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Lm Assg Final

  1. 1. BUSM3195 - LEADERSHIP AND MANAGEMENT INTRODUCTION Procter and Gamble Co. (P&G) is an American multinational corporation (MNC) where its businesses focus on fast-moving consumer goods. Durk Jager, the former chief executive officer (CEO) of P&G, reorganised the company to meet the growing demand of globalisation. However, his drastic plans proved futile as thousands of followers were confused and demoralised by his move. As a result, P&G’s stock went into tailspin after reducing two earning projections (Tichy & Bennis 2007). Therefore, in 2000, Jager was eventually replaced by Alan George Lafley, who later transformed the company to its current state. In 2007, P&G was ranked as the 8th largest corporation in the world by market capitalisation, the 14th largest company by profit in the States and also the top ten in Fortune’s most admired companies list. Apple Inc. (Apple), a relatively younger organisation, is also an American MNC. However, it deals with consumer electronics and software product instead. Apple was in a dire state before Steven Paul Jobs, aka Steve Jobs, took the post of CEO. Under his charge, several popular products were created and some of them include the Macintosh computers, iPod, iPhone and Macbook etc. In 2008, Apple has achieved worldwide annual sales of US$32.48 billion in its fiscal year ending September 2008 and Fortune magazine had also named Apple as the most admired company in the States. The successful revival of these two companies can be attributed to the effective leadership of their CEOs, Alan George Lafley and Steve Jobs. They have received worldwide praises about their leaderships for amplifying their market price and leading their respective companies from a deteriorating empire to where it is now. Hence, the Page 1 of 20
  2. 2. BUSM3195 - LEADERSHIP AND MANAGEMENT characteristics of each leader, their transformational leadership, and how they developed teamwork within their organisation and motivate their employees are significant to leadership effectiveness. APPROACH Firstly, characteristics of leaders can be classified into three categories namely, personality traits, leadership motives and cognitive factors (Dubrin, Dalglish & Miller 2006). As recent studies had also recognised that these characteristics will facilitate and determine the effectiveness of leaderships, and it is the integration of these personal characteristics that cultivate a consistent pattern of leadership behaviours (Zaccaro, Kemp & Bader 2004). Therefore, the characteristics that attributed to their successful realms are relevant to their leadership effectiveness. Secondly, transformational leaders employ a visionary and creative style, not only to inspire the employees to be creative and innovative, but also to broaden their interest in their work (Nielsen et al. 2008). They are also able to devote significant energy to lead and respect the gifts and abilities of their workers (Bryant 2003). Furthermore, they focus on what they accomplish rather than their personal characteristics and relationships with followers, and it is especially important as leaders may have to lead people from across the world (Dubrin, Dalglish & Miller 2006). Moreover, many organisations are facing turbulent and intense competition. Thus, their transformational leadership, to manage the chaos and restructure the organisation, are vital to the survival of the organisations in the long run. Page 2 of 20
  3. 3. BUSM3195 - LEADERSHIP AND MANAGEMENT Lastly, motivation is a hidden force to induce someone to do something that is desired through various approaches (Arnold 1988). Hence, it is essential to motivate employees through the right approach in order to achieve organisational goals (McShane & Travaglione 2007). Developing teamwork is another important leadership role that is said to differentiate successful from unsuccessful leaders as it will influence the followers to work effectively in a cohesive manner (Locke et al. 1999). Hence, their methods of motivation and fostering teamwork would be relevant in determining their leadership effectiveness too. ALAN GEORGE LAFLEY Traits Lafley has shown lots of passion for his work and the people in the organisation. For instance, even when it is Mother’s Day, he would meet the company’s head of human resource, Richard Antoine, to go through reports on the performance of the company’s senior executives every Sunday evening (Sosik et al. 2004). The fact that he could even sacrifice the time with his mother on Mother’s Day has shown his determination and passion to preserve the company’s culture of valuing talents. Additionally, Lafley has demonstrated his farsightedness by acquiring SpinBrush and Clairol in 2001, shortly after taking over the post of CEO (Berner 2002). From the acquisitions of these two companies, he actually strengthened the company core strengths in hair and oral care, and also increased its market share and maintaining a balance between sales and profit growth where analysts had also expected P&G’s operating earnings to increase by 9% (Berner 2002). Page 3 of 20
  4. 4. BUSM3195 - LEADERSHIP AND MANAGEMENT Furthermore, Lafley is also soft-spoken, friendly and warm in nature. He displayed a high level of emotional intelligence, especially his self regulation, by not screaming and yelling at his subordinates because he believes that the messenger is just as critical as the message (Berner 2003). Besides that, he also has the ability to build enduring relationships as he relied a great deal on relationships he had built over the years to transform P&G’s culture (George 2006). For example, when a student asked him a dull- witted question, he showed patience and willingness to listen in order to understand the question by returning to the student repeatedly, resulting in better relationships between him and his followers (Krauss 2008). Lastly, Lafley also has insight into people and situations when he by-passed dozens of potential general manager and appoint Henretta to head the North America baby-care unit (Tichy & Bennis 2007). Although there was almost a rebellion against his decision, he upheld his decision and justified why Henretta was better than the other candidates (Tichy & Bennis 2007). Despite all these, Henretta’s success has proven that Lafley has chosen the right person for the post (Tichy & Bennis 2007). Transformational Leadership When Lafley took over as CEO, he realised the critical problem he was facing was not about turning P&G from the losses of US$85 billion in market capitalisation to profitability. Instead, the crisis confronting P&G was the loss of confidence in the leadership as the organisation was in a state of chaos. Headquarters and business units globally were blaming each other for the problems created and employees were calling for heads to roll (Tichy & Bennis 2007). Page 4 of 20
  5. 5. BUSM3195 - LEADERSHIP AND MANAGEMENT Thereafter, Lafley flaunted his transformational leadership by helping his followers understand that the organisation needs to undergo major changes in order to survive and eventually managed to transform the culture to a nimbler and more open one (Woolley 2005). He also created awareness and got them to face up to the reality that it is critical for the organisation to change so that it will be more profitable, resulting in lesser retrenchments (Tichy & Bennis 2007). For instance, only ten days in office, he immediately flew to Europe to listen to the complaints and address their issues in order to help them understand and be aware of the changes that were ahead of them (Dyer, Dalzell & Olegario 2004). During such meetings, he shared his core beliefs on the ten things he believed about the fundamentals of business (Dyer, Dalzell & Olegario 2004). This helped his followers understand the need for change. As a result, it rallied everyone to work more cohesively in order to achieve organisational goals. The corporate culture he advocated was revolved around innovation and creativity (Hamstra 2008). He made it explicit that innovation in every facet of operations, from inventing to distributing, is crucial to keep the company in existence (Berner 2008). Subsequently, in 2001, Lafley allowed innovations to flow freely across the entire organisation and encouraged outsourcing for innovators to make up at least fifty percent of its innovations (Skarzynski & Gibson 2008). As such, the organisation has been able to introduce numerous new products to the market that exemplify the innovation fortitude of P&G (Skarzynski & Gibson 2008). Page 5 of 20
  6. 6. BUSM3195 - LEADERSHIP AND MANAGEMENT Therefore, it is evident that when Lafley mandated about the innovation imperative, he is intensely transforming the organisation (Skarzynski & Gibson 2008). Furthermore, Lafley was visionary and was not afraid to make changes. Hence, Lafley transformed a legendary but ossifying company by organising around innovation (Saporito 2008). Motivation and Developing Teamwork Lafley motivates his employees by empowering the management team to make business strategic decisions by just providing them the directions. This is similar to the motivator factors advocated by Herzberg (cited in Sanford & Taylor 2006). On one occasion, he even shook the hands of a student working in the company and told him that the work he is doing is vital to the future of the organisation (George 2006). Another example of his recognition of efforts put in by the followers is that he heaps praises on them, including his division president, brand managers and other employees (Krauss 2008). In addition to that, Lafley had used informal techniques to foster the teamwork of his followers. For example, he had worked very hard to change the company’s new strategy to be customer driven innovation (Saporito 2008). Through reiterating the new strategy, the team will be able to develop a norm that innovation will become a routine for everyone (Berner 2008). He also encourages his followers to compete with rivals so that they will collaborate as a team to win the rivalry as a whole (Lafley & Charan 2008). On another occasion, before the company started outsourcing, he adopted the consensus leadership style by having various teams to give inputs and vigorously debate on the issue (Lafley & Charan 2008). In the course of contributing inputs to significant decisions, Page 6 of 20
  7. 7. BUSM3195 - LEADERSHIP AND MANAGEMENT members will feel that they are more valuable to the team and resulting in improved team effectiveness (Dubrin, Dalglish & Miller 2006). STEVE JOBS Traits Jobs is a leader who is capable of influencing his followers to have strong desire for work as he possesses a high degree of passion for his work. Even though he always yelled at them, they appreciated his strong passion where he always spend long hours at work (Kahney 2008). Thus, he was able to capture the spirit of his followers and work cohesively towards a common goal (Young & Simon 2005). Furthermore, Jobs is a leader with low emotional intelligence as he does not care about his followers' feelings as he strives for perfection incessantly and will hurl verbal attacks at those who failed to meet his demands (Lee 1994). Additionally, his reputation in the organisation further enhanced his deficiency in emotional intelligence as he screams at his followers frequently and randomly fired those unlucky ones (Young & Simon 2005). Additionally, Jobs had displayed his farsightedness when he reduced the product lines and cut the wholesale cost with a year in office (Morris & Levinstein 2008). Even though there were vast numbers of mobile phone models catered to suit the needs of the dynamic consumer market, he stood on his solid grounds to launch the iPhone, which generated tons of profits for the company (Burrows 2009). As a result, he not only prevented Apple from further losses, he also turned Apple into a profitable business (Kahney 2008). In another instance, he confidently opposed to the major accordance to launch the iMac Page 7 of 20
  8. 8. BUSM3195 - LEADERSHIP AND MANAGEMENT without a floppy drive and it proves that the floppy drive technology has diminished (Kahney 2008). Lastly, Jobs has the insights into his people and situation as he makes careful assessment of the strength and weakness of each staff (Dubrin, Dalglish & Miller 2006). For instance, he had a core team, where all his outstanding staffs resides in, to assist him with key assignments such as the Mac project (Kahney 2008). One very good example is Jonathan Ive, who had helped him in the creation of iMac and iPod (Kahney 2008). Thus, the formation of the core team allows him to tap on the best knowledge to handle those projects with outmost importance. Transformational Leadership When Jobs took over the position of CEO, due to the incompetency of the previous CEO, the main crisis facing Apple was that there were too many non-profitable products causing the organisation to be on the verge of bankruptcy (Burrows 2009). Thus, Jobs held individual meetings with all product groups. During these meetings, they had to convince him that the product was profitable or else they will be terminated and he managed to make them understand the criticality of a change in order for the organisation to survive (Kahney 2008). As a result, he took a broad and long term perspective to eliminate those non-profitable products. His intention was to focus on the core products to increase the profitability of the organisation and expertise of his followers so that he can obtain the results he aimed to achieve (Baldoni 2006). As such, he managed strengthen the brand name and reincarnate it to thrive in a disruptive age (Morris & Levinstein 2008). Another of his Page 8 of 20
  9. 9. BUSM3195 - LEADERSHIP AND MANAGEMENT long term vision for Apple is to convert Apple into a digital hub where digital entertainments devices could be connected to this technology centrepiece (Kahney 2008). Furthermore, he managed to convince all the employees that the organisation can develop new businesses like cell phones despite the intense competition in the market (Burrows 2009). Subsequently, he also managed to convince them that they were in a distinctive position where they will change the face of computing that no one had created before (Kahney 2008). As a result, they will be more willing to accept responsibility for what they have been doing (Baldoni 2006). Hence, ever since the introduction of iPod, his followers are very much self-fulfilled as Apple has dominated the consumer electronics market with the complements of iPhone and Mac products (Lyons 2008). Therefore, Jobs has evidently transformed his followers to widen their interest in their job by helping them to realise the self-fulfilment they will achieve. Moreover, his vision was clearly communicated to his followers who helped to transform Apple into a digital hub. Hence, he is definitely a transformational leader who managed to revive Apple to thrive in the competitive market. Motivation and Developing Teamwork The way Jobs motivate his followers is comparable to Herzberg’s motivators as he believes in giving capable followers the reins and chances to make good decisions (Morris & Levinstein 2008). For instance, he recognised the ability of Cook, Apple's chief operating officer, and entrust the company’s daily operations in his hands where he will only make the strategic decisions (Lashinsky & Siklos 2009). He also respects Cook as the company has already coalesced around him because he did almost nothing that Page 9 of 20
  10. 10. BUSM3195 - LEADERSHIP AND MANAGEMENT would make people disrespect him (Lashinsky & Siklos 2009). On another occasion, Jobs praised Ratzlaff, leader of Human Interface Group, for creating an exciting design for iMac which gave him a sense of achievement because Jobs was a person with very high expectations (Kahney 2008). Additionally, Jobs foster the teamwork of his followers by one of the informal techniques, demanding performance standards and providing directions. For instance, during one design meeting, he took a telephone book and threw it on the table demanding them to build a computer of that size, where the size of the smallest computer back then was twice as big as a telephone book (Kahney 2008). As a result, it actually serves as a wakeup call to his followers stipulating them to work cohesively in order to satisfy his demand (Kahney 2008). On another occasion, he just gave directions to his team that he was counting on them to deliver a software demo disk (Kahney 2008). They can only went back to their cubicles immediately and start working as a team in order to deliver to their demanding boss as they did not even had the chance to rebut (Kahney 2008). Therefore, he is said to give the team lots of challenging goals which eventually brought the team together cohesively. SIMILARITIES One of the similarities that both leaders have is their passion in their work. Lafley was willingly to forgo his rest days to guide and manage his staff, while Jobs was known to work overtime to ensure that tasks were accomplished. Their passion, which is a task related personality traits, puts everyone on an overdrive and things naturally move and Page 10 of 20
  11. 11. BUSM3195 - LEADERSHIP AND MANAGEMENT fall in place (Dubrin, Dalglish & Miller 2006). As highlighted by Vallerand et al. (2007, p. 506), ‘being passionate for an activity leads individuals to dedicate themselves fully to their activity, thereby allowing them to persist, even in the face of obstacles, and to eventually reach excellence’. Hence, it suggests that if a leader has passion for his job, he should be able to bring about a successful organisation. Another key similarity they possess is their cognitive abilities. Both of them are considered to have farsightedness and an intuition to identify people with good potential to carry out important tasks. Their farsightedness is critical as it helps to shape the vision and corporate strategy that brought their companies out from crisis. Additionally, their insight into people and situation helped them to appoint the right people to hold key positions. In Lafley's case, he recognised that Henretta had the right leadership abilities to turn around the baby care unit, even though she had no experience in that area. Jobs displayed similar ability by selecting Jonathan Ive, whose creativity helped to create the famous iMac and iPod. Thus, it could be concluded that these two cognitive factors are thought to be essential of an effective leader (Dubrin, Dalglish & Miller 2006). Apart from having some similar characteristics, they are considered as transformational leaders. They were able to convince and influence their people to accept and commit to change. For example, when their followers were not ready to step out of their comfort zone, they had managed to help their followers understand the criticality for change in order for the companies to survive in the long run. Therefore, transformational leadership is vital to organisations as it boosts the followers' motivation and their intrinsic needs, resulting in higher performance from them (Dubrin, Dalglish & Miller 2006). Page 11 of 20
  12. 12. BUSM3195 - LEADERSHIP AND MANAGEMENT DIFFERENCES However, the difference in emotional intelligence distinguished the two leaders. Lafley is a leader who has self regulation and social skill which allows him to be able to connect with his followers and understand them, resulting in better relationship between him and his followers (Dubrin, Dalglish & Miller 2006). Although he seems to be quite people- oriented, he is very decisive when it comes to work (Berner 2003). On the contrary, Jobs is a leader who does not empathise on anyone and socialise with his counterparts. Although Jobs does not have a high level of emotional intelligence, he is still able to lead the organisation to achieve the goals successfully. Thus, it appears to imply that the level of emotional intelligence does not affect leadership effectiveness to a large extent. Although the two leaders similarly believed that if they desire positive attitudes and job satisfactions from their followers, they will have to motivate them using Herzberg's motivators, but they used different kind of approach to achieve the same results (Herzberg 2003). Lafley is a leader who recognises the efforts of almost everyone in the company as he constantly heap praises on his followers. On the other hand, as Jobs set high expectations from his followers, he seldom praises them. However, this provides them with the sense of achievement, which motivates them to produce better results in the future, whenever they met his expectations. Therefore, it may be simplistic to suggest that the two leaders used different ways to motivate their followers as the fundamental approach which led to positive attitudes and job satisfaction is still the same (Herzberg 2003). Page 12 of 20
  13. 13. BUSM3195 - LEADERSHIP AND MANAGEMENT Lastly, another key difference between the two leaders is the way they develop teamwork amongst their followers. Lafley fostered the teamwork by reiterating the strategy in order for them to develop a norm. Thereafter, his followers are more likely to work cohesively in order to achieve organisational goals due to the collaboration. On the other hand, Jobs fostered teamwork by constantly challenging his followers. As a result, they are likely to focus on a common purpose and work cohesively to meet the standards he set. Therefore, although the two leaders use two different ways to foster teamwork, their respective teams are still able to work cohesively to achieve higher quality performance (Dubrin, Dalglish & Miller 2006). LEARNING SUMMARY & CONCLUSION A leader’s characteristics can have an influential impact on the organisation and the different characteristics displayed by Lafley and Jobs proved that characteristics are not the same with every leader, but is unique to the individual. However, Kirkpatrick and Locke (1991, cited in Pierce & Newstrom 2006) advocated that although possessing the correct set of characteristics does not guarantee successful leadership, but these are considered vital preconditions that an effective leader must possess. For example, effective leaders need to be mentally sharp in order to inspire followers, solve problems creatively and eventually bring about positive organisational changes (Dubrin, Dalglish & Miller 2006). Therefore, in contemporary organisations, the traits approach is definitely still very much appreciated because when the situation becomes more complex, it will play a more significant role in anticipating successful leaders (Zaccaro, Kemp & Bader 2004). Page 13 of 20
  14. 14. BUSM3195 - LEADERSHIP AND MANAGEMENT Both Lafley and Jobs proved that transformational leadership is particularly valuable for organisations in crisis as it will increase the followers’ level of trust, loyalty and respect towards the leader while being motivated to do more than what were expected of them (Bass 1985, cited in Tsai, Chen & Cheng 2009). In other words, it is able to directly influence employees to stretch their abilities for task accomplishments (Tsai, Chen & Cheng 2009). Thus, transformational leadership is ultimately recognised in terms of its performance outcomes of the organization (Walumbwa, Avolio & Zhu 2008). Using Herzberg’s motivator to motivate followers is deemed as a positive reinforcement and they are effective because the desire for recognition is a natural human need, and employees want to know that their work is beneficial to somebody (Dubrin, Dalglish & Miller 2006). Thus, it can be detrimental to an organization’s growth if a manager fails to recognise employees’ works (McClelland & Burnham 1990). Therefore, managers, who wish to be as successful as Lafley and Jobs, must recognise the fundamental needs of employees to be appreciated, needed and wanted so that they feel respected and recognised (Arnold 1988). As a result, employees will be more willing to work for the organization because they regard the organization as part of their life and thus producing better results (Arnold 1988). There are intrinsic rewards related to superior teamwork as it will be able to tap on the diverse knowledge of individuals in the team (Adler 1997). As a result, it can simplify challenging tasks which will lead to reduction in turnover times and costs (Dempsey, Larson & Shockley 2009). Additionally, teamwork can also increase followers’ job Page 14 of 20
  15. 15. BUSM3195 - LEADERSHIP AND MANAGEMENT satisfaction when they can collectively seek and sort through useful information and enjoy effortful cognitive activities for solving problems (Park, Baker & Lee 2008). Even senior managers and professionals are organised into teams to reduce barriers and decrease bureaucratic red tape (Gautschi 1990). Hence, organisations, that desire to be as flourishing as P&G and Apple, must utilise the art of teamwork to boost productivity and increase quality (Gautschi 1990). In a nutshell, the characteristics of a leader do not guarantee his success, but it is a prerequisite of an emergent leader. Thus, if a leader, with the correct set of characteristics, is transformational and has the ability to motivate his followers appropriately and foster their teamwork, he will definitely be an effective leader. Page 15 of 20
  16. 16. BUSM3195 - LEADERSHIP AND MANAGEMENT REFERENCE LIST Adler, G 1997, ‘When your star performer can’t manage’, Harvard Business Review, vol. 75, no. 4, pp. 22-36. Arnold, VD 1988, ‘Motivation: turning theory into practice’, IM, January, pp. 21-22. Baldoni, J 2006, How great leaders get great results, McGraw-Hill, New York. Berner, R 2002, ‘Why P&G’s smile is so bright’, Business Week, August, no. 3795, pp. 58-60. Berner, R 2003, ‘P&G: new and improved’, Business Week, July, viewed 9th March 2009, < http://www.businessweek.com/magazine/content/03_27/b3840001_mz001.htm> Berner, R 2008, ‘How P&G pampers new thinking; CEO Lafley lays out principle of innovation that turned around his company and can fire growth anywhere’, Business Week, April, no. 4079, p. 73. Bryant, SE 2003, ‘The role of transformational and transactional leadership in creating, sharing and exploring organizational knowledge’, The Journal of Leadership and Organizational Studies, vol. 9, no. 4, pp. 32-44. Burrows, P 2009, ‘Apple without its core?’, BusinessWeek, January, no. 4117, p. 31. Dempsey, C, Larson, K & Shockley, T 2009, ‘Making the case for specialty teams’, OR Manager, February, vol. 25, no. 2, pp. 11-13. Page 16 of 20
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  20. 20. BUSM3195 - LEADERSHIP AND MANAGEMENT Young, JS & Simon, WL 2005, Icon Steve Jobs: the greatest second act in the history of business, John Wiley & Sons, New Jersey. Zaccaro, SJ, Kemp, C & Bader, P 2004, ‘Leader traits and attributes’, in J Antonakis, A Cianciolo & R Sternberg (eds) 2004, The nature of leadership, Sage Publication, California, pp. 101-124. Page 20 of 20