Developing Leadership and Global Recession - Essay Example

?Topic:  Developing Leadership and Global Recession Introduction Global recession is an issue faced by all organizations in the recent years and it has posed has a biggest threat to the international business world. Global recession has engulfed the business scenario and decreased the industrial output and brought about negative mood in the business activity. The Global recession is having a significant impact on the business functioning of an organization as well on the strategies and plans related to it. Global recession has forced organizations to change their outlook to global business market and adopt aggressive strategies to sustain in the market. However, countries which are wealthy were able to cope with recession to an extent. According to AusAID(2010)“Those with stronger economies and more financial resources were able to implement effective policy responses to support the economy and weathered the global recession relatively well”. In combating a worldwide threat like global recession, an organization needs to make visible changes in their leadership styles and business strategies. The issue of global recession demands a leader to change his attitude in conducting business in order to be flexible and realistic. Global recession is a serious issue and threatens the financial structure of a company and its profitability. As per Sawan(2008) “A recession normally takes place when consumers lose confidence in the growth of the economy and spend less” . In such a condition the objectives and aim of a business needs to be revised and reconsidered according to the demands of the situation. Implication of Leadership on Global Recession a) Autocratic Leadership: This is a leadership style in which the whole decision making process of the business is vested with a single individual. Here the whole group members in an organization are monitored by the autocrat leader. In the event of global recession, the leaders should make effort to increase the confidence of share holders along with motivating staff to achieve maximum profit returns. An autocratic leader has more visionary skills and can implement strategies with less time and effort as consultation with other employees are not required. As an autonomous authority, he can analyze the prospects of the product market and make alternative choices to increase the demand for the product. As per Kiselev(2007)“An autocratic leader likes to make decisions himself. This leader relies on personal experience and input he has sought, not the voluntary contributions of others”. This kind of leadership is not viable with global recession concept as co-operation and co – ordination wit all employees can solely achieve long term success for business. b) Democratic Leadership: A democratic leader is one who considers everyone’s opinion and solution on a specific problem before taking a decision. In this kind of leadership, the leader conducts meeting with group members and discuss the complexities of the business in the event of economical downturn. The conclusions are drawn considering the suggestion of all mangers and experts in the organization. During a recession period, most of the organization cut off employees in order to reduce cost, so a declarative leader must plan with organizational heads to retain experienced and skilled employees and disown employees who are less productive. According to Hansen(2011,pg.268)“ Democratic style displays the leadership strength of the leader and usually generates respect from the team member c) Laissez –faire Leadership: In laissez – faire leadership, the decision making power is least vested with a particular individual. The decision making authority is distributed among various employees of the organization and they have strong hold on the business activity of an organization. In times of recession, it will be valuable if many employees have freedom to exercise their power to take action on relevant areas of an organization. In recession period, the organization has to take instant decisions to avoid losses and save market value of the firm. If the employees have power to make appropriate decisions, then best could be made out of all. However,laissez – faire is not practically a reliable form of leadership as it may get negative feedback from employees. According to Bass(2007,pg.157)Hence, exposure to some form of destructive leadership is quite common, with laissez – faire leadership and supportive- disloyal leadership being the most prevalent one. d) Transformational Leadership; In transformational leadership, the leader transforms himself according to the need and demand of the business crisis. According to Hay(2006) “Transformational leadership is that which facilitates a redefinition of a people’s mission and vision, a renewal of their commitment and the restructuring of their systems for goal accomplishment”. In terms of global recession, transformational leadership is the apt choice as the leader is extremely flexible. They have the ability to persuade and influence the employees and followers and motivate them to work towards his goal. Transfromational leaders are challenging in nature and work towards with employees to make new strategies and target markets where products can be launched in economic downturn. In his book Galloway(2011)“The transformational leader defines support for all levels in the organization by observable actions and provides data and visible progress to ensure support increases and is sustainable” Negotiation Style of Leaders on Global Recession Global recession is not a relatively new issue but had been faced by world on few occasions in the past. Nevertheless, the recent recession faced by the world economy was hard hitting and has altered the global business scenario completely. Leaders are undergoing extreme stress, work overload and additional responsibilities in an attempt to combat economic downturn. Most business managers and employees are delegated with additional responsibilities and obligation to adapt to the new economic conditions. According to Lane(2009) “Most respondents are working more hours since the crisis began, and nearly 40 percent have more responsibilities without the benefit of a new title”. However, many executives experience that economic downturn have made their job more challenging and competitive The main objective in recession period is the reduction of the operating cost of an organization. The aim is to reduce capital input and in turn increase the productivity of the business. The business leaders had to invest extra effort and time in to their job in order to maximize business profitability. Apart from monitoring financial performances, motivating employees has been a second most priority for business executives. When considering the theory X and Theory Y , the former suggest people work for money whereas latter directs that people work for self satisfaction. However, with skilled management and professional training the employees can be motivated to achieve high productivity during recession times. As per Furnham(2011)“ Management styles and values, and competencies and skills, are one of the best practitioners of staff motivation”. Conclusion The Global recession phenomena have induced the business leader to adopt many different styles of leadership in order to adapt to the adversities in the global market. Leadership style is of various kinds and the nature of the contingencies faced by the business decides which leadership needs to be adopted by a business leader. In his journal Ogbonna(2000,pg.766-788)“ The evidence demonstrates that the relationship between leadership style and performance is mediated by nature of organizational culture”. However the different styles of leadership and their implication on global recession are of great importance. There are many types of leaderships and attitude and behavior of a leader can save or dissolute a business firm. The global recession is an unpredictable situation and leader need to fluctuate according to needs of the crisis. If an organization has an autocratic leader, then the business activities are controlled by a single individual. According to Fleming (2011)“In a system of autocratic leadership, one person has control over all of the workers or followers”. In economic downturn, autocratic leadership is useful as decision can be taken in less time and with expertise and precision as more often these leaders are skilled and genius. In case of democratic leadership, all the employee input their voice and collaborate they work towards the upliftment of the organization.Laissez – faire leadership is useful in case of global recession as employees have autonomous power but not very advisable. In the website Horwitz (2011)“Many on the left continue to argue that the recession and financial crisis were caused by a deregulated, laissez faire economy”. Ultimately transformational leadership can be recommended as the most effective leadership in the event of global recession. Bibliography AusAID. 2010. AusAID's response to the global recession. [ONLINE] Available at: http://www.ausaid.gov.au/makediff/gec.cfm#top. [Accessed 11 January 2012]. Bass, B.M, 2007. Transformational leadership. 1st ed. New Jersey: Taylor & Francis. Fleming,G. 2011. Student Leadership Styles. [ONLINE] Available at: http://homeworktips.about.com/od/studymethods/ss/leadership_2.htm. [Accessed 11 January 2012]. Furnham, A, 2011. Managing People in a Downturn. 1st ed. London: PALGRAVE MACMILLAN. Galloway,S,M. 2011. Overcomming Tommorow's Challenges : The Transformational HSE Leader. [ONLINE] Available at: http://www.proactsafety.com/articles/overcoming-tomorrows-challenges. [Accessed 11 January 12]. Hay,I. 2006. Transformational Leadership: Characteristics and Criticisms. [ONLINE] Available at: http://www.leadingtoday.org/weleadinlearning/transformationalleadership.htm. [Accessed 11 January 12]. Hansen, K, 2011. Civil Engineer's Handbook of Professional Practice. 1st ed. New Jersey: John Wiley & Sons Horwitz,S. 2011. Rhetoric, Reality and Recession. [ONLINE] Available at: http://www.thefreemanonline.org/headline/rhetoric-reality-recession/. [Accessed 11 January 2012]. Kiselev,A. 2007. Critique of Leadership Styles *. [ONLINE] Available at: http://www.ehow.com/info_7742337_critique-leadership-styles.html. [Accessed 11 January 2012]. Lane,K. 2009. Leadership in Crisis. [ONLINE] Available at: http://www.mckinseyquarterly.com /Leaders_in_the_crisis_McKinsey_Global_Survey_Results_2422. [Accessed 11 January 2012]. Ogbonna, I, 2000. Leadership style, organizational culture and performance: empirical evidence from UK companies. Int. J. of Human Resource Management, 11/4, 766-788 Sawan,J. 2008. What's a recession? How will US slowdown hit India. [ONLINE] Available at: http://ia.rediff.com/money/2008/feb/14spec.htm. [Accessed 09 January 2011]. Read More