Leadership Style in Haier and Daner Associates - Case Study Example

CASE STUDY Daner Associates: Considerate leadership style and level 2 leader The case study is about how leaders succeed in or fail to balance their leadership goals with the needs and requirements of their employees. The case study tells the story of Daner Associates and its talented leader Paul, who, while standing in a traffic jam, trying to rethink his business position and the situation his organization is currently in. First, he thinks of the responsibilities he is bound to carry due to his position in Daner Associates. He is being constantly torn between his family and workplace obligations. Second, he finds it extremely difficult to neglect personal needs of his employees: Lisa, his right hand in the organization, is taking care of her terminally ill mother and can no longer devote much time to her workplace tasks. Larry is still an organizational tiger but does not want to spend all his time at work – all he wants is to play golf and get some rest (Edelman & Hiltabiddle 2006). Paul observes the leadership style of his colleague, George, and notices what a rigid person he can be at times – apparently, he is not going to accept his style of doing business. These difficulties, however, do not prevent Paul from preparing a project that will speed up the development of Daner Associates and make it more competitive. Simultaneously, this very project does not guarantee that Paul will become the next company CEO: he is at least surprised to hear that Larry considers him for the number two (Edelman & Hiltabiddle 2006). He feels that Larry does not perceive him as a true man and leader, although he truly believes that customers and employees love him. Contemporary theory defines leadership as “a process by which a person exerts influence over people and inspires, motivates, and directs their activities to help achieve group of organizational goals” (Lecture Notes 2010). Taking this definition as the basis of the current discussion, Paul does seem to lack several essential leadership features: he inspires and motivates but fails to direct the activities of his employees to achieve the principal organizational goals. This is, in part, a result of the absence of clear performance standards and, simultaneously, Paul’s ability to make his followers meet these criteria. In his current situation, Paul exemplifies a level 2 leader, who contributes to improved performance of his team, but is neither willing to set clear objectives not can force his followers to pursue them (Lecture Notes 2010). From the behavioral viewpoint, Paul is a considerate leader, who seeks to build support and rapport in employees but cannot ensure that the job is done on time and in accordance with the general performance standards (Lecture Notes 2010). It should be noted, that the past years witnessed a rapid shift in business consciousness, away from the pure profit-maximization hypothesis toward accounting for the views and opinions of all organization members. The company, whose purpose is to maximize profits, is no longer attractive to consumers and businessmen (Jordi 2010). Employee empowerment and devolution of responsibility have already become the distinctive features of the postmodern business reality (Leeman 2010). However, empowerment and devolution of responsibility, as well as humanistic leadership perspectives, must be well-balanced with rigidness, toughness, and orientation on getting the job done. Paul forgets that a talented leader must successfully combine the roles of a steward and agent, who strongly influences his organization’s financial outcomes and displays the level of propensity needed to redistribute and spend limited business resources (Rakotobe-Joel & Sabrin 2010). A talented leader is the one, who can govern employees and resources in ways that meet stakeholder expectations (Rakotobe-Joel & Sabrine 2010). The case of Paul and Daner Associates reveals a set of serious organizational problems. First, although a leader for ten years, Paul lacks a proper insight into the essence of leadership. His leadership style is concentrated on employees and their human needs, pushing the goals and tasks of the organization to the background. As a result of those difficulties, Paul fails to balance his own responsibilities with the limited time he has to accomplish them and fails to convince Larry that he is the best candidate to become the next CEO. However, the lack of toughness in Paul is not dangerous in itself. Rather, it is undermining the stability of the organization’s competitive position and risks the company reputation. Another problem is in that Paul does not realize the hidden danger of his leadership mistakes and fails to understand why George has become number one candidate to the CEO position. Paul is increasingly concentrated on his emotional convictions on what it takes to be a true leader. He is confident that the love of his employees and customers can suffice to bring him and his organization to the desired end. He cannot see how the lack of toughness and strict requirements toward his employees affects his organization and its performance. It is high time Paul realized that love, affection, and the lack of clear performance standards cannot support Daner Associates in its competitiveness fight. From my experience, leaders like Paul rarely achieve the highest position within the company. I remember how one of my colleagues exhibited similar features and leadership potential but could not push people toward their goals. What I know about the ways of doing business today convinces me that (a) Paul is not the right type of a leader for Daner Associates and (b) people like Paul can hardly survive in a highly competitive business environment. If I were Paul, I would, first of all, reconsider the appropriateness of my own and other organization members’ leadership styles. I would try to understand the reasons behind my organizational failure. I would proceed to develop clear and rigid performance standards for everyone and develop an effective network of responsibilities in my team. For example, while Lisa is taking care of her terminally ill mother, other team members could assume some of her work responsibilities, while she is away from work. I would concentrate on getting the job done, without losing control over the personal needs and opinions of my followers. In this case, I have learned that every leader exhibits a unique leadership style. For example, certain organizations benefit from having the needs of their employees met; others, on the contrary, concentrate on setting efficient performance standards and getting the job done. However, the scope of leadership cannot be limited to the love and support of employees. Leadership implies that employees are motivated to meet the objectives, which the organization sets for them. Therefore, a talented leader must have sufficient charisma and, simultaneously, rigidness and toughness, to ensure that these goals are being met. The efficiency of leadership is directly associated with the firms’ financial outcomes (Rakotobe-Joel & Sabrine 2010). Simultaneously, a firm concentrated solely on profit maximization can hardly achieve its competitive goals (Jordi 2010). In present day business, efficient leadership is a personal ability to maximize financial profits by helping employees to meet their individual and organizational objectives. Haier: successful transformations The case of Haier and its remarkable transformation has already become the topic of a hot scholarly analysis. From a minor company in China, Haier grew to occupy one of the leading business positions in the Chinese and international markets. The case study provides an insight into how the company leaders succeeded in motivating their employees and using their skills and knowledge to achieve a better market position. At the time Zhang Ruimin took leadership of Haier, the company was in the state of serious organizational disarray and lacked business focus (Ruimin 2007). Zhang’s leadership was human-oriented; he sought to establish better morale and discipline and use the benefits of organization and consensus to meet the principal organizational goals (Ruimin 2007). In this case study, Zhang describes the main features of a talented leader, who must have confidence, change awareness, ability to communicate the vision and mission to the followers, and monitor their performance. Zhang built support and trust among his employees and fought with the resistance of senior executives, as they were giving up a share of their position power to employees. Zhang is creating value in his enterprise, by giving employees a sense of being a part of the company and giving them sufficient freedom of decision-making, as long as they can meet their performance standards. From the theoretical viewpoint, Zhang is the direct reflection of the so-called laissez-faire leadership principles. In the French language, the phrase “laissez-faire” means “let it be” and implies that leaders give their followers sufficient freedom of decision-making and acting (Okafor 2009). However, the belief that laissez-faire leadership is inefficient in itself is at least incorrect. Certainly, laissez-faire leaders risk losing control over their followers and their actions and may miss an opportunity to detect and address the emerging organizational issues. Also, laissez-faire leadership is effective only to the extent, which ensures that followers have sufficient professionalism, experience, and expertise to take independent decisions. As soon as these conditions are met, laissez-faire leadership turns into a unique form of employee empowerment, which leads organizations to their strategic goals. Theoretically, Haier exemplifies a new form of business enterprise, which uniquely combines the features of profit maximization and satisfaction of employee needs (Rakotobe-Joel & Sabrine 2010). It emphasizes the contributing role of employee empowerment to the development of fairness and justice atmosphere within the organization. The current state of research claims that fairness and justice in organizations are the direct preconditions for improving the organizational climate and, subsequently, the organizational outcomes (Boudrias et al 2010). Zhang’s successes with Haier prove a theoretical belief that empowerment is an essential element of successful management, business practice, and an important source of competitive advantage (Al-Mbaidin & Ali 2010). Zhang seems to successfully combine the features of laissez-faire and team leadership, as long as he can initiate new ideas, seek information and ask relevant questions and keep his team on track (Hobson, Strupeck & Szostek 2010). The core of his success is in his ability to adjust his leadership features to the changeable conditions of business performance. Despite the undeniable success of Haier, several potential problems deserve professional attention. First, Zhang is a rare example of people-oriented, humanistic leaders, who are willing to support their employees as they are trying to meet their goals. These leaders emphasize the importance of interpersonal relations, take a personal interest in the needs of their followers and accept professional and individual differences among them (Lecture Notes 2010). However, Zhang must be extremely careful about not losing control over his subordinates and their decisions – an organization whose sole purpose is to satisfy employees cannot be successful in the long run. As of today, Zhang seems over-concentrated on giving employees ample freedom of decision-making within the organization. Another problem is in that employee empowerment does have its limits. According to Boudrias et al (2010), “empowered employees are expected to conscientiously assume their work-related responsibilities and proactively initiate change in their work environment to increase work efficiency” (p.201). Needless to say, empowerment is possible and justified only within the limits that lead the organization to the desired goal. Zhang mentions the opposition he met from executive seniors as they were reluctant to give up their position power to employees. Organizations cannot exist without leaders; nor can they develop in the absence of a clear organizational hierarchy. Zhang must be extremely careful in his intentions to give employees more power to take organizational decisions. If I were Haier’s leader I would, probably, pursue a similar path. When a prospective company is in the state of organizational disarray, employee-oriented leaders can turn into an efficient source of motivation for employees. However, everything has its limits, and so do empowerment and human orientation in organizations. Meeting individual needs of employees is unreasonable and unjustified, if employees do not try to improve their performance and meet the standards, which the organization sets for them. Zhang describes how he was borrowing money to purchase a new bus. Personally, I would have the company people motivated to earn on a new bus, rather than purchasing it for granted. Put simply, I would set clear performance standards, lead employees to meet those standards, and reward them by meeting some of their individual needs. What I have learned from this case study is fairly simple: empowerment and people-oriented leadership are becoming the vital ingredients of business success. It seems that the growing role of human orientation in business sets the stage for the development and expansion of a completely new form of business enterprise: the success of this enterprise is in aligning the goals of employees with those of the organization, for which they work. In this sense, Haier clearly sets an example of how organizations must work to stay competitive. These organizations work to produce and distribute their goods to serve the needs of their customers and invest significant resources in hiring, training, and rewarding their employees (Rakotobe-Joel & Sabrine 2010). Another important thing is in that a reasonable balance of shareholder primacy and employee satisfaction is possible and even justified. Talented leaders are able to redirect the efforts of their followers in ways that meet shareholders’ expectations. However, it also seems that, at times, the emphasis on employee empowerment becomes exaggerated. In other words, leaders lose the grip of control over their tasks, as they are trying to meet employee needs. I am gradually coming to realize that contemporary vision of leadership is a balance of task- and people-orientation (Hobson, Strupeck & Szostek 2010). Successful leaders will use their people-oriented intentions as a form of rewarding their employees for their ability to accomplish their workplace tasks. Reflection These case studies and the course, in general, have taught me several interesting things. First and foremost, I see the development of the new organizational and leadership tendencies in the business world. The growing competitiveness of business requires that leaders are able to motivate their employees to achieve the main organizational goals. Simultaneously, motivation implies that leaders can identify and meet personal and workplace needs of employees. I cannot but agree to Jordi (2010) in that profit maximization is a critical factor in achieving business success, but profit maximization alone cannot suffice to ensure the stability and competitiveness in the changeable business reality. Human-oriented leaders can significantly enhance any organization’s position in the long run. Employees who feel respected have better opportunities to accomplish their workplace tasks successfully. In the meantime, the boundary between people orientation and low efficiency of business is extremely fragile. Looking at Paul and his position in Daner Associates, it is difficult to imagine an efficient leader, who is increasingly concentrated on his employees and loses an insight into the principal organizational issues. Leaders who are excessively human-oriented readily forget that their leadership styles and decisions affect the financial and business outcomes in the organizations, for which they work. In the current state of business evolution, a leader is equally an agent and a steward (Rakotobe-Joel & Sabrine 2010). That means that an efficient leader is a person, who can utilize the best skills, knowledge, and experiences of his employees to meet stakeholder expectations (Rakotobe-Joel & Sabrine 2010). The financial results of the firm do not lose their relevance in the modern world but can be looked at from a different, human-oriented angle. Undoubtedly, people are the main source of competitive advantage in firms, but everything has its reasonable limits, including autonomy and empowerment. The latter can benefit an organization only when leaders possess rigidness and toughness to push empowered employees in the right direction. Second, a clear mission and comprehensible performance standards are the key to successful performance in organizations. Failure to adopt performance standards and goals for employees will subsequently lead to other, related organizational failures. In no way does employee empowerment mean that employees have the right to neglect their workplace obligations for the sake of other, personal matter. Empowerment and distribution of responsibilities in the organizations does not also mean that leaders must assume a share of their followers’ responsibilities, while the latter are coping with their personal issues. Clear performance standards mean that people-oriented leaders do not lose the sufficient degree of control over the organization and their decisions. “This element of control is in line with the belief that leadership is about telling people what to do, not letting do whatever they want to” (Leemann 2010). This element of control can be successfully balanced with the people-oriented vision of leadership, when employees are told what they need to do but have freedom of choosing how to meet the goals, which the leader sets for them. This is, probably, the vital element of successful performance in organizations, when employees do not lose the responsibility for meeting their workplace standards and goals. A clear mission and comprehensible performance standards are required and justified, as long as they do not turn leaders into cops and their organization into a boot camp. An efficient leader knows clearly well, what he expects from his employees. Clear performance standards create an atmosphere of standardization, equality, and justice: they help leaders to assess the quality of employee performance objectively and without any personal bias. These standards give the leader a comprehensive idea of what to demand from employees. They also create a clear workplace meaning, and only meaningful work can build commitment and support in the leader’s team (Varney 2009). Finally, I have seen that not all leaders have a clear idea of what it takes to be a leader and what criteria of successful leadership they must meet. While setting performance standards for their followers, leaders also need to set such standards for themselves. Take a look at Paul: he is absolutely unaware of the reason of his organizational failure and surprised at being the number two for the CEO position. Take a look at Zhang: a successful leader, he feels that employees need more autonomy in their decision-making efforts but cannot see the boundary between empowerment and efficiency. He does not seem to realize the limits of successful empowerment at Haier. Apparently, a successful leader in contemporary organizations is a person, who understands what skills, knowledge, and personal features one needs to meet the standards of organizational performance. Given the changeability and flexibility of the organizational environments, the criteria for effective leadership will differ across organizations. While preparing for this paper, I did not find any scholarly agreement on what a successful leader must look like. Hobson, Strupeck and Szostek (2010) vote for the development of a team-oriented leader personality. In their turn, Hoyt, Goethals and Forsyth (2008) claim that an efficient leader is a person able to solve complex problems and facilitate adaptation of the organization to complex social contexts. Looking back to the two case studies, Paul and Zhang exemplify the two dramatically different types of personalities, but both were able to achieve reasonable leadership success. I am confident that each organization must develop its own criteria for leadership. These criteria need to be communicated to those, who possess leadership potential and exhibit willingness to assume leadership responsibilities and tasks. For a company, whose goal is to remain competitive in the changeable market conditions, setting leadership standards is as important as setting annual financial goals. Certainly, companies need to update these standards, to fit in the changeable conditions of doing business. Certainly, leaders need flexibility and change awareness, to adjust their skills and knowledge to the emerging business demands. I feel that there are no universal standards of leadership in modern organizations, and each organization defines these standards for itself. One of the most serious mistakes at Daner Associates was the failure to clarify its leadership expectations – Paul spent ten years in a delusion that he was the best and loved leader of all times. Organizational success begins at leadership standards which, on the one hand, reflect the vision and mission of the organization and, consequentially, transform into a set of clear goals and expectations for employees in their striving to become the best. References Al-Mbaidin, SM & Ali, FM 2010, ‘Evaluating employee empowerment as an important feature of successful management’, Institute of Interdisciplinary Business Research, pp.38-49. Boudrias, JS, Brunet, L, Morin, A & Savoie, P 2010, ‘Empowering employees: The moderating role of perceived organizational climate and justice’, Canadian Journal of Behavioral Science, vol.42, no.2, pp.201-211. Edelman, R & Hiltabiddle, T 2006, ‘The nice guy’, HBR Case Study, February, pp.21-30. Hobson, CJ, Strupeck, D & Szostek, J 2010, ‘A behavioral roles approach to assessing and improving the team leadership capabilities of managers’, International Journal of Management, vol.27, no.1, pp.3-17. Hoyt, CL, Goethals, GR & Forsyth, DR 2008, Leadership and psychology, ABC-CLIO. Jordi, CL 2010, ‘Rethinking the firm’s mission and purpose’, European Management Review, vol.7, pp.195-204. Leeman, JE 2010, ‘Let’s get real about empowering employees’, Systems Thinking, December, pp.209-210. Okafor, PC 2009, Self-confrontation, self-discovery, self-authenticity, and leadership: Discover who you are and transform the leader in you, Authorhouse. Rakotobe-Joel, T & Sabrin, M 2010, ‘An outcome-based perspective of leadership: Investigating the direct effects of corporate leaders on the firms’ financial outcome’, Journal of Business and Economics Research, vol.8, no.11, pp.113-123. Ruimin, Z 2007, ‘Raising Haier’, Harvard Business Review, February, pp.141-146. Varney, J 2009, ‘Leadership as meaning-making’, Human Resource Management International Digest, vol.17, no.5, pp.2-4. Read More