The Role of Decisiveness and Decision Making - Essay Example

?Running head:  John Chambers (Cisco CEO) - THE ROLE OF DECISIVENESS AND DECISION MAKING Insert         Insert Grade Insert 13 December 2011  John Chambers (Cisco CEO) -The Role of Decisiveness and Decision Making Introduction The Cisco chief executive officer, John Chambers, is one of the admired executives in the technological industry. He took over Cisco in 1995, and he has contributed to its growth from $1billion to over $40 billion (Lussier and Achua, 2009, p.279). However, his glory has turned futile since 2001; the CEO has failed in his growth strategy and management structure, which has contributed to the deterioration of the company’s stock over the years (Business Insider, 2011). In October 2011, Cisco’s net income dropped by 8%, while earlier in august this year, the net income had dropped by 36%, although it later on rose by only a small margin of 3.3%. Shareholder value creation is one of the most important strategies in an organization, and should be a priority for a CEO; however, Chambers has failed tremendously. According to Rappaport (2006), executives should always make decisions that aim at maximizing value. In addition, at times, it is wiser to return the shareholders cash in dividend form, rather than using excess cash in investments that end up being destructive. Therefore, excess cash should be returned to shareholders when the value-creating opportunities are not available. In addition, an organization should focus on the activities that contribute to long-term value in the organization. Decisiveness is one of the major qualities of a successful chief executive officer; the act of being determined is evident in Chambers such that, despite the rise of Cisco from $1billion to $40 billion followed by the challenges in 2001, Chambers has continued to hang on in the company’s leadership. His leadership abilities, which contribute to decision-making, have been questioned, but he has remained unmoved (Lussier and Achua, 2009, p.279). Moreover, his decisions with an aim of resurrecting the company include downsizing the company through staff cuts and implementing a new organizational structure based on teamwork and collaboration throughout the company. Lussier and Achua (2009, p.279) argues that the continuous recovery of Cisco can be attributed to the CEO’s leadership skills, as he is known as an effective communicator and motivator of employees. Literature Review John Chambers, the Cisco’s CEO, has faced both negative and positive remarks concerning his role in the company. The failure to persuade the public that the company’s future earnings are reliable is one of the existing critics. Chambers replaced the top-down decision-making process with the committees of executives. This strategy required most managers to spend their time in committees; this absurd system was later on abandoned. According to Geothals, Sorenson, and Burns (2004, p.319), the presence of the correct information leads to informed decisions, whilst decisiveness creates room for timely actions. Nevertheless, inconsistency and failure to fulfill promises in a CEO creates an atmosphere of mistrust from the employees and the customers. Therefore, an open management style contributes to the development of trust, improved communication skills, and listening skills as well. However, ineffective communication leads to poor teamwork due to lack of collaboration, decrease in productivity, and high levels of turnover. Decisive managers are aware that their decisions may not be effective; hence, they leave room for modification, and therefore, they do not hesitate to modify their decisions once they realize that their original decisions are not effective. This is evident in Chambers case; for instance, when chambers changed the company’s top-down decision-making process to manager’s committee strategy, the new strategy proved ineffective as managers spent most of their time in committees. However, Chambers reconsidered changing the strategy after discovering that it did not contribute positively to the company’s productivity (Business insider, 2011). Needless to say, being decisive goes hand in hand with decision-making such that, if a CEO is decisive but takes long to make decisions, this can contribute to the stagnation of a company. Every organization depends on the strength of its leadership, the ability to make decision is a plus for the leader of an organization; therefore, a decisive leader makes excellent decisions. Decisions are the focal point of success in today’s competitive business environment, with each decision made contributing to either the success or failure of an organization. When Cisco success began deteriorating in 2001, with a $460billion stock value evaporating, one would think that Chambers would resign and give up. However, Chambers proved the public wrong when he implemented a collaborative approach. The profit margins have improved from 16% to 21%, while revenues are at 90% since 2002, an incredible improvement, Chambers admits that he had to change from a command-control leadership to collaborative leadership (Harvard business review, 2010). Needless to say, a CEO who is quick to respond to a situation that affects the company stands to gain a competitive advantage. According to Coghlan and Rashford (2006, p.162), the CEO is viewed as the final decision maker; however, getting closure is an added advantage, as a better solution is likely to be found. It is rather evident that John Chambers is a decisive leader, one who is flexible to change and determined as well. When Chambers was appointed as the chief executive officer in 1995, he managed to increase the company’s net income shortly afterwards; therefore, buying shares at this time would have proved profitable today. Figure 1: investment and value 1998-2011 (Network world, 2011). By the time Chambers become both the chief executive officer and the chairman, a share cost 24.34; therefore, if an individual purchased a 100 shares the total amount spent would be $2,434, which would be worth $1,730 today, therefore running a loss of 29%. Figure 2: investment and value 2007-2011 (Network world, 2011). Current Trends and Tensions A decisive leader is determined; it is this determination that has led Chamber to reorganize the company, and as a result, an improvement is notable in the company. The ability to make a decision and stand by it is challenging, yet important; Chambers is currently boosting profits by laying off employees, reducing expenses, and restructuring the management structure to that which will hasten the decision making process (Bloom berg news, 2011). Chambers decisiveness is likely to bring a good fortune to the company; he is also delegating more power to his deputies. Decisiveness involves the ability of making a decision, failure to which the company will stagnate. Individuals will always follow a decisive leader; however, delay in decisions could also cost a company. Needless to say, a decision made should be consistent with business priorities and core values. As it is the case with Chambers, decisions are made in a timely manner. Difficult decisions are made considering both the employees and the organization, and time is taken before a decision is made. As a result, the leader comes up with the best solution. As of now, Cisco is regaining its lost glory; however, the main challenge lies with the public, who have not gained full confidence of investing with the company. Nevertheless, being indecisive only leads to the downfall of an organization, as the leader lacks vision for his organization, and therefore, a clear direction does not exist. Extent to which theme has been developed in the organisational context In Cisco, decisiveness and decision-making is the role of John Chambers, the CEO. According to the Washington post (2011), Chambers has resulted to laying off employees, restructuring management by delegating more power to his deputies, shuttering the flip camera, and reducing operational expenses as the only way of regaining profitability. These may be hard decisions, but the CEO is determined to regain the company’s lost glory; his decisive nature is what has led to the stability of the company despite many losses. Chambers is determined to lead Cisco to success; therefore, he does not let challenges overweigh him at all. In an organizational setup, decision-making is the role of top officials; however, this is never an easy task due to the fear of worsening the situation. Moreover, decisiveness assists managers in being flexible even while making decisions (Michaelson, 2011). A leader in an organizational context is defined by his ability to make decisions; such leaders are not afraid to fail, as they understand that mistakes have to be made in order to learn. Decisive managers are more confident, a similar case to that of chambers whose confidence is vivid even when the public claims he should resign. Amazingly, being decisive offers room for a leader to improve by learning from his mistakes (Michaelson, 2011). Needless to say, leaders should be the key decision makers. Generally, a decisive leader does not try to please everyone; rather, he focuses on the best solution. However, a leader’s decision-making style reflects his leadership style, and therefore, when leaders enact a specific style of decision-making, they expect their subordinates to adhere. Implications for the conceptualisation of leadership Decisiveness and decision making are associated with leadership; therefore, a decisive leader’s decision-making is influenced by four factors. The first is speed, which refers to the time taken to make a decision. The second one is importance, which refers to the nature of decision made. The thirds is commitment, which is the effort put towards the decisions making process. The last one is rightness, which refers to the correctness of the decision made; here, decisions are the heart of a leader’s success, although it is not always an easy process. A leader is determined by his ability to make quality decisions while taking the necessary actions. In addition, flexibility on decision-making is vital, whereby, a leader can adjust his decision-making style depending on the situation at hand; therefore, decisions of little consequences should not be focused upon. According to Wart (2007, p.127), decision-making follows a trend of no input to substantial input to the leader’s making-decision. In an organisational setup, the situations that require decisiveness require minimal subordinate’s participation. In addition, leader’s decisiveness is important in an organisation, as it gives the subordinates a sense of confidence that the organisation is heading towards the right direction. A decisive leader encourages his deputies to make decisions, which form a strategy that empowers his staff (execution MiH, N.d). In addition, decisiveness is important in time of crisis, as it creates a sense of confidence in the followers pertaining to their leader (Wart, 2011, p.263). Decisive leaders have the responsibility of making tough decisions; therefore, decisiveness should be accompanied with good judgement (Cohn and Moran, 2011). In addition, an effective leader empowers and motivates his employees, while focusing on the organisational goals. Therefore, both decisiveness and decision-making are aspects of leadership. Areas for personal development as a leader In order to improve my leadership skills, it is important for me to acquire decisive skills. As a leader, I should be in a position of making sound decisions and should not focus of making everybody happy, as it could compromise my effectiveness. However, I should be in apposition of making quality decisions based on the situation at hand. As a leader, my main fear is taking risks, which could compromise the organization; however, based on the above research, a good leader should be flexible in decision-making. I will not be afraid of taking risks in the future, as a leader learns from his mistakes, and therefore leaving room for improvement. Conclusion A decision delayed is considered a decision denied; therefore, a decisive leader makes sure that timely decisions are made to avoid any inconveniences. Making of sound decisions is necessary as they tend to last long. Needless to say, a leader should be well informed based on the competitive business environment that exists today. Decisiveness is related to determination, an appropriate example being that of John Chambers, the CEO of Cisco. Despite the challenges faced by the company, Chambers has remained strong, with the determination of leading the company to success. Reference List Bloomberg news. 2011. Cisco Climbs after Chambers Turnaround Plan Lifts Profit. (Online). Available at: http://www.bloomberg.com/news/2011-11-09/cisco-systems-profit-tops-estimates-on-cloud-growth-reorganization-plan.html (accessed 12 December 2011). Business Insider. 2011. The truth about Cisco. John Chambers Has Failed. (Online). Available at: http://articles.businessinsider.com/2011-05-13/tech/30027214_1_cisco-ceo-john-chambers-growth-strategy (accessed 12 December 2011). Coghlan, D., & Rashford, N., 2006. Organizational change and strategy: an interlevel dynamics approach. NY: Taylor & Francis Publisher. Cohn, J., & Moran, J., 2011. Why Are We Bad at Picking Good Leaders A Better Way to Evaluate Leadership Potential. NJ: John Wiley and Sons Publisher. Execution MiH. N.d. Act with Decisiveness. (Online). Available at: http://www.executionmih.com/leadership/competency-act-with-decisiveness.php (accessed 12 December 2011). Geothals, G., Sorenson, G., & Burns, J., 2004. Encyclopedia of leadership, Volume 1 Encyclopedia of Leadership. NY: SAGE Publisher. Harvard business review. 2010. How John Chambers Learned to Collaborate at Cisco. (Online). Available at: http://blogs.hbr.org/cs/2010/03/ciscos_john_chambers_on_how_to.html (accessed 12 December 2011). Lussier, R., & Achua, C., 2009. Leadership: Theory, Application, & Skill Development. Edition 4. OH: Cengage Learning Publisher. Michaelson, E., 2010. How being decisive helps to make you a good manager. (Online). Available at: http://www.helium.com/items/1716597-decisive-managers-how-to-become-better (accessed 12 December 2011). Network world. 2011. Is John Chambers still good for Cisco? (Online). Available at: http://www.networkworld.com/community/blog/john-chambers-still-good-cisco (accessed 12 December 2011). Rappaport, A., 2006. Harvard Business Review on point Article. Ten Ways to Create Shareholder Value. (Online). Available at: http://analystreports.som.yale.edu/internal/S2008/tenways.pdf (accessed 12 December 2011). The Washington post. 2011. On leadership; shuttering the Flip cam: What was Cisco’s John Chambers thinking? (Online). Available at: http://www.washingtonpost.com/blogs/post-leadership/post/shuttering-the-flip-cam-what-was-ciscos-john-chambers-thinking/2011/04/01/AFXrQnWD_blog.html (accessed 12 December 2011). Wall street journal. 2011. At Cisco, Results Show Progress. (Online). Available at: http://online.wsj.com/article/SB10001424053111904006104576500654069799110.html (accessed 12 December 2011). Wart, M., 2011. Dynamics of Leadership in Public Service: Theory and Practice. NY: M.E. Sharpe publisher. Wart, V., 2007. Leadership in public organizations: an introduction. NY: M.E. Sharpe Publisher. Read More