Fords and Sloans Leadership Styles - Case Study Example

Contents Contents 1 Introduction 2 Ford’s Leadership Style 2 Sloan’s Leadership Style 4 Ford vs. Sloan 6 Conclusion 8 Works Cited 9 Introduction The current corporate battle between General Motors (GM) and Ford Motors started about a century ago when GM was started and Alfred Sloan made its president, in an industry that was dominated by Ford Motors, founded by Henry Ford. The rivalry is bigger than all other corporate battles, bigger than Coke vs. Pepsi, compelling than Huggies vs. Pampers and older than Nike vs. Reebok. The rivalry is presently fought with budgets to the tune of billions of dollars that are used in marketing and advertising and in acquiring new automobile models. The rivalry is currently subject to ups and downs that exceed those observed in the stock market (Taylor). Ford’s Leadership Style Ford was a very bright engineer. He was one of the people who derive happiness from their profession and thus he was the happiest when designing. Up to the day that he died, Ford understood intuitively the intricacies of process flows and production engineering. He always planned his purpose and actions, a fact that is evident in his writings. Ford believed that what any business leader needs to do to be successful is to concentrate on correcting flaws in his/her business model and following the fundamental principles of business. Notably, however, Ford later on breached some of the business principles he believed in, which include the following: Striving to produce goods that are of high quality at low costs, and selling the goods at lower prices. Striving to economically and increasingly make goods of the best possible quality in increasingly large quantities and forcing their acceptance in the market. Ensuring that wages are raised constantly but gradually and never cut. Ensuring that delivery logistics are as cheap as possible to enable the consumer enjoys low-cost production benefits. The principles stated above, which Ford believed in, are evidence of both his weakness and strength as a leader. By focusing on product quality as well as the market needs, Ford proved to be a transactional leader, who only focused on his success/ the success of his business. Despite the various advantages that accrue to transactional leaders, this style of leadership is limiting because it does not allow the person who practices it to look at the bigger picture. For instance, if Ford were a transformational leader, he would not only look at his business and focus on it, but he would also look at the industry as a whole and strive to make the industry better while at the same time, striving to achieve profitability in his business. In addition, Ford’s attention on the product, its quality and market needs speak of a man who bestows the responsibility for the success or failure of the organization. Ford therefore, arguably, believed that the executive of any business was some kind of a super-authority capable of ensuring the success of the business through controls and authority. This leadership and management style was unsustainable because it is contradicted by various effective management principles. For instance, in order for any business organization to be successful, it has to be aware of the industry it operates in. Knowledge of the capabilities of the competitors of the business is also paramount. By ignoring these aspects, Ford adopted a management and leadership style that could only be effective for a short period of time. By the time his principles were written, that is, by the year 1931, Ford had realized that it was difficult to stick by the principles he believed in earlier. He had abandoned some of the principles in practice and he had also become more and more autocratic, chasing away a brilliant pool of management experts who had helped him in making the company successful during its early days. Ford openly humiliated and bullied his son, an action that was termed as his greatest failure by one of his most loyal employees, Sorenson. He slowly became suspicious and paranoid towards his employees and eventually changed the working environment in the company from a cooperative one to a fearful one. Ford avoided ostentation but paradoxically embraced popularity and the limelight. As a consequence, he always strived to develop a Ford myth. Sloan’s Leadership Style Sloan, who had been uneasy about the problems that were facing General Motors, GM at the time, had drafted a plan in 1919 detailing how GM could be reorganized and revitalized. After he submitted his plan to his superiors, it was rejected, but shortly after a change in management, the plan was accepted, almost without change. Sloan’s objectives for coming up with the management plan were to have institutional controls instead of personal controls at General Motors. At first, he defined how the various divisions at GM were contributing to the overall organizational goal, a step that was meant to ensure that divisions logically contribute to the overall vision of GM. With authority and influence in GM, one would be tempted to think that Sloan’s job was easy. However, Sloan shunned autocracy and sought to increase the power of the Chief Operating Officer, while at the same time being a benign leader. According to Sloan, browbeating was an unacceptable mode of management. He later pointed out that he never sought to minimize the power of the position of the Chief Operating Officer when he rose to that position, but rather, he explained that he sought to apply discretion in the exercise of the power of the position (Stewart, Taylor, Petre and Schlender). He also explained that he managed to achieve better results by avoiding bossiness and telling people how to do their work, as well as by ensuring that when he had better ideas on how issues ought to be run, he sold his ideas to the staff. In implementing his hands-off kind of management, he also ensured that he got involved. He hired gifted personnel for senior positions, paid them well and treated them well. Sloan also placed the senior management in committees where the staff could deliberate on issues facing GM and reach an agreement on the way forward for such issues. Therefore, GM management operated trough consensus on pertinent issues reached at committee meetings. Sloan realized that it was easy to cripple GM if his plan put an overreliance on committees that were non-decisive, desultory and countless. He however avoided the system of operation that Ford had adopted; with no roles for specific positions, few titles, no line of authority or succession, and no conferences. He therefore chose committee members carefully, giving them specific goals and objectives and sometimes giving them guidance, at times towards desired decisions. He also made sure that the committee members had competencies that complemented each other, with a statistician giving the objectivity that the sales manger may lack, and a sales manager giving the enthusiasm that a statistician may lack (Stewart et al.). The committees were therefore able to objectively understand their perspectives, problems as well as the collective and individual opportunities that could be employed in problem solving. Sloan also ensured that he kept a close eye on the committees and their procedures, and intervened when there was need for committee guidance. Leadership has indispensable and crucial human dimensions. Sloan was indubitably an expert in preparing plans and charts but the main reason for his success is often cited as his ability to embody the virtues and values that he wanted to see in his associates. Being a tireless worker, Sloan always made sure that he was on the loop on all issues facing GM. He commissioned studies to unravel complex issues, and ensured that he used the conclusions drawn in those studies in making decisions for GM. He participated in the groups he formed at GM and modeled group discussions and convergence of the group to a common and desirable decision (Vellandi). For years, Sloan personally wrote the annual report for General Motors. Sloan also sacrificed time to get to know his staff, from the less-highly-placed individuals at GM to the executives. He occasionally invited staff for a chat, dropped by their workstations to see how they were faring on, and wrote countless responses to memos, and sent several memos himself. Sloan’s ability to impact GM should be credited two-facedly. First, Sloan was an expert in the art of directing and organizing a complex organization, a skill that he had gained through experience while working with the GM Corporation, United Motors and Hyatt, and through the education that he had acquired at the university. In addition, it helped that the team at GM was willing to apprehend and appreciate his message, perhaps due to his approach. Thus for this facet of Sloan’s success, it was not very important the personal demeanor that Sloan kept, he could have applied his expertise and experience behind the scenes through indirect leadership. Secondly, while the president of GM, was a direct leader. From the platform of a president for the corporation Sloan conveyed an identity message that resonated throughout GM (Vellandi). Part of it was that and every member of staff was part of the most dynamic and important company in the US, perhaps in the world. Part of it was that GM was a special company where managers and workers were part of the world’s most powerful and progressive organization. GM ensured that all employees, no matter their position, felt that they made an important contribution to the quality of the products of the company. To the employees, the company felt like a family, whose patriarch was Sloan. He made sure that he was the embodiment of the values of the corporation and expected his corporate offspring to have similar embodiment of GM’s values. Ford vs. Sloan From the discussion above, it is clear that Ford was not committed to becoming an effective leader for the organization that he had personally built. Ford adopted the transactional style of leadership because he only concentrated on business logic and failed to be a leader to his workforce. The working environment at Ford Motors in the late 1920, the time when the rivalry between Ford and Sloan had picked, was very poor. This is partly the reason why Sloan was able to make GM overtake Ford’s market dominance in the 1920s and dominate the automobile market for more than seven (7) decades (Taylor). Ford also adopted an indirect leadership style, in which he gave authority to managers who were responsible for the corporation. Although Ford is credited for providing low-cost motor vehicles in the beginning of the 20th Century, his management/leadership style had a negative effect on Ford Motors Inc. and thus Ford lost the opportunity for market dominance and the opportunities that come with such dominance to GM. It is important, however, to note at this point that Ford pioneered the idea of minimum wage because he believed that members of staff were supposed to be able to survive with their daily wage. Notably, however, Ford kept on changing his leadership style throughout the period during which he was at the helm of Ford Motors. On the other hand, Sloan was a transformational leader who embodied the values that he believed in and always made sure that GM was run in a democratic manner, whereby members of staff were organized into teams that made decisions by consensus. Sloan also transformed GM into a corporate family in which all members of staff felt they had valuable contribution to the success the company. He also employed direct leadership in that he made personal contact with individual members of staff and with committees and teams working on various projects to ensure that the teams and individuals did not have any issues delivering their contribution to the overall goal of the corporation. He gave his work a personal touch, planning it all the way and providing his members of staff with the motivation they required, financial, emotional, intellectual, etc, in order to make them achieve organizational goals. Sloan is credited to have pioneered organizational planning with tiers of responsibility attached to various levels in the organizational hierarchy such that staff turnover has a minimal effect on the performance of the organization. He made sure that the roles of all members of staff working for GM were clearly defined and that such members of staff felt part and parcel of GM, ensuring that they gave their work the best and owned the results. Employees therefore celebrated the success of GM because they knew that they had contributed to the success and by so doing, they were motivated to work even harder to achieve the overall goals of GM. General Motors was therefore able to dominate the automobile industry for decades with Ford Motors only outshining it in short interludes until GM’s bankruptcy of 2009. Analysts have argued that if GM stuck to the management principles that were employed by Sloan, it would not have run bankrupt in the year 1999. Conclusion Having been some kind of a monopoly for a couple of years, Ford was enjoying an approximate three-quarter of the US automobile market when GM was founded. However, Ford employed poor management and leadership styles that saw Ford have high turnovers and which focused less on the welfare of Ford’s workforce. On the other hand, Ford’s competitor, GM, promoted Sloan to the president of the corporation, and Sloan employed adept leadership and management styles that were instrumental in making GM the market leader in the US’s automobile industry of the early 21st century. GM became more powerful than Ford, dominating the US market for more than seven decades. Works Cited Stewart Thomas, Taylor Alex, Petre Peter & Schlender Brent. “The Businessman of the Century Henry Ford Alfred P. Sloan Tom Watson Jr. Bill Gates”. 1999. Web. 27 Apr. 2016. http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269067/index.htm Taylor Alex. “GM vs. Ford: The hundred-year war”. 2011. Web. 27 Apr. 2016. http://archive.fortune.com/2011/03/22/autos/gm_ford_war.fortune/index.htm Vellandi, Mario. “Alfred Sloan and Organizational Management”. 2008. Web. 27 Apr. 2016. http://www.melodiesinmarketing.com/2008/01/28/alfred-sloan-and-organizational-management/ Read More