Transformational Leadership Style and Communication in the New Organizational Goals - Research Paper Example

Introduction As the newly recruited consultant for Oakes, this report will be presented in three major sections. As part of helping Richard convince the Board to support his proposed business plan, the first part will provide a detailed analysis with regards to the business benefits associated with Richard and Katie’s strategic plans for Oakes Shoes and the community of Middletown followed by identifying parts of the HR system which could prevent the success of implementing Richard’s proposed business plan. Eventually, the business impact of the opposition’s plan over the business growth will be analyzed in details. The second part will focused on identifying the ‘change agent’ whereas the third part will provide an action plan that could clearly demonstrate the proposed activities that can be use in gaining support from the stakeholders within the firm and the community members. First Part A. Business Benefits Associated with Richard and Katie’s Proposed Strategic Plans for Oakes Shoes and the Community of Middletown For a business to be successful, significant changes within the external market environment of shoe industry should be aligned with the internal business environment (Change Management. Session 1. The Context of Change (lecture notes), 2010). Given that the company’s target consumers are working men and women between the age brackets of 26 to 45 years old, Richard and Katie’s plan to shift from the focus on selling Oakes shoes from small-scale shoe shops to online selling could significantly increase the company’s annual sales and profit by expanding the business within the U.K. market to international market. In line with this, there is a strong need to provide training programmes for its staff with regards to the use of online marketing and selling, new courses on web designs, and web-based applications. As an increasingly Human Capital Centric organization, Lawler (2008) explained that the HR selection and recruitment process plays an important role in terms of establishing a long-term business relationship with its employees. In line with this, the availability of competitive and flexible training and development programmes could encourage competitive employees to deliver outstanding customer service and remain loyal to the company for a long period of time. Since the company aims to improve its existing shoe designs and expand its market through the use of online selling, it is necessary for the company to consider the need to recruit young individuals who are technically qualified to perform online marketing and selling on a part-time basis. In response to tight market competition, flexibility in working arrangements such as contractual or part-time jobs can be beneficial to both employers and employees in the sense that having a large group of contractual workers will enable the company cut down on fixed operational cost whereas employees can have more time for leisure purposes (Chang & Liao, 2009). Considering the risk factors that could make Oakes Shoe Company lose some of its loyal customers, the high cost of training programs, advertising costs, recruitment expenses, and lower levels of productivity and sales performance (Bach 2005, p. 115), Hacker (1997) revealed that “a poor recruitment decision can cost a company the amount equal to 30% of the company’s First-year earnings”. Given that satisfied employees can deliver a better customer service as compared to employees who are not satisfied with their job, it is necessary to examine the company’s actual recruitment process, the available training programmes, and motivational strategies used within the business organization. Aside from reducing the number of existing employees, the use of information technology will enable the company to increase the efficiency of its production by incorporating the concept of just-in-time (JIT). As part of the business success, the production system should always be aligned with sales and marketing in the sense that the company should only produce what is being demanded by the customers (Lai and Cheng, p. 89). By enhancing the company’s ordering process and flow of production operations, the company can easily keep down its inventory levels to a minimum. B. Parts of the HR System that could Prevent the Success of Implementation The business culture at Oakes Shoe Company follows seniority and authority based on the acquisition of skills. Because of fear of losing authoritative power within the business organization including their existing jobs, the shift from traditional way of running the business into a more modern approach could make the older group of employees create resistance-to-change (Burke 2002, p. 262). This is possible since most of the older individuals within the business organization will have more difficult time adjusting with the use of information technology and the Internet. Instead of admitting their own weaknesses, most of these people would simply create internal chaos to prevent the implementation of the newly proposed business plan a success. When implementing organizational change, it is very important to realize that managers and leaders are not the same. Within a corporate organization, managers are expected to have the ability to influence, supervise, communicate, and lead employees who belong to the different levels of the organizational structure aside from having analytical mind which can be useful in solving management problems (Dessler 2001, p. 11, 291). On the other hand, competitive leaders are people who could effectively influence, select, equip and train a group of employees with different sets of abilities and skills without the use of coercion (Winston & Patterson, 2006). For this reason, competitive leaders could successfully encouraging employees to willingly participate in the implementation of a new business plan. Effective leadership is the key behind the implementation of a successful organizational change (Cox 2010). Although managers within a business organization have the legal authority to lead a group of employees, not all managers are effective in terms of persuading employees to support the implementation of new strategies because of the use of ineffective leadership style. Therefore, the probability that resistance-to-change will occur increases whereas the success rate of implementing the new business plan decreases (Burke 2002, p. 262). This explains why managers without a good leadership skill can cause a business organization to stagnate and eventually suffer from the negative consequences of mismanagement (Kotter 1999, p. 2). The strong support coming from Oakes’ employees is essential behind the success of implementing Richard and Katie’s new business plan. Ever since the self-motivated employee has gained importance in making business organizations competitive in the world market, the application of an autocratic leadership style is no longer considered effective when dealing with a diverse workforce. Aiming to mobilize employees toward a single organizational vision, the use of authoritative leaders is more effective. Since each type of leadership approach has its own advantages and disadvantages, it is necessary on the part of Richard and Katie to carefully choose the most effective leadership style when dealing with each situation that may occur during the implementation process of the proposed business plan. C. Analysis of the Business Impact of the Opposition’s Plan over the Business Growth of Oakes Shoes Within the business organization, it appears that Daniel Oakes – Marketing Director, Michael Smith – Production Manager, and Edward Newman – Leader of the Local Branch of the Shoe Making Trade Union opposes Richard and Katie’s newly proposed business plans. Upon analyzing the business situation, Daniel strongly opposes the need to expand the business to international market because of his beliefs that the U.S. market is the best for Oakes Boot and Shoes Company. Specifically the determination of Daniel to resist the online marketing and selling of Oakes Boots and Shoes will prevent the company from having a bigger prospective market. Given that Richard and Katie would be successful in convincing the board of directors to support the implementation of the new business plan, Daniel Oakes despite being the son of the owner may end up losing his job position to other people who are more qualified to perform and monitor online sales and marketing activities. Michael and Edward opposes Richard’s idea to offer redundancy packages to each employee who will be refusing to accept the newly proposed flexible working conditions for the reason that this strategy could destroy Oakes’ worldwide reputation for quality. In line with this, Lee (2007) explained that the offering of redundancy packages is one of the HR strategies used in avoiding unfair dismissal claims. In exchange with the redundancy packages, Oakes will have the benefit of cutting down the number of employees who are not comfortable with the flexible working arrangements which is necessary to increase the business success and profitability of the company. Michael Smith works with the company as the Production Manager. Aside from pointing out that the production department is over-staffed, Richard and Katie strongly suggest the need to implement JIT system and develop new designs in its production operations. This strategy is necessary to reduce the high levels of excess stocks of ready-made boots and shoes inventory which has been one of the major factors that made the company unable to compete in the market. Given that Richard and Katie will be uncovering Michael’s mismanagement in the production department to the board of directors, Michael strongly opposes the idea of implementing the new business plan by claiming that the use of redundancy packages could only worsen the business situation. Edward Newman is the Leader of the Local Branch of the Shoe Making Trade Union. Having in mind that the implementation of the new business plan could result to the need to cut down on the number of currently employed staff, Edward has been lobbying with Michael knowing that both of them is protecting their own self interests in exchange with the business benefits associated with Richard and Katie’s newly proposed business plan. In case Richard and Katie failed to convince the board of directors about the reasons behind the opponents’ resistance-to-change, the company would lose the opportunity to be able to expand and improve the efficiency of Oakes Boots and Shoes Company. Second Part The term change agent is represents “the person who gives expert or professional advice when managing or implementing organizational change” (Gilley et al., 2001, p. 5). As a change agent, Richard and Katie should consider the change process theory of Kurt Lewin which includes: unfreeze, change, and refreeze (Sinclair-Hunt & Simms, 2005, p. 124). Taking this model into consideration, change agents can effectively manage organizational change. Katie – the Managing Director of Oakes should be considered as the change agent in the local community area because of her strong connection with the town’s Chamber of commerce as an active member aside from her current position as the Advisory Board of the University’s Business School. During the unfreeze stage, Katie is responsible in challenging the beliefs, values, attitude and behaviour of the community members when conducting training and development programme. Eventually, Katie can act as a change agent by persuading the young individuals within the community to have an open mind with regards to part-time jobs. Since young individuals have less knowledge with regards to handling business, young people can be easily trained by encouraging them to participate in the necessary training programmes designed to improve their special skills as needed by Oakes. To refreeze the change, Katie should provide effective leadership support and create reward system and feedback options to enable the change agent keep up the success of the new business structure. With regards to convincing the family board of directors1 and two other members that the newly proposed business plan can work effectively in terms of increasing the production, sales and marketing efficiencies, Richard who is the Finance Director of the company can also act as a change agent by showing the past, current, and forecasted sales and total operational savings once the newly proposed business plan is implemented. With this in mind, Richard will be able to effectively convince the board of directors to strongly support the need to implement the proposed organizational change. Third Part Developing a clear organizational goal and vision is necessary to increase the success rate of implementing the new business plan. According to Gilis (2006), organizational vision is “the big picture and is crucial to the success of the business enterprise since a vision gives employees a direction by combining good business strategies with a comprehensive organizational purpose” (pp. 128 – 129). Given that the job of implementing the new business plan will be so much easier when employees are able to fully understand the new corporate vision and business strategies, the first step in Richard and Katie’s action plan should include developing a new organizational goal and vision. Based on the given case scenario, the organizational goal is to expand Oakes’ existing market to international markets by implementing the use of online marketing and selling activities and information technology to align its marketing with the production process. By doing so, the company will be able to save a lot of money by keeping its current inventory down to zero level. On the other hand, the company’s vision is to become one of the most competitive online sellers of high quality boots and shoes within the next 10 years. Effective communication is crucial behind the success of implementing organizational change because an open communication line between the top management and staff establishes trust between the two major groups within the business organization (Gilis, 2006, p. 47). As soon as Richard and Katie developed a clear organizational goal and vision, it is necessary for both parties to meet-up with the community members and the board of directors to discuss the advantages and disadvantages of implementing the proposed organizational change (Heim, Chapman, & Lashutka, 2004, p. 42). In line with this, it is necessary for Richard and Katie to communicate with employees who are open in communicating what they actually feel about the organizational change by organizing meetings or holding special clinics to talk with individual employees (Gilis, 2006, p. 102). After clearly discussing what the stakeholders will be expecting out of implementing the change, it would be easier on the part Richard and Katie to make important decisions based on the sentiments of its stakeholders (Heim, Chapman, & Lashutka, 2004, p. 43). This strategy will enable Richard and Katie to come up with solutions that could persuade employees to support the implementation of the newly proposed business plan. Given that Richard and Katie are able to convince majority of the stakeholders to support the implementation of the new business plan, it would be easier on the part of the change agent to monitor and manage the organizational change. After negotiating with the opponents further, Richard and Katie should come up with the final decision on the 10th week onwards. (See Appendix I – Summary of the Proposed Action Plan on page 15) In general, a unitary approach highlights the importance of establishing a harmonious and integrated system within a business organization in the sense that employees will be able to develop a unified organizational goal as they work together as a team. On the other hand, a pluralist approach acknowledges the fact that a business organization is composed of different groups which could often lead to the creation of internal conflicts between employer and employees (Gennard & Judge, 2005, pp. 55 – 56). Although internal conflict within the business is possible within pluralism, internal conflicts are considered manageable and resolvable by balancing the interests of employees and employers. When using the unitary approach, it is assumed that employers and employees have a commonly shared interests but internal conflicts between employers and employees can still happen because of ineffective HR management. When providing people with new employment opportunity, the application of unitarism approach is better than pluralist approach since unitarism approach will provide qualified applicants with long-term employment benefits. However, the use of unitary perspective is not effective since bargaining process between employers and employees has beome less applicable in today’s labour market since the supply of labour is more than the demand (Ghoshal, 2005; Adams, 2001). Under pluralist approach, internal conflicts can occur between employers and employees (Kochan & Katz, 1988, p. 6). Therefore, negotiation between employers and employees with regards to the agreed salary, employment packages and benefits, and redundancy packages is necessary. Considering the need to implement work flexibility at Oakes, it is best to use of pluraist approach when managing contingent or part-time workers. By doing so, the company will be free from the need to offer long-term employment benefits to its employees. Unlike the use of autocratic or authoritative leadership style, the application of transformational leadership style is better when managing organizational change because this type of leadership approach enables the leader to go beyond what is going on around the environment (Johansson 2004). This is possible since transformational leaders have the ability to implement new ideas anytime they want. Aside from being flexible in the implementation of organizational change, employees who are handled by transformational leaders could easily adapt with the implementation of a new strategic plan. For this reason, employees that are being handled by transformational leaders could instinctively adopt with the newly proposed organizational change (Burke 2002, p. 243). Organizational change that will take place within the business organization is discontinuous (Grundy 1993, p. 25). In line with this, Burke (2002, pp. 201 – 203) suggested the need to apply transformational leadership style when implementing a discontinued change. Charismatic leaders are able to inspire employees. Since charisma is part of the main characteristics of transformational leaders, the use of transformational leadership style is considered effective in terms of making effective implementation of organizational change (Posakoff and Schriesheim 1985). Given that the benefit of using transformational leadership style outweighs its limitation, Richard and Katie should adopt the use of transformational leadership style when implementing work flexibility. Conclusion It is common for opponents to create resistance-to-change for the reasons that these people are protecting their personal self-interests particularly when it comes to their authority within the business organization or simply because of fear that they will lose their job. To effectively manage resistance-to-change, Richard and Katie should first develop a clear organizational goal and vision as this will serve as a guide when explaining the need to push through their proposed business plan. To increase their chances of successfully implementing this organizational change, Richard and Katie will have to make use of transformational leadership style and effectively communicate the new organizational goals and business strategies that now need to be implemented to all stakeholders. Only then will the company be able to turn the new organizational goals into reality. *** End *** Appendix I - Summary of the Proposed Action Plan                       Week   1 2 3 4 5 6 7 8 9 10 Develop clear organizational goal & vision       Effectively communicate organizational goal & vision     Negotiate with the stakeholders             Meet-up w/ employees in meetings or special clinics             Develop negotiating strategies to win the full support of employees             Meet-up w/ employees for further negotiation           Finalize decision-making                     References Adams, R., 2001. Choice or Voice? Rethinking American Labor Policy in Light of the International Human Rights Consensus. Employee Rights and Employment Policy Journal , 5(2), pp. 521 - 548. Bach, S., 2005. Managing Human Resources. 4th Edition. Personnel Management in Transition. Blackwell Publishing. Burke, W., 2002. Organizational Change: Theory and Practice. Sage Publication. 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