Meta-Analytic Reviews of Board Composition - Essay Example

Leadership Review For as long as there have been societies, there have been leaders who seem to rise naturally and with relative ease to the top of their field. As the world became more complicated with the rise of the factories and the potential for minute by minute control such organizations offered, an understanding of how to maximize worker productivity and cooperation became more and more necessary. These theories have evolved through the years to increasingly involve the workers as cooperative and equal members of the organization. Although the new approach to leadership has led to some difficulties in implementation, the potential benefits for the organization as well as the stakeholders, meaning owners, board members, managers, employees and consumers cannot be ignored. The following literature review illustrates this progression. In “Meta-Analytic Reviews of Board Composition, Leadership Structure and Financial Performance” (Dalton et al, 1998), the authors establish that there is no direct connection between the composition of traditional organizational boards or board leadership structures and financial performance of the organization despite widespread belief that such a relationship exists. After exposing this basic belief, the authors examine a number of different forms of board compositions and leadership structures and illustrate the means used to evaluate any relationship between these and the firm’s financial performance. Although these relationships have been studied in a variety of ways in the past, this study focuses on bringing the research together to determine whether the findings have yielded any meaningful results. Because this study takes into account numerous other studies, it is able to provide a more broadly-based view upon the findings of each study conducted and concludes that, despite individual reports of inconclusive results, is able to demonstrate that while there does not seem to be any direct relationship evident between the board and the firm’s financial performance, further study into the various ways board subcommittees might affect the firm is recommended, giving rise to many new theories regarding organizational leadership. In a study entitled “The Illusion of Leadership” (Weber et al, 2001), the problem of the large group in bringing about effective, efficient leadership in the organization is examined as the authors study how groups tend to work together through the use of coordination games. The authors suggest that the traditional means by which individuals are deemed to be good leaders may be much more subjective than commonly considered as a result of basic attribution theory. In this theory, people tend to attribute qualities, both positive and negative, upon a given person based upon the outcome of situational elements existing widely outside of the individual’s influence. To test their theory, the authors use a situational game in which it is shown that this tendency does exist in most group environments, and that it becomes more pronounced within larger group settings because people become less involved in the situational elements of situations and are thus more capable of ignoring it. Through this study, the authors illustrate why assessing leadership skills in this way can be harmful and begin to open up new means of approaching leadership roles as a means of more efficient and more effective operation. The fallacies of attribution theory are also a matter of discussion in David Waldman and Francis Yammarino’s article “CEO Charismatic Leadership” (1999). In this study, the authors attempt to prove that a charismatic leader often has a significant impact upon the function of an organization. While they acknowledge some basis of truth to the concept of attribution theory, they also illustrate numerous ways in which good leadership can work in close proximity within the small group as well as strategies in which the CEO can bring about effective change in a long-armed umbrella approach to leadership over the organization as a whole. As one considers the various approaches to leadership to be discussed, it will become increasingly clear that a ‘total picture’ view such as these authors describe would be an essential element, although perhaps not the final or only authority, in assuring the organization continues positive progress. Micha Popper examines the history of the charismatic leadership theory in her article “The Development of Charismatic Leaders” (2000). The origins of this theory are based upon early assumptions that great leaders were naturally endowed with superior inborn traits that would enable them to rise to the top of any crowd. Studies concentrated on identifying what these traits might be so they could be recognized early and encouraged through education and experience. As she reveals in her history, disappointment in not being able to find consistent natural traits that gave rise to effective leaders forced researchers to begin studying the situational environment as the probable variable in the creation of great leaders. However, this approach also disappointed in its lack of consistency or adequate means of measurement. This gave natural rise to theories that included the interrelationships between the leaders and their followers and, as shall be demonstrated, continued to evolve from there. It is commonly thought that regardless of the role the leader plays in a particular organization or group, they will set the standard by which all other participants will follow. Applying their study to a global significance, the authors of “The Effect of Leadership in a Public Bad Experiment” (2003) suggest that while leadership by example is effective in reducing the levels of ‘public bad’ participated in by others, the benefits of providing this example can often serve simply to discredit and devalue the leader until s/he is no longer effective. Using a relatively simple game design, the authors test whether the decisions of a particular individual, at no particular hierarchical level as compared to others in the group, can be influential in encouraging others to work to the public good. Their conclusions determine that while leaders usually have a statistically significant and persistent effect on those they would lead, followers’ tendencies to side with the leader will vary depending upon the variations in the leader’s decisions. Leadership in the present climate of fuzzy boundaries and shifting power has introduced a paradox in that the traditional understanding of a leader is someone who holds power, yet the leader of today holds no more power than those he would lead. This is the subject of the article “Paradox and Performance: Toward a Theory of Behavioral Complexity in Managerial Leadership” (Denison et al, 1995). While this is not necessarily a new concept within this field of study, the authors point out that there hasn’t been a great deal of empirical research done into how theories of paradox have influenced empirical study. As they apply Quinn’s model of leadership roles to some of the more prevalent implications of paradox theory, they make a case for the need for further research into behavioral complexity as well as cognitive complexity as a means of measuring effectiveness and provide an example of what they propose. Within the article, the authors present the findings of their empirical study in which leaders’ effectiveness is determined by a rating of leadership role behavior assessed by subordinates and effectiveness is rated by superiors. The results of their study demonstrate that those who engage in leadership behavior roles are much more effective as compared to those executives who do not engage in this sort of behavior, and that their position is much more clearly understood by their subordinates. Through their study, the authors highlight the need for including paradox theory and behavioral complexity in leadership studies. Marguerite Schneider outlines the stakeholder theory of organizational leadership in her article. The primary purpose of the article is to investigate how the radix organization has changed the practice of leadership and calls for new theories that are not based upon the assumption that the leader has power and control over those being led. Stakeholder theory is suggested to be the leadership model best suited to the constantly changing and multiply expanding organizational structure of the modern day. It is suggested that this method of leadership is particularly well-suited to provide for flexible leadership relationships as it provides a means of predicting leadership effectiveness in environments where there are fuzzy boundaries, flattened hierarchies and contractual relationships rather than more traditional employment. According to Schneider, stakeholders may exist within the organization in various capacities as well as outside of the organization without any assumption of managerial authority over stakeholders in any level. To illustrate her point, Schneider reviews the various business practices that are associated with the radix organization and illustrates how the traditional managerial approach is no longer effective. This article extends the literature on leadership theories by providing a model upon which new management structures can be organized that are not based on hierarchical concepts. The stakeholder approach to leadership is somewhat different from other recent theories of management in that it doesn’t necessarily propose that the manager or leader necessarily determine the action from the beginning. This view of leadership is examined in “Leadership Self-Efficacy and Manager’s Motivation for Leading Change” (Paglis & Green, 2002). In approaching this type of leadership style, the authors identify a sense of self-efficacy as a prime characteristic of an effective leader. This characteristic refers to an individual’s belief that they can bring about change and the strength of this belief not only enables them to persist in the face of obstacles, but encourages others to follow in their wake. As it is presented in this study, this approach to leadership assumes the leader should individually assess a given situation, determine the best course of action, and then get other members of the organization to help them implement the plan. This differs from the stakeholder theory in that the stakeholder theory engages other members of the organization from the beginning, facilitating a more team-oriented and ownership approach. In their article, Vicki Goodwin et al (2001) explain what is meant by the term transformational leadership, how it is implemented and its potential implications for future leadership theory. “Transformational leaders are typically described as those who stimulate their followers to change their motives, beliefs, values and capabilities so that the followers’ own interests and personal goals become congruent with the vision for their organization (Burns, 1978 cited in Goodwin et al, 2001: 759). This is contrasted with transactional leadership in which subordinates are encouraged to participate through the promise of rewards or punishments. While it is concluded that transformational leadership builds the potential for stronger positive relationships between the various hierarchies of an organization, both transactional and transformational leadership styles continue to rely on the concept of a rigidly defined hierarchical structure as the foundational element of leadership. At the same time, they are also based upon the concept that the original motivating idea must originate within the upper echelons of this structure and then be pushed onto subordinates who are expected to conform their opinions to that of the superiors. In explaining how transformational leadership must be transcended to bring about widespread involvement, the environment and global issues are again brought forward as a field requiring a new form of leadership that differs from the old forms. This becomes the case as advocates attempt to get as many individuals as possible to buy into the concept that they are all part-owners in such large-scale global issues and pollution, conservation and restoration. In identifying the ways in which environmental leadership needs to be different from traditional leadership, Egri and Herman (2000) provide a list that sounds very similar to the list provided through stakeholder theory. This list begins with a common vision in that sustainability and least impact to nature are primary considerations. It includes the concept that it is not only the members of the board, the management or the employees of a given organization that will be making the decisions, but the consumers as well as other organizations as well as leadership must encourage active participation from all parties. To accomplish this kind of involvement, hierarchical structures are necessarily struck down and the traditional concepts of competition must blend into a more flexible and cooperative dynamic give and take. Case study: 3M One of the areas of organizations most keenly aware of the need for flexibility, rapid adaptation and drastic role changes is the information technology field. Those involved in providing technical services to organizations are increasingly expected to be integral members of the organizational team, contributing and problem-solving as much as the guys ‘on the floor’. In their study of how the large manufacturing firm 3M has addressed modern day issues of IT strategies, the authors of “Aligning the IT Human Resource with Business Vision: The Leadership Initiative at 3M” illustrate the ‘stakeholder leadership’ theory in practical application. “A key element of this journey is the development of business-aligned, entrepreneurial leadership skills, competencies, and behaviors among the entire IT staff” (Roepke, 2000: 328). By focusing on providing for the needs of the IT staff as well as giving them the power to bring about the types of changes and make decisions necessary for the smooth operation and efficient consideration of options, 3M was able to create an environment that was both more productive and more employee-friendly by recognizing employees’ stakeholder status. Case study: Southeastern school district In their case study of how an unnamed southeastern school district handled significant, fundamental change within their operating procedures, the authors of “Transition Leadership in a Shifting Policy Environment” (Goldring et al, 2003) also demonstrate the principles outlined in the stakeholder theory of leadership. Based upon interviews that were conducted with various principals of the individual schools within the district, the authors found that the successful navigation of significant change was brought about by the way in which the district involved everyone in the district with the transition. The transitional leadership worked to dismantle the old policies at the same time that they were working to create new policies as they actively enlisted the help and advice of the various individuals who would be involved. This helped to bring the district community together with a relatively unified goal while giving individuals a sense of ownership in the process. Case study: NCR Another organization that successfully navigated the difficult waters of change to finally find safe harbor in flexible leadership structures is NCR. Richard Rosenbloom presents the history of the company’s leadership styles in his article “Leadership, Capabilities, and Technological Change: The Transformation of NCR in the Electronic Era” (2000). As is shown, the company under traditional leadership came to the edge of failure before new management came in and opened up the possibilities of more flexible leadership styles, inviting the stakeholders (employees and customers) to provide input as to where the organization should devote its attentions. This new form of leadership enabled the company to turn itself around, becoming an eventual leader in the electronics field. This case is particularly helpful in understanding the changes taking place in leadership theory because it demonstrates both how the old ways were failing as well as how new approaches were bringing about astounding change and possibility. Although it is becoming increasingly recognized that management styles must be more flexible and begin including organizations and agencies once considered outsider groups, this less defined leadership style is not without its own perils. A study into the implementation of a teacher peer assistance and review (PAR) at a large urban California school district is examined as an example of distributed leadership (Goldstein, 2003). The study was conducted over a period of a year and a half and attempted to explain how a mandatory PAR policy in California was being interpreted at the local level, what this was doing in terms of leadership responsibility and understanding the implications of this redistribution of leadership might be within the organization. The findings indicated that while the idea of greater responsibility was generally well-received, there remained a tendency for individuals to prefer a ‘higher’ authority to turn to for final decisions, thus a continued preference for a well-defined and authoritative leader. Although it may be difficult and require a new approach to leadership training, it seems clear through studies such as McGillivray and Smith’s “The Impact of Leadership Turnover on Trading Relations Between States” (2004). In this study, the authors examine the impact of individual leadership change on organizational relationships with other entities. Based in the political realm, the study indicates how democracies, functioning as a collective body rather than an individual man or exclusive select few, can experience changes in individual leadership representatives without losing a great deal in extra-organizational relationships. However, when the organization is characterized by a single ruler, president or small family autocracy, changes in organizational leadership can have a profoundly negative impact upon extra-organizational relationships. In a swiftly shifting economy, it is to the organization’s benefit to adopt the most stable leadership structure possible to ensure sound relationships with partner organizations and this means finding ways of implementing more of the concepts proposed through the stakeholder theory of leadership. In conducting this literature review, the various changes that have taken place in leadership theory came together into a cohesive whole. While I can see the basis for various approaches that have been taken and continue to be proposed, I have a greater understanding of why the breakdown of hierarchy and traditional structural organization is an important element in new approaches. If employees, consumers and other ‘external’ agents are to begin playing a role in the development of a new form of organization, the structures of the past must be cleared away at the same time as the introduction of the new approaches is explained and implemented, allowing everyone the time to realize that they, too, are an important element of bringing about this change. References Dalton, Dan R.; Catherine M. Daily, Alan E. Ellstrand & Jonathan L. Johnson. (March 1998). “Meta-Analytic Reviews of Board Composition, Leadership Structure and Financial Performance.” Strategic Management Journal. Vol. 19, N. 3: 269-290. Denison, Daniel R. Hooijberg, Robert & Quinn, Robert E. (Sept-Oct., 1995). “Paradox and Performance: Toward a Theory of Behavioral Complexity in Managerial Leadership.” Organization Science. Vol. 6, N. 5: 524-540. Egri, Carolyn P. & Susan Herman. (August 2000). “Leadership in the North American Environmental Sector: Values, Leadership Styles and Contexts of Environmental Leaders and their Organizations.” The Academy of Management Journal. Vol. 43, N. 4: 571-604. Goldring, Ellen; Robert Crowson; David Laird & Robert Berk. (Winter 2003). “Transition Leadership in a Shifting Policy Environment.” Educational Evaluation and Policy Analysis. Vol. 25, N. 4, Special Issue on Educational Leadership: 473-488. Goldstein, Jennifer. (Winter 2003). “Making Sense of Distributed Leadership: The Case of Peer Assistance and Review.” Education Evaluation and Policy Analysis. Vol. 25, N. 4, Special Issue on Educational Leadership: 397-421. Goodwin, Vicki L.; J.C. Wofford & J. Lee Whittington. (November 2001). “A Theoretical and Empirical Extension to the Transformational Leadership Construct.” Journal of Organizational Behavior. Vol. 22, N. 7: 759-774. McGillivray, Fiona & Alastair Smith. (Summer 2004). “The Impact of Leadership Turnover on Trading Relations Between States.” International Organization. Vol. 58, N. 3: 567-600. Moxnes, Erling & Eline van der Heijden. (December 2003). “The Effect of Leadership in a Public Bad Experiment.” The Journal of Conflict Resolution. Vol. 47, N. 6: 773-795. Paglis, Laura L. & Stephen G. Green. (March 2002). “Leadership Self-Efficacy and Managers’ Motivation for Leading Change.” Journal of Organizational Behavior. Vol. 23, N. 2: 215-235. Popper, Micha. (December 2000). “The Development of Charismatic Leaders.” Political Psychology. Vol. 21, N. 4: 729-744. Roepke, Robert; Ritu Agarwal & Thomas W. Ferratt. (June 2000). “Aligning the IT Human Resource with Business Vision: The Leadership Initiative at 3M.” MIS Quarterly. Vol. 24, N. 2: 327-353. Rosenbloom, Richard S. (Oct.-Nov., 2000). “Leadership, Capabilities, and Technological Change: The Transformation of NCR in the Electronic Era.” Strategic Management Journal. Vol. 21, N. 10/11, Special Issue: The Evolution of Firm Capabilities: 1083-1103. Schneider, Marguerite. (March-April, 2002). “A Stakeholder Model of Organizational Leadership.” Organization Science. Vol. 13, N. 2: 209-220. Waldman, David A. & Francis J. Yammarino. (April 1999). “CEO Charismatic Leadership: Levels of Management and Levels of Analysis Effects.” The Academy of Management Review. Vol. 24, N. 2: 266-285. Weber, Roberto; Colin Camerer, Yuval Rottenstreich & Marc Knez. (Sept.-Oct., 2001). “The Illusion of Leadership: Misattribution of Cause in Coordination Games.” Organization Science. Vol. 12, N. 5: 582-598. Read More