Fundamentals of Leadership - BMW Case study - Coursework Example

? Fundamentals Of Leadership - BMW Case study Table of contents 0 Introduction 3 2.0 Leadership in BMW – Presentation and analysis 4 2 Evaluationof Joachim Milberg as a leader – leadership theory 4 2.2 Skills Approach of leadership theory as applied in BMW’s leadership style. 6 2.3 BMW’s leadership style as related to the facilitation of goal accomplishment – Blake & Mouton’s Leadership Grid 8 2.4 Team leadership in BMW – promotion of teamwork across the organization 9 3.0 Conclusion 10 4.0 References 12 1.0 Introduction The approaches used for explaining the success of organizations within the global market are not standardized. The characteristics of the industry in which each firm operates are vital for understanding the level of this firm’s performance through the years. However, there are certain organizational aspects, like leadership, which indicate the potentials of each organization to face competition and develop its operations either locally or internationally. Different views have been developed in the literature regarding the elements of leadership, as an aspect of modern organizations. In accordance with Daft and Lane (2007) leadership is ‘an influence relationship among leaders and followers who intend real changes and outcomes that reflect their shared purposes’ (Daft and Lane 2007, p.4). On the other hand, Goethal, Sorenson and Burns (2004) note that leadership reflects ‘the ability of an individual to intentionally and unequally influence and motivate the members of an organization towards the achievement of a valued outcome’ (Goethal, Sorenson and Burns 2004, p.302). The characteristics of leadership, as described above, can be differentiated within modern organizations, being influenced by the organizational culture and values but also the social ethics and culture of the country in which each firm operates. Current study focuses on the review and the evaluation of leadership as the basis for the development of organizational activities; reference is made to a specific organization, the BMW Group, which is well known in the global market. BMW is currently considered as the most important competitor in the global automotive industry; the organization’s employees, for 2010, have been estimated to 95,453 (p.2 case study, BMW 2010 annual report). The organization operates in about 34 countries (BMW 2009 annual report). The success of the organization in the global market has been related to the leadership style of its leader, Joachim Milberg, who was appointed as the firm’s CEO in 1999. Milberg initiated the restructuring of organization’s operations promoting the alteration of organizational values and mission. The leadership style of Joachim Milberg is presented and evaluated in this paper; the trait leadership theory is used for explaining the success of Milberg as the leader of BMW. Other leadership theories, such as the Blake and Mouton’s Leadership Grid, the team leadership theory of Hill and the Skills approach of Katz have been employed for evaluating the characteristics and the effectiveness of leadership in BMW, as reflected in the continuous development of the organization in the global market. It is made clear that in BMW leadership has been used not just for developing effective organizational strategies but also for improving communication and cooperation across the organization; in other words, in BMW leadership has been a framework for supporting the transformation of the organization to a highly competitive one but also for enhancing the team working and the participation of employees in key organizational plans. 2.0 Leadership in BMW – Presentation and analysis 2.1 Evaluation of Joachim Milberg as a leader – leadership theory Joachim Milberg can be characterized as an exceptional leader. Since his appointment as the leader of Milberg, in 1999, Milberg managed to significantly improve the company’s performance, a target which was mainly achieved by emphasizing on the openness of the organization and the respect to the perceptions of the organization’s members (p.7 of the case study). I order to describe Milberg as a leader, it would be necessary to refer to the key aspects of his initiatives and proposals. The involvement of leadership in the development of organizational activities is not made clear in BMW. In fact, leadership affects all the organization’s operations but not directly; rather, the leadership sets the principles and values on which organizational plans are based. The above practice is part of Milberg’s leadership style, showing that Milberg does not focus on the promotion of his capabilities as a leader, but rather on the promotion of the firm’s name in the international market. Indeed, in 2010 ‘BMW has been ranked first in the Dow Jones Sustainability Index’ (BMW annual report 2011, p.1 case study). The success of the company in the global market is highly related to the appointment of Joachim Milberg, in 1999, as the company’s leader. Even after his retirement, in 2002, Milberg continued to highly intervene in the planning of critical organizational strategies, as a member of the ‘supervisory Board of BMW’ (p.2, case study). Milberg has appointed as a leader of BMW in a period when the organization had to face a series of challenges; the acquisition of Rover in 1994 had been proved as a major mistake (p.2 of the case study). At the same time, ‘the continuous financial crises worldwide and the increase of opportunities in Asia’ (p. 2 of the case study) were critical issues to which the organization had to respond. The organization’s previous CEO, Bernd Pischetsrieder, had failed in developing an effective organizational strategy, a fact that resulted to delays in the decline of the organization’s performance within the global market. Milberg managed to face existing organizational challenges, as described above, mostly be promoting team working, quality and innovation. The introduction of the firm’s Associate and Leadership Model has been another aspect of Milberg’s leadership style; the above model has helped the transformation of BMW to a ‘leaderful organization’ (p.8 case study), i.e. an organization in which the decisions of the leader are based on his personal perceptions as influenced by the views of employees on the firm’s daily operations. One of the most appropriate theories for explaining Joachim Milberg as a leader is the trait theory. In the context of this theory, excellent leaders can be identified through a series of traits, like ‘intelligence, self-confidence and determination’ (Shriberg and Shriberg 2010, p.66). In accordance with Kliem (2004) the trait theory of leadership can be used in order to explain the excellence of certain individuals as leaders; the trait theory is based on the perception that excellent leaders have specific psychological or physical characteristics that ‘enable them to stand above the pack’ (Kliem 2004, p.2). Moreover, Gill notes that the origins of the trait theory of leadership can be identified ‘in the teachings of Plato, Aristotle and Socrates’ (Gill 2006, p.37), meaning that leadership, as the trait theory accepts, is related not just to the personal characteristics of leader but also to his position within the society. Indeed, Joachim Milberg had managed to solve critical organizational problems, like the losses resulted because of the acquisition of Rover, and to transform the organization to a major competitor in the global automotive industry, despite the severe financial crisis in countries worldwide. 2.2 Skills Approach of leadership theory as applied in BMW’s leadership style In accordance with the existing leadership theories, successful leaders are not only those who have specific traits, a view supported by the trait theory, as explained above, but also those who manage to acquire skills that result to leadership excellence. This view is reflected in the work of Katz (1955); the above theorist promoted the three-Skills approach, which is based on the following perception: the personal skills that most affect leadership are ‘technical, human and conceptual’ (Northouse 2009, p.40). The skills mentioned above can be described as follows: the technical skills reveal the ability of the leader to work on specific organizational activities, the human skills reveal the potentials of the leader to communicate and cooperate and the conceptual skills show the ability of the leader ‘to work with ideas and concepts’ (Northouse 2009, p.42). The Skills approach is differentiated from the trait theory at the following point: skills, as described above, are acquired while traits already exist (Northouse 2009). From a different point of view, the success of a leader seems to be related to the leader’s ability ‘to creatively solve problems’ (Puccio et al. 2010, p.17). The above view is based on the theory of Mumford (2000) on leadership. In BMW the Skills approach of leadership, as derived through the theories of Katz and Mumford, can be identified at the following points of the firm’s brand strategy: as noted in the case study (p.3) the organization’s brand profile is based on specific characteristics: ‘energy, performance and sheer driving pleasure’ (p.3 case study). In other words, the development of specific technical characteristics in regard to its products is among the firm’s priorities. The firm’s leader has to be able to understand the technical characteristics of the firm’s products; the promotion of specific concepts, like driving pleasure and energy, requires that the leader can identify the key elements of these concepts. At the same time, the elimination of problems related to the promotion of the firm’s brand profile is critical, so that the risks in regard to the performance of the firm’s products in the global market are minimized. Thus, problem-solving skills are considered as having a critical value as elements of the firm’s leadership. 2.3 BMW’s leadership style as related to the facilitation of goal accomplishment – Blake & Mouton’s Leadership Grid The evaluation of leadership style of BMW requires the presentation of the firm’s initiatives in regard to specific organizational problems. Certain aspects of the firm’s leadership style were presented in the previous sections. A critical aspect of the organization, the level at which its goals are achieved, should be discussed in order to understand the reasons for which the organization’s leader promote specific strategies. The Blake and Mouton Leadership Grid can be used for evaluating the level at which the organization’s leader emphasize on employees and tasks for the achievement of the organization’s goals. In the context of the above Grid, ‘managers – and leaders – have two potentially conflicting centres of attention: employee needs and task needs’ (Rees and Porter 2008, p.93). The Grid is based on a series of questions through which the responses of the firm’s managers to specific employee needs and task needs are identified (Rees and Porter 2008). In accordance with Miller (2008) the Blake and Mouton Leadership Grid reveals the potentials of a leader ‘to align employee needs and task needs’ (Miller 2008, p.47). The potential position of BMW in the specific Grid is presented in Graph 1, below. This position is based on the firm’s existing performance in terms of team working and quality/ time in regard to its products, as analysed in previous sections. The position of BMW in the specific Grid reveals that the organization’s leader is highly capable of understanding the needs of employees and the needs of the organization’s tasks and promotes the appropriate methods in regard to the structure/ time schedule of the firm’s daily activities. High Concern for people Low Low High Concern for production 2.4 Team leadership in BMW – promotion of teamwork across the organization Team working is a critical element of a successful organizational strategy. In fact, the promotion of team working is considered as quite important for the standardization and the development of organizational performance. At the next level, ‘team development and team performance as considered as being closely related to team leadership’ (Komive et al. 2009, p.122). The above two elements of team leadership can be analysed as follows: team development is the establishment of strategies that will help ‘individuals to feel highly valued and members of a team’ (Komive et al. 2009, p.122). As of team performance, the term is used for showing the level at which organizational tasks are effectively accomplished and goals are achieved (Komive et al. 2009). Emphasizing on team development and team performance is an indispensable part of organizational strategy, at least in organizations that are characterized by leadership excellence. The use of team leadership for the achievement of organizational goals is highlighted in the literature published in regard to the specific issue. A well known theory on team leadership is that of Hill (2004); the above theorist noted that the team leadership has specific characteristics, including the following ones: ‘a) clear, elevating goal, b) results-driven structure, c) competent team members, d) unified commitment, e) collaborative climate, f) standards of excellence and g) principled leadership’ (Hill 2004, p.211, in Komive et al. 2009, p.124-125). The external support is also necessary in order for team leadership to be effectively developed (Komive et al. 2009, p.125). In BMW the principles of team leadership, as described above, are highly appreciated. More specifically, the organization has created appropriate conditions for the promotion of teamwork, as reflected in the following practices of the organization: a) emphasis is given on the hiring of high skilled employees; these employees are expected to respond more effectively to organizational needs and be able to highly perform as members of a team, b) staff potentials are promoted, c) staff opportunities are secured through the introduction of flexible working schedules and the promotion of fair compensation, d) the Associate model, part of the firm’s Leadership framework, is based on ‘the generation of a culture of trust, the provision of orientation and the promotion of cooperation’ (p.8 case study). In fact, the firm’s culture and goals have been appropriately transformed so that they enhance team working and cooperation, which can secure innovation, quality and delivery on time in regard to the firm’s products. In this context, it can be noted that the organization highly emphasizes on team leadership, under the terms that this framework can secure the achievement of the organizational goals, as analysed above. 3.0 Conclusion One of the key advantages of BMW towards its rivals in the global market seems to be its leadership style. In fact, the development of the BMW in the global market has been highly based on leadership. The appointment of Joachim Milberg, in 1999, as the company’s CEO, has led to the transformation of the firm’s existing leadership style. Prior to the entrance of Milberg in the organization, the firm used to follow common practices in regard to the development of its activities; emphasis was given on mergers and acquisitions as a tool for achieving organizational growth. For example, reference can be made to the acquisition of Rover in 1994, an initiative that resulted to severe losses for BMW. Milberg has introduced an innovative leadership framework. Instead of searching for strategic alliances, Milberg has emphasized on the improvement of internal organizational environment, promoting cooperation, team working and employee satisfaction. At the same time, using innovative production processes and improving the time of product delivery more effectively addressed the organizational needs. In this way, the effectiveness of organizational plans has been increased, a fact that is reflected in the success of the firm in the global market. The firm’s leadership style, as influenced by Milberg, had a key role in the transformation of the firm’s internal and external environment. Leadership excellence, a characteristic of the firm’s leadership style, has been the key term for the growth of the organization towards its rivals. The above characteristic has been related not only to the conditions of the organization, meaning its internal and external environment, but also, mainly, to the traits of its leader. 4.0 References BMW Group in figures, 2012, Online. Available from < http://annual-report.bmwgroup.com/2010/gb/en/facts-and-figures-2010/bmw-group-in-figures.html> Accessed at 17 January 2012 BMW (2010) Annual Report, Munich Accessed at 17 January 2012 BMW (2002) Annual Report, Munich < http://www.bmwgroup.com/publikationen/e/2002/pdf/gb2002_gesamt_en.pdf> Accessed at 17 January 2012 BMW (2001) Annual Report, Munich < http://www.bmwgroup.com/publikationen/e/2002/pdf/BMW_AnRep2001.pdf> Daft, R., and Lane, P. 2007. The leadership experience. Belmont: Cengage Learning. BMW (2000) Annual Report, Munich Accessed at 17 January 2012 Kliem, R. 2004. Leading high-performance projects. Florida: J. Ross Publishing. Gill, R. 2006. Theory and practice of leadership. London: SAGE. 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