Leadership Theories and Practices - Deloitte - Case Study Example

Leadership Theories and Practices Table of Contents Introduction 3 Traditional Leadership Approaches 3 Trait Approach 3 Skill Approach 4 Importance of Theories in the Firm 5 Modern Leadership Approaches 6 Servant Approach 6 Limitations of Servant Approach 6 Transformational Approach 7 Limitations of Transformational Approach 8 Relevance of Leadership Theories in Deloitte 9 PEST Analysis 9 Considerations Based on Global Environment 9 Relevance of Traditional and Modern Approaches 10 Gender Issues 11 Conclusion 11 Reference List 13 Introduction Turkey’s economy has been performing remarkably over the decades and a steady growth has been noticed and also the country presented itself as the 17th largest economy in the world. An efficient macroeconomic strategy along with discreet fiscal policies and major structural reforms has led to an integration of Turkish economy into the globalised world. Deloitte has been operating in Turkey since 1986. Deloitte’s business plans include choosing of Turkey as the concerned market and based on that, the company has opened four new branches in Turkey besides the office located at Istanbul, which is the headquarter of the company. Deloitte has been attempting to enhance its market penetration by investing in Turkey to a large extent. The company by its investment strategies wishes to hold a leading position within the professional consultancy firms. The first part of the study explains a few traditional leadership approaches such as trait and skill theories and the relevance of those theories in the global organizations. It also clarifies that these approaches are still relevant in the changing world. In order to explain the theories a case study is analysed. The second part explains the importance of modern leadership theories such as servant and transformational approaches and their limitations that needs to be kept in mind by the global firms before applying them. A case study helps in understanding the theories better. The final part explains the relevance of leadership theories in Deloitte by conducting a PEST analysis and by studying the gender issues of the firm. According to the issues of the company the leadership approaches that suits best will be advised. The study concludes that leadership theories are vital for achieving its vision and for ensuring that the leaders of the Deloitte are developed internally and externally and the leadership process in the firm should be given the topmost priority. Traditional Leadership Approaches Trait Approach The trait theory considers that certain qualities and traits are inherited by the individuals which enable them to be comfortable with the leadership strategies. Trait theory often takes into account particular personality traits or characteristics of the behaviours possessed by the leaders. The trait theory developed from the early research of leadership primarily focuses on searching a group of heritable attributes that differentiates among leaders and non leaders. Trait approach attempts to identify the physiological, demographic, task allied and social characteristics with the emergence of leader and its effectiveness, as mentioned by Spillane, Halverson and Diamond (2004).A large number of companies considers this theory to be vital for implementing. A question arises if the specific traits are main features of leaders and the leadership process, how will the people be explained who possess such qualities but are not leaders? Existing inconsistencies in the connection between leadership traits and its effectiveness leads the scholars to shift their paradigms in exploration of innovative explanations for competent leadership. The trait theory provides productive information about leadership. The core trait to be possessed by people under this leadership theory is achievement drive including high level of effort, ambition and energy (Bennis, 2007). Another trait is motivation to lead team in achieving common organizational goal. Inspite of the leadership theory being complex, it provides an in depth knowledge and understanding of the leadership element in the process of leadership. Some other important traits also include emotional maturity, self confidence, honesty and detailed knowledge of business. This theory can be applied by individuals at every level and in all types of organizations. According to Northouse (2012), the information gathered by the theory can be utilised by the managers of the organization for analysing their position. Skill Approach The skills theory of leadership takes into account the skills and the abilities that the leaders possess, Amanchukwu, Stanley and Ololube (2015). Skills theory never refuses to acknowledge the interrelation between the traits inherited and the capability to lead efficiently. The theory also argues that the important keys to leadership performance are learned abilities, an enhanced leadership style and the gathered knowledge. The skill theory discovers the skills and abilities that make the leaders efficient. The theory dictates that an effective leadership requires three skills which include technical, individual and theoretical abilities, Uhl-Bien, Marion and McKelvey (2007). Technical skills focus on proficiency in a particular work or activity. Human skills consider the capability to work with people. The theoretical skill comprises the skill to work with broad facts and concepts. The three skilled approach of skill theory hence are to be adopted by the leaders depending on their position in the management structure of the firm. The vital strength of this leadership theory is it considers leadership performance on the skills that are learned rather than traits. The weakness of the skills theory lies in their predictive ability and failing to recognize that an individual’s competencies lead to an efficient leadership, Kolb (2009). An ample data for the construction of the skills model are collected from the military which means the theory’s applicability in the general organizations are doubtful. A well-built belief in this theory demands that a substantial attempt and resources needs to be devoted in leadership training and development. Importance of Theories in the Firm The trait theory of leadership has some fruitful advantages and hence Deloitte cannot afford to disregard it. The operations of the company might enhance if the theory is owned by the firm. The theory provides a benchmark for identifying capable leaders that if followed by the firm the leaders can become efficient. The trait theory is spontaneously alluring. It fits with the fact that leaders are people who are out front and leading the way in the organization. The theory is considered to be consistent with a belief that leaders are special kind of individuals with gifts to perform extraordinary tasks. It lies on the foundation that leaders are unique and their uniqueness lies in the abilities that they possess. The theory enables assessment of personalities that are important in analysing the prospective leader’s strengths and weaknesses. The theory hence proves to develop leadership skills in the company and leads the global firm to enhance their performance. The skill theory of leadership comes with many benefits to the business and hence the theory if followed by the firm can prove to be profitable, Levin and Mattis (2006).The theory enables the learners to bring to use the characteristics of the skills theory for carrying out self evaluation of oneself in order to identify their own strengths and weaknesses based on the three skills that is technological, human and theoretical. This assessment enables the leaders to gather an idea of their effectiveness and undergo training in enhancing their leadership skills and lead his followers in a better way. Thus, the theory may enable Deloitte to improve their leadership abilities in order to enhance their organizational productivity. A renowned company Deloitte uses trait and skill leadership theories for maintaining efficient operations. The company was on the verge of getting destroyed due to poor economic conditions. The company succeeded through their approaches to innovation, market attention and self confidence but failed pay attention to what their employees think. A conflict started to arise among the employees and the management due to faulty leadership. For reviving such state, the company implemented trait and skill leadership approaches that generated fruitful results for Deloitte. Courage, motivation served to be important characteristics of the theory. The employees were motivated by various engagements of the management with the employees and by means of rewards such as pay hike or promotion for accomplishing a task brilliantly. Courage enabled the firm to step forward and overcome uncertainties. Having courage enabled the firm to restructure and come across all the negativities. The theories generated desirable results and the employees felt dedicated to the company and simultaneously the stock price of Deloitte increased. Modern Leadership Approaches Servant Approach Servant leadership theory is considered to be a set of practices that enhances the lives of the people and builds efficient organizations. Servant leadership means a leader of a team provides support to its subordinates. The theory suggests that the leaders must address the wants of their followers, customers and the community at the forefront in order to meet organizational goals effectively. Deloitte implements servant leadership to focus on a big picture as they are capable of identifying complex issues beforehand and are capable to implement effective solutions in time and in a planned way. Servant leaders have the quality of optimism and also have a compassion for people. From the planning of the project until its final implementation, a servant leader gives priority to serve best to the people. The qualities possessed by the servant leaders include constructive quality, persistence and with great motivating power, Acker (2006). Servant leaders are known to transform societies and solve complex problems within a specific timeframe. This theory has gained a significant amount of popularity among the various firms. Servant leadership is considered to be incredibly important in sustainable leadership. This theory advocates a framework of motivating leaders but it also difficult to describe this theory as a set of standards and beliefs that the leaders supposed to keep in mind. Limitations of Servant Approach The servant leadership theory has become well-known in this era of businesses that Deloitte should be bewaring of. Though this leadership theory is considered important in the organization, but the theory also comes with certain limitations. Servant leadership leads to the minimization of power of the subject manager and the overall management functions in the organization. When the employees find out that the leaders are catering to their requirements in an acute manner, they no longer view them as a convincing figure. If the top management desires the lower level managers to push the team members under them towards brilliant performance, it becomes difficult for the servant managers to stage back into this position as a more superior figure, Avolio, Walumbwa and Weber (2009). Implementation of servant leadership can even demotivate the employees, who then produce inferior results over time. Leaders in every context of a business are different from those who are regular employees as they have a role of developing vision and provide a path. Thus a manager requires getting some detachment from its employees in order to explore innovative opportunities and resolve issues and developing a picture of heading their business. Deloitte suffered from servant leadership failure in the early years of their operations. The company strived to sustain as a result of leadership failure. They implemented the approach for generating superior results but failed to produce better results. The company failed to provide enough support to its employees that demotivated the employees. It was unsuccessful to analyse the complex issues of the environment. The leaders thought they had answers to every question and did not rely on their teams to cope up with critical problems and there they faced the problems of faulty leadership. With time they realised their weaknesses and developed strategies to make their leadership approaches efficient. Therefore, the limitations of the leadership approach should always be considered to avoid such failures. Transformational Approach Transformational theory also known as relationship theories limelight on the relation formed between the leaders and the followers. Transformational leadership is understood as a leadership style in which the leader is stimulated with identifying the change required by forming a vision in order to guide the change by inspiration. This theory understands the leadership as a process by which an individual engages with others and is capable to build a connection that leads to an increased motivation and morale in both the leaders and its followers, Penciliah (2005).The leaders of this style are supposed to hold positive expectations for the followers, perceiving that they can perform their best. Transformational leadership theories are compared to the charismatic leadership theories in which the leaders who possess specific qualities like confidence, companionability and clearly defined values are considered as the best able in motivating the employees. The transformation leaders inspire its group members by helping them to make them understand the importance to perform a good task, Kolb (2012). Transformational leaders’ focus on the better productivity of its group members but also closely focuses on individual person to realize his or her potential. Hence, by applying this leadership theory Deloitte can transform its business into a highly successful one. Limitations of Transformational Approach By applying transformational leadership, Deloitte can successfully create a vision for the company and inspire their workforce to attain that vision. Besides gaining benefit, the company should also be aware of the limitations that come with the leadership theory. One of the drawbacks of the theory is lack of details, Epitropaki and Martin (2004).The transformational theory is efficient in motivating and driving the workforce towards achieving the company’s vision but he may lack the focus on the details required for developing a strong corporate structure or go through the policies of the company. A transformational leader takes into account the overall big picture of the company’s visions and neglects daily functioning details of the firm. Another major drawback is disguised authenticity. A transformational leader operates by motivating their workforce. The leader convinces the employees to take on much responsibilities and progress themselves by training and hard work. Transformational leaders may sometimes haze the line between actuality and motivation. To obtain the desired results, the leader may continue to motivate his followers by admiring the employees’ performance. But the reality may turn out to be that the employees may lack abilities necessary to carry out the tasks that are assigned to him and the transformational leader only shares words of motivation where training is needed, Eagly and Karau (2002).These limitations need a close attention in order to make the leadership theory efficient. Change is inevitable in today’s complex business environment. The transformational leaders in Deloitte developed a forward looking vision and tried to understand where they tend to head and for which reasons. They implemented technological and cultural changes in their organization in the initial stages of their operations but failed to drive employees for adapting such changes. The company took the approach in the form of risk taking and long term scheduling. The company’s perception that they understand the market best due to its past performance is the reason for their failure. They failed to create a vision and drive the workforce to attain the organizational goals. Deloitte put forth the characteristics of the approach and focussed on short term objectives with the forging years and motivated them to adapt to the changes and succeeded. Relevance of Leadership Theories in Deloitte PEST Analysis Political factors that are affecting business are given a lot of importance by Deloitte. As the company realises that the government policies of Turkey in which they are operating can affect their business, the managers of the firm strictly follows the laws. The shifts in the interest rates as a result of government interventions can affect the demand patterns of the firm. Deloitte continues to track their political environment for building business strategies in order to cope up with the adverse affect of the political changes. Economic factors that are affecting the business include customers’ confidence, fluctuations in the interest rates and inflation. These factors need to be monitored in accordance to the business to perform well. The sociological factors include cultural factors affecting the business. Deloitte being a global company consists of a culturally diverse workforce possessing distinct beliefs and values. The firm initiated strategies in managing the diverse workforce and reducing conflict among employees with distinct cultural background, Zhang and Fjermestad (2006). The technological factors affect the business operations of Deloitte. In order to enhance their operations and be competitive, the firm takes IT-enabled approaches. They are also coming up with an innovative approach of Deloitte-digital and further showing willingness in investing in various other technological innovations to ease out their business operations eliminating chances of errors. The company comes with strong technology practice for satisfying their clients. Considerations Based on Global Environment By conducting the PEST analysis of Deloitte, the environment in which the business is operating can be analysed. Based on the requirements of the company, the leadership approaches which are found suitable are discussed. The trait theory helps in identifying certain leadership traits in the prospective leaders such as adaptability, cooperativeness, persistence, responsiveness to the global changes so that best leaders are selected in managing employees. The skill theory on the other hand judges whether an individual possess leadership skills like creativity, cleverness and are educated about group job for efficient handling of their followers. These leadership approaches might prove well in developing the leadership effectiveness in the company. Relevance of Traditional and Modern Approaches There is an immediate requirement to develop leaders for maintaining company’s growth in the era of globalisation. A global firm faces numerous competitive challenges and the effects of globalisation have escalating emphasis on the emerging markets present corporate leaders with numerous challenges in training the leaders in order to run the global firms. The leaders are considered to act as a catalyst that enables all the various elements of the organization to work together. Absence of leadership leads the business resources remain dormant. Global firms have diverse workforce who require motivation to perform their best in the company and such motivational support comes from efficient leaders. The traditional and the modern approaches are proved to work well in the global nature of the organizations. Servant leaders focus developing their team’s individual potentials and encourage their personal growth, and on the other hand transformational leaders lay emphasis on enhancing the creativity of the workforce. Organizational development in the global market can be obtained by adopting these leadership approaches. Traditional theories have their own advantages in developing efficient leaders, and served the organizations well enough for decades. Traditional theories work fine in the world of manufacturing. Inspite of the benefits, the traditional styles of top down management is gradually evolving into a joint approach that empowers the workforce and hazes the lines between higher authority and staff. It is noticed that the modern leadership theories prove to be more participatory and effective in the firms in 21st century global scenario than the traditional theories and hence, modern leadership styles can give out better results in this changing world. Deloitte is one such company where modern and traditional leadership approaches worked well and the firm is successfully performed their business. Leadership facilitated the engagement of employees in accomplishing tasks and maintained a healthy organizational culture. The firm believed that in today’s disrupting market place traditional approaches are not keeping pace. The firm is known to a servant leadership company. They linked shareholders value with the value for their staff. In every possible ways they tried to fulfil their employees’ expectations and best served them. As a result the employees got motivated and dedicated towards the organization and gave out incredible results. They also used transformational approach for motivating their employees and always admired the talent and ideas of their employees and directed them towards adapting to change. The characteristics of the leadership theories are understood well by Deloitte and by observing the success rate of the company it can be gathered that both the modern leadership approaches if implemented correctly can generate profitable results Gender Issues An increasing number of countries are trying to understand and cope up with the issues relating to gender inequality. It has been observed that ample global companies are advancing less beyond simple tokenism when it comes to introducing women in a leadership role. There lie many obstacles on the way of corporate gender balance, Zhang and Fjermestad (2006). Mentoring, coaching and women leadership conferences have come to existence in order to shift the balance and address the gender inequalities. Global firms maintaining gender equalities can help reduce expenses and perform much better. Maintaining gender equality helps improving national productivity and helps to gain competitive advantage. Deloitte has contributed a lot in addressing issues arising from such gender inequalities. The company has been ranked best in 2014 employees of choice for maintaining and encouraging gender equality in workplace. The company believes that they are committed towards achieving gender equality. Deloitte puts more emphasis on empowering women by providing equal opportunities to them to prove their leadership abilities. From having four female partners in 1998, Deloitte has now gone to have 125 female members in 2015 and out of the 54 members that were promoted, 31% were found to be women. In the Deloitte board, females now represent 27% of it, Reskin (2000). They believe that they have achieved such a tremendous progress in the field of gender equality through means of their strategies for sustainable commitment in achieving gender equalities. Being a leadership team Deloitte has always clearly stated that it is not related to experimenting with the newest trend, but is related to understanding that the gender equality deserves an extended term vision and commitment to remain concentrated on lashing change. Conclusion By conducting an in depth study of the relevance of the traditional and modern leadership theories, an idea is gathered that how vital it is in the global firms like Deloitte. An idea is also gathered in the grounds of addressing gender inequalities. Deloitte is found to be seriously committed in maintaining gender balances and provide equal opportunities to its female employees in presenting their leadership skills. Application of the traditional and modern theories of leadership discussed in the study is to be considered by the company for empowering their leadership abilities and to achieve the organizational vision. Leadership is at the top position when it comes to human capital concern. There is a requirement to develop new leaders sooner and globalise the leadership approaches. In this era of globalisation, Deloitte may face new leadership challenges which include training several generations of leaders and facing the demand for leaders having global flexibility. The theories of leadership need to be implemented in the firm as per its suitability which might help to develop efficient leaders. Hence it can be concluded that leaders should be developed at all levels so that they can drive employees of the organization in attaining the common organizational objectives. Leadership will continue to keep its significance in the organizations in upcoming years. Reference List Acker, J., 2006. Inequality regimes gender, class, and race in organizations. Gender & society, 20(4), pp. 441-464. Amanchukwu, R.N., Stanley, G.J. and Ololube, N.P., 2015. A review of leadership theories, principles and styles and their relevance to educational management. Department of educational foundations and management. 5(1), pp. 6-14. Avolio, B. J., Walumbwa, F. O. and Weber, T. J., 2009. Leadership: Current theories, research, and future directions. Annual review of psychology, 60(1), pp. 421-449. Bennis, W., 2007. The challenges of leadership in the modern world: introduction to the special issue. American Psychologist, 62(1), p. 2. Eagly, A. H. and Karau, S. J., 2002. Role congruity theory of prejudice toward female leaders. Psychological review, 109(3), p. 573. Epitropaki, O. and Martin, R., 2004. Implicit leadership theories in applied settings: factor structure, generalizability, and stability over time. Journal of Applied Psychology, 89(2), p. 293. Kolb, D. M., 2009. Too bad for the women or does it have to be? Gender and negotiation research over the past twenty‐five years. Negotiation Journal, 25(4), pp. 515-531. Kolb, D. M., 2012. Are we becoming part of the problem? Gender stereotypes in negotiation research. Negotiation and Conflict Management Research, 5(2), pp. 127-135. Levin, L. A. and Mattis, M., 2006. Corporate and academic responses to gender diversity. Equal Opportunities International, 25(1), pp. 60-70. Northouse, P. G., 2012. Leadership: Theory and practice. Los Angeles: Sage. Penciliah, Y., 2005. How far have we come? Integrating women in management in the South African public service. Journal of Public administration, 40(3), pp. 341-351. Reskin, B. F., 2000. Getting it right: Sex and race inequality in work organizations. Annual Review of Sociology, 2(2), pp. 707-709. Spillane, J. P., Halverson, R. and Diamond, J. B., 2004. Towards a theory of leadership practice: A distributed perspective. Journal of curriculum studies, 36(1), pp. 3-34. Uhl-Bien, M., Marion, R. and McKelvey, B., 2007. Complexity leadership theory: Shifting leadership from the industrial age to the knowledge era. The leadership quarterly, 18(4), pp. 298-318. Zhang, S. and Fjermestad, J., 2006. Bridging the gap between traditional leadership theories and virtual team leadership. International Journal of Technology, Policy and Management, 6(3), pp. 274-291. Read More