Organizational Leadership - Essay Example

?Introduction The current economic situation in the developed world and the overall performance of the organizations is under a lot of scrutiny not only in press but at the government level. New regulations are being enacted in order to ensure that organizations behave responsibly. Banks and financial institutions specially are becoming more and more regulated in order to ensure that they are managed in efficient manner and their mass failure should not affect the economy as a whole. Organizations are also increasingly becoming complex due to the overall nature and degree of the competition. Fast changing consumer needs, emergence of new technology as well as the more emphasis on doing business in ethical manner has put organizations under a lot of pressure. The traditional methods of competition as well as the way organizations were managed has been changed completely and organizations now work and behave in an entirely different manner. The reasons for the underlying changes can be different as the rapid changes in the technology have offered loads of information to the consumers and other stakeholders. The free flow of information therefore invariably has allowed consumers to become more aware of how the organizations work and what are the key influences of the organizations in the ordinary lives of the consumers? Further, governments has became more aware of the organizational practices and the underlying changes in the regulatory environment specially in the wake of current economic crisis has placed organizations under tremendous pressure to ensure they are managed in effective and efficient manner. Such changes therefore have put further emphasis on the role of effective leaders within the organization. However, before tackling such situations, it is important that the organizations must have an effective strategy in place to counter with the changes specially happening at the external front. Thus a well crafted strategy is required in order to ensure that the organizations develop the capability to negotiate successfully with the different changes taking place at the external front. What is however, more significant is the role of a leader in implementing and managing such strategy and to achieve the strategic objectives of the firm. The critical role of a strategic leader in the overall success of the organization therefore is really important in terms of ensuring that the organization has a direction and a vision to achieve while at the same time ensuring that it can successfully deal with its external environment. Leaders and leadership within the organization therefore are probably the most important facets of a modern organization in order to help it to become successful and strategically managed. However, leaders ability to understand the general business environment, competition as well as the political economy are some of the really important aspects which make a leader successful in the current business environment. Above all the strategic thinking is extremely important in order to ensure that the leaders have the enough skills and capabilities to successfully negotiate with such challenges. This paper will look into the effects of strategic thinking and practices of business leaders in dynamic business environment. Leadership defined Before discussing on the strategic role of leadership, it is critical that a comprehensive view of the overall concept of leadership is presented in order to ensure that a solid theoretical foundation is laid for further discussion. Leadership has been defined in different manners and its definition has also changed over the period of time as the overall research on the subject evolved. What is also however, critical to understand that the leadership is often associated with the achievement of a common goal and how leader through his or her influence can actually get best out of the individuals to perform to their best.? It is significant to understand that leadership is often associated with the achievement of defined and shared objectives which are set at the beginning and the organizational resources are committed in order to ensure that the desired objectives are achieved. Leadership therefore is also associated with the effective utilization of the resources in order to achieve the desired objectives of the firm. (Northouse, 2009) In order to fully explain the leadership, it is important to note that there are different themes which emerge from the leadership. Leadership is first of call is considered as a process- a continue process of evolving and defining how the organization will work and behave and how the employees will actually kept motivated in order to achieve the desired organizational results. The motivation inherently also requires that the leaders must have the relative degree of influence over the employees in order to motivate them. Another important theme which emerges from the leadership is the development and achievement of the common goals. Leaders must be able to develop a shared vision and values and motivate the employees to achieve such shared vision. (Giuliani & Kurson, 2005) It has also been argued that the leaders are born and therefore cannot be made however, there are opposing views also indicating that the leaders can be made and leadership can arise under the situational context. The emergence of leadership and what characteristic traits actually define a leader and how leadership emerges is something which has remained one of the most researched topics in the area of leadership. This has also due to the fact that earliest studies focused on the traits which were shown by some of the most successful leaders of their time. (Greenleaf & Spears, 2002) Traits theory of leadership therefore is one of the oldest theories on the subjective of leadership and earliest writers including Plato has discussed at great length the kind of characteristics required by a leader in order to be successful. It is because of this reason that with the emergence of the scientific management as a discipline, much attention was paid to the traits theory of leadership and many researchers actually went on to identify the ideal characteristics necessary for a successful leader. Some of the characteristics included such as intelligence, integrity, status etc and all these traits therefore suggested that the leaders are actually born and these traits cannot be developed with the help of teaching or other methods. (Lussier & Achua, 2009) However, the alternative views on leadership started to emerge in 1940s and 1950s when new research on the subject actually suggested new ways of defining the process of leadership and how it can affect the organizations. These alternative views were based on the assumptions that the individuals who are leaders in one situation or setting may not be necessarily leaders in other situations. This view therefore outlined the so called situational leadership which put leaders under the spotlight of rising on the occasion. The situational leadership concept therefore suggested that that leaders emerge according to the given situations and it’s not necessary that a leader in one setting may be a leader under a different setting also. (Gardner, 1993) It is also however, important to note that there was a renewed effort on further refining the traits theory during 1980s when with the help of modern statistical tools, researchers further evaluated the data and found the patterns which could identify the different traits in the individuals. These studies however, further extended the scope of the trait theories to include some other aspects also such as cognitive skills, social abilities, problem solving skills etc. Trait theorists therefore focused on the set of behaviors which are shown by the leaders and suggested that in order to be successful, leaders must have to show some essential traits such as high level of self confidence, self esteem as well as the ability to influence others. (Koestenbaum, 2002) Based on the traits of the leaders, different leadership styles were defined and identified too suggesting that the leaders depicting certain kind of traits fit into certain kind of leadership style. This approach towards leadership therefore helped the researchers to define and identify the leadership styles and under what circumstances or situations such styles can be successful. (Grint, 1997) The situational leadership theories were developed as a reaction to the trait theories of leaderships. These theories were based on the concept that over the period of time, many leaders have just emerged under different circumstances and it’s not necessary that the presence of certain traits could only result into a successful leader. Accordingly the actions of leaders depend largely upon the environment and the situation in which he or she acts. (Hartman, 1999) Leadership styles Research on the topic of leadership also resulted into the defining of different leadership styles shown by the leaders under different contexts or situations. Autocratic leaders are considered as those leaders who tend to make the decision making process as a centralized process wherein all the decisions are made by the leader and followers have to follow them. This type of leadership style however, was considered as suitable for the earlier generations of leaders when the overall sophistication in the styles of management and employer- employee relationships did not emerged. (Rotemberg & Saloner, 1993) Democratic style of leadership however, allowed others to participate in the overall process of decision making and decision making process is largely decentralized under such leaders. Democratic leaders therefore can easily win the confidence of their followers and can easily motivate them in order to achieve a common goal towards which an organization is working. There is also a free rein leadership style under which leaders actually do not lead themselves but let the group regulate themselves and perform and act accordingly. Maximum freedom to the subordinates is given under this situation in order to win their confidence and inherently motivate them so that they can effectively work towards the achievement of common objectives of the organization. (Jogulu, 2010) It is however, important to note that different leadership styles emerge under different situations can styles and roles can change according to what the situation demands and as such style can change. Strategic Nature of Leadership It is argued that the leadership can emerge anywhere and it does not depend upon a particular context. It does not depend upon whether a firm is small or large and its emergence therefore can be in under any environment. What is significant however is how much the leadership of any firm takes on strategic orientation under these circumstances. Leadership is therefore strategic in nature in the sense that it demands a conscious approach to develop an strategy which can help to manage individuals. The major strategic approach adapted by the leaders therefore is often focused on the motivation of employees within an organization and subsequently achieve the desired level of efficiency and effectiveness to achieve the organizational objectives. Another important facet of the strategic nature of the leadership is the fact that good leaders often provide vision for the future. Since the overall nature of the competition has changed drastically over the period of time and external environment has became too fluid in nature. In such an environment, good leaders always provide the required kind of vision and sketch the right kind of strategy to achieve the desired objectives of the firm. (Leavy, 2011) Strategic leadership also requires that the leaders must balance the whole i.e. they must be able to ensure that they develop the right kind of balance between the overall organizational needs and its resources. A correct balance between the two therefore serves as a strong point from where an organization can actually attempt to better negotiate with its external environment in more appropriate manner. Leaders therefore become strategically more significant because they have the overall responsibility of ensuring that the organizational resources are efficiently utilized. Efficient utilization of the resources therefore require that the leaders must be aware of what are the strengths of the organization and how organization can actually utilized its strengths to better manage the available resources. Effective leaders therefore are considered as experts in using their resources with optimum use. It is also important to note that the strategic nature of leadership also requires that the leaders must set their own personal targets also in order to achieve the desired results. Though leaders always help organizations to set their vision and mission and how they will perform in the future, what is significant however is the point that leaders must also ensure that they develop their own personal agenda also to take the business in future. General Business Environment and Leadership Above discussion however, points out towards the fact that in order to be a successful leader, it is important the leaders must depict their skills and ability to actually manage their business environment effectively. A firm faces different facets of its environment and therefore has to adjust its strategies accordingly in order to successfully negotiate with the changes occurring within such business environment. One of the best tools to describe the overall general business environment of a firm is called PESTLE under which a general business environment of a firm is influenced by six different forces and the firm and its leadership have to devise strategies in order to successfully negotiate with the changes in these factors. First factor is called the political factors which outline the risks which a firm may be exposed to due to the political environment of the economy within which it operates. Political risk therefore can be significant if the governments are not supportive of the businesses and the firms face significant hurdles from the State or government to conduct their business. Effective leaders therefore will have to anticipate the changes occurring at the political level and must devise the strategies which can actually help the organization to overcome the risks arising from such an environment. (Muijs, 2011) Effective leaders therefore will have to ensure that the organization maintains its strategic presence while taking into consideration the overall political situation of the environment within which they are operating. The role of the leader therefore is to ensure that the political factors are managed in accordance with the overall organizational requirements. It is also important to note that the political factors are often considered as most sensitive owing to the fact that the organizations may be affected by the same in critical manner. A change in the overall political environment of the country can lead to the difficult situation for the organization and as such the overall existence of the organization can even be compromised. What is however, significant to understand that leaders often have to ensure that the organizations anticipate the changes in their political environment and ensure that the changes on the external front have relatively little influence on the way organization acts and behave. (King & Zeithaml, 2001) Economic factors is another set of factors which a firm can face its general business environment and may affect the organization very badly. Adverse economic situation such as the current one in the developed countries can literally force the organizations out of the business therefore an effective strategic approach is required to ensure that the firm performs well under the different economic situation. A change in the economic situation has the power to influence the profitability of the firm and hence its ability to work and continue to perform as a going concern. As a result of these changes, organizations therefore have to ensure that their business models are developed in such a manner that they can offer them a relative degree of insulation against the extreme changes in their external environment. The existence economic environment of the developed countries has resulted into the failure of even large firms like Lehman Brothers and General Motors. These firms were considered as strategically managed with good leadership abilities however, their failure to sustain the current economic situation has actually suggested that even large organizations may become victim of the changes in the economic situation. This subtle change therefore also indicates towards the fact that effective leadership can actually result into the development of strategic business models which can help organizations to sustain the changes in the economic environment. Firms like Tesco has been able to withstand the difficult economic situation mainly due to the fact that its leadership stood to the challenge of difficult economic situation and devised strategies which can help to achieve the growth even in most difficult situation. Leaders therefore have to provide a vision and a direction in most difficult economic situations also. Leaders not only have to provide the direction and vision in such situations but also have to lead from the front in terms of offering a net set of strategies to overcome the difficult economic situation. Tesco did come up with strategies like doubling the reward points in order to continue to attract new customers in these difficult economic situations also. This was only due to the fact that the leadership of the firm has been able to come up with strategies which allowed it to continue to attract the new customers while at the same time ensuring that the firm remains in the business. Changing social trends and demographics also require the leaders to become more innovative and creative in their approach. For example, the overall demographic trends in countries like UK are changing with more population falling within the higher age groups. In such a situation where a firm which offers its products focused mainly on young consumers may find its market shrinking or limited because of the overall nature of the demographics. Strategic nature of the leadership role in this situation therefore would require that the firm to develop new markets or develop new products and services aimed at the relatively different market. Social factors also become significant due to the fact that failure of the firms to spot the changes at the social front can result into the decline in the firm’s overall acceptability. Technological factors as well as the environmental factors are significantly important too because a firm’s external environment poses such changes to it and the leaders will have to ensure that the they come up with the new ways of dealing with these changes. For example, a firm working in the telecommunication industry may soon find it out of the business if it fails to anticipate the changes. Firms like Dell are losing ground due to the inability of the leaders to actually anticipate the changes taking place in the technology market. With the introduction of products like Apple IPAD, there is suddenly urgency within the computer market for the vanishing of the personal computers from the market. This is due to the fact that trends are now clearly favoring the mobile computing where consumers prefer to have their computing on the go. Leaders in such an environment therefore will have to ensure that their firms continue to evolve and develop and this could only be achieved when the leaders help their firms to become more innovative and responsive to the changes taking place at the external front. Firms like Apple has only became the brand name of today because the ability of its leaders to envisage a change in the technological environment within which Apple is operating. By introducing products like IPOD, IPHONE and IPAD, Apple has been able to challenge once established and successful firms. This has only became possible due to the strategic role of its leaders in managing the company in a more creative and innovative manner. Competition and Leaders The above discussion therefore suggests that the role of leaders in order to successfully manage and beat the competition is to help the organizations to become more innovative and creative in nature. This could however, only be achieved once the leader has the ability to actually win the trust and confidence of its followers. Higher level of motivation as well as the employee trust therefore are some of the critical issues which leaders have to manage in order to ensure that the firm develop the required kind of strengths and competences to deal with the competition. The current business environment has become competitive in nature and the firms are coming up new ideas and innovations to develop the products and services which can continue to attract the attention of its customers. Leaders in such a tight competitive environment therefore ensure that their firms continue to become innovative and creative in nature while at the same time focus on their core competencies. Strategic nature of the leadership therefore signifies that the leaders must be able to help firms develop their core competencies. Core competencies are the competencies achieved in doing something in most efficient and cost effective manner. Leader’s role therefore is to ensure that the firms not only develop their core competencies but also manage the existing one. This is due to the fact that the ability of the firms to actually can utilize their strengths and core competencies to deal with the changing external environment. Firms which fail to develop the required kind of strengths therefore may not be able to challenge their external environment and may go out of the business due to their failure to develop the required strengths. (Galie & Bopst, 2006) The influx of the new technologies and new methods of doing the business has made the competition a relatively difficult proposition. Only those firms succeed which can actually take strategic benefit of the technology and use it to achieve the fullest potential of the organization. Leaders therefore will have to ensure that the firm continues to use technology in strategic manner to become more innovative and creative at product and service offering. The strategic role of leaders is also significant in this context because formation of strategic alliances as well as making new mergers and acquisitions require a sharp eye on the competition. Firms like Google has only been able to grow to their present position due to the fact that it leaders have the ability and vision to make strategic acquisitions which not only help the firm to grow however, it also help the firm to beat the competition. The strategic role of leaders therefore is significant in terms of managing the competitive pressures on the firm in terms of ensuring that the firms are well positioned in such scenarios. Political Economy of firm and leadership The overall context and nature of political economy of the firm has become a sensitive issue owing to the fact the different stakeholders have now emerged which can influence the political economy of a firm. Issues such as child labor, environmental damage, pollution, accounting reporting, fair-trade etc have now become political issues with ability to have greater influence on the firm. With the increase in the globalization most of the firms have developed their supply chains which are truly global in nature. Due to expanded nature of the supply chain of the firm, it has now become possible for the firms to enjoy greater cost reduction while at the same time procure quality material. However, this expanded nature of the supply chain of the firm has also made it a political issue where many stakeholders are pointing fingers towards the role of international firms in encouraging child labor. Since firms like Nike and other countless international firms source their products from third world countries where their suppliers often employ children at lower wages. However, increasingly, consumers in the developed world has became more wary of such business practices and require the firms to deal with only those international suppliers or firms which operate ethically. Similarity, the development of the sustainable business practices has also became more significant issues where the role of the firms is under increasing scrutiny for their failure to develop business practices which can actually help the firms to sustain earth resources. These issues and other therefore has now become quite significant for the firms and it is really critical to ensure that the firms develop their strategic responses to such changes. In these circumstances, the overall role of leaders therefore is of critical importance because leaders have to ensure that the firms have developed the kind of strengths required to negotiate with such changes. Leaders not only have to ensure that the overall image of the firms remains acceptable in its external environment but also that the firms became responsible corporate citizens. One of the effective ways therefore to ensure that the firm enjoys good reputation is to ensure that it performs its duties responsibly as a corporate citizen. Firms like John Lewis has been able to achieve the kind of reputation in the market due to the vision of its leaders to develop the organizational structure of the firm in such a manner which helped achieved the organization the kind of reputation it is now enjoying in the market. In John Lewis, every employee of the firm is treated as a business partner and it has only become possible because the leaders of the John Lewis had the vision to share the profits of the firm with its employees. However, the byproduct of this strategic move has also resulted into the strong positive reputation of the firm in the society thus allowing it to respond to the tough challenges quite easily. For example, firm has been able to remain profitable even in this tough economic situation only due to the kind of positive reputation it enjoys in the society as a whole. This has despite the fact that John Lewis and its subsidiary Waitrose often focus on the high income level consumers as their target market to market their products. Strategic nature of the leadership therefore requires that the leaders must have the ability to anticipate such changes and develop the response to such changes. Since these issues often result into the negative publicity and firm often has to incur great cost in terms of losing its reputation, therefore leader’s role is not just limited to ensuring that the firm develops its core competencies to deal with these issues but also limit the potential damage. (Hax & Majluf, 1988) Another important issue is the unanticipated nature of regulatory environment under which firms are continuously being put under strict regulatory environment. New regulations such as Serbanes Oxley or new corporate governance requirements have posed the firms new challenges in terms of reporting. Compensation issues of executives as well as the more open and transparent reporting of accounting issues require more active involvement of the leaders in the overall affairs of the firms. Large corporate scandals such as Enron and WorldPay were mostly due to the failure of the leaders to ensure that their firms report correctly, openly and with transparency. The resulting regulations therefore require the firms to become more open in their reporting as well as become more responsive to the demands of their shareholders as well as other stakeholders. Leader’s role therefore has become more significant amid all this increasing focus on the role of the firm in its overall political and social environment. Conclusion There is a definite link between the business performance as well as the leadership of the firm in the sense that the leaders often provide the required direction for the firm and set the common goals. Once a direction has been set, it becomes easier for the firms to use its core competencies and resources in order to achieve its objectives. What is also significantly more important due to external environment of the firm, nature of the competitive forces and the market conditions, firms may often find it difficult to obtain their desired objectives. In such situations, it becomes critical that the leadership of the firm must come up with the new and innovative ways of achieving the desired objectives of the firm. In a competitive environment where there are large number of buyers and sellers and the space is open for the competition, leaders often have to ensure that they continue to innovative and develop their firms to achieve the desired objectives. This continues focus on the innovation and creativity therefore can allow the leaders to develop the firms which are more robust and have significant resilience to meet the new challenges. The strategic role of the leaders therefore is significant in helping organizations to achieve such resilience and achieve the desired level of motivation and performance. Leaders often also have to manage the political economy of the firm ensuring that the changes at the political and economic fronts are also successfully met. In an environment where hold over the organizations in increasing by enacting new and difficult regulations, leaders of the firm will have to ensure that they continue to develop the overall response of the firms to such situations also. This would require the development of the firms in a manner which can allow them to become flexible enough to meet the new challenges and successful operate as a going concern. Recommendations Based on the above discussion and presentation, following recommendations are presented: Leaders to develop core competencies It is critically important for the leaders to ensure that the they help organizations to develop their core competencies. Core competencies of the firm actually help the organization to develop enough strength to negotiate successfully with any business challenge. It would however, be more significant that the leaders must channel and direct these strengths into a manner which can allow organizations to achieve maximum benefit from its core competencies. Provide a shared vision In order to successfully deal with the changing nature of the competition as well as greater influence of regulatory bodies in the affairs of the organizations, it is important that the leaders must be able to develop a solid shared vision across the organization. Developing a unifying shared vision help organizations to ensure that their energies and resources are channeled in correct way and they are optimally used for the maximum benefit of the organization. Set up a personal agenda Strategic leadership also requires that the leaders must set targets for themselves also in order to keep tem motivated and ensure that they also excel at the personal front. 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