Leadership Issues of RAK Trading - Essay Example

? Leadership Introduction/Background RAK Trading RAK Trading has been running for 100+ years and has been very successful through that time often developing and changing its products and interests to suit changing times. 100+ years of existence in a challenging business environment is not all a simple achievement. It should be noted that sound business philosophies and strong leadership are necessary for an organization to survive for such longer periods. It should be noted that employees can make or break an organization. The level of motivation among the employees is an important for the successful management of an organization. RAK can definitely be proud of the level of employee satisfaction it maintains for such a longer period. Proper training and guidance are given to the RAK employees for their empowerment and also to make them capable of meeting the challenges of modern business world. In extreme cases, RAK management is not hesitating to even dismiss the employees who fail to deliver the goods even after training and guidance. On the other hand, better performing employees in RAK always get proper rewards and promotions. In short, RAK has strong management philosophies leadership qualities to cater the needs of changing business world. RAK Trading is a company with a strong charismatic leader whose leadership philosophy is based on strong historical values and a transactional approach. At the top level CEO and directors of the company are taking decisions whereas at the bottom level, supervisor and lower level managers are responsible for taking decisions. Thus, RAK is maintaining a democratic style of management for the last few decades and therefore EMMAcorp can definitely think of RAK while taking decisions about selling its ownership to others. DAC Ltd DAC Ltd has a strongly transformational / values based leadership philosophy. It believes in situational leadership like modern business philosophies. It should be noted transactional leadership style or participatory management is good on papers and in practice, it is difficult to implement successfully. Business world is changing day by day and based on that changes in management principles and leadership styles are also taking place. Only the transformational leadership will be able to accommodate all those changes taking place in the business world. One of the major characteristics of DAC Ltd is the importance it gives to empowerment of employees. DAC leaders at all levels are trained to coach and mentor staff. Comprehensive training helps DAC to keep the employees competent all the time to meet the challenges of rapidly changing business world. DAC gives particular attention to the individual developments because of its belief that all the DAC employees are contributing to the company in one way or other. DAC is following a transparent approach in its functioning. It is not much interested in keeping company secrets. For example, everyone in DAC at all levels knows about the bid for EMMACorp. The company knows that revealing every secret to the employees may help the company to grow employee loyalty towards the company. It should be noted that employees may feel that they are essential parts of the organization and that is why the company is taking them in confidence. Relationship building is the core of every business activity and DAC knows this fact very well. This is a clearly communicated vision of the CEO and employees are expected to support this philosophy whole-heartedly. Those not committed to the company vision are encouraged to seek alternate employment. DAC knows very well that it is important for the company to keep existing customers along with finding new customers. So customer servicing at all levels has been given top priority at DAC. CHRISSIE Co One of the most common illusions among corporate world is the myth that women leaders are incapable of dealing with challenging situations. However, lessons from the latest recession show that companies with female board members done better than companies with male board members. Chrissie Co has female board members and that itself is a plus point for them while putting forward their claims on EMMACorp. It should be noted that female leaders tend to be very facilitative in their leadership approach, empowering staff and encouraging the contribution of all. The case is not much different in CHRISSIE Co also. One of the unique characteristics of CHRISSIE Co is its strong belief in ethical business principles and corporate social responsibility. Being a company managed by female leaders, CHRISSIE Co knows very well that it is necessary for a modern company to do some thing in return to the community in which it operates as part of social responsibility. Women leaders at CHRISSIE Co are friendlier so that employee stress levels in the company are too low. High job satisfaction and low turnover rate are clear indications of sound leadership styles at CHRISSIE Co. Since the CHRISSIE Co CEO is a person who suffered a lot from her previous employer, she knows the needs of the employees very well. Work-life balancing is strictly observed in CHRISSIE Co with the help of flexible working hours. Modern technologies are used at all functional areas at CHRISSIE Co so that employees may not feel the heat of over workload at any time. In my opinion, these qualities make CHRISSIE Co a strong contender for the takeover of EMMACorp. What is leadership? According to Northouse (2009), “leadership is a highly sought- after and highly valued commodity” (Northouse, 2009, p.1). In his opinion, “leadership is a process which occurs in groups; it involves influence and common goals” (Northouse, 2009, p.3). Hackman (2008) on the other hand described leadership as the first and foremost a communication based activity (Hackman, 2008, p.20) whereas Mullins (2007) argued that “leadership is not about being a wonder woman or man; but it about valuing individuality” (Mullins, 2007, p.155). According to Clawson (2008), “Leadership is about managing energy first in yourself and then in those around you. Being a leader depends on one’s point of view, not on status and title” (Clawson, 2008, p.1). The above definitions clearly suggest that it is difficult to accommodate leadership in few words. Leadership is a quality which is associated with lot of parameters. There are born leaders as well as developed leaders. In other words, leadership qualities are inborn as well as developed. For example, Steve Jobs was a developed leader whereas Edward Kennedy was a leader with inborn qualities. Leaders with inborn leadership qualities may emerge out naturally while they work in groups. Others on the other hand, emerge as leaders over time after receiving enough experiences and training. Trait theory says that traits or inborn qualities such as intelligence, communication, interpersonal skills, problem solving skills, vision and charisma are inborn leadership qualities. In other words, these leadership qualities are inherited among certain people at the time of their birth itself whereas others learn such qualities from their surroundings. There are many people who believe that management and leadership are one and the same. Even though both managers and leaders are leading certain group of people for getting certain jobs done, it is not necessary that the ways or manners used by them are the same. Managers often use their power more effectively to get the work done whereas leaders use their charisma to lead a group of people to a particular direction. For example, Hitler was a powerful leader whereas Mahatma Gandhi was a charismatic leader. Leadership styles of these people were entirely different. While Hitler was interested in autocratic leadership styles, Mahatma Gandhi was more interested in democratic leadership styles. Transactional leadership and transformational leadership Based on the nature of functioning leadership is quiet often divided into two broad categories; transactional leadership and transformational leadership. Transactional leadership involves constant interactions with the leader and the subordinates. Relationship building between the leader and the followers is the core of this type of leadership style. Democratic nature of functioning is the major characteristics of transactional leadership. In other words, transactional leaders; can identify needs of subordinates and in return subordinates will exert effort towards leaders goals and keep thing ticking over (Bass, 1990, p19-31). Subordinates may not wait too much for the instructions from the leader in emergency situations. They will use their sense to solve the problems, if the instructions from the leader were absent because of the strong positive relationships between the leaders and the followers in transactional leadership. “In business, leaders announce rewards in turn to the productivity. This relation is all about requirements, conditions and rewards (or punishment). Leaders who show this kind of relationship are called ‘Transactional Leaders’” (Babou, 2008). Total change in all aspects political, social and economic life of Americans was the offer put forward by Obama when he contested for the presidential election. Same way transactional leaders give some offers to the followers for completing certain tasks. For example, many CEO’s give attractive offers to the employees at the beginning of every financial year for meeting certain targets. Such CEO’s would constantly monitor the progress of the company periodically throughout the financial year. Rewards and punishments are dispersed to employees based on their performances periodically to motivate them. Such leadership functioning are often referred as transactional leadership. “In contrast to transformational leadership, transactional leadership focuses on short-term, day-to-day leadership and has been considered as a more passive form of leadership”(Rowold & Schlotz, 2009, p.38). Instead of long term benefits, transactional leaders give more emphasize to short term benefits. The leadership philosophy of such leaders is that “think about present; don’t worry about the future”. Such leadership philosophies may be good in the short run, but in the long run it may create problems. For example, many transactional leaders have the habit of avoiding the importance of after sales service or customer relationships management. Such leaders may not give much importance to after sales service. Dissatisfied customers will give bad publicity to the company in such cases and the company’s long term business prospects could be damaged. Transformational leadership on the other hand “arouse emotions in their followers which motivates them to act beyond the framework of what may be described as exchange relations”(Babou, 2008). Power and authority has immense role in transformational leadership. Because of the involvement of power and authority in functioning transformational leaders cannot always function in a democratic manner. The relationships between the leader and the follower need not be positive always in transformational leadership. Bass (1990) pointed out that transformational leaders need vision of what needs to be done and this vision should be communicated to the followers to energise and inspire them. In his opinion, four key characteristics of transformational leadership are Charisma, Vision, Intellectual stimulation and Emotional awareness (Bass, 1990, p19-31). “If a leader is thought to display certain positive attributes (e. g. perceived power, focus on higher-order ideals and values), his/her followers will develop an emotional tie to their leader. This relationship then consists of trust and confidence” (Rowold & Schlotz, 2009, p.36). Sense of belonging is important in professional world. An employee who feel separated or isolated in a company may not deliver the goods. Transformational leaders are capable of injecting a sense of belonging into the minds of the employees so that they may consider the organization as their own and deliver the goods. Maxwell, (2007) mentioned that the “the measure of leadership is influence; nothing more nothing less” (Maxwell, 2007, p.11). Leaders with Charisma, Vision, Intellectual stimulation and Emotional awareness can definitely influence the followers positively. For example, Steve Jobs was believed to be the most charismatic leaders of the modern organizational world. His leadership style can be cited as the best example for transformational leadership. The ways in which he raised Apple Inc from a pathetic condition to the worlds largest technology company is still causing surprise to the organizational world. Many people were written off Apple in 1980’s and 90’s. They thought that it was difficult for Apple to cause any major challenges to Microsoft because of the absolute monopoly enjoyed by Microsoft in the operating system market earlier. However, Steve introduced some “i” series products such as iPad, iPhone, iMac, iPod etc at the beginning of twenty first century and the rest is history now. At present Apple Inc is the second largest company in market capitalization and Microsoft is placed far behind of Apple now. “Apple's market capitalization - the sum of its outstanding shares multiplied by its stock price - finished at $222.07 billion, ahead of Microsoft's at $219.18 billion Wednesday, May 26, 2010” (Kim, 2010). On the other hand Bill Gates implemented transactional leadership in Microsoft. However, Gates failed to match with Steve which resulted in Microsoft getting far behind Apple at present. The inspirations provided to the Apple employees by Steve was more than that provided by Bill Gates to the Microsoft employees. “I am constantly surprised at the frequency with which chief executives feel threatened by open challenges to their ideas, as though the source of their authority, rather than their specific ideas, was at issue”(Zaleznik 1977, p.81). Situational leadership is one of the most modern methods of leadership implemented in majority of the organizations. As the name indicates, it is a leadership based on situations. In other words, situational leaders implement different leadership styles based on the circumstances. On certain occasions, they may use democratic methods whereas on other occasions they may use autocratic methods. In short, situational leadership says that “a manager’s style should be adjusted according to the readiness of the followers to take responsibility for directing their own actions” (Rollinson, 2002 p.387). It should be noted that an organization may consists of employees of different kinds; some of them may hardworking whereas others may be lazy. Use of power upon hardworking employees may bring negative results whereas use of power upon lazy employees may bring positive results. In other words, a situational leader should provide rewards to the hardworking employees and punishments to the lazy employees in order to motivate them. “According to Vroom-Yetton model, a leader should be both autocratic and participative, varying his style according to various situational factors” (Bryman, 1986, p.153) It is not possible for an effective leader to be fully autocratic or fully participative always. He should be able to make judicious changes in his strategies based in the circumstances. For example, it is possible that a worker who performed well in one instant might underperform on another occasion. An effective leader complements the worker when he performs well and may punish the worker when he fails. A more effective leader may enquire the reasons for the occasional failure first before punishing the employee. A manager who is reluctant in using power will never command respect from the subordinates. Employees may work carelessly if the manager fails to punish employees who commit mistakes. Same way, employees may not develop motivation if the manager fails to recognize outstanding performances of the workers. According to Depree (1990), “The first responsibility of the leader is to define reality. The last is to say thank you. In between the two, leader must be a servant and a debtor. That sums up the progress of an artful leader” (Depree, 1990, p.11). Kotter (1996) pointed out that “Leaders know how to encourage people to transcend short term parochial interests” (Kotter, 1996, p.65). Since no two individuals are alike either physically or mentally, the behaviour patterns of different leader vary from person to person and situation to situation. Same leader may function differently on different occasions. “Self- awareness is central to being a successful leader” (Bennis et al., 2001, p.87). The leader should be able to know his limits and plus points very well to function effectively. He should hide his limitations as much as possible and project his plus points as much as possible to command respect from followers. Personality and intelligence play vital roles in shaping leadership behaviours. As mentioned earlier, power and authority are always associated with leadership. Without power, it is difficult for a leader to function properly. If a leader was unable to exercise the power, he will be labelled as a leader by position. However, too much or too less exercising of power is not suitable for effective leadership. If a leader uses too much power, he will be labelled as an autocratic leader whereas when a leader uses less power he will be labelled as a democratic leader. Autocratic leadership & Democratic leadership Some people adopt autocratic or authoritarian style of leadership in which they never allow the followers to raise any opinions or views. They will force the followers to functions in a specific manner as directed by him without any questions or doubts. It is a kind of dictatorship. In autocratic leadership, the leader uses his power to get the work done from the employees. The leader controls decisions, policy, tasks, rewards and punishment under such leadership and the subordinates cannot question any of such decisions. Hitler’s leadership style is often cited as the best example for autocratic leadership style. It should be noted that Hitler never allowed his followers to ask any questions to him. Those who objected the ideas of Hitler were killed or imprisoned. Same way, under autocratic leadership, employees who question the authorities of the leader could be dismissed or punished. Even though Steve Jobs followed transformational leadership, Apple’s top managers are trying to follow autocracy in their leadership. Apple employees forced to work lengthy hours in the company and their workloads are too much. Apple gives less importance of work-life balancing and some of the recent reports showed that Apple believes more in employability rather than employment security. Qumer (2009) pointed out that “Because of the absence of well-structured system, and over work load of Steve, the VP’s became more powerful and they work in a totalitarian manner (Qumer, 2009, p.14). Some other leaders adopt democratic style of functioning while leading a group. Such leaders always value the opinions of the group members and they consider the needs of the group members on a humanitarian basis. Democratic leaders always welcome the ideas of the workers before starting a job. For example, in a fabrication unit, only the fabricator knows the problems associated with the production of certain items. If the manager was able to seek the advices of the fabricator before the beginning of the production, he can avoid lot of problems which may arise midway through the production. Most of the modern organizations such Google, Vodafone, Nokia etc are following democratic leadership styles. It should be noted that autocratic managers may not wait for the opinions of the workers and they may face too much problems at the time of production of certain items. Democratic leadership is not all about obeying or following the opinions of the workers. It is all about the judicious acceptance and rejection of ideas put forward by the workers. It is not necessary that the workers always put forward the right ideas. For example, workers may advice the manager that a particular work may end up in the prescribed time even without overtime. They may give such advices to escape from overtime. The manager has to analyse the feedbacks of the workers deeply before taking decisions about overtime. It should be noted that the manager is answerable to the company and the customer in the case of failure to meet deadlines. In short, employee participation in decision making process should be allowed only on occasions. Otherwise the company and the leader may struggle to function effectively. Power is the major weapon for autocratic leadership whereas influence is the major weapon for democratic leadership. In other words, job stress will be too much under autocratic leadership compared to the job stress under democratic leadership. An autocratic leader keeps certain distance with the followers all the time whereas a democratic leader keeps the company of the followers all the time. Because of such close associations with the leaders, employees under democratic leadership may not feel much job stress. It should be noted that autocratic leaders in China are staying away from the public whereas Obama like democratic leaders always like to have the company of the public. The case is not much different in organizations which are managed by autocratic and democratic leaders. PDP Outcomes As I have previously stated, after I graduate from the university I would prefer to return to my home city in China and establish my own business, namely a company to promote local tourism to foreign visitors. I do believe that I have to follow a shared leadership approach for the success of my future business endeavour. I think the four major elements of leadership qualities that I should develop are; expert power, reward power, coercive power and shared leadership. According to French and Raven (2001), expert power refers to one person’s professional or special knowledge of the field or exclusive skills or techniques (French and Raven 2001, p.70). Academic world and professional world are entirely different. Being a student, I am currently concentrating mainly on my studies. However, I know that for the success of my future endeavour, I should develop more man management skills. Tourism is an industry in which relationship building has an important role. Better communication skills are necessary to establish meaningful relations with the visitors in tourism industry. It is better for me to improve my English language skills more since most of the visitors to China are from English speaking countries such as America, England etc. I should improve my verbal and nonverbal communication skills to service the visitors more efficiently. Moreover, I should know more about the cultural traits of the visitors more to service them effectively. “Reward power, whose basis is the ability to reward, entitles the person the perception that the social agents can mediate rewards for him or her (French and Raven 2001, p. 65). I know that it is my duty to service the employees properly to get my work done through them. Only the satisfied employees will deliver the goods for me. Good salary and working conditions are as important as rewards and complements. I should learn more to complement the employees for their better work. I know that it is not necessary to complement the employees with financial rewards always. Even a praising word can motivate the employees to improve their performances. I should learn more to speak politely with my employees. So I should do lot of researches to know how to develop such power. I plan to spend one year’s time doing the reading and case studying with respect to the importance of rewarding in human resource management. “Coercive power stems from the perception that one will be punished by the organization such as the company or the immediate boss if he or she fails to conform to the influence attempt” (French and Raven 2001, p.66). One of the major disadvantages of my leadership qualities is the extreme nature in punishing and rewarding employees. I know very well that I am intolerant to mistakes. At the same time, I am ready to complement each and every good work. However, in business, I should be more careful with this behaviour. There are many occasions in which I should keep a blind eye towards certain simple mistakes or simple achievements of the employees. If I complement or punish employees for minor achievement of silly mistakes, they will expect same thing always which is not good for the organization. “Shared leadership can be defined as a dynamic, interactive influence process among individuals in groups for which objective is to lead one another for the achievement group or organizational goals or both”(Pearce and Conger 2003, p.1). I know very well that the workers in my future firm may have more knowledge than my in hospitality or tourism industry. I should utilize that knowledge effectively to build my business. For that purpose, it is better for me to follow the shared leadership style. Since, I will be only a beginner in business world, I need the assistance of my employees to fine tune my talents and leadership skills. Shared leadership can help me to maximally use the potential of the team members by encouraging staff to be involved in the decision-making process or key business management. References 1. Bass, B.1990. From Transactional to Transformational Leadership. Organisational Dynamics 18 (1) p19-31 2. Bennis, W., Spreitze, G.M. & Cummings, T.G. 2001. The Future of Leadership Publisher: Jossey-Bass; 1 edition (May 9, 2001). 3. Babou, 2008. Transactional Leadership Vs. Transformational Leadership. [Online] Available at: http://leadershipchamps.wordpress.com/2008/08/04/transactional-leadership-vs-transformational-leadership/ [Accessed 22 March 2012] 4. Bryman, A. 1986. Leadership and organizations, Routledge & Kegan Paul plc, London, 5. Clawson, J. G. 2008. Level Three Leadership: Getting below the surface, Publisher: Prentice Hall; 4 edition (April 19, 2008). 6. Depree, M. 1990. Leadership is an Art, Publisher: Dell (August 10, 1990) 7. French, J.R.P. and Raven B. 2001. The Bases of Social Power in Negotiation Sourcebook, Ira Asherman and Sandy Asherman, HRD Press, Amherst. 8. Hackman, M.Z. 2008. Leadership: A Communication Perspective Publisher: Waveland Pr Inc; 5 edition (August 6, 2008) 9. Kim, R. 2010. Apple Passes Microsoft As Top Tech Company, [Online] Available at: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/05/26/BUDJ1DL0IU.DTL [Accessed on 22 March 2012] 10. Kotter, J. 1996. Leading Change. Harvard Business School Press 11. Mullins, L.J. 2007. Management and Organizational Behavior. Publisher: Financial Times Management; 8 Pap/Pas edition (September 28, 2007) 12. Maxwell, J.C. 2007. The 21 Irrefutable Laws of Leadership: Follow Them and People Will Follow You Publisher: Thomas Nelson; 10 Rev Upd edition (September 18, 2007) 13. Northouse, P.G. 2009. Leadership Theory and Practice, Thousand Oaks CA: Sage Publications 14. Pearce, C.L. and Conger, J.A. 2003. Shared Leadership: Reframing the Hows and Whys of Leadership, Sage, London. 15. Qumer, S.M. 2009. Apple Inc’s corporate culture: The good, the bad and the ugly, ICMR Center for Management research, www. Icmrindia.org 16. Rollinson, D. 2002. Organisational Behaviour and Analysis London, Pearson. 17. Rowold, J. & Schlotz, W. 2009. Leadership Review, Kravis Leadership Institute, Claremont McKenna College, Vol. 9, Spring 2009. 18. Zaleznik, A. 1977. Managers and Leaders: Are they different?. Harvard Business Review May-June 1977. Read More