Organisational Leadership and Performance - Literature review Example

Organisational Leadership and Performance Student’s Name: Course Code: Tutor’s Name: Date of Submission: 1.0 Introduction Goffee and Jones (2005, p.1 & 2) observes that fluidity in the globalised environment calls for a leadership that is able to analyze the situation and offer a unique response without imitating others blindly, but by using their previous experiences as resource material. The current globalised environment has brought a myriad of opportunities and challenges to business organisations. Such opportunities and challenges include increased competition, expanded market opportunities. The question that emerges is how business leaders are able to align their businesses to be top performers despite of the challenges by leveraging on opportunities as key success factors and create lasting values. In this regard, Goffee and Jones (2005, p.1); George et al (2007, p.129) indicates that authenticity is the hallmark of leadership within the context of globalised environment. The highlight of this paper is to underscore the way that leadership has evolved within the context of globalised environment by profiling the leadership and communication style of a global leader. To frame this discussion, the expose utilises case example of Louis V. Gerstner, Jr. tenure as IBM CEO from 1993-2002 where he managed to transform IBM from a possible to a dominant business outfit. To accentuate this concern, the paper first examines from a historical perspective the existing situation before his tenure and the turnaround he cultivated into the organisation so as to justify why he is an admired leader worth mentioning. Lastly, examines how the leader managed to inspire and empower those behind so as to rejuvenate IBM. This segment thus stresses how leadership has changed with the globalised environment. Such changes include being genuine by practicing your values and principles so as to create culture change and building powerful team through motivation, teambuilding and empowering employees to be hands on. 2.0 The Organisational Performance and Leadership Response: Case Example of IBM Tung (2001, p.40) provides a brief historical background on IBM performance and how Louis managed to bring it back on its feet. International Business Machine also known in short as IBM, was founded in 1880s with merger of three different firms which was later incorporated in 1911 by the name Computing Tabulating Recording (CTR) Corporation. During this period, they dealt with various products such weighing scale, coffee grinders and so on. From 1914, under the leadership of Thomas J. Watson Sr for 40 years, the company enjoyed a tremendous growth. Indeed the hallmark of his leadership was the ability to project that the changing technology is geared towards computing and thus changed the focus of the company towards the same. By 1980s, the company accounted for 40% of sales in computer industry. This sales volume equally accounted for 70% of its profit. During this unprecedented growth, the produced world class physicists that opened new horizons in computing technology. While in 1990s, the growth had slowed down with 6%, the company still enjoyed the lead since it sales was 5 times more than the nearest competitor (Tung, 2001, p.40). While such exponential growth was happening, slowly in 1980s unchecked problems as result of change in external dynamics started creeping in. certain technologies that IBM invented and relied on started becoming redundant or their market share significantly diminished. These included DRAM, hard disk drives, and personal computer and electric type writers (DiCarlo, 2002). As result of the above, the company started showing signs of failure. The firm became a overstaffed organisation with well of 400, 000 employees, a company that invested in low margin transactional and commodity-based businesses (IBM, 2013). Yet on the other hand, the pointer was that the computing industry was headed to a highly segmented sector with Microsoft taking lead in personal computer software, Novell in networking, Hewlett Packard in printers, Seagate in disk drives, Oracle specialising in database software while at the same time IBM faced cut throat competition from other manufactures of personal computers such as Compaq and Dell. Such trends made the company rated by Wall Street as failed organisation with its stock price hitting the lowest in 1990s coupled with two year loss amounting to over US$ 1billion. For instance, for the 1992 financial year, the firm recorded a massive loss of US$ 8.10 billion which was the highest in US by then (Tung, 2001, p.41). This was the worst experience the firm had since the demise of Watson in 1956. To counter the eminent failure of the firm, the board of directors went out of the tradition and recruited outside their ranks. Thus, in April 1993, Louis Gerstner was recruited as the CEO with the promise of radical transformation (DiCarlo, 2002; Tung, 2001, p.41; IBM, 2013). During his tenure followed by immediate predecessor, the company has engaged in 108 strategic acquisitions so as diversify and strengthen its portfolio, capture higher value ventures and provide global scale expertise (Tung, 2001, p.43). Thus, in the subsequent section, the paper will assess the various radical transformations that were brought by the new CEO up to his retirement and how such leadership skills reflects within the context of globalised environment. 3.0 Contextualising Change of Leadership in Globalised Environment: Case Example of Louis at IBM Frankel (2008, p.24) advances an interesting scenario about the ultimate focus of leadership. He notes the role of a leader is to work through others by influencing them so that their synergies can be galvanised towards a common purpose where the essence is to create aura of possibilities among the employees to contribute to this goal using various interpersonal/ peoples skills soft skills coupled with the technical skills. To contextualise the change of leadership styles in globalised environment, the discourse draws from the case example of Louis Gerstner during his tenure that lasted from 1993-2002 where he managed to transform IBM as a loss making company back to its global dominance. Principal to the discussion would be the emerging leadership styles, characteristics, behaviours, traits, competencies and perceptions displayed by the leader in the process of restructuring the organisation through insightful strategies. 3.1 Genuine Transformational Leadership and Distinct Organisational Culture Leaders recruited during crisis such as the one experienced by IBM are recruited to initiate and sustain change that can create a lasting and sustainable organisation which is competitive. Indeed Tung (2001, p.41) Di Carlo (2002); IBM (2013) indicates that Gerstner was recruited by board of directors to transform the company from the imminent failure. However, the challenge to be experienced by such leaders is based on the concern that not all changes prosper. Beaudan (2006, p.2) postulates that “three out of five change efforts are only a partial success, and two out of five end up in failure”. This is as result of the expected internal resistance because most people are comfortable with known situations instead of untested experience where they are not sure what is in for them (Kotter and Schlesinger, 2008). The interrogative question that arises is how he managed to transform the organisation if creating change isn’t an easy path. George and Colegues (2007, p.130 citing George, 2003) indicates that over the past five years, people have developed a deep distrust of leaders. It is increasingly evident that we need a new kind of business leader in the twenty-first century. Based on the later realisation, he challenged a new generation to lead authentically. Authentic leaders demonstrate a passion for their purpose, practice their values consistently, and lead with their hearts as well as their heads. They establish long-term, meaningful relationships and have the self-discipline to get results. 3.1.1 Practicing your values and principles Not let examine how Gerstner was a real leader who never copied others, but was a person of his own who only relied on the past as a guiding frame. Tung (2001, p.40) notes that after the new CEO was recruited in 1993, the gap that he saw was on the segmentation of computing industry and need to have customer centred/ demand driven approach; team work which was missing as result of uncontrolled decentralisation and too much individualised reward scheme; speed and execution. These he achieved by standardising global core processes, centralising the company to utilise its strengths as a one stop solution provider to customers, fixing the core businesses, reformulating employee reward scheme and shifting the culture of the organisation to be responsive to customer needs. For instance, to be unique and distinct within the context of the prevailing environment, the new CEO engaged in structural adjustment programme where the workforce size was reduced to manageable levels where the number reduced to 220, 000 in 1994 from all time high 400, 000. Secondly, instead of disintegrating the firm into smaller units as result of the segmentation the industry was facing, he decided to integrate it and ensure that it offers one stop solutions to customers and thus giving them a competitive adage over other competitors- this he terms as the greatest decision ever made in his career (DiCarlos, 2002). Thirdly, marketing communication was reformulated so that they could speak in one direction. In the next three years, the company focus was on high margin products instead of low margins like printers. This equally saw it venture in service provision and thus have presence in business process outsourcing, infrastructure support, product maintenance, application management services, business consulting and systems integration (Tung, 2001, p.41). According to Tung (2001, p.42), to cushion these gains, one the ultimate aim of Louis was to create a distinct organisational culture that positions the company “as a globally integrated model with one set of processes, shared services and broadly distributed decision making, carried out by a global workforce managed by a common set of organisational value.”. The lesson learn from the above experience is that leaders do not create change, but they rely on the employees to change the culture through day to day behaviours by creating that enabling environment for employees (Cummings, 2010, p.363). In this essence, the focus of Louis was to create a collaborative platform between management and employees by setting out vision and motivating them in line with the market trends. That belief is asserted below as he was quoted. In creating this distinct culture so as to allow him practice values and principles he believed in without imitating others, one crucial lesson on how leadership in globalised environment has changed over time emerges. The emerging lesson here is that ‘one size fit all’ strategy should not be implemented. Levasseur (2001, p.72) indicates that initiating new paradigms or perspective on how to run an organisation is more difficult to perform, doubtful in terms of success, and dangerous. Implementation of organizational change is usually met by resistance and likelihood of failure because managers more often than not apply ‘one-size-fits-all’ strategies. Such kind of approach is what as a modern leader Louis avoided by having myriad of solutions to all problems that were afflicting the firm as seen earlier. In a generic perspective, the critical ingredients that emerge in regard to practicing values and principles one believes in, he or she must manage by having a mix of principle and procedure. Secondly, the market trend should influence how these principles are aligned otherwise these changes would be futile. As the head, the leader takes the overall responsibility and thus, he should move with required urgency to diagnose and offer solution to the problem. Lastly, while the buck stops with the leader, he or she has to work with divisional/ departmental/ unit heads since they are the people who understand the details involved. 3.1.2 Motivation, Empowering Employees and Building of Powerful Team (s) Relationship building is an important aspect in creating a united organisation that works towards a common goal. George et al (2007, p.136) observes that a leader left alone can’t succeed, he needs a team who are believer in his principles/ policies so as to attain the desired outcome through shared leadership. Bolden et al (2003, p.12-13) observes that critical behaviours of effective leader include asking question and not giving answers, doing real work in support of others, providing opportunities for other, becoming match maker instead of the focal point and seeking common understanding instead of consensus. They further offer indicators that effective leaders should follow and they include organisational performance, individual performance and team performance. For instance, as means of creating powerful teams, Gerstner observed that “people don’t do what you expect, but what you inspect.” In order to ride on this belief, the CEO advanced new methodologies of measuring performance. Moreover, he made them well aware that their competitors are not across the hall, but outside IBM. This was reaction strategy towards the earlier situation where most business units of the companies competed against each other. Additionally, he shifted the focus from perfectionism and mere research to demand driven approach where reward was on getting things done first. Lastly, employees were expected to make personal business commitments so as to help the firm attain its overall goals. Performance against those commitments was directly related to salary (DiCarlo, 2002). Early on, he decided that the whole of IBM was greater than the sum of its parts. But its many parts were far-flung and operated independently, with little accountability. Rather than work together as a team, divisions competed against each other both internally and in the field. He writes that management "presided rather than acted," and the entire company was dangerously preoccupied with itself rather than customers (DiCarlo, 2002). The above shows the commitment that the CEO had towards building a powerful team that would turn problems into solutions and thus, making the firm one of the market leaders. Gerstner talks about changing an organisation culture as the key to success and thus, that being his major role. He states that ‘Transformation of an enterprise begins with a sense of crisis or urgency," he told the students. “No institution will go through fundamental change unless it believes it is in deep trouble and needs to do something different to survive” (Lagace, 2002). According to him, having a united culture was a key principal The lessons learnt that shows how leadership has changed within the globalised context include the fact that in an organisation all individuals are integral in realisation of that successful dream and thus, hierarchy should mean little. In this regard there should be adequate paths where all individuals are given platform to engage constructively in reforming the organisation regardless of the position. This is only achievable when employees are empowered and allowed to work in teams as well as individually. The role of a leader is to outline the strategy, avail resources and allow the rest of the team to implement with their responsibility being to inform the leader. As such solution of the problems should be concentrated in lateral direction before being moved vertically to the leader. This calls for employees who are problem solvers. Yet this can work if they are empowered and allowed to work as team through team building. 4.0 Conclusion The core of this exposition was to outline how leadership has transformed within the context of globalised environment. Using the case example of Louis Gerstner during his tenure at IBM from 1993-2002 who brought the company from oblivion to a resurgent and powerful player in computing industry, the paper found out numerous lessons on how leadership has changed within the globalised environment. Basing the assumption that the role of a leader is to transform and create a distinct organisational culture through technical capabilities and interpersonal skills, the paper established that the following behaviours, characteristics and traits were displayed by Louis and thus an indicator of how leadership has changed within the context of globalised world. The first emerging lesson is the ability to be unique or true to one self by practicing your values and principles so as to create culture change. The new CEO by then displayed these characteristics by bringing in ideas that he believed in and stood with them. This saw him introduce massive reorganisation in numerous operational aspects of the firm without blindly copying others. For instance while most firms were highly disintegrated to focus on a particular niche of computer industry, he went the contrary and integrated IBM so that it would offer a one stop computing solutions to clients. The second behaviour or characteristics displayed by Louis was ability to create powerful teams that are believer and integral in implementing the unique belief and principle that he had. This he achieved through creating a balance between extrinsic and intrinsic motivations, teambuilding/ team work and empowering all employees to be hand on and proactive in creating a demand driven organisation. References Beaudan, E. (2006). Making change last: how to get beyond change fatigue. Ivey Business Journal, 22 (7): 23-89. Bolden, R., Gosling, J., Marturano, A. and Dennison, P. (2003). A review of leadership theory and competency frameworks. Centre for Leadership Studies, University of Exeter. Cummings, G. G., MacGregor, T., Davey, M., Lee, H., Wong, C. A., Lo, E., Muise, M. & Stafford, E. (2010). Leadership styles and outcome patterns for the nursing workforce and work environment: A systematic review. International Journal of Nursing Studies, 47, (1): 363-385. DiCarlo, L. (11 November, 2002). How Lou Gerstner got IBM to dance. Retrieved on 1 October 2013 from: http://www.forbes.com/2002/11/11/cx_ld_1112gerstner.html. Frankel, A. (2008). What leadership styles should senior nurses develop? Nursing Times, 104 (35): 23-24. George, B., Sims, P., McLean, N. A., and Mayer, D. (2007). Discovering your authentic leadership. Harvard Business Review. Goffee, R. & Jones, G. (2005). Managing authenticity: the paradox of great leadership. Harvard Business Review, 1-9. IBM (2013). Louis V. Gerstner, Jr. Retrieved on 1 October 2013 from: http://www- 03.ibm.com/ibm/history/exhibits/chairmen/chairmen_9.html. Kotter, J. & Schlesinger, L. (2008). Choosing Strategies for Change, Harvard Business Review, July-August 2008, p. 130-139. Lagace, M. 2002. Gerstner: changing culture at IBM – Lou Gerstner discusses changing the culture at IBM. Retrieved on 1 October, 2013 from: http://hbswk.hbs.edu/archive/3209.html. Levasseur, R. E. (2001). People Skills: Change Management Tools – Lewin’s Change Model. Interfaces, 31(4), 71-73. Tung, R. L. (2001). Learning from world class companies. London: Cengage Learning. Read More