Understanding Leadership - Case Study Example

Table of Contents Particulars Page No 1.0 Introduction 2 2.0 Understanding Leadership 3 3.0 Leadership Styles and Behaviour 4 4.0 Leadership and Market Performance of Companies 6 5.0 Leadership and Organizational Productivity 9 6.0 Conclusion 10 7.0 References 11 1.0 Introduction This report has been drafted in a comprehensive manner to critically evaluate and focus on the extent to which leadership influences the market performance of the companies. To further substantiate the reading the report looks to explore some companies through the Business Review Magazine’s Fast 100 company list for 2013. The report initially focuses on the core meaning of leadership in companies and different approaches, traits and styles which different leaders adopt to ensure better performance of their organization. The report looks to evaluate the basic characteristics of different leadership style and establishes a link of the same towards market performance of varied companies. Furthermore the core objective of the report is to evaluate the extent to which leadership influences the market performance of the companies which has been minutely portrayed through both past literature and present performance of the companies. Finally a conclusion is derived to ensure both practical and theoretical understanding of the entire topic under study. 2.0 Understanding Leadership It is hard to define leadership in a single definition as it comes in different ways. Leadership is certainly not just an individual or a group of person at the higher authority level of the management pyramid. Leadership is indeed a process in which the leader is indulged in various differing activities which are aimed towards achievement of some collective or organizational goals. It is indeed the communication process of the leader and its members. Hence it can be stated that the effective performance of an organization or a company depends upon the effectiveness of the leader and its effective leadership style (O’Connell & Bligh, 2009). Three famous ways in which we can define leadership from different perspectives have been elaborate as under. Achieve Target Through Others: There are lot many leaders who have been working hard to taste success which could not in sense be accomplished without the participation of its team or group members. Thus leaders are those who look to align the organizational objectives and individual team objectives and motivate and coordinate with its team members for the achievement of both individual and group goals. Dominating Power of Leadership: This kind of leadership explains where the individual stands out and holds a dominant position in the group or tribe and is said to their leader. It simply explains that the leader holds significant power due to his/her dominant position in the group. Positive Change towards Better Success: This type of leadership explains where an individual owns trust and confidence of his group members and takes higher risks with participation of its team members to achieve a common goal or objective. Thus we see, leadership is a complicated term with different set of approaches and meaning which all are inclined towards achievement of some common goal and is more positively linked to the market performance and effectiveness of a company. To further better understand the extent to which leadership influences the market performance of companies let us have a look at the various styles of leadership commonly followed in different companies. 3.0 Leadership Styles and Behaviour There are varieties of leadership styles and behaviour which is important for any company. The leadership behaviour is guided towards four major roles which look to enhance the market performance of a company. The four roles are vision setter, motivator, analyzer and task maker each involving certain particular duties and responsibilities of a leader in the company. Leaders as vision setter defines and articulates the company’s basic purpose and future direction with attention and focus on emerging social, economic and technological trends. Leaders as motivators in company translate the organization’s vision and economic strategy into a cause worth fighting for achieving the same in long run. Leaders as analyzer focus on the efficient management of internal operating system, shaping decisions and controlling the management decisions (Herman, 2007). The task maker finally focuses on the company’s performance and responsibilities by influencing team members or subordinates decisions and allocating resources based on highest priority activities. Leadership is not just a born trait but there are different types of leaders such as: Autocratic Leaders: Here the leaders set their own goals and objectives without considering any opinion of its team members and further command their followers or team members to execute their assigned task without any question. Consultative Leaders: The leaders here consider the opinions and ideas of their team members during the goal setting process. Here the leaders do take opinions of its followers but however mostly do not include it in the decision making. Democratic Leaders: Here the leaders participate equally with all team members and let the group make decisions in a coordinated and synchronised manner. Charismatic Leaders: This type develops a feeling of oneness between the two people or personal attraction comes in the foreplay where stronger the attraction stronger is the power. Face Saver: Such leaders are always more concerned about safety and security of the entire group. Laissez-Faire Leaders: They are often referred to as laid-back leaders. The leader here adopts a casual approach and let its team members take whatever decisions they feel like is necessary. On basis of a study conducted on the leadership traits and approaches among the fast 100 companies list for 2013 of the Business Review Weekly Magazine, it is found that Charismatic and Transactional leadership are more common and both aimed towards creating a positive influence on the market performance of the companies by ensuring better workplace and higher productivity with higher revenues, profits and growth. Clearly both leadership styles involve different behaviour. Charismatic leadership focuses more on task or performance of the firm, such as planning, articulating the vision and goals, monitoring subordinate activities, providing required assistance etc (Kanov, Maitlis, Worline, Dutton, Frost & Lilius, 2004). Whereas transactional leadership concentrates on relationship with employees, including being supportive of and helpful to subordinates, building trust and confidence among team members along with reward and recognition to team members. Thus, we see that leadership behaviour and style have a direct and positive influence on the market performance of the companies as different leaders through their own unique traits, styles, behaviours and approaches tend to motivate their team members and take group decisions towards achievement of market objectives which in turn is reflected in growing profits, sales and overall growth of the company. 4.0 Leadership and Market Performance of Companies There have been a large number of researches being carried out to establish the exact link between leadership behaviour and market performance of varied companies which is turn is reflected through a direct linkage between the same. Leadership have been examined through various perspectives, including Leader’s personal characteristics, nature of organizational context, market performance of companies and behaviour of subordinates. Leadership has indeed strong influence on firms functioning and operations as the leaders are involved in the crucial decision making process and sustain power to actually support or resist against any managerial decision which in turn is reflected in the work performance of the subordinates and have a direct impact on the market performance of the company (Parker, 2002). Hence, leadership behaviour of different leaders in different companies is indicative of their tendency in managerial behaviour and actions and acts as an important ingredient in the mix of factors which influence the firm’s success and market performance of the company. There exists a strong correlation between leadership style and market performance of the companies. Specifically it is posited that in order for a firm to taste success and enhance its market performance in a globally competitive working environment, the business strategies and the management practices have to fit or match with the leadership style so as to gain a competitive sustainable advantage over its competitors and ensure higher returns and profits along with enhanced and superior market performance of the company (Fernando, Dharmage & Almeida, 2008). In other words, there are companies where certain types of business strategies and management practices being more appropriate for a specific leadership style which is more likely to perform better in the market. Transactional leadership helps companies to achieve their current objectives more efficiently by linking job performance to valued rewards and ensuring easy availability of resources for employees to perform their assigned tasks. The level of integration and interdependencies which are required for the new working environment goes well beyond the basic transactional styles and involve contingent style and Management-by-exception to styles that are more intellectually stimulating, inspirational and charismatic. Furthermore, transformational leaders creates a strategic vision, communicate the vision to the team members, model the vision and act consistently to build commitment towards the vision thereby making a direct positive impact on the market performance of the companies by boosting up its sales and revenue and ensuring higher and better returns and growth for the company (Dimitroff, Schmidt & Bond, 2005). Organizational commitment is one of the core factors which help in enhanced market performance of companies in a globally competitive work environment which is again directly linked to leadership behaviour and is dependent on the leader’s traits, attitudes, styles and approaches to match the same with the employees of the company. Organizational commitment is the relative strength of the identification of the individuals and their involvement in their particular working company. It has three basic components, a strong belief in and acceptance of organizational goals and objectives (Identification), a willing to exert efforts towards organizational goals and objectives (Involvement) and a strong desire to stay or remain within the organization (Loyalty). Let us now look at how organizational commitment is linked to leadership behaviour and the same is further directly linked to market performance of the companies and helps in either enhancing or declining the market performance of the companies (Brown, Trevino & Harrison, 2005) Thus we can clearly see how Leadership dimensions and behaviour have a strong linking impact on the market performance of the companies where different context variables need to be considered by leaders as per changing situations to ensure enhancement of the market performance of the companies in terms of better return on investments, increasing sales and overall growth of the company. 5.0 Leadership and Organizational Productivity Organizational productivity is directly linked to market performance of a company as the higher and better the organizational productivity the better is the growth and returns of the company with enhanced market performance (Browning, 2007). There are various factors which contribute to organizational productivity and the same can be directly linked to effective leadership behaviour and styles thus ensuring a direct impact of leadership on organizational productivity and in turn on market performance of the companies. Let us have a look at the various factors of organizational productivity and there linkage with leadership which helps in enhancing the market performance of the company. Communication: Effective communication is a critical factor in enhancing organizational productivity and improving upon the market performance of companies. Leadership style effects both communication and productivity as democratic leaders tend to ensure a smooth flow of communication of all important functions of operating system and follows a strict delivery communication system so as to further ensure correct message being communicated to all team members at correct time which enhances organizational productivity (Clegg, Kornberger & Pitsis, 2012). Employee Input: Employee input acts as an important variable in creation of more efficient work methods and enhancing productivity and market performance. A democratic leader accepts inputs from employees and uses the pertinent information to enhance the market and work process and performance. Morale: Morale acts as a catalyst in enhancing the market performance which in turn is decided by leadership styles. Leaders tend to boost up confidence and trust among its team members which lead to enhanced morale and commitment of employees towards market performance. A high morale employee’s is the key to better productivity and enhanced market performance of companies. Goals and Objectives: Organizational goals and objectives tend to vary with those of individual goals and objectives. A leader is someone who helps in aligning the same and ensures cordial relationship among the employees with lesser resentment and more dedication towards work and directly upon enhanced market performance (Bolden & Gosling, 2006). Culture: Leaders tend to ensure a working culture most fit for all of its employees. Cultural differences if any can only be removed or eliminated through an effective leadership style. Further a company with better working culture is more likely to ensure better productivity and enhanced market performance. 6.0 Conclusion The report has been prepared to critically evaluate the extent to which leadership influences market performance of the companies. Furthermore a clear research through present and past academic literature has been conducted which highlights a direct impact of leadership on market performance of the companies. A company with an effective leader and matched leadership style and behaviour with management practices and operating system is more likely to ensure better growth and development in a competitive environment along with enhanced market performance of companies. 7.0 References Bolden, R. & Gosling, J. (2006). Leadership competencies: Time to change the tune? Leadership, 2 (2), 147-163 Browning, B.W. (2007). Leadership in desperate times: An analysis of endurance: Shackleton"s incredible voyage through the lens of leadership theory. Advances in Developing Human Resources, 9 (2), 183-­198 Brown, M.E., Trevino, L.K. & Harrison, D.A. (2005). Ethical leadership: A Social Learning Perspective for Construct Development and Testing. Organizational Behaviour and Human Decision Processes, 97, 117-134 Clegg, S.R., Kornberger, M. & Pitsis, T. (2012). Managing and organizations: An introduction to theory and practice, 3rd edn, Sage, London. Dimitroff, R.D., Schmidt, L. & Bond, T. (2005). Organizational behavior and disaster: A study of conflict at NASA. Project Management Journal, 36 (2), 28-38 Fernando, M., Dharmage, S. & Almeida, S. (2008). Ethical ideologies of senior Australian managers: An empirical study. Journal of Business Ethics, 82 (1), 145-­‐55 Herman, S. (2007). Leadership training in a “not-­‐leadership” society. Journal of Management Education, 31 (2), 151-­155 Kanov, J.M., Maitlis, S., Worline, M.C., Dutton, J.E., Frost, P.J. & Lilius, J.M. (2004). Compassion in organizational life. American Behavioral Scientist, 47 (6), 808-­827 O’Connell W. & Bligh, M. (2009). Emerging from Ethical Scandal: Can Corruption Really Have a Happy Ending? Leadership, 5 (2), 213-235 Parker, M. (2002). Against management: Organization in the age of managerialism, Polity Press, Cambridge. Read More