Business Ethics and Leadership Issues - Essay Example

Business Ethics and Leadership- Robert Nardelli of Home Depot Business Ethics and Leadership - Robert Nardelli of Home Depot In the modern market, which is characterized by strong competition, effective leadership is a key requirement for business success. This has been the case of Home Depot. Indeed, the growth of the above company has been highly related to its leader, Robert Nardelli. Nardelli left Home Depot in 2007; during his leadership the performance of Home Depot reached quite high levels (Kavilanz 2007). The leadership style of Robert Nardelli is described and evaluated in this paper. Effort is made to explore the alignment of the leadership style of Nardelli with ethics. The fact that the decisions of Nardelli have secured the firm’s success is not enough for justifying potential violations of ethics by Nardelli, if such case is proved to exist. Nardelli was appointed as the leader of Home Depot in 2007 (Kavilanz 2007). Nardelli introduced an important change in Home Depot: he supported discipline in regard to all aspects of the business (Kavilanz 2007). Many employees were opposed to this practice as they preferred the leadership style of the firm’s previous leader: Bernie Marcus (Kavilanz 2007). Marcus was quite friendly with employees, a fact that allowed him to establish strong links with staff in all business department; however, as the company was expanded the above practice of Marcus would have to be changed (Kavilanz 2007). The appointment of Nardelli as the firm’s leader was related to a new era for the firm: discipline was set as a priority in regard to all parts of the business (Kavilanz 2007). Nardelli kept a distance from staff at least when having to deal with employees at group level (Kavilanz 2007). Gradually, employees who preferred the leadership style of Marcus left the company, a fact that had not affected the growth of the business (Kavilanz 2007). Still, the leadership style of Nardelli, being characterized by ‘no flexibility and autonomous management’ (Kavilanz 2007) had to be changed in order for the firm’s performance to be kept at high levels, especially since the housing market had started to show signs of slowdown from 2007 onwards (Kavilanz 2007). Under such terms, the autocratic leadership style of Nardelli, being based mostly on ‘command and control’ (Nussbaum 2007) would have to be replaced by a more flexible, democratic leadership style; such leadership style would allow employees to express their creativity and enthusiasm, a fact that would lead to the improvement of employees-customers relationship (Nussbaum 2007). In order to evaluate the leadership style of Nardelli it would be necessary to refer to the literature related to leadership. Leadership, as a concept, reflects the efforts of ‘a person to influence others to accomplish an objective’ (Sharma & Jain 2013, p.310). In order to achieve the above target leaders are likely to use their ‘knowledge and skills’ (Sharma & Jain 2013, p.310); in the context of leadership the above process is known as ‘Process Leadership’ (Sharma & Jain 2013, p.310). In practice, it has been proved that the decisions of leaders are influenced by certain traits, such as ‘beliefs, values, ethics and character’ (Sharma & Jain 2013, p.310). This phenomenon is described as Trait Leadership and denotes the uniqueness of the leadership style of each leader (Baack 2012). In the case of Nardelli, the Trait Leadership could be used for explain the leadership style of the particular leader: as a person, Nardelli probably used to respect hierarchy and control. This characteristic of his character led Nardelli to promote relevant leadership decisions in Home Depot; this practice helped the company for a particular period of time at the level that at business level discipline helps to have full control on daily operations so that major failures are avoided. However, in the long term this practice prevents a business to expand while it can also leads to the deterioration of the firm’s relationship with its customers. From another point of view, the Behavioral Theory of Leadership promotes the idea that the leadership style of a leader can be classified using four categories. In each of these categories the leadership decisions are characterized by different priorities, such as ‘the completion of tasks, change, the development of relationships with employees at all levels of organizational hierarchy and acceptance of decisions/ facts without resistance’ (Derue et al. 2011, p.15). Using the terms of the behavioral leadership theory, Nardelli could be characterized as a leader focusing on task completion. The role of such behavior in the effectiveness of Nardelli, as a leader, is evaluated below. Derue et al. (2011) noted that the effectiveness of a leader can be decided based on various criteria, such as the performance of a leader at a personal level, his performance in regard to groups, his ability to inspire followers and the level of job satisfaction among employees (Derue et al. 2011). The existence of the above criteria, as applied to a particular leader, can be explored using the leadership theories, especially the trait theory and the behavioural theories of leadership. If based on the trait theory the effectiveness of Nardelli, as a leader, can be characterized as high However, as explained above Nardelli tried to promote control in all business processes without being interested in the needs of employees or the level of job satisfaction. This means that at three, out of four, of the criteria set by Derue et al. (2011) were not met. Using the situation theories of leadership the leadership style of Nardelli could be also characterized as problematic. For example, the Leadership model developed by Tannenbaum and Schmidt promotes the idea that a leader should not employ ‘only an autocratic leadership style or a democratic style’ (Peretomode 2012, p.15); rather, a leader should prefer a flexible leadership style so that he is able to inspire and motivate followers without loosing control (Peretomode 2012). The issues discussed above could lead to concerns whether the leadership style of Nardelli has been ethical or not. In the context of the literature, ethical leadership has been related to the ‘good character of the leader’ (Monahan 2012, p.57). This means that a leadership style could be characterized as unethical not necessarily if the leader violates business ethics, as for example by supporting corruption, but even if the leader does not behave appropriately to the staff (Baack 2012). Emphasizing on control at quite high level, as Nardelli used to, could be possibly characterized as a behavior opposed to ethics. The fact that many employees of Home Depot had left the company after the appointment of Nardelli as a leader proves that the leadership style of Nardelli had been too autocratic. In this context, the specific leadership style would be characterized even if it resulted to high business performance, a condition which is not of higher value from job satisfaction when evaluating the leadership style in terms of ethics. References Baack, D. (2012). Organizational behavior. San Diego, CA: Bridgepoint Education, Inc. Derue, S., Nahrgang, J., Wellman, N. & Humphrey, S. (2011). “Trait and Behavioral Theories of Leadership: An integration and meta-analytic test of their relative validity.” Personnel Psychology, 64: 7-52 Kavilanz, P. (2007) “Nardelli out at Home Depot.” Jan 3, 2007. CCN Money. Retrieved from http://money.cnn.com/2007/01/03/news/companies/home_depot/ Monahan, K. (2012) “A Review of the Literature Concerning Ethical Leadership in Organizations.” Emerging Leadership Journeys, 5(1): 56-66. Nussbaum, B. (2007) “Lessons from Home Depot’s Bob Nardelli – Why Command And Control Is So Bad.” Jan 4, 2007. Bloomberg Business Week. Retrieved from http://www.businessweek.com/innovate/NussbaumOnDesign/archives/2007/01/lessons_from_home_depots_bob_nardelli--why_command_and_control_is_so_bad.html Peretomode, O. (2012) “Situational And Contingency Theories Of Leadership: Are They The Same?” Journal of Business and Management, 4(3): 13-17 Sharma, M. & Jain, S. (2013) “Leadership Management: Principles, Models and Theories.” Global Journal of Management and Business Studies, 3(3): 309-318 Read More