My Vision of Leadership

In today’s age, the business environment is faced with never-ending competition (Armenakis et al., 2000) and developments in organizational technology infrastructure. Alongside these external factors, businesses are faced with changes in socio-cultural and environmental factors that can and most likely affect the success of an enterprise (Peterson et al., 2001). However, these challenges can be seen as opportunities for development to aspiring leaders (Wharton, 2016). As discussed by Powers (2004), dynamic leadership is paramount for tomorrow’s success and survival of an organisation. The leaders of tomorrow needs to incorporate ways of gaining commitment and momentum towards a united purpose directed through empowerment and collective interests of their followers (Powers, 2004).

Figure 1- Leadership Quote by Henry Kissinger (source: Quotefancy.com)

In my opinion, my leadership approach will be highly situational. That being said, I am an advocate of situational leadership in management. Furthermore, I would highly recommend Fiedler’s (1967) contingency model of leadership effectiveness or any hybrids that includes situational aspects into its frameworks such as McKinsey’s Situational Leadership Model (2016). I believe that managers should lead individuals based on the circumstances of the environment, the organisation, the individual and the tasks at hand. These leaders have to adapt their leadership style based on the situation (Mullins, 2010; McKinsey, 2016; Fiedler, 1967).

As consulted in my earlier blog under ‘Most Effective Leadership, Management & Approaches’, Fiedler’s (1967) theory considers the circumstances of the task structures, leader-member relations and leader-position powers (see figure 2).

Figure 2: Adapted from Fiedler (1967)
Source: Psycnet.apa.org

To learn more about Fiedler’s (1967) contingency model for situational leadership, please view my previous blog.

What have I learned?

Since I have started my MBA programme, I have managed to be part of an integral team within our course. My research and discussion regarding the capabilities and characteristics of an ethical and effective leader has helped me understand how to become a role model and a leader that adopts different leadership styles to adapt to the circumstances at hand (see table 1).

Table 1- Summary of What I have learned

My Inspiration

The leader who has inspired my understanding of effective leadership has to be Winston Churchill (see figure 3) for his tremendous success as leader during troubling times of war and distress.

Figure 3- Winston Churchill (source: Time.com)

Although he may not be a business leader, I think he has actually demonstrated many notable characteristics of a successful transformational and situational leader which has revolutionized the way leaders within business organizations look at accomplishing both personal and collective goals. Churchill has inspired me truly by the art of speech and teamwork.

Figure 4- Winston Churchill Quote (source: quotesgram.com)

Firstly, Churchill has never worked alone and relies on coalition and teamwork to ensure success (Freeman, 2015). Secondly, Churchill is remembered for his great talent for speaking and communicating in public to keep morale high with the entirety of his team (Freeman, 2015). Thirdly, he was not afraid to take chances, accept responsibility, and accept suggestions from his followers. This demonstrates characteristics of an effective leader who empowers and includes his followers’ creativity and ideas into his political plays. To read more about what he has thought to business leaders, click here or alternatively watch the video below.

Skills Development

After receiving feedback from my teammates and personally reflecting on my actions and research of leadership, I can surely say that my leadership skill needs to be continuously development throughout my life. I feel as if I have ability to be a great leader because many of friends, family and colleagues see me as a figure to follow during times of unrest. In fact, after rigorous Myers-Briggs Type personality tests, the results show that I am an ENFJ (Extroversion, Intuition, feeling and judgment). ENFJs are “natural-born leaders, full of passion and charisma. Forming around two percent of the population”, (16Personalities.com).

Figure 5- ENFJ, The Leader (source: 16personalities.com)

I have never seen this responsibility of being a leader for others as a burden but as an opportunity to extend myself (see figure 6). Going through this MBA programme, my goal is to increase my understanding and knowledge whilst developing my hard skills such as leadership and strategy formulation skills. In order to measure my progression every 8 months, I have created a personal development plan (PDP). To be an effective leader, I must keep improving these skills and start putting knowledge into practice. One day, I will be the leader of tomorrow.

Figure 6- My Team and our Team-Building Group Activities

Team Activities

Team-Members

 

References

Armenakis, A. ,  Harris, S. G , Feild, H. S. (2000), Making change permanent A model for institutionalizing change interventions, in (ed.) Research in Organizational Change and Development (Research in Organizational Change and Development, Volume 12) Emerald Group Publishing Limited, pp.97 – 128.

Fiedler, F. E. (1967). A Theory of Leadership Effectiveness. McGraw-Hill.

Freeman, D. (2015). Winston Churchill & Lessons for Business Leaders. [online] Winstonchurchill.org. Available at: http://www.winstonchurchill.org/publications/finest-hour/finest-hour-166/winston-churchill-lessons-for-business-leaders [Accessed 14 Mar. 2017].

Gardenswartz, L. & Rowe, A. (2003). Four layers of diversity. Retrieved from http://www.gardenswartzrowe.com/why-g-r

Maccoby, M. (2000). The Human Side: Understanding the Difference between Management and Leadership, Research-Technology Management, 43(1), pp. 57-59.

McKinsey. (2016). Leadership in Context [online] available at: http://www.mckinsey.com/business-functions/organization/our-insights/leadership-in-context [Accessed 7 Mar. 2017].

Mullins L. J. (2010) ‘Management and Organizational Behaviour’. Ninth Edn. Edinburgh Gate: Pearson Education Ltd.

Murray, A. (2010). The Wall Street Journal essential guide to management. 1st ed. New York: HarperPaperbacks.

Peterson, D., Rhoads, A. and Vaught, B.C. (2001). Ethical beliefs of business professionals: A study of gender, age and external factors. Journal of Business Ethics, 31(3), pp.225-232.

Power, P.G., 2004. Leadership for tomorrow: Once more, with feeling. Mt Eliza Business Review, pp.43-49.

Wharton (2015). McKinsey’s Dominic Barton On Leadership [online] available at: http://knowledge.wharton.upenn.edu/article/mckinseys-dominic-barton-on-leadership-and-his-three-tries-to-make-partner/ [Accessed 7 Mar. 2017].

Leadership and Change

Due to increased competition within business globally, the rate of organizational change has accelerated in an unprecedented way (Armenakis et al., 2000). Firms are continuously downsizing, delayering, restructuring and merging with other organisations in order to stay competitive within their industries. Although many individuals are resistant of change and see it as a negative change to the status quo and their security, some managers clench the opportunity for themselves and their organisations to grow and innovate (Mullins, 2010:753).

Importance of Change Agents

Scholars, such as Mullins (2010), stated that “there is little management can do about resistance to change” (Mullins, 2010:753). I would have to respectively disagree with this statement as the statement disregards the impact that a charismatic and credible leader can have as a change agent towards his or her employee’s resistance to change. Armenakis et al. (2000) suggest that individuals placed in all the leadership positions within an organisation are expected to collectively help support change throughout the firm. These scholars go on to mention that the most important attribute of a change agent for changing the cognitions and behaviours of employees is his or her credibility (Slater and Rouner, 1992, Kouzes and Posner, 1993; Armenakis et al., 2000). In fact, specific studies (Nystrom, 1990) have discovered that the most significant factor that determines commitment from organizational members is the rapport between a change agent or leader with his or her organizational members.

Change Frameworks

The most popular and widely utilized change management model is McKinsey’s 7-S Framework (see figure 1) developed by Waterman and Peters in the 1980s. The model provides an approach to addressing change by aligning seven key elements which are: Structure, Systems, Style, Staff, Skills, Strategy and Shared Values (McKinsey, 2008). Unlike other change management frameworks, McKinsey’s 7s model focuses on coordination rather than structure for addressing change (McKinsey, 2008).

Figure 1- McKinsey 7s Model (Source: Valuebasedmanagement.net)

   

The applications that this model provides are outlined in the table below.

McKinsey 7s Applications

Assists in implementing new objectives and strategies

Helps facilitate change during mergers and acquisitions of firms

Supports in facilitating organizational changes

Identifies and analyzes the impacts and change of each element

Criticisms of McKinsey’s Model

The first critique to be noted regarding the McKinsey 7s Model is that it assumes that a change in strategy will require a change in the skills and shared values of an organisation (Feurer and Chaharbaghi, 1995). Due to the complexity in comprehension and applications, the McKinsey framework was criticized to be more applicable and successful in managing change for large organizations rather than smaller organizations (Kaplan, 2005).

Amazon.com, Inc.

A great example of an organisation that embraces change is Amazon.com, Inc. (see figure 2). At first, they were established as a bookshop retailer exclusively and now they are considered a global retailer that sells just about anything. In fact, they even produce and offer their own motion pictures. The reason why Amazon is a great example is because they embrace the change in technology, demand and socio-cultural as an opportunity to grow in market share globally (Rajdev, 2016).

Figure 2- Amazon.com, Inc. (Source: ericmichaelbooks.com)

Apple Inc.

Forbes (2017) has ranked Apple (See figure 3) first in the world’s most valuable brands within the technology industry. The reason why they are as successful as such is because of their embrace of technological change. Apple’s cultural intelligence, which is being smart enough to develop a work culture that drives change and innovation within a firm, is the strongest in the world (Llopis, 2011). They were the first to develop and shift consumer needs from personal digital assistants (PDAs) to smartphones (iPhone), beating Samsung and all the other mobile competitors in the industry.

Figure 3- Apple Inc. (Source: Forbes.com)

 

Conclusion & Reflection

To conclude, it is in my opinion that leadership plays a crucial role as a change agent within an organisation. Their credibility amongst organizational members and their leadership can create a workplace culture of change by driving commitment from employees. The 7 elements mentioned in the McKinsey 7s model can help leaders understand how to coordinate during times of change.

Based on my preferences and experiences, I tend to see change as an opportunity to learn when I want to learn. However, if the change impedes my progression towards achieving my ambitions and goals within my career then I would look negatively on it. Therefore, I would respect a leader who would be able to consider my personal agenda when making decisions.

References

Armenakis, A. ,  Harris, S. G , Feild, H. S. (2000), Making change permanent A model for institutionalizing change interventions, in (ed.) Research in Organizational Change and Development (Research in Organizational Change and Development, Volume 12) Emerald Group Publishing Limited, pp.97 – 128.

Kouzes, J., and Posner, B. (1993). Credibility: How leaders gain and lose it, why people demand it.

Slater, M. and Rouner, D. (1992). Confidence in beliefs about social groups as an outcome of message exposure and its role in belief change persistence, Communication Research, Vol. 19, pp. 597 – 617.

Mullins L. J. (2010) ‘Management and Organizational Behaviour’. Ninth Edn. Edinburgh Gate: Pearson Education Ltd.

Nystrom, P. (1990). Vertical exchanges and organizational commitments of American business managers, Group & Organization Studies, Vol. 15, pp. 296 – 312.
Feurer, R., and Chaharbaghi, K. (1995). “Strategy development: past, present and future”, Management Decision, Vol. 33(6), pp.11 – 21.

Robert S. Kaplan, (2005) “How the balanced scorecard complements the McKinsey 7‐S model”, Strategy & Leadership, Vol. 33 Iss: 3, pp.41 – 46.

Rajdev, N. (2017). The Competitive Edge Most Companies Forget: Embrace Change. [online] Observer. Available at: http://observer.com/2016/07/the-competitive-edge-most-companies-forget-embrace-change/ [Accessed 13 Mar. 2017].

LLopis, G. (2011). The Most Successful Companies Embrace the Promise of their Culture. [online] Forbes. Available at: https://www.forbes.com/sites/glennllopis/2011/09/12/the-most-successful-companies-embrace-the-promise-of-their-culture/#140d61507fe3 [Accessed 13 Mar. 2017].

Forbes. (2017). Apple. [online] Available at: https://www.forbes.com/companies/apple/ [Accessed 13 Mar. 2017].

 

 

Effective Leadership, Management Styles & Approaches

Management versus Leadership

The difference between leadership and management has been a topic of controversy in literature as scholars have suggested that they are in fact different (Murray, 2010; Maccoby, 2000). There has been a general acceptance between management of organisations towards having a more consultative and participative leadership approach rather than a more command and controlled leadership approach (CMI, 2013). This is why it is important for managers to understand the outcomes and appropriateness of different leadership styles towards management and selecting a personal style that is the most effective approach towards managing their workforce.

Leadership is usually defined as a two-way relationship or skill to inspire the workforce to work collectively towards a shared vision effectively through relationship building as well as to lead them through times of change (Maccoby, 2000). However, management is considered a business function that focuses on completing organizational tasks of planning, budgeting, evaluating and facilitating (Murray, 2010; Maccoby, 2000).

Figure 1: Example of bad leadership (Source: Dilbert.com)

In order to differentiate between Leadership and Management, I propose mentioning the conventional frameworks regarding these concepts. The classical management theory was brought forward by Fayol (1916) and he proposed that there are five main functions of management are to: plan, organize, coordinate, command and control.

To oppose the classical autocratic management theory, Fiedler’s (1967) contingency model was introduced and was considered the first model that focuses on leader-to-situation leadership styles. He believed that “leadership behaviour is dependent upon the favorability of the leadership situation” (Mullins and Christy, 2016:321).

Most Effective Leadership Approach

Fiedler’s (1967) Contingency Model of Leadership Effectiveness

Since Fiedler’s (1967) model is dependent on the favorability of the leadership situation, he developed a “least preferred co-worker (LPC) scale” (Fiedler, 1967:146) as illustrated in the figure below. Employees are categorized (I-VIII) based on task structure, leader-member relations and leader position power. Based on these factors, utilize different leadership style approaches that are orientated based on relationship or task as well the level of control (High, moderate or low). It considers both a transformational and transactional approach to motivating employees as well.

Figure 2: Adapted from Fiedler (1967)
Source: Psycnet.apa.org

Criticisms

Although Fielder’s model offers additional dimensions to the literature of leadership, his model has faced much criticism. Strube and Garcia (1981) suggest that the model is not very applicable for every field. Several writers point out that the model has weaknesses in measurement since there is an ambiguity regarding what exactly LPC measure (Vecchio, 1983; Yukl, 1989). It is also considered to have “serious conceptual deficiencies that limit its utility for explaining leadership effectiveness” (Yukl, 1989b:266). For example, Fielder’s model has a narrow focus upon a single leadership trait and it does not include medium LPC leaders (Vecchio, 1983; Yukl, 1989).

Transformational versus Transformational Leadership

Figure 3: Summary of Transformational and Transactional leadership by Renand (2015)
Click here to view cited references.

Transformational Leaders

Tony Hseih, CEO of Zappos (Source: Chahal, 2016)

In 2015, Tony Hseih restructured his organization to a ‘holacracy’, which excludes any management hierarchy, in order to make employees feel equal (Chahal, 2016). Although it had caused almost 50 employees to quit the firm, Hseih believes that it will increase the entrepreneurial spirit within the firm.

 

Elon Musk, CEO of Tesla and SpaceX

Elon Musk is a considered a visionary that leads by example. His continuous hard work, creativity and views on corporate responsibilities have inspired not only his own employees but also millions of admirers (Forbes, 2017). He is currently ranked as the 21^st most powerful and influential people across the world (Forbes, 2017).  In Tesla, he encourages his employees to think creatively and innovatively. In SpaceX, he has made office spaces limited to enforce different employees from different departments to increase communication effectiveness.

Figure 5: Elon Musk (Source: ecell.in)

Conclusion

In my opinion, I agree with the statement mentioned by CMI (2013) that there is no unified way of leading. This is mainly because managers or leaders have to face different and diverse individuals that will react uniquely to different leadership approaches. Personally, I would feel more comfortable with a situational leadership approach as mentioned by Fiedler’s (1967) since it focuses primarily on the characteristics of the person. Whenever I am a team-member, I prefer my leader to first analyze my ability to complete the task. If I am highly capable then I prefer a lassiez-fare style of management, whereas if I am incapable then I would like supervision and mentoring but still in a transformational style.

Team-Members

Team Activities

References

 

Chahal, M. (2016). The new era of leadership: the management styles unlocking unique ways of thinking – Marketing Week. [online] Marketing Week. Available at: https://www.marketingweek.com/2016/04/29/the-new-era-of-leadership/ [Accessed 7 Mar. 2017].

Clark, D. (2013). Why Great Leaders Make Bad Managers – and That’s OK. Forbes [online] Available at: https://www.forbes.com/sites/dorieclark/2013/01/10/why-great-leaders-make-bad-managers-and-thats-ok/#14f6a6e369cc [Accessed 7 Mar. 2017].

Fayol, H. (1916). General and Industrial Management. Sir Isaac Pitman & Sons, London (translated by Constance Storrs in 1949).

Fiedler, F. E. (1967). A Theory of Leadership Effectiveness. McGraw-Hill.

Forbes, (2017). Elon Musk- Most Powerful People. [online] Forbes. Available at: https://www.forbes.com/profile/elon-musk/ [Accessed 7 Mar. 2017].

Maccoby, M. (2000). The Human Side: Understanding the Difference between Management and Leadership, Research-Technology Management, 43(1), pp. 57-59.

Mullins, L. and Christy, G. (2016). Management & organisational behaviour. 1st ed. Harlow: Pearson Education Limited.

Murray, A. (2010). The Wall Street Journal essential guide to management. 1st ed. New York: HarperPaperbacks.

Renand, F. (2015). Genuine leadership and the global financial crisis. International Journal of Peace and Development Studies, 6(1), 10-20.

Strube, M. J., & Garcia, J. E. (1981). A meta-analytic investigation of Fiedler’s contingency model of leadership effectiveness. Psychological Bulletin, 90, pp. 307-321.

 

Vecchio, R. P. (1983). Assessing the validity of Fiedler’s contingency model of leadership effectiveness: A closer look at Strube and Garcia. Psychological Bulletin, 93, pp. 404-408.

Yukl, G. (1989). Leadership in organizations, second edition. Englewood Cliffs, NJ: Prentice-Hall.

Yukl, G. (1989b). Managerial Leadership: A Review of Theory and Research. Journal of Management, 15(2), pp.251-289.

 

 

 

 

 

 

 

 

 

Diversity Managemet

The Challenge of Managing a Diverse Team

Research has established a direct relationship between diversity and increased efficiency amongst teams, provided that the teams have been led well by their leaders (Ibarra and Hansen, 2011). Differences in backgrounds, cultures, generations can pool in and foster a great deal of creativity and fulfillment at the workplace. However, it may also cause a concern when certain clashes between individual differences arise. This is when a leader should step in, with his or her abilities to empower people to collaborate with each other (Mullins, 2010) and leverage what they have to offer (Ibarra and Hansen, 2011). In order to understand these cultural and personal differences of people, leaders should be aware of the dimensions of diversity which can be explained by the Gardenswartz and Rowe’s (2003) Diversity Wheel.

Dimensions of Diversity

There are already many studies that have successfully created simplified methods to measure an individual’s personality, the Diversity Wheel by Gardenswartz and Rowe (2003) is one of the few that illustrates the complexity of what creates and influences an individual’s unique personality (see figure 1). Understanding the internal, external and organizational dimensions shaping an employee’s personality may assist a manager in maximizing their full potential and provide with them with a feeling of fulfillment.

Figure 1: The Diversity Wheel by Gardenswartz & Rowe (2003)

 

Group Development

Llopis (2012) is amongst other researchers who emphasized the importance for leader to having the ability to build a team by learning and maneuvering his or her pupils’ unique skills and strengths to achieve overall organizational efficiency. Therefore, it is important for a manager to be familiar with stages of team formation as outlined by Tuckman and Jensen’s (1977) in their Stages of Group Development (Figure 2). The model discusses the four consecutive stages that lead to team formation which are: Forming, Storming, Norming and Performing. To learn more about these stages, please watch this video.

Figure 2: Tuckman and Jensen’s (1965) Stages of Group Development Model

Advantages and Limitations of Diversity Management

Managing and fostering diverse teams have been researched to provide organisations with increased productivity, employee satisfaction, cross-team learning, creativity and profitability (Mullins, 2010). A good example of a company earning these benefits is Google Inc. as they have taken an enormous interest in harnessing the creativity and collaborations of diverse programmers across the globe. Google Inc. is utilizing their interest in workforce diversity as an opportunity and strategy to gain competitive advantage over their competitors and there is research (Hunt et al., 2014) that has proven that higher workforce diversity provides companies with competitive advantage.

However, if managers are unable to manage culturally diverse teams, it will be problematic to almost all stakeholders of an organisation. Firstly, misunderstanding the differences in cultural values may lead to low morale levels as managers are not able to apply the right motivation techniques for the right person (Majlergaard, 2012). Secondly, if a firm does not invest in workforce diversity, such as diversity training programs, then the firm will forgo the opportunity in noticing overachieving minorities or diverse employees that should be earning an opportunity to be promoted or at least rewarded. Finally, the main challenge that may occur during diversity management is discrimination amongst employees. Research (Conner, 2015) suggest that over 30 % of women still feel that men are offered better work opportunities and promotions than them. It is important factor to consider as discrimination and stereotyping have been found to cause direct harm to a firm’s reputation, working relationships, productivity and overall employee satisfaction and morale (Green et al., 2015).

Managing a Diverse Team as a Skill

Since I am aiming to enter the entertainment industry, managing a diverse team is one of the most significant skills. In the entertainment industry, advertising projects are done in a regular basis in order to attract viewers from across the world. A small film studio based in the US can advertise a film that is almost guaranteed to be watched by an individual from a different continent. Therefore, it is required to hire and pool in ideas from diverse individuals in order to stay creative as well as to stay globally aware of cultural differences when designing marketing communication tactics. A practical example is CBS Entertainment, an entertainment firm that has designated a sole department to hire diverse talents (see figure 3) across the US (Porter, 2017).

Figure 3- CBS Diverse Talent Search (Source: CBSCorporation.com)

NORTH HOLLYWOOD CA. JAN. 18, 2012. The entire cast greeting the audience before the performances at the CBS Diversity Showcase at the El Portal Theatre on Jan. 18, 2012. CBS hosts their annual diversity showcase, designed to spotlight young performers of color. The showcase has attracted numerous top casting agents. (Lawrence K. Ho/Los Angeles Times)

In order to my team work together effectively I would follow the steps illustrated in the picture below.

 

References

Bales, R. F. (1965) ‘The equilibrium problem in small groups’ in A. P. Hare, E. F. Borgatta and R. F.

Clements, P. and Jones, J. (2008). The Diversity Training Handbook. 1st ed. London [u.a.]: Kogan Page.

Conor, L. (2015) A Third Of Working Women Say They’re Discriminated Against [online] available from <https://www.theguardian.com/women-in-leadership/2015/jun/03/third-of-working-women-discriminated-against&gt; [Accessed 5 Mar. 2017]

Gardenswartz, L. & Rowe, A. (2003). Four layers of diversity. Retrieved from http://www.gardenswartzrowe.com/why-g-r

Green, K., Clark, J., Lopez, M., Farnsworth, D., Kepner, A. and Wysocki, J. (2016)Diversity In The Workplace: Bene Ts, Challenges, And The Required Managerial Tools [online] 1st edn. Florida: University of Florida. available from <https://edis.ifas.ufl.edu/pdffiles/HR/HR02200.pdf&gt; [Accessed 5 Mar. 2017]

Hunt V., Layton D. and Prince S. (2014) ‘Why Diversity Matters’ [online] available from:<http://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters> [Accessed 5 Mar. 2017]

Kemper L. E., Bader A. K. and Froese F. J. (2015) ‘Diversity Management in AgeingSocieties. A comparative study of Germany and Japan’, Management Revue. 27(1-2), 29-49 [online] available from: <http://web.a.ebscohost.com.ezproxy.inti.edu.my:2048/ehost/pdfviewer/pdfviewer?sid=b05d97b9-53a0-4e6e-9f8c-321cb21275c2%40sessionmgr4009&vid=1&hid=4204> [Accessed 5 Mar. 2017].

Llopis G. (2011) ‘Diversity Management Is the Key to Growth: Make It Authentic’Forbes Leadership [online] available from: <http://www.forbes.com/sites/glennllopis/2011/06/13/diversity-management-is-the-key-to-growth-make-it-authentic/2/#32a84c8d6646> [Accessed 5 Mar. 2017].

Majlergaard, F. (2012) The Top 5 Challenges Managers Of Cultural Diverse TeamsAre Facing – Gugin [online] available from <http://gugin.com/the-top-5-challenges-managers-of-cultural-diverse-teams-are-facing/&gt; [Accessed 5 Mar. 2017]

Mullins L. J. (2010:157-162) ‘Management and Organizational Behaviour’. Ninth Edn. Edinburgh Gate: Pearson Education Ltd.

Porter, J. (2017). Meet the CBS Executive Who’s Bringing Diversity to TV. [online] TIME.com. Available at: http://time.com/collection-post/4596947/tiffany-smith-anoai-american-voices/ [Accessed 5 Mar. 2017].

Tuckman, B. W. and Jensen, M. A. (1977) Stages in small group development revisited. Group and Organisation Studies 2; pp. 419-427.

 

 

Ethical Leadership, the Rarest Skill?

This blog will discuss the topic of ethics and leadership within the banking industry, an industry I am currently interested in pursuing my career in. Not only will this blog mention the literature behind ethical leadership, but it will demonstrate examples of good and bad ethical leaders as well as apply relevant ethical leadership models. Dan Price for Gravity Payments is a good example of ethical leadership while Kenneth Lay for Enron is a bad example.

Many scholars (Kanungo 2001; Bass & Steidlmeier, 1999; Kanungo & Mendonca, 1996) have accepted that EL is based upon a morale foundation shaped by sets of ethical values that are grouped into the either deontological perspective (morale assumption) or the teleological perspective (consequential assumption) (White, 1993).

The noticeable similarity between these scholars’ definitions of ethical leadership (EL) is that it involves leaders’ demonstration and persuasion towards a “universal standard of moral behaviours” (Mihelic et al., 2010: 32) among their followers and this is done by actively engaging in two-way communications, having interpersonal relationships, and reinforcing ethical behaviours (Rubin et al., 2010: 216-17; Brown et al., 2005: 120; Thomas, 2001).

In order to evaluate and judge a leader’s behaviours to be ethical, the Dimensions of Ethical Leadership (Figure 1) by Kanungo and Mendonca (1998) should be mentioned.

Figure 1: The Three Dimensions of Ethical Leadership by Kanungo and Mendonca (1998)

As Figure 1 illustrates, the three core dimensions that separates a leader from an ethical leader are his or her intention/motive, character and influence strategy (Kanungo and Mendonca, 1998). Firstly, understanding the leader’s motive as an ethical leader must present a selfless altruistic motive. An example of an altruistic motive by a leader is Dan Price for Gravity Payments (view this short video).

Furthermore, an ethical leader should demonstrate a more transformational rather transactional mode of influence to his or her followers (Plinio, 2009; Martinez-Saenz, 2009; Frank, 2002). Dan Price has consistently demonstrated his concern for his employees and interest in positively affecting society. As shown in picture 1, he actively involves his employees in group exercises.

Picture 1: Dan Price, CEO of Gravity Payments (Source: Weise, 2015)

Finally, in order to be an ethical leader, a leader has to have incorporated ethical principles, developments and self-transformation into his or her beliefs and values. In this dimension, Kanungo and Mendonca (1998) have adopted the 1988 version of Blanchard and Peale’s (2011) five principles (5 P’s) of ethical power which are: “pride, patience, purpose, persistence and perspective” (Kanungo and Mendonca, 1998:143). In order for leaders to self-transform and become an ethical leader, they “must tap into these sources of ethical power” (Kanungo and Mendonca, 1998:143).

To demonstrate this, Price (shown in picture 1) in 2015 announced that he will raise the minimum yearly salary for employees earning less than $ 100,000 a year to $ 70,000 in order to secure them from financial hardship. He has financed this project by cutting his million dollar salary down to $ 70,000 only (Weise, 2015). Although this decision was criticized, Gravity Payments revenues began to grow twice as fast and employee retention rate was 91 % (Weise, 2015).

Kenneth Lay (Picture 2 and click here for full profile) was the CEO of Enron, an organisation that went bankrupt due to his unethical behaviours and violation of deontological ethics.  Learn more about what happened to Enron by clicking here.

 Picture 2: Kenneth Lay (Source: Bio., 2017)

The breaking of accounting had led to the company to go bankrupt and the dissolution of Arthur Andersen, one of the largest accounting firms in the world (Forbes, 2013), causing major job losses (BBC, 2002). Based on Lay’s actions, it is safe to assume that he followed a teleological approach in ethics as he based his decisions on the outcome that follows. His morale principles did not stop him from lying to investors and breaking violations since the consequences were beneficial until he was caught.

Therefore, to be an ethical leader is a difficult task. Based on my understanding of what it takes to be an ethical leader, it will be difficult to achieve this status in the banking industry. Based on my ethnic background and morale beliefs, I stand with a strong deontological approach to ethics. Since the banking industry has always been the face of unethical behaviour, it will even be more difficult to watch my leaders performing unethical behaviour to achieve the needs of the organisation such as Kenneth Lay. However, I learned that I am strong follower of the deontological and my industry is being surveyed by law enforcements for unethical behaviours.

References:

 

Bass, B.M., and Steidlmeier, P. (1999). Ethics, Character, and Authentic Transformational Leadership Behavior. Leadership Quarterly, 10, pp. 181-217.

BBC (2002). BBC NEWS | Business | Andersen guilty in Enron case. [online] Available at: http://news.bbc.co.uk/1/hi/business/2047122.stm [Accessed 5 Feb. 2017].

Bio. (2017). Kenneth Lay Biography. [online] Available at: http://www.biography.com/people/kenneth-lay-234611#synopsis [Accessed 6 Feb. 2017].

Blanchard, K. and Peale, N.V. (2011). The power of ethical management. Random House.

Brown, M. E., Trevino, L. K., & Harrison, D. A. (2005). Ethical leadership: A social learning perspective for construct development and testing. Organizational Behavior and Human Decision Processes, 97(2), pp. 117-134.

Forbes. (2013). 5 Most Publicized Ethics Violations By CEOs. [online] Available at: http://www.forbes.com/sites/investopedia/2013/02/05/5-most-publicized-ethics-violations-by-ceos/#7c07bfe22799 [Accessed 5 Feb. 2017].

Frank, D.G. (2002). Meeting the Ethical Challenges of Leadership. Journal of Academic Librarianship, 28(1/2), pp. 81.

Kanungo, R. N. (2001). Ethical Values of Transactional and Transformational Leaders. Canadian Journal of Administrative Sciences, 18(4), pp. 257-265.

Kanungo, R.N. & Mendonca, M. (1998). Ethical Leadership in Three Dimensions. Journal of Human Values, 4, pp. 133-148.

Kanungo, R.N., and Mendonca, M. (1996). Ethical Dimensions of Leadership. Thousand Oaks, CA: Sage Publications.

Martinez-Saenz, M. A. (2009). Ethical communication: moral stances in human dialogue. Current Reviews for Academic Libraries, 47(4), pp. 693-693.

Mihelic, K. K., Lipicnik, B., and Tekavcic, M. (2010). Ethical Leadership. International Journal of Management and Information Systems, 14(5), pp. 31- 42.

Plinio, A.J. (2009). Ethics and leadership.International Journal of Disclosure & Governance, pp. 277-283. Retrieved from http://0search.ebscohost.com.library.regent.edu/login.aspx?direct=true&db=a9h&AN=44824168&site=ehost-live

Rubin, R. S., Dierdorff, E. C., & Brown, M. E. (2010). Do Ethical Leaders Get Ahead? Exploring Ethical Leadership and Promotability. Business Ethics Quarterly, 20(2), pp. 215-236.

Thomas, C. (2001). The Ethical Leader. Executive Excellence 18, pp. 15. Executive Excellence Publishing.

Weise, K. (2015). The CEO Paying Everyone $70,000 Salaries Has Something to Hide. [online] Bloomberg.com. Available at: https://www.bloomberg.com/features/2015-gravity-ceo-dan-price/ [Accessed 5 Feb. 2017].

White, T.I. (1993). Business ethics: A philosophical reader. New York: Macmillan.

Yukl, G. (2006). Leadership in organizations, 6th edition. New Jersey: Pearson Prentice Hall Upper Saddle River, NJ.