Organizational Leadership at Nike - Case Study Example

Organizational

Author Note

Introduction

Leadership plays an essential role in the growth and development of an organization. Organizations require strong leaders for maintaining optimum effectiveness with the performance and productivity. Organizational leadership encompasses both human psychology and expert tactics (Ford & Seers, 2006). It focuses on enhancing the leadership skills and qualities that are pertinent with the organizational objectives. An ideal organizational leader should have the ability of motivating others and not dominate them with personal ideologies (Ertureten, Cemalcilar & Aycan, 2013). They should motivate the subordinates and other employees and encourage them to enhance their performance and productivity that would eventually lead to the achievement of organizational goals and objectives (Men, 2014). Organizational leaders are expected to act sensibly and responsibly and be empathetic towards understanding the needs of the group members. They are highly ambitious, intelligent and urge to lead with self-confidence.

Businesses with strong organizational leadership have better understanding regarding the objectives and goals as the leaders are focused on achieving them, by motivating the human resources. Successful leadership capitalizes the strengths, while minimizing the weaknesses (Endrissat & von Arx, 2013). Similar leadership attributes have been observed in the CEO of Nike, Mr. Mark Parker. Mr. Parker uses a wining management tactic that has enabled him to successfully lead the company, thereby making it one of the most popular athlete footwear brand (Lebowitz, 2015). He believes that leaders should ask questions to their teams and encourage them to find appropriate answers. Mr. Parker is a “multiplier leader” who prompts his team to find the solution for their questions, thereby encouraging them (Wiseman & McKeown, 2010). The confidence and self-efficacy of the employees rise when they come-up with solutions on their own, that would solve any kind of organizational problems.

Leadership Theories and Models used at Nike

For the successful growth and development of an organization, it is essential for the managers and leaders of the firm to follow appropriate leadership practices that would aid them with the process. The types of leadership theories or models that are followed by leaders define the success of an organization (Raelin, 2012). An efficient leader focuses on encouraging the employees so that they are motivated to perform better and deliver high productivity to the organization that eventually lead to the fulfilment of corporate goals and objectives. There are several leadership theories and models that the leaders and managers can follow, to enhance the employees’ performance and productivity (Hernandez, Eberly, Avolio & Johnson, 2011). Leadership was considered as a trait in the past, with which an individual is born. However, in the recent times, it has been established that leadership skills can be developed through managerial processes. The earlier theories that focused on characteristics of individuals for being successful leaders include the Trait Theory, Charismatic Theory and Great Man Theories (Northouse, 2015). However, with modernization and globalization, the concept has evolved and Behavioral Theory was introduced that explains how an individual is capable of developing leadership skills through suitable trainings and guidance (Nohria & Khurana, 2010).

Great Man Theory

The Great Man Theory was proposed by Thomas Carlyle around the 19th century (Allio, 2012). The Great Man Theory follows the concept that the leaders are born with the necessary leadership skills and qualities and that they are endowed with heroic capabilities that enable them to overcome all kind of difficult situations. The theory assumes that the leadership traits are intrinsic and only those individuals who are destined by birth become successful leaders at later stages of their lives (Cunliffe & Ericksen, 2011). As per this theory, the leadership requires qualities such as commanding personality, courage, persuasiveness, charm, aggressiveness and intelligence. The term “great man” was used for this theory as during the 19th century, leadership was considered as the attribute that is possessed primarily by the males and especially used in the terms of military leadership (Ayman & Korabik, 2010).

Similar leadership qualities have been observed in the case of notable leaders such as Napoleon, Hitler and Gandhi, who have presented their leadership skills during challenging circumstances (Khan, Nawaz & Khan, 2016). However, the leadership theory had progressed since then, from the dogma that leaders are born with the attributes and are destined by nature for reflecting their traits at particular time that envisage their potential for leadership. Moreover, the theory had overlooked the issue that certain individuals with the acquisition of power has the potential of becoming “toxic leaders” and influence their employees into taking harmful decisions (Northouse, 2015). In the context of Nike, to maintain the brand image in the international market, it is vital for the company to sustain strong leadership strategies that is not based on the traits of just a single or few individual leaders. This is because the workforce of the organization is spread widely across several nations.

Trait Leadership Theory

The Trait Leadership Theory has been established on the assumption that people are born with certain traits that qualify them as leaders. It also believes that certain people are made to develop the necessary traits that will enable them to excel in their roles as successful leaders. The attributes that differentiates such individuals include sense of responsibility, intelligence, creativity and similar other values (Dinh, et al., 2014). The trait leadership theory focuses on the analysis of social, physical and mental characteristics for gaining a better understanding of the traits or combination of traits that are common among the eminent leaders.

The qualities that are identified by the trait leadership theory can be divided into major types, the first being “emergent traits” that are dependent heavily on the heredity of an individual and comprises of characteristics such as intelligence, self-confidence, height and attractiveness (Crevani, Lindgren & Packendorff, 2010). The other kind includes “effectiveness traits” which encompasses the qualities that are acquired through learning and experiences, with charisma being the fundamental component of leadership (Khan, Nawaz & Khan, 2016). The trait theory pursued towards establishing a connection between the positive aspects of leadership (Northouse, 2015). With respect to Nike, the organization can use those individuals who possess the attributes of self-confidence, emotional stability, intelligence, vast knowledge base and honesty. However, the corporate is required to be aware of the various pitfalls that are associated with the perspective that visualizes only certain individuals to possess inherent good qualities.

Behavioral Leadership Theory

The Behavioral Leadership Theory postulates that the psychological behavior of individuals is associated with their leadership traits. Tourish (2014) elaborated that certain leadership traits can never be learnt, rather the persons are born with it. The behavioural theories provides a different perspective focussing on the habits or behaviours of the leaders, and not just based on their social, mental or physical characteristics (Clifton, 2012). From the behavioural perspectives, the leaders can be classified into two groups he behavioural theories first divided leaders in two categories based on the nature of the people and the tasks that they are assigned with. The two most common theories of leadership grid model or the managerial grid model and the role theory are generated form the roots of the behavioural theories (Raelin, 2016).

Contrary to the early forms of the behavioural traits, later this model changed to the perspective that the behaviours can be adopted over time and working situations. This type of leadership model also puts emphasis on the process rather than focussing on the individuals (Wood & Dibben, 2015). Nike, being a multinational conglomerate, needs to adopt effective managerial tactics and strategies for people working at various tiers, within the organisational structure. In order to create a reputable and fortified brand image, Nike needs to focus on developing its workforce, so that its employees are well familiar with the organisational processes and different situations, in which the personnel are able to deal effectively.

Contingency Leadership Theory

Evolving from the behavioural theory, the contingency theory explained that there is not a single particular way of leading, rather every leadership style is based on certain situations. These situations tend to illustrate the maximum potential of the individuals at certain situations and point of time, which also marks the attitude and ability of the individual (Northouse, 2015). To some extent the contingency theory is considered to be an extension of the trait theory, illustrating that the human traits link to the circumstances where the individuals demonstrate or exhibit their leadership abilities.

The contingency theory establishes that during context, the leaders tend to reveal their decision-making and decision taking abilities. This theory explains that an effective leader must be ready to show flexibility even in adverse situations and that there is no universal or one size formula for leading (Schaubroeck, et al., 2017). Nike maintains its operations over territories, practicing diversified culture and traditions. Therefore, it is highly required for the mangers and leading personnel in Nike to take necessary decisions based on the situations, which do not tend to impact the workforce or teams, consisting of people from the diversified socio-economic backgrounds.

The major leadership models that can be followed by the leaders include Relational Leadership Model and Inclusionary Leadership Model.

Relational Leadership Model

Relational leadership model focuses on the application of five fundamental attributes, namely, process, empowering and purpose of inclusive and ethical considerations. The model is useful in building strong relationship and commitments that would empower the employees to be inspirational and vision driven (Uhl-Bien, 2006). Furthermore, the human resource should positively interact with the higher authority. Also, the leaders must be willing to adopt with the changing scenario of the business environment for improving the organizational productivity.

Inclusionary Leadership Model

Inclusionary leadership model encompasses the contributions made by the stakeholders in the community and the firm. It is vital for the leaders to acquire an understanding regarding the organizational culture, to properly motivate the employees and increase their productivity. An inclusive leader is expected to commit themselves towards the achievement of corporate goals and objectives (Nohria & Khurana, 2010). Some of the vitalelements of inclusionary leadership model include breakthrough actions, inclusive leader, institutional skills and expected outcomes. The main element of the inclusive leadership model is focused on the achievement of outcomes that would drive the firm to adopt varied strategies for enhancing the productivity (Nohria & Khurana, 2010).

Modern and Emerging Trends in Leadership Theories and Models

The next generation theories have shifted the concept of universalization to contextualization, which has resulted in the emergence of new leadership theories; namely, Transformational Leadership Theory, Transactional Leadership Theory and Cognitive Leadership Theory.

Transformational Leadership Theory

Transformational leadership theory is associated with the leaders’ ability of bringing positive changes within an organization. The theory focuses on the leaders’ abilities for developing a strong bond with the entire human resources and motivating them positively by putting forth regarding what is worth pursuing. As per this theory, the process using which an individual interacts with others based on common beliefs, values and goals, to build strong relationship with high trust, which would aim at raising motivation, in both leaders and motivation (Rolfe, 2011). The theory states that leaders transform their followers using their charismatic personalities and inspirational nature. The transformational leaders are required to identify the need for implementing the change, acquire commitment and agreement of others and create a vision to guide and incorporated the change (Rolfe, 2011).

These leaders develop an appearance for convincing and encouraging the future visions. Furthermore, they treat their subordinates individually, to pursue the development of their skills, morals and consciousness by providing feedbacks to their challenges and works. In global organizations, such as Nike Inc., innovation plays an essential role to serve the highly demanding and ever-changing requirements of consumer base. Through constant innovation, employees can be encouraged to be more productive and be prepared to encounter any kind of situations through self-assessment.

Transactional Leadership Theory

The Transactional Leadership Theory focuses the importance on the significance of strategic communication between leaders and employees. Transactional leaders are expected to have the ability of motivating all the employees through an institutionalized rewards system, to be provided based upon their actions. Furthermore, the reward system should be supplemented with an alternative mechanism to provide punishment for unwanted behaviors. The transactional theory is based on mutuality where leaders influence the followers and the leaders are under their influence as well (Northouse, 2015). However, transactional leadership has been observed to show discrepancy as per the level of actions taken by leaders and the nature of relationship shared with the followers. Furthermore, transactional leadership is a contingent-reward type leadership. The rewards from the leader to the employees might be provided in the form of bonuses, work achievement, positive support, cooperation and so on. The transactional leader should focus on avoiding errors and delayed decision-making process. The management of Nike would benefit through the establishment of clear idea regarding the actions that can be considered to be compatible with the organizational objectives.

Cross-cultural Leadership Theory

With globalization, organizations have been successful in expanding their businesses in the international markets. As a result of this, the managers come across individuals from varied cultures when the corporate is establishing itself in a foreign location. Furthermore, individuals from different cultures follow varied beliefs, rules, values, traditions, symbols and norms (Carroll & Simpson, 2012). Business expansion, due to globalization, demands the leaders to manage multicultural workforce and managers are required to deal with individuals belonging to different cultures. Therefore, leaders belonging to cross-cultural workforce are required to be free of all kinds of prejudice.

Leaders of large multinational organizations like Nike Inc. are required to continuously improvise their perceptions regarding their workforce belonging to different cultural backgrounds. It is crucial to maintain a balance between the traditional beliefs and advanced notions. The preconceived notions could be harmful for organizations with culturally diverse workforce. Leaders of multinational enterprises such as Nike Inc. that operates in several international regions are required to ensure that people from all cultural spheres participate evenly in all the key committees and boards of the firm.

Cognitive Leadership Theory

The modernization has led to the development in the field of cognitive sciences that influence the leadership theories. Cognitive leadership theory focuses on the perceptions and intensions of leaders (Shondrick, Dinh & Lord, 2010). Using the cognitive processes, the leaders are able to create association between people, successes and failure. These theories attempt to explain the emotional responses and mental states of the leaders under certain situations.

With the help of cognitive theory of leadership, the effects of bureaucratic and political situations on the mental state of the individuals leading a team. With respect to international organizations such as Nike Inc, leaders are required to show emotional stability during the situations of high competition in the business environment. Leaders with cognitive skills are expected to be emotionally stable and should possess the required knowledge to cope with difficult situations that could affect the competitive position of the organization.

Multidisciplinary Aspects Affecting the Leadership at Nike

There are several aspects that might affect leadership that is being observed by the Nike’s leader. These factors can be analyzed using PESTLE analysis framework, which would provide an insight regarding the various environmental factors that influences an organization, thereby affecting the leadership tactics that are required to be followed to manage those elements. Since Nike operates in the international market, it is important to analyze these factors from a global perspective.

Political Factor

• Favorable policies of the US government
• Political unrest of certain Asian nations and the entire Middle East
• Changes in the international legislations

Economic Factor

• Increase in labor issues and production costs
• threat of competition and recession
• Fluctuating profit margins
• Subsidiaries and acquisitions

Social Factor

• Customers have become more brand conscious
• Rise in female customers
• Working environment at factories
• Customers have become more fashion and health conscious

Technological Factor

• Marketing techniques
• Innovations

Legal Factor

• Counterfeit products
• Minimum wage allegations and child labor
• Legal battles with other brands

Environmental Factor

• Pollution concerns in China
• Environmental concern and global warming
• Decrease greenhouse emission

Political Factor

The various governmental policies associated with the global businesses have evolved and have profound influence on international operations. Although the US government had implemented growth-oriented policies that have supported the development and expansion of several organizations after the dynamic election of Donald Trump, as US President, might negatively affect the operations of various corporates. The international competitive taxes, stable government and trade regulations arrangements regulated by the Federal Reserve foster the growth of most global businesses.

Since most of the manufacture and production factories of Nike are situated in the Asian nations such as Indonesia, Vietnam and Thailand, the political unrest of these regions affects the operations of the company. Furthermore, the social unrest, political instability and protests in certain regions of China affect the supply chain of the organization. Additionally, the political turmoil of Middle East due to the authoritarian governments influences the business of Nike (Schlossberg, 2016). The various international legislations have become stringent in the past few decades due to the rise in threat of terrorism and illegal activities in certain zones (Schlossberg, 2016). As a result of this, there has been an increase in the tariffs of some countries and it affects the trading activities in the international market.

Economic Factor

Nike has their production and manufacturing units in the Asian nations due to the availability of cheap labor costs. However, due to the rising economic conditions, the lifestyle of individuals across the world has been improving. As a result of this, there has been a decline in the availability of cheap labor at various places and has raised the production costs. Furthermore, the emerging privatization has increased the disposable incomes for a large section of global population. Therefore, the individuals belonging to the middle-class segment provide the target segment for Nike to market its products (Nike, 2016). However, Nike should be prepared to tackle any kind of global economic recession with efficient strategic plan. It is important for Nike to devise a plan in advance as during the times of economic recessions customers might switch to another brand that offers its products at prices lower than Nike does.

Nike’s business operations are at global spectrum and therefore, the stability of international interest’s rates and currency exchange is crucial for the organization’s growth of profit margin. However, fluctuating currency rates with respect to USD and higher inflation rate had detrimental effects on the profit margins of the company. Additionally, Nike Inc., has acquired several other brands and have various other subsidiaries under its name such as Converse Inc., to increase its consumer base (Nike, 2016). These acquisitions have been financially successful for the organization.

Social Factor

The growing modernization has evolved the lives of global population. Most of the consumers have become highly brand conscious and they associate Nike with stature and quality, which has led to an increase in its businesses. The amalgamation of technology with style has been a successful strategy for Nike Inc. Furthermore, the brand logo and slogan “Just do it!” is recognized highly amongst the global population due to its popularity, thereby leading to its success. Additionally, the global consumer population has been becoming highly conscious regarding their health and is indulging in outdoor activities, which has been beneficial for Nike, as it has boosted the sales of its products. Many consumers associate Nike with leisure and fashion, especially the female consumers and this has further added to its sales. The organization ensures the safety of the workers at its factories and manufacturing units and believes in being socially responsible.

Technological Factor

Nike Inc. has been ameliorating its products with the help of technological innovations, which has enabled it to stay ahead from its competitors and have augmented the production process (Nike, 2017b). Furthermore, the innovative marketing techniques and strategies have ensured its rise in the global market. Nike Inc. utilizes the various online and digital media platform for promoting its products. Furthermore, it has also introduced its online stores and does not depend only on franchise or retail outlets for the sales of its products. In the fiscal year 2017, Nike Inc. has earned a total revenue of $28,694 million (Nike, 2017a).

Legal Factor

The products of Nike Inc. have been counterfeited globally for a long time, which has drastically affected its annual revenue. Many of its contract manufacturers have been producing counterfeit products of Nike, due to which Nike has introduced monitoring systems to ensure that its products cannot be copied. The widespread sales of its fake products have been ruining its reputations worldwide and decreasing its profits. Furthermore, since the manufacturing and production base of Nike is located in the emerging nations such as China, Malaysia, and other such Asian countries, it is required to ensure that the payments made to the employees meet the minimum wage requirements. The company is also required to ensure that no child labor is employed at its manufacturing and production units, failure to which would attract legal penalties and tarnish its reputations. Furthermore, the company is also required to avoid any kind of legal disputes against its rival brands as would lead to negative promotion of the organization.

Environmental Factor

The rising environmental concerns regarding its sustainability and global warming have become extremely important for Nike Inc. The organization has always strived towards decreasing its share of carbon footprint and has initiated several strategies towards waste reduction, using innovative techniques during the manufacturing processes. Furthermore, it has collaborated with the Chinese government for reducing the pollution by limiting the usage of fossil fuels.

It is essential for Nike Inc. to have strong leaders who shall be able to encounter the changing scenario due to these factors, to sustain the competitive position of the organization in the international business market.

Recommendation for Nike’s Leadership Strategies

The various cultural differences that prevail amongst the different nations, determine the nature of leadership. To improve the sales of Nike Inc., the organization is required to regularly monitor the social dynamics associated with the consumer base, such as increasing global social status of women. Females are becoming more independent, as compared to earlier times. Nike can utilize this factor to its advantage and target the affluent section of women belonging to all the countries across the world (Schlossberg, 2016). The advertising strategies should be developed such that the concept of “self-awareness of women” is taken under consideration (Ayman & Korabik, 2010). Emerging economies have been witnessing rise in their income levels and therefore, Nike should utilize this opportunity to successfully promote itself for gaining more popularity and brand image. Furthermore, the leadership theories of Nike should be developed such that the various cultural contexts such as linguistic, ethnic and national individualities. Additionally, the social media can be utilized for tracking the changing demands of the consumer base.

Nike Inc. can also consider penetrating into the merging market as the social living conditions of the individuals is improving and therefore, the organization can consider targeting them. For this purpose, Nike can reposition its target and increase the organization’s brand image through advertisements and efficient leadership qualities. The business expansion through penetration in new markets should be conducted after strategizing suitable plans. The new advertising strategy of Nike that are focused towards attracting the female target consumers should take into consideration the local context of the area of operations. Furthermore, organization is required to produce products that fulfil the demands of consumers who are both health conscious and fashionable. Additionally, Nike Inc. can conduct investments in its research and development departments for developing products that can be utilized for the purpose of a variety of outdoor sports, as these are gradually becoming popular amongst the target segment of consumers.

Conclusion

For the successful growth and development of a global company, it is essential for the firm to possess strong organizational leadership capabilities. The various theories and models that are associated with leadership, provide an insight regarding the various traits and attributes that must be possessed by the leaders to successfully motivate the workforce, which would aid in enhancing their performance and productivity that eventually would lead to the fulfilment of organizational aims and objectives. With respect to Nike Inc., the organization has been successful in sustaining its competitive position due to the efficient leadership policies that are being followed and implemented by the most important leader of the firm, Mr. Mark Parker. Mr. Parker has played a major role in increasing the competitive position of Nike Inc. through efficient utilization of leadership policies that defines the traits of a competent leader. Therefore, the organization should ensure to preserve the leadership trait that is being followed within the organization.