The stakeholders have an important stake into the business and therefore it is vital for the management of an organization to employ strategies that would enable achievement of business targets so as to satisfy these external stimuli. This includes using management tools that would help the higher level staff to strive for the correct decisions at correct timing so that organizational gains are maximized (Harrison and John 2009).
Leadership requires the authoritative figure i.e. the leader to bring all the resources together and then bring out maximum benefit out of them. This means that the leader should be highly sensible and should be very particular about the fact that employees are highly motivated and there is a friendly environment in the organization. This unfolds an important tool which is bottom-up processing that relates to empowerment of workers. Leadership also encompasses good communication skills with staff members.
Now moving on to how Strategic management and Leadership are connected to each other. For successful strategic management of a company, leadership skills are required to break down the goal into steps that could be easily managed, and then advancing towards it. Leadership requires the leader to scan through all the pros and cons of a decision and then strategically communicate the message to the employees; this does not necessarily call for domination, but it requires more of energy and motivation on part of workers which can be attained through a positive influence of the leader. The leader should give chance to employees to give their suggestions so that their interest is boosted and they collectively work towards the required strategic action or direction.
It is in the hand of the leader to decide what strategy is most likely to suit the nature of the business. For instance multinational corporations would be more likely to prosper if they operate in vicinity where labor is cheaply available, basic raw material is close at hand and geographical orientation is most beneficial. Now all these are effective and goal-oriented strategies, and therefore it is up to the leader to analyze and critically evaluate the gains and losses that the organization could incur as part of this strategic action.
Taking Unilever as an example, whose products are currently being entertained in about 180 countries (www.unilever.com), there is no doubt that there is a great leader behind it. From snacks to soaps, shampoos, tea, cleansers, oil etc, it is evident that Unilever has a leader who not only manages by analyzing what products consumers are looking for and therefore catering to them; but also bringing forward pioneering, creative and challenging ideas that would be worth risking. Here the association of a strategic manager to a leader sets in. Leadership takes management to another level, where only administering a company is not the agenda, but there are more complexities to it. This involves introducing tactics so as to survive the highly competitive market; again, communicating these plans with the employees in a way that their vision is enlarged is what the leader should have at his/her disposal.
When Unilever launches detergents that are specialized for washing machines so that there is minimal usage of hands or rather effort, it brings this innovative idea from its leader; and then bringing it to the market and carrying out effective strategies for example advertising, managing resources (for maximum benefit out of minimal), are a few things that enable combination of a strategic manager and a leader.
So basically, a leader helps in implementation of the strategic goal and is able to split the goal into sub-parts and gain trust of employees so that the entire organization works together for the strategic goal.
Analysis of impact of management and leadership styles on strategic decisions
Behind billions worth profits or losses of an organization, are the higher level staffs of an organization who are basically the key drivers. Therefore, it is vitally essential on their part to adopt styles that could be manipulated so as to suit different situations. An autocratic style may not be favorable in a situation where a diverse product is being launched, and which requires equal enthusiasm (motivation) of the entire workforce. Likewise, a situation where employees are taking liberties and not working sufficiently hard, a dominant leader would be desirable.
Paternalistic leadership: This kind of leadership allows employees to give their ideas, suggestions and participate towards the progression of the goal, but they are not allowed to carry out decision-making. This style may be quite discouraging for the staff that is experienced and qualified as they would feel their knowledge base is being disregarded. Paternalistic leaders feel that only managers can take the best decision, moreover they are least likely to delegate responsibilities along the hierarchy. (Mobley, Wang and Hi 2009)
Unilever is operating on a wide scale and therefore requires participative workforce as only the top management cannot alone manage the strategic layout. Therefore such a style could become a drawback as it would lead to frustration amongst experienced workers.
Democratic leadership style: This kind of leadership style empowers employees to be an active part of the decision making process. Democratic leadership is most effective where a complex decision needs to be taken for instance, installation of an IT base where the top management does not have know-how of it. Therefore, the whole range of staff would tackle the decision then. However, when the business is in a state where it cannot risk any wrong decisions, then this style proves fatal (Daft 2007).
Unilever constantly brings in new technology to speed up its production and specialize, so it is important for the lower level staff to be as much part of the implementation of this technology as the top management since it is the workers only who have to work with the new systems.
Autocratic leadership style: An autocratic leader is the sole decision-maker. Whatever decision the leader takes, it is passed along the chain of command and everyone has to follow it. Instructions are given to the lower level staff and it is ensured that they work in the desirable manner, thus reducing the motivation levels amongst employees. These employees do not feel part of the organization as their dependency on the leader is high, and trustworthiness is minimized (Gitman and Daniel 2008).
Considering the widespread globalization that the world is going through, organizations need to manipulate their decisions every now and then so as to suit the current trends. For Unilever, such a style could lead to lack of interest amongst employees and if the leader does not have the potential to bring about very innovative ideas then progression would be least likely to occur.
Task-oriented leader: Such a leader would make the organization functional by assigning jobs or tasks to the workers, and then ensuring that each worker is successfully accomplishing that task. This makes the staff more focused as their objective is crystal clear to them. It also reduces inefficiency and time wastage. However, the workers' thinking capacity becomes exhaustive as they are just doing tasks that are given to them, and not contributing towards strategies that could give room to creativity and vision. (Bowerman and Wart 2011).
For Unilever, such leadership would have limited benefits, perhaps only in the short-run. The work process may speed up for the time being, but in the long run what works out more is diversity in the range of products, and for that a lot of minds working together can only work towards attaining the goal.
How Leadership Styles can be adapted to Different Situations
With the massive changes a company has to face especially with respect to globalization, every strategic decision needs to be tackled with a different leadership approach. Monotony in leadership styles regardless of varying situations could lead to inefficiencies and losses.
The following are indicative of how leadership styles should change with strategies:
Limited time to a decision:
When a decision has to meet a deadline, then there is definitely insufficient time to delegate the message along the hierarchy and take everyone's opinion. Such a procedure could take a lot of time and the deadline may pass causing trouble to the organization. Therefore, in such a situation autocratic style would be the most ideal approach. The person superior in authority will critically evaluate the strategic decision and just pass on the decision to the lower level staff so that there is quick functioning (Northouse 2010).
For example, if Unilever has to take a quick decision as to close down one of its production lines which maybe incurring loss, then the superior authority would quickly take the decision and not wait for suggestions of lower level staff so that losses do not get excessive.
Developing high sense of personal growth and job satisfaction:
In such a case, where the employee's motivation level decreases and they are not taking interest in the well being of the organization, then democratic style of leadership would be most effective. By giving the lower level staff authority to take decisions and contributing towards suggestions and innovations, which would boost the responsiveness of the workforce and job satisfaction, along with quality of work would significantly improve (Daft 2007).
Again considering Unilever as an example, if all the decisions keep rotating amongst the top management, the workforce is bound to feel detached. By giving them the freedom to present their views openly especially when considering a new installation of plant or new techniques of production, the enthusiasm levels can increase.
Trust factor: For excellence in performance of the entire workforce, the element of trust is very important. If the higher level staff does not entrust the workforce with decision making and other important aspects of effective functioning like proficiency and expertise; then there is frustration amongst employees and its immediate consequence is bad performance of the organization as a whole. Therefore, to counter such a situation, relationship oriented leader is required who could strengthen the terms of the two classes of hierarchy. By getting to know each other, a friendly working atmosphere is acquired which is an important element workers look for, other than the pay.
Lack of performance: A charismatic style of leadership is mostly required in a situation where the vision of the employees is not clear and they fail to understand what they are expected to do. Thus, a leader who could clarify the organizational goals to the employees and explain them how to go about and carry out their tasks skillfully would set up a ready-to-work environment and better services for customers, and of course higher turnover. It is the lower level staff only which can reap the profits through its skills (Kinicki and Kreitner 2008).
With the manipulation in situations, it is vital for businesses to vary the leadership styles. Managing such variations is very much a part of effective business management. Therefore it cannot be said that a particular leadership style is most suited to a company, it all depends on factors that have been discussed above. Hence, an organization needs to opt for a culture that is more prone to rapid changes; and should be sure where to encompass workforce as part of strategies and when not to.
TASK 2
A review of the impact that selected theories of management and leadership have on organisational strategy.
It is very important to understand theories with respect to management and leadership as they can have significant impact on the strategic orientation of an organization. A number of theories have been devised, a few of them are:
Trait theory:
This theory relies on the assumption that there are certain physical and psychological characteristics which are inborn and account for the leadership quality within a person. According to Galton, the qualities of leadership are genetically rooted in a person and therefore this trait goes on over the generations. Gheselli has discovered six traits that are constituents of successful leadership:
Need for achievement.
Intelligence
Decisiveness
Self-confidence
Initiative
Supervisory ability (Manning and Curtis 2003).
A person possessing these traits may not be a guaranteed good leader. The person should make an effort to recognize these qualities and try to polish them so as to suit the organizational requirements. For example, a manager in Unilever who genetically holds these traits, and then work upon them to cater to the demands of the organizational strategy, will give a lot of progress to Unilever.
Path-goal theory of leadership:
This style of leadership works when the employees' interest and motivation towards the work are not up to the mark. This is usually a norm in a situation where the workers are ambiguous with regard to the task expected of them. In such a scenario, the most efficient leader would try to broaden the vision of the employees by showing them the right track to acquire the preferred goal. Also, by offering fringe benefits like accommodation, fuel, health care etc, an ambiguous worker can be encouraged to work (Pennings 1986).
Rewards are very meaningful when it comes to making employees goal-oriented. If Unilever gives intrinsic and extrinsic rewards to its workforce, it can ensure desirable results in form of better performance.
Situational theory of leadership (Hersey and Blanchard):
This style emphasizes on the fact that maturity level of the workforce determines whether the organizational strategy should be delegated or it should be tackled at a higher level only. If there is high psychological capability and readiness to work, then it is preferable to delegate the job to the employees as they would be enthusiastic and skillful enough to undertake what they are entrusted with. Situations where the employees are least motivated and have lack of talent or skill, then it is risky to delegate since they could lead to failures. (Chemers 1997)
Contingency Theory:
This theory has been devised by Friedler. It has been defined as "leader-match" theory which means that it depends on the efficacy of the leader to adopt the relevant style according to the situation or context. This theory gives a generalized framework to match the leader and situation. As per the theory, the situation can have three factors:
Leader-member relations: Relates to the friendly atmosphere; and trust and loyalty of the work force towards the leader. If there are good relations between leader and workers, and there is confidence on the leader then this system works out really well. However, if there is lack of trust, confidence and understanding, then the system functions poorly.
Task structure: structured tasks give more command, authority and hold to the leader. However, a vague task may take away the influence of the leader.
Position power: this relates to the legitimate power a leader has with respect to rewarding or punishing the workforce. The leader should reward or punish after scrutinizing closely so that any undesirable consequences are not attained (Northouse 2010).
For the organizational strategy to work out most effectively, the best situation is where the relations of the leader to the workforce are good, the leader is authoritative and has the legitimate power to reward or punish; vice versa for the worst situation.
Creating a leadership strategy to support organizational goals:
A leader needs to be versatile, and susceptible to changes with respect to the massive globalization. In a situation where an organization is a multinational corporation, the strategies designated should be flexible enough to cater the varying environments (Leavy and Wilson 1994).
A leader should include the following as part of effective strategy to attain organizational goals:
1. Solving problems with the right question: A leader should approach the problem with a solution-oriented query which calls for a straight forward answer i.e. yes or no. If the labor costs are as high that they are resulting in lack of profits, then the leader should ask questions such as "is the labor force excessive?" If yes, then some workers who are contributing more to cost and less to productivity should be made redundant. (Connor)
2. Innovation: With the rise in competition and globalization, it is very essential for the leader to be innovative. The leader should use technology and devise creative ideas which could surpass the competitors and give the organization a firm hold over consumers. Installation of new technology so as to have an edge over the market through improved production lines is what an innovative leader should opt for. Likewise, adopting a decentralized approach is also another aspect of innovation where the lower levels staff could also bring forward its creative ideas, thus contributing to the wellbeing of the organization (Hender 2003).
Unilever keeps launching different products which could meet customers' needs. This brings in consumer-loyalty along with high turnovers.
3. Employee empowerment: Employees should be delegated tasks so that their self-confidence is boosted and they start feeling as a part of the organization. The sharing of responsibilities also reduces the load on the leader; this results in fewer mistakes and an aggregate efficiency towards attaining the organizational goal (Bass and Riggio 2006).
By taking a democratic approach in leadership, Unilever should ensure that ideas are given by every concerned person; and that tasks are evenly delegated so that the burden is shared equally.
4. Training the employees: Providing expertise and widening the knowledge-base of the employees is what favors organizational goals. The better an employee is trained, the more he/she would contribute to productivity. An employee who is not sufficiently trained would only add to the labor costs and give diminishing returns. Training can be given within an organization, by making the new workers observe the trained ones. It can also be acquired outside the organization through training centers that are designated especially for this purpose. A smart leader would prioritize employee training so as to maximize returns. Along with expertise, employees should also be trained with respect to catering the needs of the customers. The more employees respond to the queries of the customers, the more they will be attracted. Customer service is therefore a major area where the employees need to be made aware (Wentland 2006).
