Leadership Communication Issues - Term Paper Example

?An In-depth Analysis of Leadership Communication Issues Raised by Real-Life Events Introduction In any organization, the quality of its performance depends in great part on how well people work together, which in turn rests upon effective communications. Open channels of communication are critical, but none moreso than that between a leader and his followers. The communication link may involve a supervisor and his small team, or a chief executive officer and the thousands of corporate employees under him; the specific organizational level notwithstanding, where a person is installed in a position of leadership over a group of people looking up to him for inspiration and direction, then the strength of their performance will inevitably revolve around the strength of the coordination between them. The more systematic and finely tuned this channel of communication is, the more effectively the firm may attain its strategic goals. In the situation that follows, flaws in communication within the organization cause problems in the firm’s delivery of services to its clientele. The developments in the case study shall be discussed and possible recommendations offered to address those issues of leadership communication; the identities of the company and persons involved will be concealed pursuant to an agreement to maintain confidentiality of the subjects. Description of the situation The Everest Stock Brokerage (not its real name) was riding the crest of a stock market bull run when Adam (not his real name) joined the company. Adam was a duly licensed stock trader authorized by the exchange to execute transactions on the computerized trading system. He was a perceptive and well schooled finance student in college, and his ambition was to be an expert stock analyst and eventually stock broker, thus in his academic program he gained as much training and information as he can on equities valuation and price forecasting. These are considered important core knowledge for any professional who would wish to work in stock investing, particularly in advising individual investors on their hard-earned placements. Everest seemed an ideal place for Adam to work in, because it specialized in retail stock brokerage (i.e., for individuals rather than institutions) and its president and chief executive officer, Mr. Henry Lorne (not his real name) is a recent past board member of the stock exchange. When Adam joined the company, sales were skyrocketing, profit was strong, and the brokerage was flourishing to the point that the company doubled its sales force and rented a second dealing room in the same high rise building that housed the corporate administrative offices and the first dealing room. (Off-floor trading was adopted years earlier when trading became computerized and online trading became possible, even for clients in their homes.) Business continued to remain good for the next two years. Then, midway in 2008, the inevitable happened. The market faltered, sales thinned, then prices suffered a severe correction due to panic selling by investors because of the credit crunch that began in the subprime mortgage market. It was about this time that Mr. Lorne was beset by calls from clients that their orders were not being executed fast enough, or were not being confirmed to them as soon as they get done. Such delay created the impression in the minds of the customers that the particular traders handling their phoned-in orders were executing their own personal trades, which was against exchange rules, and passing on to customers the less advantageous trades (i.e., trades with losses, or minimal gains at best). Among its corporate values, the company had a policy of “attending to clients’ need for information promptly and transparently.” However, there were no definite guidelines by which to determine what is meant by prompt and transparent provision of information to clients according to their needs. On the contrary, there is an unwritten but consistently observed standard operating procedure (SOP) that all trades involving certain select stocks held in the house portfolio should be coursed through the office of Mr. Lorne. Only after his office clears the transaction is it confirmed to the client. Another problem encountered by the company involved customer complaints about the accuracy of transactions. The type of error that causes the greatest concern is the unintentional interchanging of the number of shares with the dollar amount intended by the client to be transacted. The most serious incident that made this type of error involved the trader asking the client, “How much do you want to buy?” to which the client replied “Buy me 20,000 of stock A.” The client, responding to the question “how much” and not “how many,” intended to purchase $20,000 worth of a share of stock at the approximate price of $25 each, totalling 800 shares. The trader mistook the order to mean a purchase of 20,000 shares of stock, and at $25 each the executed transaction came up to $500,000. Needless to say, the client was furious, and the house ended up shouldering the loss incurred when the excess shares were sold down. The problem was traced to vagueness in the design of the order slip that is filled up during the call, and which the execution of the transaction is based upon. One other problem that Adam feels is important but which the administration merely dismisses is the lack of a written code of conduct for personnel. Administration contends that there is a daily morning briefing among team leaders and their teams to discuss trading strategies for the day; aside from these, Mr. Lorne conducts a general weekly meeting with the trading department every Wednesday afternoon, so there is ample discussion and guidance about what traders may or may not do. Adam felt the need for a written code in the first year he joined the company. In his hurry to catch a price in executing a trade online, he failed to fill up the pertinent order slip first, thinking to get back to it later. As a result the transaction, which happened to be one of the house stocks, was executed and confirmed to the customer before it could be cleared with Mr. Lorne’s office. Adam was fined $100 as a first offence, to be increased to $500 should the violation be repeated. Adam felt this was utterly unfair, because there was nothing written about the infraction and the penalty, but he was informed by his co-traders that such had been the practice as far back as anyone could remember. HRD informed him that the policy was taken up during the orientation, but Adam does not recall it, admitting that it was probably because the rule might not have meant much to him then. Identification of the leadership and communication issues in the situation under investigation In analysing aspects of the relationship between the corporation and its employees, there appear to be external manifestations and internal issues pertaining to the problems that beset this relationship. For the purpose of this study, I would term the external manifestations as the formal issues because they deal with the technical aspects of the problem. On the other hand, I would term the internal aspects as the substantial issues. They are identified as the following: Formal issues: 1. Lack of formal code of employee conduct. This was brought to the attention of the administration by Adam, when he was charged with trading against policies. 2. Absence of mechanism of due process for employee discipline. This became apparent when Adam was slapped with a penalty without being afforded the opportunity to defend himself. 3. Inadequate design of order slip forms. This problem came to light when an erroneous trade was done due to a misunderstanding by the trader on the basis of the order slip. 4. Need for service script to guide phoned customer dealings. The lack for a standard manner of dealing with clients over the telephone has exacerbated the misunderstanding between the trader and his client. 5. Articulation and emphasis on corporate Vision, Mission, and Values. The corporate values lacked emphasis and therefore failed to guide employees in dealing with clients’ needs for prompt and accurate information. Substantial issues: 1. Leadership integrity and honesty. There is a question of integrity and transparency in the reason behind the company’s policy of clearing the trade with Mr. Lorne’s office before confirmation with the client. 2. Communication of leadership by example. The leadership of Mr. Lorne is perceived to be of a double standard when he practices a policy of censureship and prior clearance, contrary to the corporate value of promptness and transparency. 3. Two way communication and affording an opportunity to be heard. The issue came to fore when Adam was imposed a fine without being allowed to explain the reason for his action. This substantial issue is associated with the formal lack of a mechanism for employee discipline, by which due process may be observed. 4. Fairness in dealing with employees. A lack of fairness is evident in the manner employees are forced to abide by conflicting policies (i.e. seeking clearance from Mr. Lorne but needing to deal transparently with clients), as well as having to shoulder penalties without having any code of employee conduct to rely on. 5. Sincerity in abiding by the corporate values. The sincerity of the company’s leadership is perceived as lacking in the contradictory policies and values it implements on its staff and customers. Analysis of the issues using concepts and principles from the course Before the adverse factors are to be discussed, it is important to highlight those positive aspects of leadership communication that are already present in the Everest Stock Brokerage organization. It is apparent that there is a deliberate and conscious effort on the part of management to provide guidance and direction and to establish open communications with staff. The daily meetings between team leaders and team members is an invaluable way by which to disseminate vital information which changes daily in the stock market, and to discuss fundamental and technical analyses of the economy, industries, and particular listed companies. The daily briefing helps coordinate the teams’ efforts and provide support for team members to extend better service and advice to customers. Also, the weekly meetings conducted by no less than the firm’s CEO, Mr. Lorne, with the trading staff provides a regular venue for open, two-way communication that is vital for the leadership to read the pulse of the staff and to provide immediate response to their concerns. It will be noticed that there is no indication that the staff take these issues against the person of Mr. Lorne. It is likely that the weekly face-to-face between top management and front liners have created a personal bond of trust between them. These being said, the aforementioned adverse issues are discussed in the following pages, grouped under three main headings: specificity, empathy, and integrity in communication. First is the need for specificity in informing personnel of how management wants them to act. Specificity is an important aspect of leadership communications. For instance, a more adequately designed order slip forms will provide an exact guide for the information the individuals in the organization will need to process the transaction. Also, if there were a service script to guide phoned customer dealings, then the problem of misunderstandings between trader and customer would be reduced. For instance, in this case the script may say: “A purchase of 20,000? Is this in shares or in dollars, sir?” The script may prompt the customer service provider to elicit exact information from the customer and reduce failures in communication (Lovelock & Wright, 2004). Secondly, there is a need for establishing empathy and trust in communicating with personnel. Under this may be unified the issues on the lack of formal code of employee conduct, the absence of mechanism of due process for employee discipline (Padilla, 2004), the need to establish fairness in dealing with employees, as well as two way communication and affording employees an opportunity to be heard. Employees must always be given prior notice of what behavior is expected of them, the consequences of non-compliance, and the chance to explain themselves when suspected of doing so. The means of communication may use cutting edge technology, but if the message comes across as false or contrived, then communication will fail. In dealing with their employees, Everest will have to deal squarely and transparently with their employees, so that employees will become more receptive to what it has to say (Shaw & Barry, 1995). Finally, company leaders must maintain integrity and good faith in communicating with all stakeholders, whether they be staff, customers, suppliers, or the community. There must be faithful adherence to the corporate vision and mission, and sincerity in abiding by the corporate values (Burke & Friedman, 2010); because these stand as the contract of the firm with its stakeholders. Leadership integrity and honesty (Grover & Moorman, 2008) must be manifested through leadership by example (Baldoni, 2009). Management cannot afford to be perceived as promising its customers something it forbids its personnel from accomplishing (in this case, the prompt and transparent execution of trades). Company leadership must not only deal honestly with all its stakeholders, it should likewise be perceived to be doing so. Conclusion The case described above is still to find resolution, for which this study will provide some suggested courses of action. Right away, the company must put its house in order by reviving and abiding by its corporate vision, mission and values, coming together with the staff to decide what they mean in concrete terms and action. Next, the company must draw up a definitive code of employee behavior, with details of the consequent rewards and penalties. This must be threshed out together with the participation of the employees; and, once drawn, their commitment to abide by it must be secured. Following that, the company’s leadership must be sure to set an example to abide by the same mission, vision, values and code, and to periodically report its performance in this regard to its stakeholders. This involves nothing less than a total transformation of how the company’s leaders view their business. Leaders must be the epitome of what they ask their personnel to be, and much more, or else be meted the same consequences, if not more severely, as those it imposes on its staff. This case has opened up our understanding and appreciation of communication, not only as a deed or activity, but as an indispensable tool that cannot be alienated from the management function. WORDCOUNT = 2,404 (2,393 excluding title) References Baldoni, J. (2009) Lead by Example: 50 Ways Great Leaders Inspire Results. New York, N.Y.: AMACOM Books (American Management Association) Burke, R. E. & Friedman, L. H. (2010) Essentials of Management and Leadership in Public Health. Sudbury, MA: Jones & Bartlett Learning Grover, S. L. & Moorman, R. (2008) “How Leaders Deal with Dilemmas of Honesty.” In Ethical Dilemmas in Management. Garsten, C. & Hernes, T., (eds.) New York, N.Y.: Routledge Lovelock, C. H. & Wright, L. (2002) Principles of Service Marketing and Management. Upper Saddle River, New Jersey: Prentice Hall Padilla, R. (2004) Business Ethics. Manila: Rex Book Store, Inc. Shaw, W. H. & Barry, V. E. (1995) Moral Issues in Business. Cengage Learning –Wadsworth. Read More