Leadership Style and Organisational Effectiveness


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Leadership Style and Organisational Effectiveness

  1. 1. Leadership Style and Organisational Effectiveness 20 July 2012 SHANMUGA PILLAIYAN (010194) TAN CHEE HOAW (010120) KEVIN CHOO (010226) HELMMY SHAHNY MOHD MUSTAFA (010268) AMRI MOHD SOFIAN (010563) GURMEET SINGH (002967)
  2. 2. Agenda 1. Introduction – What is Leadership? 2. Leadership Models & Styles 3. Case Study – Apple Inc I. Historical Milestones II. Steve Job‟s Management Style III. Impact on Organisation Behaviour IV. Evidence of Organizational Effectiveness 4. Comparisons with Other Leaders 5. Conclusion Nottingham Malaysia July 2012 Slide 2
  3. 3. What is Leadership ? “The ability to influence a group toward the achievement of goals” (Robbins 2003) “Management is doing things right, leadership is doing the right things” (Warren Bennis and Peter Drucker) Robbins, Stephen. Organizational Behavior. 10th ed. Upper Saddle River, NJ: Prentice, Hall, 2003. Nottingham Malaysia July 2012 Slide 3
  4. 4. Leadership Theory The Evolution of Leadership Theory Transactional Theory Behavioural Styles Theory 1940 1950s Trait Theory Nottingham Malaysia 1960s Transformatio nal Theory 1970s 1980s 1990s Contingency Theory July 2012 Slide 4
  5. 5. Leadership Theory Transformational Leader 1. Leaders stimulate and inspire(transform) followers to achieve extraordinary outcomes 2. Characteristics: I. Leadership is proactive II. Works to change the organizational culture by implementing new ideas III. Employees achieve objectives through higher ideals and moral values IV. Motivates followers by encouraging them to put group interests first V. People will follow a person who inspires them. Intellectual stimulation: Promote creative and innovative ideas to solve problems. Nottingham Malaysia July 2012 Slide 5
  6. 6. Leadership Theory Transactional Leader 1. Leaders promote compliance of his followers through both reward or punishment. 2. Characteristics: I. Leadership is reactive II. Works within the organizational culture III. Employees achieve objectives through rewards and punishments set by leader Subordinates are not selfmotivating IV. Motivates followers by appealing to their own self interest V. Management-by-exception: maintain the status quo; stress correct actions to improve performance Nottingham Malaysia July 2012 Slide 6
  7. 7. Leadership Theory Contingency Theory 1. According to the contingency approach of leadership, a single leadership style is not applicable to all situations. 2. The 3 contingency models of leadership styles. I. Fiedler‟s Contingency Model II. Hersey and Blanchard‟s situational theory III. Path Goal Theory a single leadership style is not applicable to all situations IV. Tannenbaum and Schmidt‟s leadership continuum Nottingham Malaysia July 2012 Slide 7
  8. 8. Leadership Style Research done by the consulting firm Hay-McBer Associates (Harvard Business Review, 2000) , found six different leadership styles as the following: 1. The coercive style 2. The authoritative style 3. The affiliative style 4. The democratic style 5. The pacesetting style 6. The coaching style Nottingham Malaysia July 2012 Slide 8
  9. 9. Leadership Style -Details Coercive Authoritative Affiliative Mode of Operation Demand immediate compliance Mobilize people toward a vision Create emotional bonds and harmony The style in a phrase “Do what I tell you.” “Come with me.” Maximizes people's commitment toward organisation goal, enhance clarity and flexibility “People come first.” Advantage Efficient and effective Disadvantage Erode flexibility, motivation and responsibilty. Failed when a leader is working with a team of experts who are more experienced than him Drives up trust and flexibility, build up sense of recognition and belonging. Allow poor performance to go uncorrected, and leaves people rudderless In a crisis, to kick start When changes require a To heal rifts in a team/ When the style works a turnaround, or with new vision, or when a clear motivate people during best problem employees direction is needed stressful circumstances Nottingham Malaysia July 2012 Slide 9
  10. 10. Leadership Style -Details Democratic Pacesetting Coaching Mode of Operation Build consensus through participation Expect excellence and self-direction Develop people for the future The style in a phrase “What do you think?” “Do as I do, now.” “Try this.” Advantage Drives up flexibility and responsibility Fast pace, focus and result oriented. Coaching improves flexibility, responsibility and commitment. Disadvantage Endless meetings and elusive consesus. People end up feeling confused and leaderless Erode Flexibility and responsibility. Lack of commitment. Time consuming When the style works best To help an employee To build buy-in or To get quick results from improve performance or consensus, or to get input a highly motivated and develop long-term from valuable employees competent team strengths Nottingham Malaysia July 2012 Slide 10
  11. 11. Organisational Climate The term organisational climate was first defined by psychologists George Litwin and Richard Stringer. It refers to six factors that influences working environment: 1. Flexibility- How free employees feel to innovate. 2. Responsibility- Sense of responsibility to the organization. 3. Standards- The level of standards that people set. 4. Rewards- The sense of accuracy about performance feedback and aptness of rewards. 5. Clarity- The clarity people have about mission and values. 6. Commitment- The level of commitment to a common purpose. Nottingham Malaysia July 2012 Slide 11
  12. 12. Leadership Impacts Company Performance Leadership has a direct impact on Organisational Climate and Organisational Performance. LEADERSHIP 1. Leadership Models 2. Leadership Styles Nottingham Malaysia ORGANISATIONAL CLIMATE 1. 2. 3. 4. 5. 6. Flexibility Responsibility Standards Rewards Clarity Commitment ORGANISATIONAL EFFECTIVENESS 1. 2. 3. Product Innovation Profit Share Price July 2012 Slide 12
  13. 13. Apple Inc.'s Historical Milestones Nottingham Malaysia July 2012 Slide 13
  14. 14. Steve Job’s Leadership Style Nottingham Malaysia July 2012 Slide 14
  15. 15. Steve Job’s Leadership Characteristics* Visionary Transformational Persuasive Leadership Gifted Inspirational Detail Oriented Passionate Relentless Autocratic and Blunt Pace-setting Manipulative Approach Rude *drawn from comments and quotes from friends, colleagues, employees, fans, anc competitors Nottingham Malaysia Dismissive Spiteful Hostile July 2012 Slide 15
  16. 16. Steve Job is a Transformational Leader • When Jobs returned to Apple in 1997, his assessment was that the company was ninety days from going bankrupt • In May 1998, Jobs announced the new direction for Apple to focus on just four core products: laptops for consumers & professionals & desktops for consumers & professionals. The direction was simple & clear. • The high value placed on ideas is one of the things that Steve burned into the Apple culture & it will likely to continue to guide the company into the future • Steve Jobs  became a steward of creative thinking & became its greatest advocate while expecting such behaviour from each employee  built an organization that recognized the needs for creativity, Nottingham Malaysia July 2012 Slide 16
  17. 17. Impact on Organizational Behaviour Individual 1. Emotions: Most employees at Apple are fans of Steve Jobs, and tend to “hero-worship” him from afar. Senior and middle management personnel who have regular contact with Steve, approach him with a mixture of reverence (because of their immense respect for him and his vision) and fear (because of his “take-no-prisoners” style of management) 2. Attitudes: Apple sets the tone of the work culture within the organization from day 1, and focuses on developing the higher levels of their employees‟ hierarchy of needs, which are Esteem and Self Actualization. 3. Values: Employees with a high nAch* disposition appear to thrive at Apple, due to the focus on Motivators instead of Hygiene Factors * nAch – Need for achievement Nottingham Malaysia July 2012 Slide 17
  18. 18. Impact on Organizational Behaviour Feedback from Apple employees: “Steve Jobs is revered at the company.” – Apple Employee “Watching Apple grow in the Steve 2.0 era has been nothing short of astonishing.” – Apple Network Engineer “ I am proud to say that I work for Apple. The products speak for themselves and it is great to be able to use them.” - Apple Project Manager (Austin, TX) “Great products and phenomenal co-workers! An awesome work environment that cultivated creativity and competition. I woke up every day and could not wait to get to work!” – Apple Account Executive (Atlanta, GA) “Apple is an amazing company with a very successful management. Innovation is at the heart of all decisions. Successful organization. And great products.” – Apple Employee (location n/a) “Apple is an amazing company, with cutting edge products, unparalleled customer service focus and a place that cultivates a family atmosphere. Very enjoyable working environment.” – Apple Employee (location n/a) Apple is an amazing place to work. There are so many opportunities to grow and learn. “- Apple Employee (Cupertino, CA) Nottingham Malaysia July 2012 Slide 18
  19. 19. Impact on Organizational Behaviour Group: Communication • The approach to management & talent development is top-down  with an all-knowing CEO aided by a powerful executive team – ET o the purpose of the ET is to coordinate things & set the tone for the company through effective communication platforms • The company maybe top-down, but the executive –team format engenders a system of managing up  teams throughout the organization are in a constant state of communication by preparing their boss or their boss‟s boss to present at an executive team meeting Nottingham Malaysia July 2012 Slide 19
  20. 20. Impact on Organizational Behaviour Group: Conflict Given Apple‟s product silo structure in a relatively flat organization, internal conflicts are usually resolved within the small teams in each silo independently. The thoroughness of Jobs‟ vision and mandates, as well as his blunt manner, usually precludes conflicts from significantly affecting day-to-day operations, leaving the onus of satisfactory conflict resolution to the various stakeholders of the organization. Nottingham Malaysia July 2012 Slide 20
  21. 21. Impact on Organizational Behaviour Organisation Structure The Organization Organizational culture: Loyalty, Evangelistic, Hero-Worship Decision Making: Top down approach, tempered by upwards management Change: The organization is resilient and adaptable to changing circumstances due to a strong structure and culture. Nottingham Malaysia July 2012 Slide 21
  22. 22. Job’s Impact on Organizational Behaviour Organisational Climate 1. Flexibility- Apple employees are encouraged, even expected to continually innovate, but always within the boundaries of Steve‟s vision 2. Responsibility- Most Apple employees proudly feel a deep, abiding sense of responsibility towards the company and behave accordingly 3. Standards- Steve sets very high standards for performance and innovation, and every Apple employee is expected to adhere and exceed those standards 4. Rewards- Apple‟s remuneration is on par with market trends, and they do not seem to be focused on obtaining and retaining talent through hygiene factors 5. Clarity- Every Apple employee has a clear sense of what they need to do on a day-to-day basis 6. Commitment- Despite his brusque manner, most Apple employees remain committed to realizing Steve‟s vision Nottingham Malaysia July 2012 Slide 22
  23. 23. Evidence of Organizational Effectiveness Steve Left For Good Steve Left Nottingham Malaysia Steve Came Back July 2012 Slide 23
  24. 24. Staff force for Apple, Microsoft and HP. Staff Force (2001-2010) 350,000 300,000 250,000 200,000 HP Microsoft 150,000 Apple 100,000 50,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (Source: Financial Reports) Nottingham Malaysia July 2012 Slide 24
  25. 25. Profit per employee (Source: Yahoo Finance) 1. With 46,600 employees and a turnover of 20 billion dollars in 2010, each Apple‟s employee generates a turnover of 419 528 dollars per year. 2. While, Microsoft with 244,831 dollar at 3rd place. And HP with 28,096 dollar per year. Nottingham Malaysia July 2012 Slide 25
  26. 26. Comparisons with other Leaders • Born in September 1954 • A UCLA drop out • Six time Forbes Businesswoman of the year • First female CEO of a fortune 20 company with a mandate to shake things up • Also known as “Fiorina Shakeup” She is Carly Fiorina CEO of Hewlett-Packard (1999 to 2005) Nottingham Malaysia July 2012 Slide 26
  27. 27. Comparisons with other Leaders Carly‟s Leadership Carly’s leadership traits • Fostered a top-down approach to management (Transactional). Conflicted with the old-style of HP: a completely decentralised management approach • Exhibited a truly coercive – pace-setting leadership style • Dynamic and headstrong leader • Highly motivational speaker • “Consummate” Saleswoman – Customer satisfaction Nottingham Malaysia July 2012 Slide 27
  28. 28. Comparisons with other Leaders Carly‟s Leadership Carly’s downfall as a leader • Was not able to delegate tasks • Move too fast and too drastic with changes for the organization to cope • Neglected to foster employee needs resulted in high turnover • Was not able to form and communicate a cohesive, convincing and powerful vision of HP‟s future Nottingham Malaysia July 2012 Slide 28
  29. 29. Comparisons with other Leaders Carly‟s Leadership - A Transactional Leader Conclusion • Carly failed to execute HP‟s strategy and deliver improvements in HP‟s profits and stock price • Was asked by HP‟s BOD to resign due to lack of leadership skills needed to take advantage of emerging market opportunities • Indeed, Carly was a very good businesswoman but she could not prove herself as a leader. • She saw her downfall when she could not relate to her employees, and without followers, there cannot be a leader • Perhaps, Carly could be a successful leader by adding more people centred leadership skills into her highly dominant job centred leadership style. Nottingham Malaysia July 2012 Slide 29
  30. 30. Comparisons with other Leaders Carly‟s Leadership Hewlett Packard‟s Organizational Effectiveness Carly joined HP Carly helm as CEO 1999 to 2005 Carly left HP Nottingham Malaysia July 2012 Slide 30
  31. 31. Comparisons with other Leaders Bill Gates‟ Leadership 1. Co-founded Microsoft with Paul Allen 2. Philosophy – his vision turned to his philosophy which ultimately the focus is about running software in every computer 3. Fast in taking in ideas and turned them into a successful product – „95 Microsoft response to internet with the launch of MSN 4. Transformational Leader – visionary, and inspirational 5. Authoritative, and Democratic – free hand to research and create teams for more product development & launches BUT careful in control and judgement 6. Microsoft 2005 from 7 decentralised business unit converted to 3 centralised units. Nottingham Malaysia July 2012 Slide 31
  32. 32. Comparisons with other Leaders Bill Gates‟ Leadership Characteristics 1. Intelligent 2. Visionary 3. Passionate 4. Innovative 5. Risk Bearer 6. Continuous Learner Nottingham Malaysia July 2012 Slide 32
  33. 33. Comparisons with other Leaders Bill Gates‟ Leadership - Organisational Effectiveness • Microsoft IPO in 1986 at $21.00 (13 March 1986) Close at $28.00 • Pays a quarterly dividend of $0.20 • Stocks has split 9 times over 26 years Nottingham Malaysia July 2012 Slide 33
  34. 34. Comparisons with other Leaders Nottingham Malaysia July 2012 Slide 34
  35. 35. Conclusion 1. Industries that experience a high rate of change and uncertainty (in terms of products, paradigm shifts, business climate) like computing, internet services and telecommunications benefit more from transformational leadership than any other leadership model. The success of an organization within these industries depend heavily on the vision of its leader to successfully navigate the inherent uncertainties. 2. Transformational Leaders who are proven visionaries are able to easily gather around them people who are willing to buy into their visions and passionately commit to making them a reality. 3. Both Jobs and Gates are considered Transformational Leaders because of their ability to inspire high levels of innovation, creativity and productivity from their employees through their visions 4. A leader can afford to be autocratic, even dictatorial and still lead an organization successfully as long as the leader continues to be successful in his role as a visionary. Nottingham Malaysia July 2012 Slide 35
  36. 36. Thank You All rights reserved @ 2012