The Impact of Effective Leadership on Organization Performance - Coursework Example

The Impact of Effective Leadership on Organization Performance “Organizational success is determined by effective leadership" Discuss, using examples from organizations to illustrate your argument. Name Course Institution Instructor’s name Date Introduction The modern business environment is volatile, full of uncertainties as well as stiff competition, which exposes an organization to various opportunities and challenges. As a result, organizations have embarked on a mission to create competitive advantages on how they can formulate strategies appropriate to enhance their performance (Jeramilo et al., 2005). Unlike in the past, when organizations focused mainly on financial performance, nowadays information development has changed their competitive background into the immaterial assets and the leadership effectiveness from the past material financial performance. Thus, organization performance is measured not only on financial success, but also on intangible indices such as customer satisfaction and quality which can be used to evaluate the organization’s performance and amalgamate competitive advantage. Effective leadership is one of the key elements in enhancing organizational performance in terms of financial and non-financial perspectives. This essay seeks to support the statement that, “Organizational success is determined by effective leadership.” Effective Leadership and Organization Performance Leadership in an organization is pivotal in the realization of the organizational goals. There are various leadership connotations applied by managers in an organization. They entail autocratic, democratic, transformational, transactional, laissez faire, as well as servant leadership. Leadership style entails all kinds of approach and capability directed at realizing organizational goals and further influences all activities within the organization. Leadership style is a form of a relationship that an individual applies his rights and methods to influence many people towards a common goal (Wang et al., 2010). Nevertheless, leadership styles may be effective or ineffective depending on the situation. Effective leadership is concerned on satisfying the needs of the employees, customers and stakeholders, which collectively steer performance. Wang et al. (2010) believe that, effective leadership is directly related to organization success. It is sometimes difficult to define effective leadership as it is based on varying factors and characteristics determining how it is measured in order to be regarded as effective. Leadership entails creativity, values, vision, ethics, knowledge, charisma, among other things (Brindusa, 2012). An effective leader should have a purpose and a stable personality and ability to put that purpose into action. The leader has the dedication, vision, integrity, and is creative and open to people and makes sure that, credit for performance is given to all staff and at the same time be ready to take blame for failures. An effective leader is flexible due to the volatile business environment and globalization process (Sashkin & Sashkin, 2003). The leader acts as an instrument of change and the center of solemnity, he can enable individuals and the organization as a whole to be successful while maintaining customer satisfaction. The various leadership style applied in management of organizations have to be effective for success to be realized be it in a profit or non-profit organization. Effective leadership styles that are believed to enhance performance entail; transformational or visionary leadership, servant leadership, and democratic leadership. Transformational leadership is a modern form of leadership where the leader acts as a role model, inspires employees and challenges them to be more engaged in their work (Drucker, 2006). Transformational managers communicate with the subordinates, delegate responsibilities, know their employees and try to understand their strengths and weaknesses for them to find a way to boost their performance, hence boosting the performance of the whole organization. Transformational leadership focuses on transforming an employee from a worker to a valuable team player. Therefore, the leader can influence the way employees think and perceive their work and the company by developing an ownership attitude. Employees tend to trust the company, its mission and are less skeptical on the objectives of the company and thus work tirelessly to achieve results. This definitely leads to increased organizational performance in terms of quality, customer satisfaction as well as financial performance. In transformational leadership, the leader can stimulate a sturdier sense of commitment from the employees, which brings about positive effect on efficiency and effectiveness of their work and that of the organization (Brindusa, 2012). In effective transformation leadership, the leader believes in delegating duties, involving employees in critical decisions and exhibiting confidence in their capability to make rational decisions. In addition, effective leadership is responsible for developing a good organizational culture. Successful organizations are a reflection of effective leadership and a good organization culture (Schein, 2004). Effective leadership always echoes the values and beliefs of the leaders. Leaders are responsible for setting organization culture. Consequently, the culture through its establishment influence leadership of an organization. When the values of the culture are inherently shared among employees, and are aligned with the values stipulated in the organization strategy in turn influences organizational performance. Effective leadership is capable of adjusting the organizational culture to suit the objectives and the vision of the company. There is a perpetual relationship between leadership and culture in an organization. Leaders develop the framework and the mechanism for cultural and organizational development for supporting the values and norms conveyed within the culture (Shamir, 1999). Norms occur and change depending on the focus of interest, depending on the leader’s response to conflict, and to whom they are concerned in attracting to the company (Brindusa, 2012). Effective leadership ensures that conflicts are resolves amicably and that the business is in touch with the customers and the world. This helps the company to understand its employees and customers hence create a good rapport between customers and the company. As a result, the company is able to improve its performance in terms of financial scopes. Effective leadership helps in developing and implementing a comprehensive culture. An organizational culture is normally developed from a preconceived cultural scheme that the leader has in his or her mind (Brindusa, 2012). Huang (2006) supports that; transformational leadership has positive influence on organizational performance than exchange leadership. The success of business management is ascribed to effectiveness of leadership approach. That is, the leadership approach of administrative managers has a significant influence on organizational performance. The leadership approach of a leader significantly influences the performance of employees. As a result, effective leadership helps shape employees to the vision and values of the organization, which attribute to organizational performance. The leadership style of a manager has a significant influence on the work performance of workers. Workers performance is directly related to the general performance of the organization (Feng Jing and Avery, 2008). Effective leadership determines the organizational success, that employees need to adopt, and offers suggestions and feedback to implementation. In this context, the workers understand their role and what is expected of them, while the leaders know their place in the organization and the demands of the workers at the same time. Effective leadership enables managers to respect and care for employees, which enhances self-interest of employees, organizational promises and make them perform better in work and influence their job satisfaction (Iqbal, 2011). Effective leadership is perceived as a powerful source of management development and constant competitive advantage for improvement of organizational performance (Feng Jing and Avery, 2008). For instance, transactional leadership enables companies to realize their present objectives more proficiently by associating job performance to valued rewards and by making sure that employees have the necessary resources to get the work done (Zhu et al., 2005). Effective leadership entails visionary leadership which focuses on creating a strategic vision for the future of the organization, communicating the vision through outlining and use of metaphor, model the vision by acting steadily, and establishing commitment towards the vision (McShane & Von Glinow, 2000). Zhu et al. (2005) argue that, visionary leadership in an organization lead to high levels of cohesion, trust, commitment, motivation and therefore performance. For example Apple Inc. is a company that has over the time grown into a leading global innovator under effective leadership of its co-founder, the late Steve Jobs. Steve Jobs was a visionary leader. Through effective leadership the organization has worked on the traditional concept of informal corporate culture and adopted the flat organizational hierarchy instead of the tall version. The company values the quality of work its employees offer, creativity, innovation, and works on nurturing the raw talents, rather than petty issues such as mode of clothing since Apple Inc. does not require its employees to have formal attire. This form of a culture has been developed through effective leadership and the results have been a successful company of the 21st century. Effective leadership in an organization is concerned on the welfare of employees. It is supportive in nature and is aimed at satisfying the needs and preferences of the followers. An effective leader shows concern for the welfare of his or her followers and works towards creating a friendly and a supportive working environment. This results to high self-esteem and social satisfaction for employees. As a result, there is reduced stress and reduced frustration among employees. Supportive behavior in effective leadership is manifested in employee performance, the perception of employees’ effectiveness and the general performance of the organization (Abiodun, 2010). Besides, an effective leadership model entail participatory behavior in which the leader encourages the employees to participate in decision making process in an organization. This helps in increasing the autonomy of members and the ability to carry out their intentions resulting to greater effort and organizational performance. Various leadership styles are used in organizations and they are meant to produce results. It does not necessarily mean that one type of leadership is better than the other, but the situation and the culture in an organization determines the result brought about by such leadership. Leadership is pivotal in shaping the trend in the organization. When there is effective leadership, the results are a motivated staff, improved performance and ultimately organizational performance improves. Studies have linked various leadership styles to organizational performance. Authoritative leadership in which the leader has all the authority and makes rules and demands things to be done his or her way is for instance perceived to reduce performance. Laissez faire on the other hand gives employees too much autonomy without limit or coordination. These are not effective leadership styles and can lead to failure in an organization. Nevertheless, effective leadership may entail an amalgamation of one or more leadership models depending on the situation. There is no single leadership style that can exist in an organization to help achieve high performance. It is important for an effective leader to be flexible and be ready to practice various models of leadership in dealing with varying situations within the organization. Conclusion Conclusively, the success of an organization relies on effective leadership, the relevance of the leader’s values, beliefs to emerging opportunities and limitations facing the organization at a given time. Effective leadership ensures that the leader can adapt to changes and challenges in the contemporary business environment and knows how to motivate followers and inspires them to take further ownership for their work. The varying leadership models can be applied effectively to enhance results in an organization. However, the most advocated effective leadership models by various scholars include visionary or transformational leadership and servant leadership. Other models are also effectively applied to achieve results. Normally, effective leadership seeks to empower, motivate, support, encourage, and guide employees towards attaining satisfaction. When employees are satisfied and motivated, they tend to increase their performance and hence that of the organization. References Abiodun, R. (2010). Leadership Behavior Impact on Employee's Loyalty, Engagement and Organizational Performance: Leadership Behavior and Employee Perception of the Organization. AuthorHouse. Brindusa M. (2012). The relationship between leadership Effectiveness and organizational performance, Journal of Defense Resources Management, 3, (1), pp. 123-128. Drucker P. F., (2006). Managing for results. Michigan: Harper Collins Publishers. Feng Jing, F. and Avery, G.C. (2008). Missing Links in Understanding the Relationship between Leadership And Organizational Performance, International Business & Economics Research Journal, 7, (5), pp. 67-76. Huang L. (2006). Transformational leadership has effect on organizational performance: the organizational culture as an intermediary variable. Unpublished master's thesis, National Taipei University, Taipei, Taiwan. Iqbal, T. (2011). The impact of leadership styles on organizational effectiveness. Karachi: GRIN Verlag. Jaramilo F, Mulki JP, Marshall GW (2005). A Meta-analysis of the relationship between organizational commitment and salesperson job performance: 25 years of research, Journal of Business Research, 58, (6), pp.705 - 725. McShane, S.L. and Von Glinow, M.A. (2000). Organizational Behavior. Burr Ridge, IL: Irwin/McGraw-Hill. Sashkin, M. & Sashkin, M.G. (2003). Leadership that Matters. The critical factors for making a difference in people’s lives and organizations’ success. San Francisco: Berrett-Koehler Publishers, Inc. Schein E. H. (2004). Organizational culture and leadership, 3rd Ed. New York: John Wiley & Sons. Shamir, B., (1999). Leadership in Boundaryless Organizations: Disposable or Indispensable? European Journal of Work and Organisational Psychology, 8, (1). Wang F., Chich-Jen, S. & Mei-Ling, T. (2010). Effect of leadership style on organizational performance as viewed from human resource management strategy, African Journal of Business Management 4, (18), pp. 3924-3936. Zhu, W., Chew, I.K.H. and Spangler, W.D. (2005). CEO transformational leadership & organizational outcomes: The mediating role of human-capital-enhancing human resource management. The Leadership Quarterly, 16, (1), pp. 39-52. Read More