Leadership Challenges and Strategies in a Post Global Financial Crisis World - Coursework Example

Leadership Post-GFC Name Course Lecture Introduction Executive leadership after the Global financial crisis has increased in complexity and is much more challenging. The captains of business have lost their legitimacy in the eyes of the public as they lost shareholders billions of their hard earned money. Since the GFC is owed to the greed of top corporate officers, scrutiny of their work has increased tremendously. Every stakeholder in the organization now demands to know what is going on in the management echelons of the organization. This essay intends to review the various challenges leadership is facing in the post-GFC management period. The paper starts by reviewing the view of various authors on the challenges facing corporate leadership post-GFC and the possible solutions to these problems. Secondly, it takes an in-depth analysis of three challenges facing organizational leadership after the GFC crisis and the possible solution to these problems. The issues addressed are low employment engagement, stringent financing conditions, and the disregard of the leader’s educational qualifications. Thirdly, the paper discusses innovative leadership solutions that are being applied by organization as a response to the challenges of leadership after the GFC. The leadership of Auto maker BMW and the leadership of Southwestern Airlines are sampled for their innovative leadership that appropriately reacts to the post-GFC leadership crisis. Literature review Discussion and opinions on the leadership challenges and possible option to handle them remain varied. James (2012) in an article for Leading Company identifies financing as one of the major hurdles of leadership after the GFC crisis. Banks show a greater reluctance to finance the investment of organizations. Banks were among the leading institution that suffered most from the GFC (Henry 2011). The collapse of JP Morgan Chase as American bank that was thought to be to big go under has changed the way banks approach lending. Another challenge facing business leaders is the public disregard of their MBA education. The public resent that MBA educated leaders had no clue on how to stop the GFC as it took its toll on investor’s funds. The problem of poorly-educated executives is compounded by the commercialization of education. It is now possible for people to gain educational qualification through poorly controlled online courses whose quality is in doubt (Starr 2014). In the view of Shoemaker (2008), the highly commercialized education is only producing business texts and nothing in terms of applicable business skills. Business leaders also have the challenge of ensuring their businesses succeed in a competitive business environment while avoiding excessive risk-taking. Over optimism and excessive risk taking are identified as the leading causes of the GFC (Coleman and Pinder 2010). However, businesses cannot succeed without taking risk which leaves a dilemma in the minds of corporate leaders. Leaders have to choose between a conservative approach to risk-taking which holds little potential for organizational profits and substantial risk-taking which may guarantee the success of the organization. Schoemaker (2008) says that business leaders have to deal with the loss of legitimacy of businesses and business leaders. The public increasingly view businesses as a force for evil rather than good. Going by the number of people who lost their life-time savings in the GFC, the public is justified in taking such a dim view of business and its leaders. Just as opinion on challenges facing corporate leadership is varied so too are the strategies and solution suggested in addressing the issues. According to Voegtlin, Patzer and Scherer (2010), application of the responsible leadership theory is a viable solution to the leadership problems experienced post-GFC. With Nation states unable to control the behavior of corporate entities due to the forces of globalization, Voegtlin, Patzer and Scherer (2010) suggest societal self-regulation as a good alternative. A more practical focused business education curriculum is one of the most commonly quoted solutions to management challenges after the GFC (Starr 2014). Education that is practically relevant will prepare leaders to deal with the ambiguity and the high rate of change in contemporary business environment (Schoemaker 2008). Programs in some institution of learning have been identified as good models of what business education should be. The rigorous curriculums of MIT, Carnegie-Mellon, University of Chicago and MIT have produced some of the most competent business leaders in the globe (Schoemaker 2008). Similar approaches in business schools across the globe will enable leaders be able to handle the challenges of managing Post-GFC. Waddock and Lozano (2013) suggest inclusion of some core elements in Business MBA education. These core elements are the inclusion of reflective practices in MBA education, promotion of understanding along the system thinking perspective of today’s globalized world, and finally application of the two concepts in understanding business’s purpose, responsibilities and ethical values. On the other hand, Coleman and Pinder (2010) want businesses to take a more realistic look at investment risk taking. Being too optimistic about the chances of success of investment ventures was among the leading cause of the GFC. DU et al (2013) suggest transformational leadership style as solution to the leadership challenges as transformational leaders initiate and design practices that factor in the social responsibility of businesses. James (2012) suggests the removal of excessive executive bonuses for good performance as another possible solution to the post GFC management crisis. Thomas Monahan a top CEO in the United States argues that companies should focus on employee driven productivity instead of debt-driven productivity gains (Ceoforum.com.au n.d). As seen from this review most scholars are of the opinion that changes in the business education university curriculum would be most effective in facing the leadership challenges resulting from the GFC. Some Challenges facing leadership Post-GFC One of the most understated and underestimated effects of the GFC are low employee engagement. According to Thomas Monahan the employee’s intention to leave their employers have decreased in the post GFC era (Ceoforum.com.au n.d). This trend is as a result of the lack of employment opportunities as most economies experienced contraction or slowdown in growth. However, employees who want to leave a firm but are unable lack commitment and are mostly disengaged. Unfortunately, disengaged employee are likely to engage in ethical misconduct and Fraud (Ceoforum.com.au n.d). Therefore, organizations have to find ways of engaging employees who come to work just because they have to (James 2012). Putting staff motivation programs in place is one of the simplest ways of securing employee engagement. Leaders should include employee recognition programs as part of their management practices. Recognizing the best performing employee in a certain period of time will force employee to become more engaged as they seek recognition by the organization. Another challenge of leadership in the post-GFC era is the disregard and belittling of their educational qualifications (Scoemaker 2008). Public opinion believes that the MBA degree education possessed by business leaders did little to stop the GFC. Retraining leaders in business education can be a good solution to this problem. Schoemaker (2008) suggest rigorous curriculum like those taught in University of Chicago, Carnegie-Mellon and Stretford as possible solutions to this problem. Waddock and Lozano (2013), on the other hand discuss the Vicens Vives Program (VVP) offered by Spain’s ESADE Business School Executive Education Unit, and the Leadership for Change (LC) Program offered at Boston College’s Carroll School of Management and Sociology Department as the model programs that can impart the leadership skill that enable executive deal with the leadership challenges thrown up by the GFC. Financing in a business environment where banks show a greater reluctance to lend is another major challenge for post-GFC leadership (Henry 2011). However, this problem can be overcome by presenting well supported investment plans informed by comprehensive market research to investors. Innovative Leadership in Organizations BMW sustainable leadership is one of the innovative ways organizations are dealing with the leadership challenges resulting from the GFC. BMW leadership corresponds to the responsible leadership construct suggested by Voegtlin, Patzer and Scherer (2010) as a solution to the post-GFC leadership crisis. BMW has focused its leadership on producing long-term value for its shareholders by practicing the Honeybee leadership principles (Avery and Bergsteiner 2011). Sustainable practices are applied through-out the BMW organization showing BMW adoption of the system approach suggested by Waddock and Lozano (2013). As a result BMW has made remarkable recovery from the GFC. Another firm that has used innovative practices to overcome the leadership challenges thrown-up by the GFC is South-Western Airlines. South-Western Airlines practices a concept called relationship management and has built close relationship with its employees (Gittell 2004). By making its employee partners, South Western airlines has managed to keep its employee engaged (James 2012). South Western airlines remained profitable during and after the GFC despite the many leadership challenges faced by businesses. However, South-Western airlines strategy rely on cost cutting which unfortunately makes their management less effective in handling contemporary leadership challenges (Gittell and Bamber 2010). South-western airlines may not commit the investment in executive retraining to prepare executive for the challenges of post-GFC management. Conclusion We can conclude that Leadership in business organization has become a more daunting task in the post GFC period. Challenges include a discrediting of the management education most leaders received in school, the view of businesses as forces for evil, closer scrutiny of corporate decision making and reluctance of banks to finance investment. Re-education of corporate leaders and redesign of business school curriculums to make them more practical oriented has been discussed as an effective solution to these leadership challenges. Several existing business program are good models of what the future of business education should be to effectively handle the challenges of leading post-GFC. Innovative leadership practices as applied in BMW and SouthWestern Airlines can help organization handle to challenges of Post-GFC challenges. BMW sustainable leadership approach is more effective as it has a long-term focus and is well funded unlike the South Western approach. References Avery, GC, & Bergsteiner, H 2011, How BMW successfully practices sustainable leadership principles. Strategy & Leadership, vol. 39, no. 6, pp. 11-18. Ceoforum.com.au n.d, Winds of change: Interview with Thomas Monahan - Chairman and CEO - Corporate Executive Board NYSE, Accessed 2nd may 2014, http://www.ceoforum.com.au/article-detail.cfm?cid=10750&t=/Thomas-Monahan--Corporate-Executive-Board/Winds-of-change/ Coleman, L, & Pinder, S 2010, What were they thinking? Reports from interviews with senior finance executives in the lead-up to the GFC, Applied Financial Economics, vol. 20, no 1-2, pp. 7-14. Du, S, Swaen, V, Lindgreen, A, & Sen, S 2013, The roles of leadership styles in corporate social responsibility, Journal of business ethics, vol. 114, no. 1, pp. 155-169. Gittell, JH 2004, The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance, ILRReview, vol. 57, no. 3, pp. 90 Gittell, JH, & Bamber, GJ 2010, High-and low-road strategies for competing on costs and their implications for employment relations: international studies in the airline industry 1, The International Journal of Human Resource Management, vol. 21, no. 2, pp. 165-179. Henry, K 2011, The Australian banking system-challenges in the post global financial crisis environment, Economic Round-up, vol. 1, no. 13 James, D 2012, How leaders are held to account post-GFC, Leading Company, 4th October, Accessed 2nd may 2014, http://leadingcompany.smartcompany.com.au/leadership/the-post-gfc-manager-how-leaderhsip-has-changed/201210032628?displaypage=start. Schoemaker PJ 2008, The future challenges of business: Rethinking management education and research, California Management Review, vol. 50, no. 3, pp. 119-139. Starr, K 2014, The game-changers: exploring radically transformational challenges confronting education business leadership, In Global Conference on Business and Finance Proceedings (2014: Honolulu, Hawaii) (pp. 265-276), The Institute for Business and Finance Research. Voegtlin, C, Patzer, M, & Scherer, AG 2012, Responsible leadership in global business: A new approach to leadership and its multi-level outcomes, Journal of Business Ethics, vol. 105, no. 1, pp. 1-16. Waddock, S & Lozano, JM 2013, Developing More Holistic Management Education: Lessons Learned From Two Programs, Academy of Management Learning & Education, vol 12, no. 2, pp. 265-284. Read More