Case Study Boeing Aircraft Company - Essay Example

Case Study: Boeing Aircraft Company Table of Contents Table of Contents Summary 2 Introduction – Managing Change at Boeing 3
Problems Boeing was Facing 3
Leadership Style of Shrontz 6
Leadership Style of Condit 7
Success of Condit Leadership Style 8
Summary
This paper looks at how strategies employed by exemplary leadership can transform an organization to the better by changing a retrogressive organizational culture. It focuses on Boeing, a leading aeroplane company and combined manufacturer of jetliners and commercial aircrafts. It highlights the problems it faced as a result of its traditional organizational culture and what the management had to do to overcome these setbacks. Boeing faced stiff competition from rival companies, had a near bureaucratic leadership therefore criticised for not adapting to change in the market, its management had difficulty co-ordinating activities towards its goals as a result of hierarchical management style; problems that had to be resolved by a willing leadership that is open to new ideas.
It was imperative that the management of Boeing takes these into account and comes up with a more effective organisational structure and adapting to a newer organisational culture in order to achieve the company’s objectives. Such change, however, is a worthy risk venture. It is expected that it could be highly resisted by both employees and operational managers. The resistance could emanate from the fear to change (Donnelly et al., 1995). Resistance could also be as a result of fear of losing something valuable or just lack of trust in the management. The large number of employees at Boeing compounds the difficulty of the situation making the change opted by Condit an uphill task. But Condit presents to fore a leadership that can mitigate the upheavals of Boeing by adopting the democratic approach of leadership where he consults his staff. In turn, they feel part and parcel of decision making. This is in contrast with the traditional autocratic style that had been adopted by Shrontz that “kept every employee at their place.” Thus, with Condit, one foresees a Boeing with a new organizational structure and culture that is embraced by its employees.
Introduction – Managing Change at Boeing
The present organisational structure and systems adopted by Shrontz were facing a number of issues emerging from the traditional management approach adopted. Condit had the tough task of changing the culture of an organisation in order to enhance its performance and meet stakeholders’ needs. This paper will examine the problems that Boeing was facing and will unveil how an appropriate leadership style can facilitate change.
Problems Boeing was Facing
A major issue for Boeing comprised the aggressive environment that the firm was operating in. Boeing was facing tough competition from other well established organisations like Airbus and McDonnell Douglas. The competition depended largely on price, terms and availability. Quality was another essential element demanded by the market. The need of cost efficiency and high levels of productivity in order to ensure that planes are manufactured quickly were requirements that management had to meet. External stakeholders, namely equity investors were also putting emphasis on higher profits. Indeed Wall Street was expecting a 20% increase in the firm’s earnings per share. Therefore, management was required to exceed competitors and enhance cost effectiveness in order to attain higher levels of profits.
The internal environment of the firm also had some problems. The workforce of the organisation is tightly unionised and management cannot afford industrial disputes that end up in strikes. Strikes mean lost sales, which can weaken the firm’s financial performance. The organisation under the administration of Shrontz was a functional organisation accompanied with a hierarchical management style. Such management style is often criticised as highly bureaucratic where the organisation is unable to adapt to changes in the environment. For example, such firms often end up unable to respond in a timely manner to changing customers needs. This leads to competitive disadvantages which may quickly result in lower market share. Organisations adopting a functional organisational structure are often unable to attain goal congruence. It is very difficult for executive management to coordinate the different functions towards a common aim. Another weakness of this type of structure is that top management end up overstrained with routine matters. This increases the risk that executive management devotes less attention to strategic matters, which are much more important for the organisation (Johnson et al., 2005).
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External stakeholders, that is, equity investors were putting emphasis on higher profits for example wall street was expecting a 20% increase in the firms earnings per share
The aggressive environment that the company was operating in, marked by tough competition from companies like airbus and McDonnell Douglas
The need for cost efficiency and high levels of productivity in order that planes are manufactured quickly.
Internal problems due to the unionization of its workers that has resulted in strikes that translate into lost sales and poor financial performance of the company.
Problems with quality of their services that was demanded by the market was also putting pressure on the company.
The leadership of Shrontz was highly bureaucratic and therefore making the organization unable to adapt to changes in the environment.
In light of the aforesaid problems and limitations, it is very important that the new management of Boeing adopts remedial actions in order to change the organisational structure and culture. Otherwise such issues may even lead the organisation into bankruptcy. However, such change process is very critical and leads to additional problems for the firm. A change of this magnitude will lead to resistance to change both at employee and operational management level. Employees and operational managers may resist such change due to a number of reasons. Resistance may be the result of fear of losing something valuable. This may take the form of power, prestige and more. Lack of trust may also lead to resistance to change where the people affected will not believe the objectives and benefits that executive management are acclaiming that will emerge from the change. Since Boeing was adopting a military style of management there is a high risk of lack of trust among employees and operational management. Resistance to change may also emerge from the personality of the individual who is reluctant to change and prefers to stick to routine (Donnelly et al., 1995). All these problems outline that it is not an easy task for Condit to effectively enable such change. This problem is further compounded by the large number of employees engaged in the organisation. There is the risk that different assessments will emerge of this change under diverse grape vines. Such assessments may not be in line with the real intents of the change and they may lead to additional resistance (Donnelly et al., 1995).
In light of the above change needs to be conducted in Boeing, but the change opted by Condit is not easy to implement. An element that can be helpful in this change process is the leadership style that Condit can apply. Such leadership style should be different from the one adopted by Shrontz. In the proceeding section an evaluation of the leadership styles utilised by these individuals will be examined. The most effective leadership style for the aforementioned change will be outlined.
Leadership Style of Shrontz
The leadership style adopted by Shrontz comprised an autocratic leadership where decisions are taken by the leader. Such decisions are eventually communicated and it is expected that all staff and operational managers follow such decisions without questioning them (Sadler, 2003). The aforesaid leadership style is indicated by the military style of management that Shrontz preferred to adopt, where decisions were taken by top management. In this type of leadership power plays a very important role, namely legitimate power. Legitimate power emerges from the authority that the individual holds under the organisational hierarchy. There are clear lines of communication that all employees must follow (Donnelly et al., 1995). For instance, if problems are noted in engineering plans by tool builders, they are required to communicate such issues to their supervisors, who will eventually deliver such message to the engineer. Tool builders could not bypass the supervisors in the communication process.
This type of leadership holds the following criticisms that can negatively affect the performance of Boeing (Scheid, 2011):
Such an imposed style can affect negatively the motivation of employees, which may reflect in lower productivity and efficiency.
Since all decisions are taken by the leader there is the risk that such decisions are affected by his/her ego and the decisions taken may not be the best ones for the organisation.
This leadership style is also accused to stifle creativity in the organisation.
The above limitations clearly outline that such a leadership style is not viable for Boeing especially in light of the business environment that the firm operates in. Indeed, Schrontz admitted that the next leader of the organisation should be one with interpersonal skills who can persuade employees to adapt to a new organisational culture.
Leadership Style of Condit
The leadership style adopted by Condit takes more the form of a consultative approach. Rather than taking decisions on his/her own, the leader takes the opinion of group members and subordinates. Despite the responsibility of taking decisions remains in the hands of the leader there is a higher involvement of employees and operational management (Sadler, 2003). Condit was often involved in discussion with operational managers and even employees. It was not a rare occasion that he would go to the plant unannounced and seeks the opinion of employees. Condit would normally request the supervisor to leave him alone with the employees. This was done to enable workers to talk more openly with him.
Condit also implemented employee empowerment in the organisation, which is a desirable element particularly when the organisation is making changes (Armstrong, 2005). Condit is aiming to make employees his partners rather than a mere factor of production. Under the management of Condit a flatter organisation resulted where employees can discuss issues with all levels of management. For example, tool builders are authorised to discuss problems directly with the engineer. One can also posit that Condit is adopting transformational leadership. This leadership is acclaimed to stimulate commitment among employees through shared values and a shared vision, which enhances intrinsic motivation (Sadler, 2003).
The aforesaid advantage immediately hints that such a leadership approach is better than the one adopted by Shrontz. Further more, such employee involvement can facilitate the change process, which as noted above is fundamental for the organisation. It is true that transformational leadership is difficult to implement and it often requires a charismatic individual (Sadler, 2003). However, in theory such leadership style is better than the autocratic approach. Transformational leadership apart from increasing motivation can also enhance creativity and limit the agency problem that can often take place under the autocratic style (Sadler, 2003).
Success of Condit Leadership Style
The leadership approach of Condit can also be evaluated in practical terms by looking at the information provided in the case. The change in the leadership style is a significant one and therefore trust in management will be build gradually. Such change will also take time in light of the increasing pressures exerted on staff and operational managers to meet the productivity targets set. One cannot expect that the culture of an organisation will change overnight. As remarked by Mahoney, this leadership style is showing some improvement where employees are realising that Condit is working also for their welfare. Thus one can envisage that trust will eventually build accompanied by higher commitment. As a result, a consultative leadership approach is healthier for a business enterprise than an autocratic one. By realising that employees are a key variable, Condit can help the organisation to enhance its financial performance with the application of a sound leadership style. This can help to mitigate the serious problems noted at the beginning of this paper.
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List of References
Armstrong, M., 2005. A Handbook of Human Resource Management Practice. Ninth Edition. London: Kogan Page.
Donnelly, H. J.; Gibson, L. J. and Ivancevich, M. J., 1995. Fundamentals of Management. Ninth Edition. London: Richard D. Irwin Inc.
Johnson, G.; Scholes, K. and Whittington, R., 2005. Exploring Corporate Strategy: Text and Cases. Seventh Edition. London: Financial Times Prentice Hall.
Sadler, P., 2003. Leadership. Second Edition. Sterling: Kogan Page Limited.
Scheid, J., 2011. A Critique of the Autocratic Leadership Style, Brighthub.com (on line). Available from: http://www.brighthub.com/office/project-management/articles/75715.aspx, Retrieved 31st December 2011. Read More