Developing Leadership after the 20082009 Recession - Coursework Example

DEVELOPING LEADERSHIP By Location Developing Leadership Introduction The 21st century business platform is entirely different from what has existed in the past. Business leaders anticipate challenges different from those they encountered in previous centuries. Worth noting is the fact that the workplace has undergone numerous transformations, a factor that compels leaders to adopt new leadership styles. One of the anticipated challenges in the next five years is global recession. Notably, the 2008–2009 global recession produced a devastating effect on the business world. Experts have highlighted that in the next five years another recession with more adverse effects will result. Although many businesses have the conviction that they learnt critical lessons during the recessions, it is evident that another recession will have an immense impact on the global economies. Leaders will have no choice but to adopt new leadership and negotiation styles in an effort to move their business towards recovery from another recession. The 2008–2009 recession proved that the recovery process needs effective strategies. Businesses that fail to strategise effectively may take a long time to recover. It is the role of leaders to facilitate fast recovery after any recession. This paper will discuss the potential adverse effects of a global recession and the kind of leadership and negotiation that leaders will need to adopt. Discussion After the 2008–2009 recession, businesses now exhibit a great fear of another recession. This is because a global recession has the capacity to shatter businesses. The fact is that a recession reduces cash flow and strains many consumers financially, so businesses suffer eventually. The spending rate of consumers declines during a recession. Many people only buy the essential goods because they lack the disposable income to spend on other commodities. The case of the recession that occurred in 2008 challenged the value of leadership (Agee 2009, p. 8). Unfortunately, many of the leaders lacked the capacity to take effective measures of presenting the financial crisis that resulted. This happened because many of the leaders made wrong choices during the critical times. They were unable to make the most appropriate decisions that would have saved the globe from a devastating recession. This means that an additional recession in the next five years will place leaders on a hotspot, where they will face the compulsion of exhibiting better leadership styles. A financial crisis places many businesses on the verge of collapsing (Avolio et al 2003, p. 378). It only takes effective leadership to lead such businesses to successful recovery and outstanding performance in the market. If a global recession similar to the ones that have happened in the past occurs, many businesses will lack sufficient capital. For example, financial institutions in the 2008 global recession exhibited the worst effect. This led to severe consequences because many financial institutions denied many businesses the opportunity to borrow capital. From 2008 to 2011, there was an 18% decline of lending rates from banks. This means that the leaders of such businesses had to make critical decisions on how to source capital from other avenues (Transforming leadership 2011, p. 19). Some of the leaders managed to develop effective strategies such as forming partnerships, a factor that allowed their businesses to stabilise irrespective of the ensuing recession (Avolio et al 2003, p. 296). Big businesses also faced the consequences of the recession. Profit margins dropped immensely because of the stagnation of some economies. Businesses that made profits during that period are those exhibiting competitive advantages. A similar situation will be evident in the next five years if a global recession occurs. Many leaders have an idea of how a recession will affect businesses; therefore, they are afraid of the critical situation that they may have to handle if another recession results. A global recession has the potential of bringing businesses to a standstill and shattering economy. With shattered economies, it becomes impossible for businesses to thrive (Avolio et al 2003, p. 301). In the case of a global recession, businesses will have to lay off their employees. This will happen in an effort to reduce the operating costs. It is unfortunate that some businesses will lose high performance employees who have outstanding talents (Choudhary, Akhtar, & Zaheer 2013, p. 435). Leaders who are not careful may lose high performance employees during a recession. This places a salient need for leaders to develop strategies of retaining high performance employees even in the worst situations. Worth noting is the fact that businesses will need talent to recover from a recession at a faster rate (Choudhary, Akhtar, & Zaheer 2013, p. 440). Losing employees with outstanding talent during a recession minimises the chances of successful recovery. A Global Recession will require Critical Types of Leadership Transformational Leadership Without doubt, a global recession is the worst thing that can happen in the next five years. Although there are signs of a looming recession, no business leader wishes such an occurrence. This is because a recession presents numerous adverse effects to any business. One of the leadership styles that leaders will need to adopt in order to help their businesses overcome a recession is transformational leadership. Transformational leadership requires a leader to have a clear vision for the organisation. Moreover, the leader needs to have the capacity, charisma, and passion for communicating the vision to all the employees (De Waal & Sivro 2012, p. 173). Transformational leaders define the specific goals of an organisation and help employees adopt those goals. This type of leadership can help a business recover easily from a recession. Since transformational leadership nurtures creativity, innovation, and talent, employees will be able to contribute positively to organisational growth. Businesses that recover from a recession easily focus on innovation in an effort to define a specific target market that gives the company a competitive advantage. Transformational leadership has proved successful in nurturing innovation in organisations (Prasad, Puri & Jain 2015, p. 90). The fact that transformational leadership enables employees to achieve self-actualisation places them in a position to register a remarkably high performance. Self-actualization can help in the development of a devoted team of employees who pursue organisational goals. Transformational leadership relies on influence as one of the leading negotiation models. In order to influence employees, leaders rely on the use of charisma. Charismatic leaders have an easier task in imparting employees with values and belief systems that can propel the organisation to success. This is especially the case during critical times brought about by recessions. Such times compel a leader to redefine the organisations strategies and communicate the new strategies to employees (Genesis Research Report 2014, p. 6). Charisma is of critical importance in helping the leader to connect with the employees. Transformational leadership can help leaders retain talent within the organisation. This is because transformational leaders give employees opportunities of handling tasks that are more challenging. This presents the employees with an opportunity to grow. Developing strategies of giving high performance employees interesting and rewarding tasks to work on will give them a sense of appreciation in the organisation and they will choose to stay. Since transformational leadership places emphasis on motivation, it can allow leaders to motivate employees to overcome the challenges of a global recession (Rowe & Nejad 2009, p. 6). Authentic Leadership In addition, adopting authentic leadership will help leaders in overcoming the effects of a global recession. Authentic leadership means that a leader is self-aware and is willing to set an example for the employees. Authentic leaders exhibit self-regulation with strong moral values. Therefore, they can easily have a strong impact on the employees. They focus on the vision of the organisation and set a good example for their subordinates to follow. During a recession, authentic leadership can help leaders retain talent within the organisation and encourage employees to register a higher level of performance (Genesis Research Report 2014, p. 11). This is because authentic leaders have values that ensure they develop positive relationships with employees. Authentic leadership is one of the emerging leadership theories in the 21st century that focuses on how leaders can have impact on people. During critical times, self-aware leaders can influence their followers positively through their strong values. Participative Leadership Participative leadership requires leaders to solicit opinions and ideas from employees before making the final decision. Certain situations compel leaders to adopt this form of leadership, a factor that exhibits the leaders’ recognition that employees have talent and potential. This makes employees feel appreciated, and may prompt them to exhibit a higher level of commitment to organisational goals (Genesis Research Report 2014, p.12). Therefore, participative leadership may prove to have desirable outcomes in case of a global recession. Leader Member Exchange Theory This theory gives attention to the dyadic relationship that exists between leaders and their subordinates. According to this theory, it is evident that followers are concerned about their relationship with leaders. In accordance with this theory, high quality leader members have the capacity to prevent employee turnover, and motivate employees to register a remarkable performance. During the critical financial times brought about by a global recession, this type of leadership can help leaders retain talent within the organisation so that the company does not lose the high performers. This is because leaders can develop mature relationships with employees, which ensures that leaders and employees have highly developed patterns that promote positive outcomes to the organisation (Prasad, Puri, & Jain, 2015, p. 90). Servant Leadership Servant leadership can help leaders to establish better relationships with employees. This is because servant leadership places emphasis on the development of empathy in leaders. Empathy encourages leaders to be more receptive to the employees’ issues. Moreover, one of the outstanding traits of servant leaders is that they are self-aware, a factor that motivates them to understand the needs and emotions of employees. A leader with this character trait makes employees feel very comfortable. This factor may facilitate a better working relationship during critical times triggered by a recession (de Waal & Sivro 2012, p. 173). As highlighted above, a recession may compel leaders to introduce rewarding systems in order to retain employees with talent within the organisation. The fact that servant leadership has its basis on persuasion rather than imposed authority, it proves much easier for leaders to retain employees who can add value to the organisation. Notably, servant leaders have foresight, a factor that can help them learn powerful lessons from the past, and use them in the future. In the case of a global recession, leaders will apply the lessons learnt during the 2008-2009 global recession (McClanahan 2009, p. 25). Strategic Leadership Both transformational and authentic leaders need to adopt a strategic leadership if they are to tackle a global recession. Usually, a financial crisis needs leaders to develop effective strategies on the type of risks the organisation can take. During such times, organisations should only invest in business ventures that can prove profitable in the shortest period (Stephen 2012, p. 32). Moreover, leaders need to strategise on the formation of partnerships in an effort to combine strengths and share business risks during such critical times. A close analysis of successful leaders who have propelled their organisations to success reveals that they define effective strategies (McClanahan 2009, p. 25). Conclusion Evidently, a global recession is likely to cause numerous hardships in the business front. Business leaders will face the compulsion of defining new strategies in an effort to have an access to capital and retain talent within the organisation. These are not easy tasks for business leaders. The 2008 global recession revealed that the traditional leadership styles lack the potential of preventing a recession or addressing its effects effectively. Therefore, leaders will need to adopt new leadership styles such as transformational leadership, authentic leaderships, and strategic leadership if they are to handle a recession effectively. Since there are signs of a looming recession, leaders need to be more aware of the economic situations and strategise effectively. References Agee, T 2009, The old recession playbook wont work this time, NZ Marketing Magazine, vol. 28, no. 3, pp. 8-9, Business Source Complete, EBSCOhost, viewed 6 December 2014. Avolio, B, Sosik, J, Jung, D & Berson, Y 2003, Leadership models, methods, and applications, Handbook of psychology: Industrial and organisational psychology, vol. 12, pp. 277-307 Hoboken, NJ, US: John Wiley & Sons Inc PsycINFO, EBSCOhost, viewed 6 December 2014. 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