Term Paper: Leadership Behavior for Effective Decision

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[. . .] The theory suggests two measures of decision effectiveness - decision quality and acceptance. When a decision of is of high quality and accepted, the leadership can be said to be high caliber. The argument is that even when a decision is correct, it can be made to fail by the resistance of those in the workgroup responsible for carrying out the decision. Vroom and Yetton identified three alternate styles of leadership - autocratic, consultative and collective or group style. There is evidence to suggest that autocratic style of leadership leads to poor performance and non-acceptance by others. (Lickert 1967, Reddin, 1970) and participative or democratic leadership is more likely to catalyze high performance. Hersey-Blanchard's theory, another well-known variant of contingency approach, suggests four situational leadership styles - telling, selling, participating and delegating.

This theory argues that a situational leader adapts leadership behavior in line with the changing situation and features of the individuals in the work group. In measurable terms, the leadership style must match up the psychological maturity and job skill of the employees in the organization. As the employee maturity goes up the scale, the leadership style should be more relationship oriented than task-oriented. In a nutshell, the development levels of subordinates determine which style the leader should adopt, to deal with a given situation. Under this theory, leaders can exhibit two types of behavior - directive, in which the communication flows from the leader to the group and supportive, which is based on two-way communication and interaction. Contingent theories were successful to the extent of covering a wide range of factors relating to leadership and giving new dimensions to successful leadership. However, the main criticism is that this approach is more suited to managers, as sub-ordinates will always prefer a participative approach, irrespective of the demands of the situation

Transformational Theory:

The more recent theories suggest that the qualities of individual leaders must be linked with the ability to transform the organization's fortunes and provide a long-term viable vision. History has shown that leaders, while becoming prey to populist goals, have shown the willingness and ability to push leadership towards the concept of transformation. (Bennis, 1994). Also referred to as visionary leadership, the transformational approach enables leaders to evolve a mental image of the organization's future position. Leadership spurs this vision into action, leading to results. Thus transformation is all about leadership providing the vital link between the present and the future, with inspiration forming a major component of the process. The transformational theory is criticized for the problems posed in making the assumptions that form the vision for the future (Hampden-Turner, 1994). However, many experts have supported this approach and the perceived value of transformational leadership has prompted Bennis to state that 'without such leadership, even the most brilliant management strategy is likely to fail', (Bennis, 1994)

Analysis of the CEO's leadership style:

Within a few days of taking over, everyone expected that the CEO will organize a series of meetings to decide on the organizational goals and he will implement tough measures such as downsizing, freezing of bonuses and promotions to keep costs under control. But to everyone's surprise, there was no announcement of a meeting. Instead, the CEO invited department heads and key personnel and held face-to-face informal discussions. Without suggesting anything, he asked the key personnel to present their views, suggestions and recommendations on the ways and means to improve the company performance. He discussed the various problems faced by the department heads and team members and asked them to identify solutions.

At the end of the discussions, almost all the key personnel agreed that the company's performance was far off its normal levels, thus allowing competition to eat into the market share. They also agreed that it is not difficult to push it to more acceptable levels and given the right environment and resources, such improvement could be achieved with internal efforts. In the subsequent discussions, the CEO impressed the need for the company to put its best foot forward by becoming world-class in whatever it does and this found immediate acceptance among the managers. In the first stage, the CEO succeeded in making the employees commit wholeheartedly for a radical organizational change.

This is a classic example of contingent leadership, where the CEO apparently adopted a relationship-oriented approach by first focusing on people related issues. The logic behind this strategy is because of the nature of the situation that confronted the CEO. Here was a professional and competent company that had a good track record of success and high caliber individuals, who knew the nuances of the business and had the capability to overcome the challenges. Perhaps the solution lay in improving the working environment and motivating the employees. Obviously, the task-oriented leadership would have alienated the CEO and he was right in choosing the relationship-oriented approach. In dealing with employees, the CEO where required, urged them to use self-assessment tools to measure decision making skills and motivation levels.

After getting to understand the people-related issues, the CEO then started fixing goals - short-term and long-term. He got the department heads themselves to do this and participated in the process of decision making to make improvements, where possible. He was careful not to fix unrealistic or unreasonable goals himself, but motivated the key personnel to improvise and arrive at the best possible targets. This way, the employees were fully involved in the decision making process and at the same time, they were aware of the support and commitment of their leader. It was a bit surprising to note that, at the end of the budget sessions, the target income was increased by 25% and cost figures were down by one-third, with the promise that these figures will be revisited from time to time. If necessary, the figures will be revalidated and revised to ensure that the goals and targets are realistic. In the entire course of formulating business plans and budgets, the CEO took an approach that showed concern for both tasks and relationships. He did not lose sight of the main objective - the task, and for attaining this objective he concentrated more team leadership, which is stressed by the behavioral theory of Blake and Mouton.

In the course of the entire process, the CEO gained trust, respect, credibility and admiration of almost all managers and executives. In essence, he had the charisma to influence decisions. Backed up with this advantage, the CEO finally announced his vision for the company - he expected the company to be among the top ten in the country, within the next five years, in terms of sales, profits, service and corporate image. He was successful in selling this idea of vision to the managers, who started feeling as part of the mission in achieving this long-term goal. Given the current size of the company and its resources, it was going to be a Herculean task to achieve the vision objectives, but the employees had a sense of belonging to the vision, which gives the CEO a fair chance of reaching it. This is the essence of transformational leadership theory, which culminates in the effective leader influencing the work group to recognize and act for the vision. If successful, the company as well as the employees will bear the fruits of success.

Challenges to leadership:

There are five key leadership challenges that form important components of the leadership role - reframe the future, develop commitment, teach and learn, build community and balance paradox (Jacobson, 2000). The challenge of building community is to be seriously considered because it represents the linking factor among all relevant members in the team. There are three components to building community - culture, infrastructure and governance. Culture is a reflection of the shared values that holds people together and can be observed readily in the action of employees rather than in the corporate policy. Shared values include what people are permitted to express, the type of actions that will be accepted, the perception of risk and the manner of decision making. The CEO in this case study appears to be well equipped to face the various challenges. He is willing to reframe the future of the company as envisioned in his vision statement and there is ample evidence to suggest his commitment to the development of people and organization as a whole.

Perhaps one of the unique attributes that I observed in him was his ability to listen to even a junior executive. He never ceased to ask questions, discuss responses and guide people to come out with better answers and solutions. In his own way, he also taught some cutting edge principles even to seasoned managers in the company, who were not exposed to such practices. He made efforts to build community, by trying to understand the culture of the employees and trying to… [END OF PREVIEW]

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