Importance of Communication in an Organization - Essay Example

In the business world change is inevitable due to the market forces that are constantly changing the way we realize business. Change also occurs within a company as it begins to mature. The product life cycle affects the decision companies make regarding their future. In the Gene One case study the enterprise has evolved and grown during an eight year period since its inception. The corporation is a privately owned corporation. The enterprise has reached a point that in order to continue to grow it needs to gain access to money and equity markets. In order to achieve its long term goals the firm has to go through an initial public offering (IPO) process. The purpose of this paper is to describe the strategic plan, leadership considerations, and other factors that will allow Gene One to achieve the transformational process successfully. The former CEO of the company Don Ruiz had the right idea in mind when he developed the idea of turning the company into a publicly traded entity. Don has passed away and Gene One is currently in dying need of a new CEO that is able to transform the company so that it can become an efficient public enterprise. The three primary goals of Gene One are to grow its revenues by 40%, to raise additional capital, and to develop new products. The timeline for completion of the IPO process is a maximum of 36 months. Prior to his death Don Ruiz had made remarks in the scenario that he might not be the right person to lead the company in the transformational process. Now that the company has to fill his vacancy the human resource department must recruit a new CEO. This CEO has to have the right leadership style to inspire the staff into believing that the direction of the company is the right path. The chief executive officer position is the top managerial position within a corporation. Due to the changes that are occurring within Gene One the new CEO has to be a true leader in order to ensure his troops follow the manager’s guidance. A leadership style that is well suited for the CEO position at Gene One Corporation is a charismatic leadership style. A charismatic leader can be defined as a leader who by force of their personal abilities is capable of having a profound and extraordinary effect on followers (Schermerhorn & Hunt & Osborn, 2003, p. 300). An example of a charismatic leader is Martin Luther King. Charismatic leaders have high moral beliefs, great interpersonal and communication skills, and the ability to inspire others to achieve higher levels of performance. At Gene One there is a problem in regards to the employees’ motivation and lack of confidence in the IPO plan. The general attitudes and beliefs of the employees have to change in order for the IPO to be successful. The CEO is the person that has to ensure that the employees go on board with the plan. A charismatic leadership style is the aligned with the problems Gene One is facing. The new CEO has to open the lines of communication within the organization. Communication is the process of transmitting ideas, thoughts, opinions, opinions, and plans between various parts of the organization (Articlesbase, 2007). The employees must learn about the new plans including the primary corporate goals. There is misperception among the workers particularly the technology department that becoming a public company will negatively affect the developing process of new products. They believe that the shareholders are going to place unnecessary pressures on them to deliver products fast. Due to the misperceptions that exist among the employees the new CEO has to step in and clarify the situation. In theory there are not any differences in the way a private corporation and public corporation operates. The employees have to realize that the new goals of the company are going to stand irrelevant if the company goes public or not. The employees need reassurances as far as their job security. Sometimes when companies go public there is employee turnover. According to the scenario there is no indication that the company plans to have a massive layoff as a consequence of it turning into a publicly traded company. The CEO has to express to the employees that their jobs are not jeopardy due to the move. Also the manager has to communicate to the staff the benefits associated with the strategic move. If the company grows there will be more promotion opportunities and future salary increases for the employees. Another important message that has to be transmitted by the CEO to the staff is the purpose of the initial public offering. The company currently does not have the capacity to obtain large amounts of capital due to the fact that the firm is privately owned company. The employees have to realize that it takes large amount of money to perform research. A potential outcome of not going public is possible a downsizing of the operations. The CEO has to let the workers know that the only way for the company to continue its successful path is by gaining the ability to raise capital. Access to Wall Street will enable Gene One to grow in the short, medium, and long term. The leadership of the company must come from other members of the managerial staff, not just the CEO. A very important player for Gene One is the behavior and leadership ability of its chief technology officer, Teri Robertson. Teri Roberson is a leader that has a unique set of leadership skills. She has been able in a short time to obtain the recognition for her work from other colleagues in the industry. This year she was named CTO of the year. She has the respect of her subordinates who follow her because she leads by example. Teri’s leadership style is task oriented. The leadership style utilized by Teri Robertson can be categorized as transactional leadership. Transactional leadership involves performing the necessary leader-follower exchanges for achieving routine performance agreed upon between the leader and the follower (Schermerhorn et al. 2003, p.301). The technology department trusts Teri a lot. It is the job of the CEO to immediately meet with Teri in order to convince her that the IPO strategic path is the best move for the company. Once Teri is on board with the plan she can influence through her transactional leadership style the technology department. Employees turnover in the technology department is a business risk that will be minimize once Teri shows her leadership among her colleagues. Transactional leaders can inspire their subordinates by offering contingent rewards. Contingent rewards are given once employees are able to achieve the goals set by the administration. Teri should utilize an active management approach. This entails monitoring progress and taking corrective actions whenever necessary. A third leadership position that is critical for the success of Gene One is the chief financial officer position. It is imperative for the company to prepare itself prior to becoming a publicly traded company. Once a company becomes public it must comply with SEC regulations and other statutes. An important regulation that was created in 2002 in order to increase investor confidence is the Sarbanes Oxley Act (SOX). Michelle Houghton, CFO, identified several of the mandates of Sarbanes Oxley that the company is currently not complying with. The company has to ensure that its auditor is independent of the company which implies there are no other business contracts between the two parties other than the auditing work. Auditor independence has created a business environment with greater accountability. The current composition of the board of directors does not comply with Sarbanes Oxley. SOX require all public companies to have a board of directors in which one member must have CPA or CFO credentials and experience. Also the method of payment used to compensate the board of director member must be cash based instead of equity based. The board of directors must have three committees for auditing, compensation and nominating. Michelle Houghton must ensure that the company takes the corrective actions to comply with SOX. She has to help the board of directors through her leadership to ensure that they make all the changes necessaries within a reasonable timeline. The new CEO of the company has to immediately deal with the conflict that exist among the executive managerial staff. The different managers are not currently communicating well with their fellow colleagues. An alternative solution to deal with the problem is to bring in an outside mediator to intervene with the staff. The group must get together and talk to each other in order to resolve the issues that exist between them. The goal is to achieve synergy among the executives so the enterprise becomes greater than the sum of its parts. The team members must improve their internal communication. Once the team begins to function as a cohesive unit their performance will improve. Gene One is a company that has the ambitious goal of becoming a publicly traded company. The reason the company wants to become public is to be able to raise capital in order to develop new products and achieve a 40% growth in the process. Transforming a company from private to public is not a simple process. The move affects the entire organization including its employees. The new CEO of the company who is charismatic leader must influence the workers to believe in the long term strategy of the firm. Retaining key personnel including the technology personnel is very important to maintain a competitive advantage. Teri Roberson has to get more involved with the staff in order to motivate them. As the company moves forward it must make the necessary changes to comply with SEC regulations and the Sarbanes Oxley Act. The communication among the employees must improve. Management has to communicate a message that convinces the employees that becoming a public company is the best strategic fit for Gene One Corporation. The false information about the impact of becoming a public company has to be clarified to gain the confidence of the workers. Teri Robertson and Michelle Houghton have to become more assertive in displaying their leadership. The future of Gene One depends on the company’s ability to get the employees collaborating towards achieving the firm’s goals. The executive staff has to use its leadership in order to get the employees support towards its plans. References Articlesbase.com (2007). Importance of Communication in an Organization. Retrieved June 5, 2010 from http://www.articlesbase.com/business-articles/importance-of-communication-in-an-organization-97064.html Schermerhorn, J., Hunt, J., Osborn, R. (2003). Organizational Behavior (8th ed.). New York: John Wiley & Sons. Read More