The Nature of Leadership Has Changed in Post-Industrial Developed Economies - Term Paper Example

THE NATURE OF LEADERSHIP HAS CHANGED IN POST-INDUSTRIAL DEVELOPED ECONOMIES Introduction Organizations worldwide have undergone significant environmental transformations on account of globalization, technological evolutions, as well as the wide scale application of information technology in businesses, influencing the economies to shift towards market based socio economic systems, where the organizations are led by knowledge and information. Accordingly, the leadership styles have also changed in response to such environmental and organizational changes. The shift from bureaucracy towards a more liberal organizational structure, dominated by information and technology and one which is highly knowledge oriented, is one of the most significant outcomes of the transformation from the industrial to information age. Such far-reaching changes have revolutionized the manner in which organizations were initially managed, thereby leading to evolution of novel leadership styles, and in the process have completely redefined the scope and impact of institutionalized power and authority within organizations, thereby influencing the manner in which such organizations operate and function in the knowledge based post industrial developed economies. This paper seeks to discuss, analyze and explore the manner in which the leadership styles have transformed from the industrial age to the post industrial era, with the help of corresponding theories and models, and recent developments. Transition from Industrial to Post Industrial Era In the industrial age the three critical factors of production included – land, labor and capital, however, the transition to the information age has added another crucial factor of production – “knowledge”. Knowledge revolution brought about by the development of new and state of the art technology which was previously unavailable to the leaders, have completely revolutionized the manner which organizations function and compete in the market place. Organizations such as Dell, Microsoft, Toyota, IBM, etc have excelled in this art, through sheer application of knowledge led leadership strategies. Automation – an outcome of technology, has facilitated the creation and development of highly skilled workforce, in the developed economies which is a vital factor of production and instrumental in redefining the human resource as mere labor – devoid of any critical skill and who are merely employed to follow the orders of their leaders, to a more knowledgeable and intellectual workforce who are employed to generate input in the form of ideas that can help the management in overcoming various organizational setbacks – both internal as well as external, through their knowledge (Pfeffer 1996). The difference between leaders and subordinates in terms of duties and responsibilities has changed greatly ever since the transition to the post industrial era. The skills required by the leaders in the post industrial age have undergone major changes as well. Leaders today are required to display unique leadership attitudes which are best suited to the digital age they are more flexible and intellectually curious with a desire for knowledge. Since knowledge has been replaced as the central factor of production leaders have shifted their focus and have centralized all their developmental efforts on “knowledge” based strategies. Furthermore, the digital revolution have expanded the scope of markets and the ensuing globalization and trade liberalization has opened the markets making it easier for international organizations to enter and compete with the local and national firms. Such changes has widened and changed the scope of leadership which now includes added burden to be aware of the international trends, and value, collaborate and focus on issues related to such diversity. The concept of working and leading in teams or teamwork is another such manifestation of the post industrial era, which developed from the realization that individuals cannot be the sole influence in contributing towards the success of any organization. Knowledge is best utilized when shared, hence teamwork would facilitate better generation of ideas thereby influencing and speeding up the process of knowledge creation. The chain of authority hence has shifted from autocratic in the industrial age to a more distributed and less hierarchical form in the post industrial age, thereby completely transforming the roles played by leaders, in influencing organizational development. Leadership in the Post Industrial Age: According to Hitt (1998): “we are on the precipice of an epoch,” in the midst of a new economic age, in which 21st century organizations are facing a complex competitive landscape driven largely by globalization and the technological revolution. This new age is about an economy where knowledge is a core commodity and the rapid production of knowledge and innovation is critical to organizational survival” (in Uhl-Bien, Marion, 2007; Pp. 186). The post industrial era alternatively referred to as the information age or the knowledge age / era, is characterized by a dynamic, highly competitive landscape, led by globalization, deregulation, trade liberalization and information technology (Halal & Taylor, 1999) thereby posing new challenges to the leaders. Thus, it is apparent that the sustainability of an organization in the post industrial age depends on the leadership as well as the manner in which the leaders manage their social assets rather than its tangible assets (Quinn et al., 2002) as opposed to the industrial age where the leaders were required to manage the physical resources at their disposal, which were mainly centered on optimizing the productivity of employees (Boisot, 1998). The post industrial economy on the other hand, requires its leaders to manage their social assets in a manner which ensures optimum returns in terms of knowledge management at lower costs. The objectives of leaders have shifted from production of physical niche products to generation of niche ideas driven by unique knowledge (Nonaka & Nishiguchi, 2001). This concept of generation of ideas is based on the shared leadership, whereby the leaders share their knowledge and work in groups rather than development of ideas by the top management and instructing the employees to follow the orders, as was the case in the industrial age (Heckscher, 1994). Leaders today rely more on speed, accuracy and adaptability rather than control, efficiency and optimum productivity, and more and more organizations in the post industrial age are now dependent on knowledge and learning in the process, thereby changing the conventional roles of leaders from delegation of responsibilities to sharing of responsibilities and accountability (Achtenhagen et al., 2003; Volberda, 1996). Leadership Theories and Models: Conventional hierarchical perception of leadership roles are rapidly fading away with the rise in complexities of the external environment. Hence, theories centered on leadership must transform simultaneously in response to such changing global environment, and develop new perspectives best suited for the complex adaptive organizational requirements. Osborn et al (2002) argue that the twenty first century leadership which is highly centered on decentralized organizational structures must adapt to the co-evolutionary ecologies of the firms and develop theories which are consistent with the horizontal as opposed to the top – down approach towards leadership management, which are at best, obsolete in this post industrial era. Leadership theories and models help in understanding the manner in which leadership influences the functioning of organizations and some of them are discussed hereunder. Stakeholder Theory: The stakeholder theory is based on the notion that corporations and society are interpenetrating systems (Svensden, 2007) whereby the firm is viewed as a collection of groups each sharing a unique and independent relation with the others. These groups comprise of internal and external members such as managers, employees, owners, customers, competitors, suppliers etc and the interests of all these stakeholders vary. These stakeholders have the ability to influence organizational decision making to create value which is in their favor or for their own personal benefits. The decisions they take is in turn, influenced by their individual bargaining power. Thus in such a situation where there is an existence of wide range of stakeholders each with differing interests, it is necessary to have effective leadership which can co-ordinate their different interests and maximize the overall benefit to the organization. For instance, the leaders may strive to retain their employees and motivate them to optimize their efficiency through intermittent performance appraisal and rewards, as this will not only ensure a committed work force but also higher and better organizational performance as well. However, Gronn (1999) argues that despite such requirement of the post industrial era, of a knowledge centered management of organizations, leadership still is largely grounded in a rigid bureaucratic structure. This claim can be justified with the fact that many of the existing leadership theories still continues to be focused on the idea of rationalized leadership whereby the organizational goals are established rationally and the managerial strategies are then centered on defining means and developing policies with which such goals can be accomplished. It is also often argued that the basic motive of a leader must be to co-ordinate the widely differing individual perspectives and assimilate the same into rational organizational objectives. Thus, the leadership theories must focus on strategies with which the leaders can effect meaningful transformation within the organizations and guide the employees towards attainment of the stated goals through development of effective policies and structures based on hierarchical, as opposed to top-down, organizational frameworks (Zaccaro & Klimoski, 2001). The leadership in the post industrial economies must, therefore, be centered on encouraging the employees to accomplish organizational goals, lead them in a manner that ensures optimum productivity, and inspire them to work co-operatively, despite their differing interests, for the attainment of a common organizational goal (Bass, 1985). Complexity Leadership Theory: The complexity theory is based on the idea that organizational objectives are developed rationally and the leaders must develop appropriate strategies based on such rational objectives for accomplishment of such goals. The theory further contends that the leaders play an instrumental role in influencing and motivating the others in accomplishing the organizational goals, within the formal hierarchical organizational structures. McGrath and Child argued that: “Scholars, managers and others face a widespread challenge to bureaucracy’s central benefit, namely, its utility as a vehicle for strong economic performance in the new era” (in Uhl-Bien, Marion, 2007; Pp.191). This theory tends to shift the importance of leadership from the individual leader, without weakening the role and significance of the leadership concept, as viewed in terms of an organizational perspective. On the contrary, it identifies leadership as a phenomenon that transcends the individual leadership towards a wider concept, i.e. organizational leadership. Leadership, thus viewed from the perspective of the complexity theory, is a collaborative framework representative of a complex adaptive system alternatively referred to as the CAS, whereby the relationship between the leaders and the employees are defined by their interactions with the heterogeneous groups within the organizations, as opposed to the horizontal communication in bureaucratic systems. According to this theory, the leadership is viewed as a ‘distributed’ phenomenon rather than a function carried out solely by one single individual, and is highly dynamic whereby the leader will assume different roles – that of a leader or a follower, according to the demands of the circumstances, meaning thereby that the leaders will be highly flexible and adaptive rather than rigid and autonomous (Brown & Gioia, 2002). Conclusion: As the industrial age faded away, with the development of new sophisticated technology; the post industrial age brought along with it immense possibilities for organizations thereby widening the scope of leadership in the process. Environmental changes thus influences the leadership styles as is apparent from the radical changes in leadership in the industrial age and the one in information age, in the post industrial era. The role of leadership is instrumental in both effecting change and adapting to it and hence needs to be studied extensively. According to Heckscher (1994): “There is a growing sense that effective organization change has its own dynamic, a process that cannot simply follow strategic shifts and that is longer and subtler than can be managed by any single leader. It is generated by the insights of many people trying to improve the whole, and it accumulates, as it were, over long periods.” (Pp. 24). 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