Do CEOs Today Have to Lead by Example - Coursework Example

Do CEOs Today Have to Lead by Example And How Does That Impact Any Leadership Styles? An Essay on Leadership Styles Introduction The business worldhas undergone a transformation since the advent of the Internet first, and then the social media growth over the last five years. Customers now conduct quite a bit of their shopping and interaction with customer service online which means that results, or lack of results, is also fairly instantaneous. As some companies have discovered, negative feedback from customers in online forums can require a quick response in damage control from company specialists in order to stave off bad press about the company’s brand and treatment of the customer. The procedure for handling a customer in any situation, good or bad, comes from the top echelon of company leaders and filters down through managers to the employees. How employees and the customers of the company are treated, comes directly from the top leader, the chief executive officer (CEO). It is only recently in the last few decades, that leadership styles have been studied and researched, in order to find out what best CEO styles of leadership will help make a company great, particularly on a global basis (Northouse, 2010). A consulting firm, Hay/McBer, did a research study of 3,871 executives, selected randomly from a global database of 20,000 executives, and came up with six distinct leadership styles, which were based on different aspects of emotional intelligence (Goleman, 2000). These styles were: the coercive style, authoritative style, affiliative style, democratic style, pacesetting style, and the coaching style. What was notable about the results was that successful leaders did not rely on just one style. They were able to effectively use several styles within the course of a week’s time, dependent on what might be happening within the business. Along with this finding, there are also six key factors that reflect the climate of a business environment and how employees respond within that environment, as based on the CEO’s leadership style. The six factors are: flexibility, responsibility, standards, rewards, clarity (mission, goals), and commitment towards a common purpose (Goleman, 2000). The six leadership styles have a direct effect on each of the climate keys, including return on sales, revenue growth, efficiency, and profitability. Essentially, only four of the six leadership styles positively affect the climate and business results. Leadership Style Impact on Business Climate Keys Coercive Authoritative Affiliative Democratic Pacesetting Coaching Flexibility -. 28 . 32 . 27 . 28 -. 07 . 17 Responsibility -. 37 . 21 . 16 . 23 . 04 . 08 Standards . 02 . 38 . 31 . 22 -. 27 . 39 Rewards -. 18 . 54 . 48 . 42 -. 29 . 43 Clarity -. 11 . 44 . 37 . 35 -. 28 . 38 Commitment -. 13 . 35 . 34 . 26 -. 20 . 27 Overall impact on climate -. 26 .54 .46 .43 -. 25 .42 (Table 1, Goleman, 2000) The dark blue areas in table 1, show negative results while the light blue show positive results. Correlation between a leadership style and climate aspects can be observed, such as -.28 in Flexibility under the Coercive style, which becomes a positive .28 under the Democratic style. If leaders have strengths in the following emotional intelligence competency skills of self-awareness, self-regulation, social skills, motivation, and empathy, then they are more successful in being able to change leadership styles, based on any given business situation that can arise (Goleman, 2000). Six Leadership Styles Based on Emotional Intelligence 1. The Coercive Style: This approach can be effective during a crisis, such as a natural disaster, or in dealing with employee issues. There is not much room for flexibility and motivation coming from managers and employees under such circumstances, as the style requires direct compliance. CEOs that use this style tend to be the bully of the neighbourhood, terrorizing and demeaning those under his rule. Rewards for good work are unlikely to happen and the climate in the workplace is unpleasant, even depressive and uninspired (Goleman, 2000). Certainly, response to the public on a customer service level is hardly going to be very productive. Yet, under different circumstances, such as a needed revision of a company’s direction during a take-over, this may be one style that works best, when a CEO, or branch director, employs a definitive style of getting things done quickly and efficiently, including firing those who do not perform, may work very well. Narcissistic leaders may also show up here more often, because of the way they can manipulate (in a good or bad way) those around him or her (O’Reilly et al., 2013). The bully approach, however, does not work under any circumstance because it is such a negative approach within a working atmosphere. Those CEOs that scream and belittle employees, particularly in front of everyone else, promote negativity and fear in the workplace, and stress levels are elevated to a very high degree. On a long term basis, employees may even become unhealthy because of the stress, and will leave to go somewhere else where they can be less stressed out, and not in fear for their jobs and career on a daily basis (Goleman, 2000). Inevitably, employees, subconsciously, feel constantly threatened and disrespected, two emotions which can tear people down quickly if they do not have emotional tactics in place to withstand such external behaviour. Unless such a CEO actually owns the business, it is highly likely that such behaviour will get the CEO fired and/or sued by a harassed employee. 2. The Authoritative Style: This style is more of an invitation to try something new to see how it works. With this style, a leader steps up and changes a negative situation by providing a positive solution, one that everyone can engage in, which can also become part of a mission statement for how a company operates with its customers’ happiness in mind. Goleman (2000) provides an example of Tom, a vice president at a national restaurant chain, who discovered, during weekly meetings to discuss recent sales (or lack of), that there was a struggle to come up with internal fixes. Tom, out of desperation during one meeting, proposed that everyone change their thinking to consider what the customer was expecting from them in terms of convenience and service, thus changing the whole direction of company focused operations from an internal viewpoint to an external one, based on the customer. The strategic goal of how to provide customers with the best food, conveniently, became the main goal, and even provided a sense of innovation when others came up with different ways of accomplishing this goal, based on their own location circumstances (Goleman, 2000). While this style may not work in every situation, it is most effective when a business has lost direction and focus. Most notably, this style may not work if the CEO has less knowledge than the team he, or she, is working with. Employees may find the leader pompous and out-of-touch under such situations (Goleman, 2000). 3. The Affiliative Style This style promotes team harmony and offers praise in an effort to provide a positive climate. Such leaders create strong loyal emotional bonds between employees, providing a family atmosphere in some cases. The only drawback is when such a leader fails to note negative performances by a few employees and can cause resentment in those employees who work very hard to achieve goals (Goleman, 2000). The positive side is that such closeness provides a good atmosphere for communication on a highly effective level, which encourages solutions beneficial to all. Such leaders also recognize good work with positive feedback, including celebrations when a project is completed satisfactorily and has provided excellent outcomes. For this leader, building relationships is everything in order to provide a climate of harmony, boost morale, and also provide an environment of trust. A combination of the Authoritative and Affiliative Styles is a very potent positive application where direction and standards are set for the goals to be accomplished, yet the aspects of caring and empathy also provide the personal touch, a humanization of the employees (Goleman, 2000). 4. The Democratic Style The Democratic Style provides an atmosphere of encouraging employees to offer suggestions and also to help make decisions through consensus. The goal is to promote organizational flexibility and responsibility. On the negative side, this can lead to more meetings than might be considered necessary and employees feeling that they really do not have a leader because a leader appears to be asking them how things should be run. Without participation in certain types of decisions, however, this can lead to misunderstandings and bad feelings when an action must be taken, such as closing down a business, when the truth of the circumstances was not presented to employees (Goleman, 2000). In this type of situation, when employees have a say and have the opportunity to ask questions about why something is going to happen, as in closing a business, then the details can be hashed out. If there is a chance to save the business, and employees can come up with suitable ideas to do so, then employees feel that they have a hand in what happens to them, rather than just letting a set of circumstances direct how their lives will be directed after a certain date, the closing date of the business and the end of their job. The best occasion for utilizing this style is when there may still be an opportunity to change an event and more ideas need to be developed in how to change that event. These ideas come from those who are competent enough to make sound suggestions. It does not work in a circumstance when those who are making suggestions, have no skilled knowledge in what is behind the problem. 5. The Pacesetting Style In the Pacesetting style, a leader sets high performance standards for employees and also follows the same criteria himself. Some employees will be very highly motivated and very competent, yet others may not have the same outlook and could resent the leader’s intrusion into normal operations. While many employees may be self-directed, others may need more hands-on direction from the leadership, thus feeling lost if they do not receive enough structured guidance. In certain situations, the pacesetting style has similarities to the coercive style, where a leader may set high performance standards, exemplifies them personally, and wants to have things accomplished better and faster, and for those who do not measure up, they will be replaced. Some leaders may have guidelines but have not articulated them efficiently, and expects that others should know inherently just what those guidelines would be. Employees feel they are always second-guessing the leader as to what he or she wants. There is also a lack of trust where employees feel that the leader does not like how they are doing their jobs and that initiative and innovation is frowned on (Goleman, 2000). A job can then become very routine, static, and boring. This is the Pacesetting style at its most negative presentation. In a positive infrastructure, where a team of professionals, such as in a research and development group or a legal team, contains members who are all self-motivated and need very little direction and coordination, then this style can work very well, particularly in conjunction with another style, such as the Affiliative Style. 6. The Coaching Style This style provides occasions for focusing on personal development rather than improving issues in work-related tasks. Some employees will thrive on this climate, but others may resent this focus being thrust on them to make personal changes. This style is usually very beneficial, especially when used conjointly with the Affiliative style, because when a leader takes time to work with an associate on how to handle certain conditions, such as potentially being moved from one part of a business to another, it is to show the associate how to view the change, what to look for in the new job, and helping the associate to see his or her weaknesses and strengths. Obviously, a CEO cannot do this directly with every single person in the company. Yet if it is done with each manager who, in turn, does this with direct report employees, this method of working filters down through the company. It also shows a caring for the other person, a desire to help others achieve better levels of efficiency on the job, and in succeeding as human beings as well (Goleman, 2000; Northouse, 2010). The Coaching style can also be adjusted with an Authoritative style, when necessary, such as when goals must be met by a certain deadline. The Coercive style may be employed as well, but only when absolutely necessary. Many CEOs and managers may say that they only have two styles, or methods, that they operate with and that employing any of the others would be contradictory to their nature. But making the effort to learn the other styles and how they operate under various situations and in conjunction with other styles to achieve goals, is important to any CEO and manager who wants to become a true effective leader, who is also beneficial to the company’s bottom line (Jin & Yeo, 2011). The Six Leadership Styles at a Glance Coercive Authoritative Affiliative Democratic Pacesetting Ceo Modus Operandi Demands Complete Compliance Mobilizes People Towards A Vision Creates Harmony And Builds Emotional Bonds Forges Consensus Through Participation Sets High Standards For Performance The Style In A Phrase “Do What I Tell You” “Come With Me” “People Come First” “What Do You Think?” “Do As I Do, Now.” Underlying Emotional Intelligence Competencies Drive To Achieve, Initiative, Self-Control Self-Confidence, Empathy, Change Catalyst Empathy, Building Relationships, Communication Collaboration, Team Leadership, Communication Conscientiousness, Drive To Achieve, Initiative When The Style Works Best In A Crisis, To Kick Start A Turnaround, Or With Problem Employees When Changes Require A New Vision, Or When A Clear Direction Is Needed To Heal Rifts In A Team Or To Motivate People During Stressful Circumstances To Build Buy-In Or Consensus, Or To Get Input From Valuable Employees To Get Quick Results From A Highly Motivated And Competent Team Overall Impact On Climate Negative Most Strongly Positive Positive Positive Negative (Table 2, Goleman, 2000) The most successful leaders are able to change fluidly from one style to another, mainly because they are aware of the impact they have on others around them and what effect produces the best results required. These leaders have most likely, been in the same shoes as the employees they are looking at and, therefore, are able to read what is going on and adjust accordingly, to reach those employees. With such empathy, leaders can help employees make changes and reinvigorate them to produce better at their jobs (Jin & Yeo, 2011; Northouse, 2010; Goleman, 2000). The Effects of CEO Leadership on the Customer As a CEO’s leadership style affects the employees, one could presume that the customers will also be treated the same way. The reality is that the customer is the base foundation of success for any company. The customer base in a company’s database repository is the gold mine from which all information, questions and answers, can be gathered for a market research study, any subsequent marketing strategy and advertising campaign, to find out what customers like now and what they want for the future. From that point, it is a matter of providing the customer with what they want and will purchase, which then provides the financial stability of a business. As we have already seen in the section on different leadership styles, those styles in operation which treat the employees as people, will generally filter down to the customers who will also be treated like people by the employees (customer service), even treated like family members if they are repeat customers. This means that when employees are listened to, customers will also receive the same treatment (Capek, 2012; Jin & Yeo, 2011). Everyone can remember some experience that seemed like a nightmare when trying to deal with a company that sent a product which, perhaps, fell apart or just did not work in the first place. Yet, they do not want to replace it. Or it could be a cable bill that, somehow, the company has chosen to double bill the customer and it feels like pulling teeth to get the money back, even when showing the customer service person where the mistake was made. Most businesses today are recognizing that the customer is the life line, the bread and butter, to the success of any company and, consequently, provide training for dealing with customers in just about any situation possible. Competition in the marketplace, particularly the global market, is very high and therefore, retaining current customers while trying to get new ones, is an essential ongoing process that every business must struggle with. Every customer is a person. There is no two ways about it. Therefore, each customer (person) has the same life problems with husbands, wives, children, their jobs, financial issues, as do the employees and the CEO of the company providing that customer its services. When a company treats a customer as an object, not a person, there is a lack of empathy, a lack of connection, and the customer can end up feeling used and insignificant (Capek, 2012). On the other side, those companies who make customers and their experiences with the company brand, the company’s priority, succeed far better because they deliver a strong personal experience of empathy to the customer’s needs and desires, and when there’s a problem, the company makes sure that it is taken care of, quickly and efficiently (Capek, 2012). In such situations, which might require some personalized assistance by creating a customized process in helping the customer, this means that the customer service associate has been given some “elbow room” to design what series of actions must take place to specifically help this customer and his or her unique situation. The Social Media-CEO and the Public Linkup Most companies now hire social media specialists who monitor company social media websites as part of looking for customers who have something to say about the company and its products, and helping those who have had obvious issues with the company. Whenever a company can jump on such problems before the negative influence is too far spread across a customer base, then less damage is done to the company brand and its public face. CEOs, in ever growing numbers, are also making themselves known on their companies’ social media websites and this helps to provide a facial and vocal image of the person in charge who relates to the public and speaks about issues. Sometimes, this can be a really positive action and sometimes, it becomes a problem (Severson, 2012). In 2012, the CEO of Chick-fil-A, Dan T. Cathy, made a news statement that “Chick-fil-A supported the biblical definition of the family unit.” Immediately, there was reaction from both sides of the issue of gay marriage, which led to quite a public relations nightmare, starting with a promotion for a same sex kiss-in on August 3rd, 2012, at all the company’s 1,600 restaurants nationwide in the United States (Severson, 2012). Former Governor of Arkansas, Mike Huckabee, then retaliated on Facebook by promoting August 1st as Chick-fil-A Appreciation Day and received such a response that the social media page had to come down for a short time. Other political figures jumped onto the support bandwagon by either supporting Chick-fil-A or else, in one case, denying land-use legislation for the company which was considering opening a second restaurant in Chicago, Illinois. The mayor of Boston, Massachusetts, sent a letter to Chick-fil-A that the restaurant was no longer welcome in the city (Severson, 2012). Two years later, Cathy and Chick-fil-A have backed off of making any comments about social issues, and moving in a new direction to win back the support of gays (Horovitz, 2014). While these are drastic events that can occur on social media or anywhere on the Internet, any business must remain vigilant in monitoring all communications regarding the company, whether on social media sites, the company website, or anywhere on the Internet. Accordingly, it is understood that the business must maintain and control the messages going out and coming in, and may also require that the CEO make statements about any issues of concern to the company’s stakeholders. When the CEO engages in active social media communications, that provides the voice of the business and give the brand a human face, rather than just a boxed entity (BRANDfog, 2014). Several CEOs who understand this concept are Richard Branson (including the major space flight accident this past week), Martha Stewart, Mark Zuckerberg and Jeff Bezos (BRANDfog, 2014). When engaging with the public over well-known issues, the ability to provide context and reasons for business connections, along with transparency, is essential for the public (and customers) to understand what is happening, based on the thought processes of the CEO and other business (company) leaders. Social Media has become the new Public Relations business outlet of the modern communications world, and the ability to engage somewhat directly with the CEO online, becomes a major asset. The growing consensus that a CEO should participate in Social Media platforms in order to provide better leadership, is seen in the image provided below. CEO Participation in Social Media Leads to Better Leadership (Fig. 1, BRANDfog, 2014) How does this relate to leadership styles? The Democratic Style provides the occasion of bringing in followers to know what is happening with a company, and to make suggestions that, hopefully, the company will listen to and respond to, accordingly. Depending on the situation, combining styles, such as Affiliative and Authoritative, with a Democratic style, also provides a certain transparency in public communications. One style may be stronger than another, because the CEO/business must maintain a certain control over the proceedings (BRANDfog, 2014). In this case, the Authoritative style would be more prominent than the other two. When an effort is being made to actually obtain feedback from customers and the public, the Democratic style may be more prominent than the other two styles (Goleman, 2000). “CEOs Who Actively Participate in Social Media Can Build Better Connections With Customers, Employees, and Investors.” (Fig. 2, BRANDfog, 2014) When asked about the perceived transparency of a brand in social media (2012), 64% of Americans agreed that CEOs (or other top leaders) who actively engaged often, provided more transparency for the brand. In 2013, this had risen to 77% of Americans agreeing, and 69% of United Kingdom (UK) participants who also agreed (BRANDfog, 2014). Another statement in BRANDfog’s research was how businesses who engaged in social media, viewed responses made by the businesses when dealing with challenges. “Having a Social Media Policy Allows a Company’s Leadership Team to be Proactive, Rather than Reactive in Response to Company Challenges.” (Fig. 3, BRANDfog, 2014) It is obvious that Social Media has changed modern business dynamics in communications because, when CEOs and other top leaders in the business of any brand, are willing to engage directly with the public, it gives a sense that leadership is easily reached and available when customers and the public need to state concerns (Goleman, 2000; BRANDfog, 2014). The case of Chick-fil-A and CEO Cathy also highlights that leadership must consider its public carefully, when making statements which may offend some of the stakeholders. Fall-out may indeed be pricey, yet in some cases, it can also boost a company’s brand and popularity. Some of the other research questions done by BRANDfog (2014) are presented in a table format below. BRANDfog Research Statements of Relevancy to CEO Leadership “Executive use of social media raises brand awareness and helps establish industry leadership.” US 2013 = 82% agree UK 2013 = 71% agree “A company whose C-Suite executives and leadership team use social media as a public relations channel to openly communicate about its core mission, values and purpose is more trustworthy.” US 2013 = 71% agree UK 2013 = 61% agree “I am more likely to purchase from a company whose values and leadership are clearly communicated through executive leadership participation on social media.” US 2013 = 61% agree UK 2013 = 50% agree “CEO engagement on social media helps to communicate company values and shapes a company’s brand reputation.” US 2013 = 82% agree UK 2013 = 71% agree “Social Media is a powerful tool for building thought leadership and enhancing the credibility of C-Suite executives with stakeholders, including press / media.” US 2013 = 77% agree UK 2013 = 68% agree “Social Media is an effective way to monitor conversations about a brand online and to help brands prevent potential reputation crises.” US 2013 = 84% agree UK 2013 = 76% agree “Having a socially active C- Suite (CEO, COO, etc.) leadership team can mitigate risk before a brand reputation crisis occurs.” US 2013 = 79% agree UK 2013 = 68% agree (Table 3, BRANDfog, 2014) What is clear from these responses is that whenever the leadership is willing to face the general public, particularly in difficult times (Chick-fil-A), then this is perceived as being honest and straightforward, providing a willingness to be direct and to confront issues. CEO Leadership Styles Developed Further Peter Northouse (2010), who wrote Leadership Theory and Practice (5th ed.), explains the Style Approach, which emphasizes behaviour of the leader and his or her actions in connection with employees and, subsequently, the public. Researchers show that there are two types of behaviours: task behaviours and relationship behaviours, which apply quite well to Goleman’s depiction of CEO leadership styles. The task behaviours focus on goal setting and helping employees to achieve company objectives (Northouse, 2010). The styles Goleman (2000) depicted which might fit into this area are the Coercive, Authoritative, and Pacesetting Styles of leadership. Relationship behaviours promotes a comfortable environment, a sense of being part of a team, and a willingness to conduct extensive communication between members and management, particularly when solving problems. The leadership styles which apply here, as promoted by Goleman (2000), are the Affiliative, Democratic, and Coaching styles. Therefore, the personality of the CEO was removed from analysis and replaced by CEO actions. This was part of a research study done by Ohio State researchers in 1964, who then designed a questionnaire now widely used to assess one’s leadership behaviour. This questionnaire is called the Leader Behaviour Description Questionnaire (LBDQ), and can be used within any type of business organization, including the military (Northouse, 2010). A subsequent shorter version, the LBDQ-XII, is most often used in leadership research studies. Two types of behaviours were identified: those leaders who provide structure to subordinates, and those leaders who nurture their subordinates. Researchers considered these two behaviours as separate, independent of each other, and distinctive. As it applied to the research, it was seen that a leader could provide high levels of initiating structure, but be high or low in task behaviour. Initiating structure means the use of the Goleman (2000) styles of Coerciveness, Authoritativeness, and Pacesetting. For nurturing actions, these apply directly to Affiliative, Democratic, and Coaching. This arrangement leads to various opportunities in how leadership is applied, based on the particular circumstances, and surrounding variables and their effects on those circumstances. Therefore, some styles may be applied as High-Structure, Low-Task. The circumstance could also mean that a High-Structure, Low-Task arrangement be applied instead (Goleman, 2000; Northouse, 2010). An example given is the difference between two professors and how they conduct their classes. Professor A hands out all of the reading lists and tasks required for the whole semester on the very first day of class. Professor B may do the same, but also spend a certain amount of time getting to know each of the students in order to gain insight on how each student tends to learn their lessons (Northouse, 2010). Conclusion This paper has endeavoured to show that there are at least six recognized styles of leadership that operate in connection with six climate keys, but have other varying influences which change whether two or more styles are to be used together. Accordingly, one behaviour style may need to be more prominent than another, in order to accomplish the end result desired. It is obviously a fine line that any effective CEO must walk in order to comprehend who the employees (and the customers) are, and how to work with them to gain the best outcome for the company and for the customers, who may also be the employees as well. Resources BRANDfog. (2014). BRANDfog Survey 2014: The Global, Social CEO. BRANDFOG Online. 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Retrieved from http://www.nytimes.com/2012/07/26/us/gay-rights-uproar-over-chick-fil-a-widens.html?_r=0. [1 November 2014]. Read More