Theory and Practice of Leadership - Assignment Example

Theory and Practice of Leadership Contents Question Actions to improve efficiency, adaptation, and human relations 3 Question 2: Why some of the changes Ghosn made were effective 3 Question 3: Traits and skills to explain successful strategic leadership by Ghosn 7 Question 4: Leadership Style 8 Question 5: Cross-cultural considerations that Ghosn had to consider 10 References 13 Question 1: Actions to improve efficiency, adaptation, and human relations Ghosn implemented different strategies for improving the business condition of Nissan. For improving the efficiency in business process he introduces cross functional teams where employees performing different functions were combined together to work for performing a same task. Ghosn gave them the responsibility to analyse the business requirement and problems. The cross functional teams analysed that the sale of Nissan was declining for a long period of time. Customers were not purchasing Nissan’s products of its high cost. They also analysed that the management system of the company was very weak. For this reason no strong strategy was implemented in the company to increase its profit. According to these finding Ghosn implemented strategies for changing the business. He changed many Human resources practices for motivating the employees. He provided the employees good salaries and bonus which influenced the employees to improve their job performances. Ghosn also changed the management system of Nissan. He introduces strong competent people in the management system of the company and removed the weak ones. This helped to improve efficiency in the management system of the company (Hayes, 2010). Question 2: Why some of the changes Ghosn made were effective When Ghosn was made the chief operating officer of Nissan in bid to turn around the company and make it profitable once again, many were sceptical that the strategy would not work. The main reason behind people’s scepticism was the fact that Ghosn was non Japanese and people in general felt that it was impossible for Ghosn to appreciate the culture of Japan and to effectively bring about any change. However, Ghosn was successful and this success of his goes on to prove that Ghosn was able to lead the company effectively and bring it out of distress. Before bringing on any change it is important to identify and give answers to several questions. The questions that needs to be asked can be summarised in the form of why, what and how. When Ghosn took the position of Chief operating officer and designated the role of leading the organization out of the bad times and back to profitability, he too was himself sure that any change that he and his expert team would recommend from outside would not be accepted by the people. So, what he did instead was to create cross-functional teams across the organization who would recommend to him instead of what needs to be done at the organization in order bring the company back to profitability. By involving the people from inside the existing management of the company in his change process Ghosn was able to participative management style in order to bring about change and make the process more forthcoming from the employees’ end than trying to impose any change. Ghosn style of leadership and management was participative and by ensuring that the employees participate in decision making Ghosn was able to make the change proposal more acceptable. Lewin says there in any change process there are two types of forces that affect the change process. One is a set of driving forces and other is restraining forces (Campbell, 2014). The driving forces facilitate change and the restraining forces are those which go against change. Lewin says that in order to make the change happen the driving forces should be greater in no. than the restraining forces. After the cross functional was set out to identify the key areas in which the Nissan needed to change in order to become profitable once again, one of the areas that was identified to be the cause of the problem was excessive costs. In order to reduce the excessive costs, Ghosn had to implement several tough decisions. One of the decision involved Ghosn to reduce the no. of workforce of the company by about 21000 or about 14% of the total workforce employed by Nissan. This was obviously a very tough decision to make and the proportion of restraining forces against this change was much higher. However, Ghosn did a very thing to overcome the restraining forces. He made the workers understand what was the step that he was taking and why was it necessary? Ghosn appreciated the fact that employees wanted to be sure about their future rather than live in uncertainty. As an additional effect to try to minimize the effect of the cut on employees moral and to make the process a smooth one, selling the subsidiaries of the company, natural attrition, early retirements and an opportunity to work at other facilities of the company were followed. The model for change as said by lewin consists of three steps that are to unfreeze change and then refreeze (Pathak, 2011). Nissan had several human resource practices that also needed to change in order to make the organization successful. However Ghosn understood it very well that this part was the most difficult part of change as the danger involved the plan leading to demoralizing the employees or earning their resentment. In order to prevent this thing from happening and to facilitate change, what Ghosn did was to announce benefits that the change process would bring and try to make the process of change gradual and natural. He introduced several steps that would slowly lead to a better organization that was able to embrace the change. Some of the steps that Ghosn took were to introduce a merit pay system in which the employees who were promoted or were eligible for salary increase were not decided on the basis of seniority but on the basis of their merit and eligibility. In other words the organization would set KPI for each and every employee that would be precisely defined and the performance of each employee would be evaluated against these set parameters and the employees would be granted promotion or a pay increase if only their performance matched the requirement set by the KPI. Another thing that Ghosn did was to introduce new bonus pay system by which employees could earn a third of their annual salary for performance. By introducing all these steps Ghosn was able to gradually replace the old and inefficient top management with more competent and worthy successors. Kotler broke down the three step model of change given by lewin into eight steps in order to facilitate change. The steps of change given by Kotler included as a first step to create a sense of urgency that would guide change (Biech, 2007). It is quite evident that the drive to go for change needed to come from the employees. They need to understand that change is necessary. Ghosn made this possible by communicating to the people the condition that the company was currently in and the steps that were needed to turn things around. The next step suggested by Kotler in order to facilitate change was to form a powerful guiding group that would lead the change process (Robbins, 2009). In this line Ghosn formed a group of people that would help the process of change. In fact the areas of the organization that needed to change were identified by cross functional teams that were created amongst the existing people and staffs at Nissan. The third and the forth steps to make the change successful was to form a vision and to communicate the same to all the sections of the organizations. Question 3: Traits and skills to explain successful strategic leadership by Ghosn Strategic leadership refers to the type of leadership in which the leader is characterised by the effort that enables him to anticipate what is required out of him and what is required for the good of the organization (Bass, 2007). A strategic leader has the capability to think and note in advance of the hurdles that can come in his path while implementing the change and how he can overcome the same in order to achieve the goal for which he is designated. The leader has the inherent ability to think in advance and to work with others in driving the change that will bring in a bright future or the organization (Kaiser, Hoga and Craig, 2008). Mr. Ghosn can be said as the perfect example of a strategic leader. Ghosn was sent by Renault, the French company which was ready to accept half of Nissan’s debt, in a bid to help the company turnaround. However, initially there was a lot of scepticism about whether Ghosn would be able to do his job successfully as the Japanese culture was totally different and being from a foreign country it would be very tough for Ghosn to take the things under his control. However, like an efficient strategic leader that Ghosn really was he decided to turn his disadvantage in his favour. Three months prior to assuming the role of COO in the organization Ghosn personally met with hundreds of employees in the organization. By these meetings Ghosn understood that any change that was put on the organization and its employees by Ghosn and his team from outside would not be accepted by the employees of Nissan. So what he did instead was to form cross functional teams `at Nissan and make the team suggest changes that would be implemented in order to turn things around in the company. The essential skills of a strategic leader are his absorptive capacity, adaptive skills and managerial wisdom (Battilana, 2010). The absorptive skills mean that the leader is ready to learn and assimilate new information. In case of Ghosn this effect is quite prominent as when Ghosn was sent to assume the post of the COO in the new organization the first thing he did was not to impose on the organization anything that he thought was relevant but to instead ask the cross functional teams to suggest him the areas where they felt that the change was required. Adaptive skills refer to the leader’s ability to change according to the situation. In foreign countries most often the strategy is to hire and fire, which is to fire the employees who the organizations thought was redundant. However Ghosn did not do any such drastic steps. The teams that were formed by him in order to facilitate and suggest changes suggested that one of the main problems that the organization faced was that of high operational cost. Ghosn knew that in order to make the organization again stand on its feet he was to fire about 21000 employees or about 14% of the total workforce of Nissan. However, knowing the fact that this was a hard pill and the employees may not be ready to accept it, he let the employees first understand why the steps were necessary for the organization. In order to make the process less painful he made the layoffs through natural process of attrition, selling some of the subsidiaries, introducing early retirements and opportunities for the workers to work for part time at other company facilities. Question 4: Leadership Style Ghosn with his strong leadership skills and techniques was able in improve the business condition of Nissan. His leadership style contributed a lot in enhancing the business process of the company. He implemented transformational leadership style in the business which created a positive result in growth and development of the business. Transformational leadership: Ghosn implemented this leadership style to improve to achieve the business objectives of the company. This leadership process also improves the performance of the employees by providing them different opportunities to take necessary decisions for improving business condition or achieving the growth and success of the company. Before implementing their decision they consult with their team leader or managers about their decisions. Ghosn implemented leadership style by developing nine cross functional teams. He gave different responsibilities and to the team members and provided them the authority to determine necessary functions and activities which are required for improving business condition of Nissan. The team members performed different cross functional activities for enhancing business situations. The employees working under these teams identified different problem which existed in the business operational process. Earlier this type of leadership approach was not used in this company. Nissan was experiencing very little cooperation in its cross functional activities. Ghosn leadership style helped to indentify the reasons behind declining sale of Nissan. This leadership process enhanced the confidence of the employees. By implementing this style Ghosn made the employees more responsible in their work. It helped them to understand the benefit and growth of the business in a detailed way. Cross functional teams of Nissan increased the productivity of the business. Employees performing different functional activities interacted with each other while working in the same team. It influenced them to know and understand about different process of the business in a much detailed way. As a result they become aware of different business process and its impact on the growth and development of the company. The company was able to reduce many costs by performing this type of leadership approach. Ghosn had a detailed discussion with its employees about their opinion to solve the business problems. By this discussion process he was able to know employees interest towards learning new things for improving their performance. Ghosn trusted its employees which facilitated him to focus more on developing effective strategies for the company. Many managers of Nissan were also involved with this cross functional teams who guided the team members in its decision making process. Ghosn has changed many human resources practices in Nissan. This leadership style had transformed the business process of Nissan. As a leader he transformed the existing rules of employment by improving promotion and pay scale of the employees. It helped the employees to enhance their motivational level. He was able to change the culture of the company by implementing strong leadership skills and essential changes in Nissan (Peng, 2013). Employees were provided reward based on their performance. It increased dedication among them for implementing changes and performing work according to the necessary changes. Individual employees of those cross functional teams learned and developed many innovate ways for implementing the change. They played a vital role in developing various approaches to reduce many cost of the business. Ghosn utilised the human capital of Nissan in a very effective way. He motivated them by providing promotions. Employment of the employees of Nissan was guaranteed by Ghosn. For increasing their dedication level in the work Ghosn provided bonus to employees who delivered a good performance. One of his major change in human resource practise of Nissan was he introduces very competent managers who replaces weak upper and middle level managers. This played a major role in improving the business process of the company. The transformational leadership of Ghosn established a vision for the company. By its strong analyses power Ghosn was able to benefit the business of Nissan in various ways (Bamberger and Meshoulam, 2000). He became the role model for many of the workers of Nissan. He understood the strengths and weakness of the business. According to that, as a leader Ghosn developed his leadership style which was very effective in the business operations of Nissan. Question 5: Cross-cultural considerations that Ghosn had to consider Nissan was in a pretty bad state and was nearing bankruptcy due to the huge debt patter that it had accumulated over the years. The company would have filed for bankruptcy but was saved due to Renault’s effort to assume part of the debt of Nissan. As part of the deal however Ghosn was sent to the company in order to help the company make a turn around. However there were several hindrances in making Ghosn successful in his plan to help the company turn around successfully. The major hindrances that obviously arose about were regarding the difference of culture. Ghosn belonged to France where the work culture and practices were totally different from that of Japan. In fact initially there were lot of scepticism regarding Ghosn would be able to succeed or not as it was believed that it was impossible for a non Japanese to come into a Japanese company and bring about the required change. However Ghosn skilfully handled this cross cultural barrier. Three months before assuming his post he personally interacted with hundreds of employees of the organization to understand the state of the problem. Through these interactions he personally came to understand and appreciate the fact that any change that would be imposed by Ghosn and his team from outside would not be accepted by Nissan. So what Ghosn did at Nissan was to from cross functional team who would suggest the changes that would be required to adopted at Nissan in order to help the company turnaround. This as a step was new for any company in Japan. In a country like Japan it was necessary to keep the supplier relations untouched. However in order to make the turnaround strategy at Nissan successful Ghosn had to change the company’s supplier strategy. The company had high purchasing costs and in any manufacturing company the purchasing costs consists of 60% of the operating cost of a company. Nissan’s purchasing costs were excessively on the higher side and were about 20% greater than that of Renault. However, despite being in a country where supplier relations were considered as one that should not be interfered with, Ghosn had to interfere in the supplier side of the company and the fact that Ghosn was able to do it successfully was evident from the fact within a period of three years Ghosn was able to reduce the cost by about 20%. Other steps that Ghosn took was that when taking any hard decisions he ensured that the employees understood why was the decision being taken and the benefits that would arise out of it. Ghosn also ensured that before he announced the changes that he was going to implement any of the proposed changes did not leak. This was done so as to ensure that the employees should not misinterpret any of the strategic change decisions before he had a time to explain them himself. By incorporating all these strategic decisions Ghosn was able to ensure that the decisions he took was well understood and the cultural differences resolved. References Bamberger, P., and Meshoulam, I., 2000. Human Resource Management Strategy. CA: Sage. Bass, B.M., 2007. Executive and strategic leadership. International Journal of Business. 12(1). pp.33-52. Battilana, J. et al., 2010. Leadership competencies for implementing planned organisational change. The Leadership Quarterly. 21(1). pp.422-438 Biech, E., 2007. Thriving Through Change: A Leaders Practical Guide to Change Mastery. NY: American Society for Training and Development. Campbell, H., 2014. Managing Organizational Change: A Practical Toolkit for Leaders. Philadelphia: Kogan Page Publishers. Hayes, J., 2010. The Theory and Practice of Change Management. Denmark: Palgrave Macmillan. Kaiser, R. B., Hogan, R., and Craig, S.B., 2008. Leadership and the fate of organisations. American Psychologist, 63(1). pp.96-110. Pathak, H., 2011. Organizational Change. New Delhi: Pearson Education India. Peng, M., 2013. Global Strategy. USA: Cengage Learning. Robbins S. P., 2009. 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