Leadership and Organisational Performance - Essay Example

Leadership can make a difference to Organisational Performance ID 19714 Order No. 268592 21 January 2009 Table of Contents: Table of Figures Serial No. Description And Link To The Figure Figure 1 Building Idea Capability - A comparison between Idea Rich Company and Idea Poor Company [Sourced from: Tom Saar, Director McKinsey And Company, 2003] Figure 2 Greater Penalty for Underperformance [Sourced from: Tom Saar, Director McKinsey And Company, 2003] Figure 3 The overlapping interests of Employees and Customers [Sourced from Insync Surveys Pty Ltd, 2008] Figure 4 Michael Porter's Diamond Model [Sourced from: Recklies, Dagmar. 2001] Figure 5 The Balanced Scorecard [Sourced from: Kaplan and Norton, 1996] Figure 6 The EFQM Excellence Model [Sourced from: Centre for Integral Excellence, Sheffield Hallam University, 2004] Introduction The modern world is witnessing change as almost a continuous phenomenon - Globalization, Optimization, Transformation, Competitiveness, etc. The dynamics of the global markets & corresponding businesses have caused increased pressures on the modern leaders to sustain & improve organizational performance. Proactiveness, Analytics, Research, Honesty, Out of Box thinking, Continuous Learning, Knowledge Sharing & Management, Directions, Team Motivation, Skill Management & Enhancement, Evolution & Focus on strategic Organizational Goals, Customer Orientation, Sound Governance, Technology Understanding & Leveraging, Automation, etc. are key attributes of a Modern Leader in order to establish the path to success & take the entire organization along with him/her on this path towards well thought of & established goals. All successful leaders are the ones who have been successful to sustain & enhance the performance of the organizations they lead and ensure success & good image among Public, Customers, Stake Holders, Government & Employees. To grow, flourish & be successful in the modern Global Competitive markets, the Leadership Team of an organization should structure & manage the internal system to ensure Flexibility, Creativity and Excellence by addressing the following building blocks of success: Result Orientation: The internal system is completely fine-tuned towards achievement of results that delight the customers, stakeholders, the board, the Government and the Employees. Customer: The Internal System is strongly oriented towards customer focus to achieve optimum levels of Customer Satisfaction. Management by data & facts: The technology enablement of the internal system such that adequate data is captured from all the systems and modelled in Business Intelligence Systems such that the exact performance of processes within the organization and their reasons are clearly evident. People involvement: People are involved in strategic decision making such that decisions are taken based on ideas from wider groups within the organization and not just by virtue of the thought process of few individuals sitting on the top. People Development: The skills & capabilities of people are developed in such a way that their consolidated outputs form a large competency model of the organization that supports the Competitive Advantages of the organization in the target markets & businesses. Partnership Development: Developing efficient & competent partners to the business either from within the organization or from the external market Continuous Learning: Developing internal Knowledge Management Framework to capture all explicit knowledge and also to ensure transition of tacit knowledge into explicit knowledge Innovations, Technology Enablement & Automation: The success of an organization depends a lot on the underlying IT systems & the corresponding processes that are used to effectively automate the business transactions of the organization. Moreover, new innovations are encouraged to help the leadership team to be better placed for taking wiser decisions for the current & future of the organization. The author hereby critically examines the influence of effective leadership in sustaining & enhancing organizational performance in the current world of Global Changes, Challenges & Competitiveness. The next section deals with the modern methodologies of performance management of an organization and the role of leadership team pertaining to the same. [Baker, John, 2004; Sheffield Business School, 1997; Clarke, Martin, 2003] Organization Performance Measurement and Management An organizational leadership with performance mindset strives to develop performance ethics in the attitude of the employees and greatly incorporates team building exercises, healthy debates, ideas sharing, process & technology innovation, 360 degrees feedback, customer focus and customer satisfaction (Figure 1). [Saar, 2003] Figure 1: Building Idea Capability - A comparison between Idea Rich Company and Idea Poor Company [Sourced from: Tom Saar, Director McKinsey And Company, 2003] The Leadership of such organizations take underperformance very seriously knowing that there are much greater penalties for not performing up to the desired levels (Figure 2). Underperformance doesn't make only the investors or stake holders worried but even the loyal customers & good employees start looking for alternatives. [Saar, 2003] Figure 2: Greater Penalty for Underperformance [Sourced from: Tom Saar, Director McKinsey And Company, 2003] A wise leadership team will take insights from employees as well to visualize the competencies of the organization (and the management) from their perspective. In this context, the Leadership need to use innovative campaigns like customer satisfaction surveys, employee satisfaction surveys, discussion boards with swanky names like "Your Idea Matters", group discussions, employee seminars, etc. The data captured from employees and customers may present surprisingly common interests which may indicate to the leadership about the priority areas which, if addressed might result in dual wins - Employee Satisfaction as well Customer Satisfaction (Figure 3). [Insync Surveys Pty Ltd, 2008] Figure 3: The overlapping interests of Employees and Customers [Sourced from Insync Surveys Pty Ltd, 2008] Having stated this, it is hereby emphasized that such conclusions cannot be drawn by simply glancing through the raw data that is collected from employees, customers and also from the internal IT systems used for carrying out organization wide transactions including business transactions. The data need to be applied to world class models which help in arriving at logical & accurate conclusions driving the future action plans. Some of the most popular models are: Michael Porter's Diamond Model, The Balanced Scorecard by Kaplan & Norton, the EFQM (European Foundation for Quality Management EFQM) and SWOT Analysis (Strengths, Weaknesses, Opportunities & Threat Analysis). The Michael Porter's diamond model (Figure 4) is pertaining to a strong correlation among four major influencing factors governing the success of an Industry at a National or Global level, and the control of the local Government on these influencing factors (Recklies, Dagmar. 2001). An analysis of competitive advantages using this model gives a leadership team very deep insight into where the organization stands in the larger scheme of things within a locality, region or country. Figure 4: Michael Porter's Diamond Model [Sourced from: Recklies, Dagmar. 2001] Firm Strategy and Rivalry is related to an imposed urgency on the firm to boost Productivity and Innovation due to direct competition in the Local Market - this influencing factor is governed by the system in the country (enforced and controlled by the Local Government), in which companies are established, organized and managed. Demand Conditions are related to the domestic demand conditions imposed on the firm by end customers, scope of products, and demand-supply ratio. These demand conditions can get internationalized if the Government Machinery supports a structured mechanism to achieve this. Related and Supporting Industries are related to the Industry that grows substantially if the local government is successful in creating and administering a sound business framework. In this framework, a strong network of competitors, suppliers, service providers, brand managers, marketing agents, etc is created which collectively influence a healthy growth of this business as well as increase demands & boost supplies. Factor Conditions are related to sound business support framework to the business that includes (but not limited to) skilled manpower, infrastructure, supply channels (like liberal import policies), funds (availability of loans from banks and venture capitalists), etc. The Balanced Scorecard system is an ideal example of Out-Of-Box thinking approach of modern leadership whereby the leadership can use the concept to focus on the entire atlas of business system of an organization that comprises of multiple (and complex) interfaces among four major strategic areas - Financials, Customers, Internal Business Processes and Learning & Growth. As presented in figure 5, these four major strategic areas are in turn aligned with the Vision & Strategy of the organization established by the Leadership. [Kaplan and Norton, 1996] Figure 5: The Balanced Scorecard [Sourced from: Kaplan and Norton, 1996] Another popular model that enables Customer Service Excellence by a corporate is the European Foundation for Quality Management (EFQM). The model is presented in the following figure: Figure 6: The EFQM Excellence Model [Sourced from: Centre for Integral Excellence, Sheffield Hallam University, 2004] The model collates the Key Performance Results (KPRs) of an organization pertaining to People, Customers & Commitment to Society and encourages continuous learning & innovation by the management by virtue of "feedbacks" from the customers and the society. This model enables the core values of management by fact (factual approach to decision making), customer driven excellence, employee & supplier value addition, focus on results, innovations by learning, system driven approach and above all, enabling high emphasis on Public Responsibility & Citizenship. A close look at the model reveals that it can ensure an excellent environment for Customer Service Excellence making the customers delighted about the organization's values & commitments thus honouring their "Brand Image" of being trustworthy, quality focussed and customer service oriented. [Sheffield Hallam University, 2004] The SWOT analysis is a mechanism of mapping the internal strengths & weaknesses of the organization with the external opportunities & threats to verify where the organization stands in the market in terms of competencies & competitiveness and risks. In the next section, it would be explained how an efficient leadership team can use these concepts & tools to ensure sustenance & enhancement of business performance in the global competitive markets. [http://www.quickmba.com/strategy/swot/] Discussion on how Leadership can make a difference in Organizational Performance The first question arises herewith is that for whom the excellence models introduced in the previous section are created The obvious answer comes in mind - Leaders!! The immediate next question is - why are these excellence models created The obvious answer is - to ensure excellence in organizational performance!! This short analysis itself closely relates Leadership with Organizational Performance. A Leader without accountability of Organizational Performance Excellence is like a Minister without a Portfolio. All the leaders who are perceived to be successful are the ones who have been able to sustain & enhance the performance of their respective organizations. Leadership is about application and not theorizing alone. In this context, the author hereby argues is that it is not by choice but is a mandate that Leaders should possess knowledge & experience of the globally renowned excellence models such that they can effectively apply them in their respective organizations. First an Foremost, the Leaders should have thorough knowledge about the competitive advantages that the organization possesses in the target markets. Thereafter, the leaders must be fully aware of the internal strengths & weaknesses of the organization and the external opportunities & threats faced by the organization such that the strategic direction towards organizational success can be established. In this context, the Leadership Team of an organization should first work towards establishing the Vision and Mission Statements of the organization and then communicate their rationale to all employees, stake holders and customers. These statements should then be translated into a number of objectives for the management team. The Management team in turn shall ensure that personal objectives of every individual across the organization are established that is aligned with the corresponding management objectives which in turn are aligned with the Vision & Mission statements of the organization. This approach shall ensure that: (a) The individual competencies of every employee in the organization are aligned to form a consolidated organization wide competency that is required for the organization to sustain the competition in the marketplace. (b) The individual objectives of the employees are established in the right direction to support the overall Vision & Mission statements of the organization such that efforts are applied in the right direction. (c) Key Performance Indicators (KPIs) can be assigned to all the employees of the organization that shall give the indication on how well the actions of individuals are aligned with the Organization Vision & Mission. (d) The KPIs can be measured periodically to assess the performance of employees with respect to alignment with the Vision & Mission of the organization (e) The Organization practices Management by objectives and not by perceptions (f) The employees can be given right guidance in the event of conflicts or ambiguity. (g) The skill & capability enhancement of employees can be aligned with the overall capability enhancement requirements of the organization. (h) The Customers possess clear cut understanding of the service expectations It is the responsibility of the Leadership Team to establish this entire framework and ensure essential technological support by investing in the right Information Technology solutions to effectively manage the organization wide performance by objectives with the help of data & facts and not by perceptions. In this process the Leadership Team should develop an excellent establishment of teams by ensuring that: (a) Individuals in the Teams are grouped by virtue of common objectives (b) Adequate Freedom & Authority is given to the teams to help them achieve their objectives more effectively (c) Team processes are establish to ensure efficient operations of the team (d) Inter-Team co-ordination platforms are established to bring them together under larger umbrellas periodically or as an when required by the Leadership Team (e) The right size and mix of teams are formed - to ensure that no team faces shortage of resources and is burdened by surplus resources (f) Teams possess efficient team leadership (g) Team creativity & innovation is boosted by motivating & rewarding them (h) Quality Management is high on every team's agenda (i) The performance of teams is directly linked with the overall organizational performance (j) The Leadership Team is flexible enough to listen to the viewpoints of all the teams in the organization (k) The performance of teams are assessed by analyzing data collected through employee surveys, customer satisfaction surveys, IT systems, Team Collaboration/Messaging Systems etc. [Sheffield Hallam University, 2004; Dickinson, Helen and Peck, Edward, 2008; Sheffield Business School, 1997; Malby, Becky, 2007; Sandbakken, Dag A, 2006] Conclusions & Recommendations The performance of an organization depends upon the capability & maturity of the organization which in turn is empowered by a collaborative framework of capabilities of individual employees & teams of the organization. This is achieved by effective leadership within the organization that helps the entire organization by establishing the Vision, the Mission and the Strategic objectives such that the entire organization can align their objectives towards them and contribute effectively to the performance of the organization in the target marketplace. From the leadership perspective, it is not an easy task as evolution of the correct Vision, Mission and Strategic objectives requires loads of analytics applied to world class excellence models like Porter's Diamond, Balanced Scorecard, the EFQM and the SWOT. These models require accurate data to be applied from an organizations perspective such that the results are in line with the competitive advantages of the organization helping the leadership team to analyze and evolve the future competencies required to sustain as well as improve the organizational performance as per market demands and customer requirements. Without the knowledge & application of such global excellence models, a leader would not be able to effectively demonstrate commitment to the organizational performance and hence at some stage may fail to deliver and loose standing in the marketplace. Reference List: Baker, John. INSPIRED LEADERSHIP - Insights into people who Inspire exceptional performance. Management, Leadership and Skills Unit, Department of Trade and Industry, London. 2004. Clarke, Martin. Luck, Legacy or Leadership - Determining the real value of leadership to organisational success. General Management Development Programmes Group. Cranfield School of Management. Cranfield. 2003. Creating A Values Driven Organization. Centre for Integral Excellence, Sheffield Hallam University, 2004 Dickinson, Helen and Peck, Edward. Is leadership and management in inter-agency settings really that different Perspectives from the literature. Health Services Management Centre, University of Birmingham. 2008 Do Strategic Leaders Matter. Sheffield Business School. Retrieved on January 22, 2009. Available at www.routledge.com/textbooks/0415355850/skills/Lecture%207%20Strategy.ppt. 1997. Kaplan, Robert S and Norton, David P. The Balanced Scorecard: Translating Strategy into Action. Harvard Business Press, 1996. Malby, Becky. How Does Leadership Make Difference to Organisational Culture and Effectiveness An overview for the public sector. Northern Leadership Academy. UK. 2007. Meshing customer and employee research for improved organisational performance. An Insync Surveys white paper. Insync Surveys Pty Ltd. 2008. Reklies, Dagmar. Porter's Diamond - Determining Factors of National Advantage. Recklies Management Project GmbH. 2001. Saar, Tom. Performance Leadership - So What Next. Australia & New Zealand Practice. McKinsey and Company. 2003. Sandbakken, Dag A. Leadership Practices and Organizational Performance. 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