Servant leadership: A journey into the nature of legitimate ower and           greatness. Ramsay, NJ: Paulist Press

    Houston, P.D. & Sokolow, S.L. (2006). The Spiritual Dimension of Leadership: 8 Key   Principles to Leading More Effectively. Corwin Press.

    Issacson, W. (1997). The Microchip is the dynamo of a new economy.. driven by the      passion of Intel’s Andrew Grove. Time Magazine, December, p22, 24 and 26.

    Kouzes, J. M, & Posner, B.Z. (2002). The Leadership Challenge, Third Edition   (Hardcover), Jossey-Bass. ISBN-13: 978-0787956783

    Leadership and Motivation. (2008). Web document. Retrieved 29 March 2008, from             http://www.braincorp.com.au/courses/12826/Leadership-and-Motivation

    McGregor, D. (1967) The professional manager. New York: McGraw-Hill.

    Moore-Ede, M. (1993). The 24 Hour Society: The Risks, Costs and Challenges of a        World that Never Stops. Judy Piatkis (Publishers) Ltd.

    Wong, P.T.P. (2003). An Opponent-Process Model of Servant Leadership and a Typology of Leadership Styles. Research paper. Retrieved 19 July 2008 from             http://www.twu.ca/academics/graduate/leadership/servant-leadership/sl-   roundtable-typology

    Wright, P.M. & McMahan, G.C. (1992). Theoretical perspectives for strategic human     resource management. Journal of Management, 18, 295-320.

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