Critically compare traditional approaches to leadership development with those designed to promote sustainable practices. Outline the impact sustainable leadership may have on organisation success.
"Sustainability is about building a society in which a proper balance is created between economic, social and ecological aims" (Széjeky & Knirsch, 2005:628).
Sustainable leadership became necessary through the depletion of resources and the environmental restrictions of the countries, e.g. the Kyoto Protocol (Driesen, 2007). Following traditional leadership approaches are compared with sustainable practices. Furthermore impacts of sustainable leadership on organizations' success are discussed.
First, when comparing traditional leadership approaches with sustainable leadership is that traditional leadership approaches are linked with performance, while sustainable leadership is linked with human sustainability as prerequisite for performance (Casserley & Critchley, 2010). The key word in this context is 'Corporate Social Responsibility' (CSR). Kotler & Lee (2005) define CSR as operating a business in a manner that meets or exceeds the ethical, legal, commercial, and public expectations that society has of business. Sustainable leadership argues against the old paradigm that leaders are born as mentioned in the 'Great Man Approach' or that just rewarding and punishing does not make true leaders or even changing to the context as seen in the 'Transformational Leadership Approach'. Sustainable leadership goes beyond these approaches and involves taking steps to being ethical and beneficial to all stakeholders.
Against traditional leadership approaches like the 'Trait Approach', sustainable leadership focuses on the quality of the relationship between the individual leader's core processes and the culture of the organisation (Casserley & Critchley, 2010). While the 'Leader-Member-Exchange-Approach' is concentrated on the relationship between leader and followers, sustainable leadership involves the relationships of all stakeholders in the organisation's culture. However, the process to do so is complex as shown below (Figure 1). At the personal level, leaders must assess personal sustainability and go beyond their self interests. According to Goleman (1997) a sustainable leader needs personal and social competence. Personal competence includes self-awareness and self-management, because the leader should think of his actions and the consequences of these actions. Social competence is about social awareness and relationship management. In traditional leadership the leaders should have these competences as well, but they do not have to think about their environment. Compared to traditional leadership, sustainable leaders have to ensure their personal purpose, motivation, and wellbeing. Therefore three hallmarks need to be considered: reflect on action, psychological intelligence, and physiological well-being (Casserley & Critchley, 2010). Reflect on action considers what impact the leader's actions can have on others. The problem hereby is to find the time and space to do it. Psychological intelligence makes sure why and what the leader is doing. Leaders have to take in account their actions with its consequences (on others/environment). Psychological means exchange in minds, therefore emotional intelligence is necessary. Emotional intelligence makes the individuals in the organisation valued through recognising them and looking after their interests. Furthermore physiological well-being needs to be considered. Several researches have shown that in neurotic motivation is often linked with over-identification with the organisation and raises the stress levels that are unsustainable in the long run (Casserley & Critchley, 2010). This makes sustainable leaders physiological more vulnerable than traditional leaders. After the leader is established on the personal level, he has to promote the sustainable leadership on the organisation level. Therefore a clear vision is necessary to improve performance implementing a culture statement. The vision supports also the business needs for significant policy directions to enable this change to occur, not just within business practices but also within society overall compared to traditional approaches (Fisher & Lovell, 2010).
Figure 1: Levels of sustainable leadership
Source: Author's adaption on Casserley & Critchley (2010)
Sustainable leadership develops environmental diversity and capacity. According to Capra (1997), promoters of sustainability cultivate and recreate an environment that has the capacity to stimulate continuous improvement on a broad front. They enable people to adapt to and prosper in their increasingly complex environment by learning from one another's diverse practices. Sustainable leadership recognises and cultivates many kinds of excellence in learning, teaching and leading and provides the networks for these different kinds of excellence to be shared in cross-fertilising processes of improvement. It does not impose standardised templates on everyone. In face of standardised leaderships like the 'Great Man Approach' a company cannot think out the box because the environment is not involved in the decision making. This is why everybody is involved in sustainable leadership.
Another difference of traditional leadership and sustainable leadership is that in traditional leadership people are drilled into via off-job training while sustainable leadership emerges from reflection on action in dealing with real-life adversity. Sustainable leadership is developed through leadership development programmes, including executive coaching, residential workshops, and reflection on action. However, these actions are limited because they can only taught internal.
The planning horizon does also differ from traditional and sustainable leadership practices horizon. Traditional leadership looks less on the environment, because not all stakeholders are involved into the business strategy. However, sustainable leadership sustains the leadership of others. Due to the rethinking on action, as mentioned before, leaders have to think about the impact of their actions on them and others. This argument is included on the ecological level in Figure 1. After the leader gained the attention for sustainable practises on the organisational level, he has to promote it to the ecological level. Once everybody is onboard alternative solutions can be applied on the whole environment. This can create environmentally friendly products and services, and obtain operating permits from local communities. In this case Coca-Cola can be mentioned, by installing rainwater harvesting systems in its plants to reduce the depletion of water in its plants vicinity. Furthermore they also gave 30 million $ to the 'Replenish Africa Initiative' who's aim is to deliver drinking water to villages and towns where the company has bottling plants. Though behaving in an ethical manner it is likely to avoid bad publicity of solely being profit focused and giving nothing back to society. Due to that sustainable leadership can secure the long-term success of a company.
One more impact, sustainable leadership has on organisations' success is that sustainable leadership creates knowledge and innovation. The previously mentioned skill of emotional intelligence on sustainable leaders supports this hypothesis. Recognising employees, taking a mature look after the interests of followers makes everybody feel valued in the organisation creates competitive advantage, because it motivates and engages employees more than in traditional leadership. For sustainable leadership a true leadership approach is necessary which secures the commitment of the management, starting at the top and reward people who develop and promote sustainability practices. The challenge herby is to convince senior managers to be sustainable, because markets are too unreliable to manage the tensions alone. Therefore a leader has to show openness and be sensitive to see whether a manager is convinced, which can be achieved by a considering followers and making everybody in the company feel valued. If the senior managers are not convinced they are not going to promote sustainable practises to their followers and the culture is not fully granted. In this case servant leadership and true leadership are useful in sustainable practices. Servant leadership recognises consistency; take a mature look after interests of followers, stock leaders and serves followers. True leadership secures the commitment of the management starting at the top and reward people to develop and promote sustainable practices. Furthermore through implementing all stakeholders into the strategy and decision-making, the leader addresses not just internal factors like managerial and organisational information inside the company as well as external factors as information from the society and environment. Due to that demands and expectations of all stakeholders can be identified, which makes working more effective. However, implementing all stakeholders into the process is costly and time-intensive. As mentioned before sustainable leadership develops environmental diversity and capacity. As mentioned before a CSR argues that companies should not only look for their financial performance, but also for their social and environmental record. It is hard to convince shareholders to relinquish on dividends, because investments need to be taken for the long-term success. Nevertheless, the culture raises the working atmosphere, and supports the learning and innovation inside the organisation.
Sustainable leadership makes a company more flexible and increases the image. Due to listening to customers by involving them into the leadership process, the company is able to address their needs. The company has to think about consumer responsibility and corporate responsibility - are consumers willing to pay a higher price when they know that the product is not produced by child labour and under appropriate working conditions (safety and health at work, excessively long working hours). Due to external information of the environment the company can also recognise market changes faster, because all stakeholders work together. Moreover, sustainable leadership raises the image of the company or of a brand. Consumers are becoming increasingly aware of the power of marketing and it adds up to good marketing campaigns are aligned with ethical policies. As example Unilever's Sustainable Agriculture Programme can be mentioned with the aim to deliver sustainable fisheries and provide a blueprint for action (Draper et al, 2006). On the other hand not acting in a sustainable manner can damage the image like Nike had with child labour (Boggan, 2001). Additionally, the company is prepared for rational regulations, like being prepared for higher restrictions in emissions. Avoiding waste and saving energy does also raise the material and energy efficiency.
To conclude, by adopting sustainability principles, business can become more profitable and sustain their activities over the long term. The three aims mentioned at the beginning have to be implemented into the business strategies, including optimising the balance among all three.
Exam Question 5
Examine the role and impact of leadership in the development and delivery of an effective performance management system
According to Armstrong & Baron (2005), Performance Management (PM) is a process to unleash peoples performance und to manage the individuals output. PM includes succession, recruitment, compensation, development and training, and learning. The PM system identifies and measures employees' performance to develop themselves aligned with the company's strategy. PM became necessary because the more competitive business environment and the increasing employer expectations about performance requirements.
The role of PM is planning, executing, monitoring, analysing and forecasting.
The PM process usually starts with Planning Performance (Figure X). Hereby the leader sets a clear vision, job responsibilities, job expectations, communicating the strategy and plans. Due to these actions the leader is able to drive change and business improvement. Through the vision it is easier for the leader to communicate a shared vision of purpose and values and enhances so motivation, engagement and commitment by recognition and feedback. Challenging goals support motivation. Leaders need to align individual goals with current and future business needs if they want to have a direct impact on the success of the business. Furthermore the goals of the individuals have to be accepted and desirable by both, leader and employee. Clear goals and expectations, what and how has to be achieved, do also ensure the awareness of leaders for high performance people (measure peoples input). Effective performance management is a crucial element in identifying the critical talent you need to retain so investment can be focused on those you want to keep during this turbulence. Performance management systems directly influence five critical organizational outcomes: financial performance, productivity, product or service quality, customer satisfaction, and employee job satisfaction. When performance management systems are flexible and linked to strategic goals, organizations are more likely to see improvement in the five critical areas.
Performance Management is the heart of the cycle; it brings Planning and Appraisal together. PM is a contingence system to ensure that an employee's performance supports and contributes to the organisation's strategic aims. Therefore the employees' performance is monitored (peoples output), the goals are reviewed and revised, and the people are supported in their development. Due to monitoring people's performance and encouraging dialogue with them the employees' performance is improving. Furthermore the leader receives feedback and commitment of the employees what the leader himself can improve.
To ensure an appropriate measuring of the performance, a Performance Appraisal is necessary. The appraisal assesses performance, sets standards and provides feedback to employee to motivate, correct and continue their performance. It is like a benchmark where an employee is now and how he/she can improve. Managers can compare information on candidates from the appraisal. And employees can now see exactly what they need to do to achieve the skills and capabilities required by any role, putting them in control of their own development. The wide range of reports allows management to easily monitor employee development and pinpoint areas for future training. Criteria to choose an appraisal tool are: accessibility (managers and employees have to take time for the process), Ease-of-use (is it easy to use the appraisal tool for managers, if not nobody can use the tool), Accuracy (it is important to know what the manager has to measure). An example for an appraisal can be the 360-degree-feedback which involves all staff and gives feedback from bottom-up, which helps leaders to manage behaviour as later explained. Feedback from all staff creates internal learning and innovation which can promote a longer-term perspective to counteract the short-termism inherent in other measures. Thus new product development and the acquisition of new business and customers may be targeted. In this way, performance management can provide competitive advantage by having a well-trained and motivated workforce (Anthony, 2004). Appraisals serve as a useful career-planning tool providing opportunity to review the employee's plans.
Reviewing of the performance is linked with reward on development issues, therefore a leader has to agree with the development and make plans for the coming years. The appraisal is necessary because it provides to opportunity to review individual performance against goals and competencies. It provides important input to make promotion and salary raise decision. The appraisal lets the manager and employee develop a plan for correcting deficiencies and reinforce/praise what the subordinate does right. After the feedback, new goals and objectives have to be set, to guarantee a sustainable development of employees.
Culture
Figure 2: Performance Management Cycle
"The nature of the strategy depends on the organisational context and can vary from organisation to organization" (CIPD, 2010).
Due to that there is no one-size-fits-all approach to deliver PM into companies. The delivery of an effective PM system is linked with challenges. As mentioned before PM is linked with the company's culture. The process and structure has to be mutual and understood by all staff. Hereby the leader has to be aware how people think and how they take feedback. The feedback has to make people feel capable, confident and strong. Therefore a feedback culture should be established, e.g. are people more likely to receive positive or negative feedback. The leader does not know how the employee absorbs feedback, so he has to be aware. However, individuals are motivated not only to meet the business objectives, but also their own personal goals. According to a CIPD research in 2005, success of performance management is dependent on role and attitude of senior and line managers. Without followers a leader cannot commit a vision. To prevent pretending of senior managers (lip service), the leader has to encourage them to let them think about the impact their words and actions have on employee's self-confidence and self-belief. However, leaders need time to find out what employees want to achieve and look if it meets the business strategy. To gather all these information the leaders should encourage peer reinforcement through inviting all members of a team to write down the positive qualities. This unlocks discretionary effort und builds up team spirit. When you have support from senior management, many obstacles suddenly vanish. Not only can budget and resource discussions be easier, but you also have someone to muster support from other key managers, minimise risks and develop alternatives that are aligned with business objectives.
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3Managing behaviour is important in the PM process. To promote and communicate the vision the leader has to be self aware and act like a role model. This can be best explained in Johari's Window (Figure 2). To become self-aware a leader should ask for feedback that he does not know about himself (Window 2). On the other hand, the leader should share his knowledge (Things only the leader knows but nobody else knows, window 3), to increase the communication flow. Therefore setting standards as mentioned before are necessary, as well as participation of the employees. By involving employees in the decision-making, the leader gets the individuals to buy-in.
Figure 3: Johari's Window
Once senior managers and line managers bought in the process they should be able to give appropriate feedback. As mentioned before, this should be linked with the organisation's culture. A negative example therefore is the case study about Orange blossoms, where everybody in the organisations deliver against the strategy. Previously taken-over companies were not fully integrated in the strategy, thus standards were not clear. Furthermore managers have to be trained in giving feedback. This is what caused problems in the case study of Retail Co., where not everybody felt comfortable or skilled in giving feedback. A positive example can be given by Kimberly-Clark. The training the company provided encouraged employees of all aged to view feedback in a moral favourable light. However, therefore the right appraisal tool should be set, that everybody understand how to give feedback. The feedbacks with the employees should take place regular as nobody remembers what he/she has done good/bad a long time ago. Regular feedback does also make people feel valued, because the manger takes time for the employee to tell him how to improve which also motivates the employee. This motivation in the feedback can be intensified by linking it with rewards. However, rewards are usually limited because a company has to be rational in spending money, which can make people demotivated. Due to that out-group's can arise and the leader loses their participation in his leadership. Nonetheless participation by employees can be decrease through a working climate of fear, because nobody wants to make something wrong and do not want to get punished for their work by getting no reward. To make rewarding easier for managers the PM cycle is important, the goals have to be clear to differentiate people and how to take in account the performance.
To conclude it can be said PM can increase the overall performance of a company. However, therefore clear standards and understanding of leaders and managers is necessary. Without the convinced senior managers it is not possible to promote PM on all levels of the organisation.
