Tuesday, August 30, 2011

The role of leadership and how it can impact organizational performance, based on Alan Mulally, CEO, Ford Motor Company.

According to  Hellriegel et al., (2011 p. 290) leadership is the process of developing ideas and vision, living by values that support those ideas and that vision, influencing other to embrace then in their own behavior, and making hard decisions about human and other resources. Therefore, to influence by one person over others power became the currency of leadership where in the context of organizational leadership, leaders need and use power in order to help an organization accomplish its goals (Kets de Vries, 1999; Tanoff & Barlow, 2002). The power can be Legitimate that is because of the person’s formal position, reward power that provide value, coercive power that is punishments, referent power that is associate with charisma and expert power that is a person with recognized talent and knowledge (Hellriegel et al., 2011). However an effective leader probably would use a variety of sources of power to influence other and be successful. Some people also use different behaviors to achieve their goals, as a political behavior and organizational politics that involves attempts by individuals to influence other in order to obtain their own advantages.
            However the Ohio State University leadership studies program identified two main dimensions behaviors that really make difference to attaining team and organizational goals: consideration and initiating structure. In the consideration the relationship between leader and the subordinate is based by mutual trust, respect and empathy for their feelings, in the initiating structure trough planning, schedule and giving orders the leader the leader prescribes the roles of subordinates in order to achieve goals (Hellriegel et al., 2011). Also some individuals’ characteristics might ensure the success of the leader in organization some as intelligence, maturity, achievement drive and integrity. Although to discuss how it can impact organizational performance we can’t focused only on the leader as a person and on his/her particular style, without consider the follower, where leadership became an interpersonal devotee relationship between two agents (leader and follower) (Gini, 1997). Indeed, based on the idea that leadership is defined as a phenomenon that gets: the voluntary adhesion of followers (Guillen and Gonzalez, 2001), the necessary effort of followers to achieve the group and organizational objectives (Koontz and Weichrich, 1994), and an increase in the followers’ performance (Drucker,1986), a suitable consequential indicator of leadership may be the extent to which followers feel motivated and ‘‘comfortable to bring the best of their knowledge and abilities’’ to the organization (Offerman, 2004, p.832).          
            Finally leader’s decisions will drive the followers to impact organizational performance. In these context decisions makers, play an important role where sometime can be necessary some change to improve the functioning of the organization; however most times resistance or aversion to change can result in organizational decline. For instance, Kets de Vries and Miller (1984) contended that decline in organizations is frequently related to the CEO’s rigidity, while CEO’s characterized as adaptors that viewing change more proactively  can make decisions faster than the market, also encourages efforts from the followers to explore thinking or alternative strategies. In the case Alan Mulally’s leadership took an important decision that resulted in Ford strategic moves (Hellriegel et al., 2011). His skills and style helped Ford to move ahead in the industry during an economic recession.

            According to (Hellriegel et al., 2011) in the situational Leadership Model leaders can choose for among of four styles that matched to the level of readiness of the followers. With telling style, leaders provide clear instructions and gives specific directions and supervise the work closely. In the selling style the leader provides directions, encourages two-way communication and helps to build motivation and confidence on the followers. Using the participation style the leaders facilitate the work by encouraging the followers to share ideas. The last style is delegating, where the leader turns over responsibility for making and implementing decisions to followers.
            I believe that in the case Alan Mulally’s leadership style is the selling style because when he arrived in the company in 2006 Ford was on the verge of financial collapse, then the follower task specific readiness increase with Mulally’s strategic decisions to integrate the company globally. As a leader Alan Mulally has provided some guidance behavior, very characteristic of selling style, for example when he create the plastic cards with four goals on one side and revised definition of the company (one Ford) on the other. With the information in the plastic card he showed exactly what he had in mind about the way the employee has to act, the importance of work in groups and the role model Ford values in order to deliver results. Also with the “One Ford” he gives the specific direction to prepare the employee to get ready to assume total responsibility to perform the task.
            In addition, when Mulally said that “they don’t bring their big books anymore because I’m not going to grind them with as many questions as I can to humiliate them” (Hellriegel et al., 2011) he begin using supportive behaviors in order to build the employee confidence to maintain enthusiasm, that is also very characteristic of selling leadership style.
            Finally using selling style Mulally encourages two-way communication demonstrated this by communicating to all the employees and not just upper level executives as to what, when and how the company was going to move forward.

            According to Locke and Latham 1990, goal-setting theory predicts that specific and challenging goals lead to better performance as opposed to vague and nonquantitative goals (such as “do your best” goals) or no goals at all. Goals are future outcomes (results), goal setting is the process of specifying desired outcomes. In the case Mulally first determine the goal when he promised that “Ford’s core North American operations, as well as the entire company, will be profitable by 2011”. However the goal setting process was not so easy, as we saw in the case Mulally first studied up on Ford like a student, interviewed employees and making notes to develop the goal setting process.
            Trough the plastic card Mulally showed the expected behaviors then focus an employees’ attention in one plan and one goal in order to show what was relevant and important for the company. The whole process was not easy demanded strategic changes trough the people as demonstrate technical excellence, believe, listen and then have initiative to deliver results. With his strategy Mulally encourages people to look for a different point of view and realize that the company has problems but they can solve this problems based on the goals setting.
            Make the goal setting clear and difficult was essential to improve Ford’s performance, because motivate employees to concentrate their efforts in the expected behavior. Finally when Mulally was asked if Ford will be able to remain in business he answer that he doesn’t know, but he says that “the plan” will ensure the company to make it (Hellriegel et al., 2011). One more time he proved that the goal setting leads to high performance not only in certain period of time but for a long time because put the company in the right path.

            The kind of Mulally’s message transmission is very open, candid and supportive because his messages are interpreted trough high trust, for instance his experience a nearly 40 years in the commercial airplane business in one of the most international of all industries makes Mulally looks loyalty for Ford and even his appearance gives to him a considerable trust from the employees. Then the way he shares his agendas and promotes the meeting with his direct reports every Thursday morning also form the base of his open message. Finally the way he conduct to make the goal clear and revealed to the whole company like when he create the plastic card with the expected behavior and the Ford goal makes his communication very open and ensure that everyone in the company independent of the level will understand his message.
            However the communication openness is a degree that according to (Hellriegel et al., 2011) the degree of openness must consider in relation to tree important factors, first the history of the relationship, second if the communication is likely to be partly adversarial, third the communication is with someone who has some control over their future. Historically Mulally has been work for several years for Boeing and had a good performance on there, this factor gave to him such comfort that make him able to focus on direct communication very open. In the second setting Mulally shows again a very open communication because is likely to be friendly especially because he wants the company’s success the same as everyone who is working there. The third setting we find Mulally in a high degree of open communication because he project a favorable image of him for the employee making very clear and objective messages.

The effectiveness of Mulally’s leadership style 
            Mulally’s leadership style was very effective as we can notice from the news “Alan Mulally has been named the 2011 Chief Executive of the Year by Chief Executive magazine” (Rana, 2011). The honor is given to a corporate leader by a group of his or her peers, the success he showed in the face of incredible difficulty was just extraordinary his management effectiveness to change the company from the near collapse in 2006 to $20.5 billion of Automotive gross cash, in the end of 2010. Also Ford Credit made pre-tax operating profit of $3.1 billion, an improvement of more than $1 billion over 2009 (Mulally, 2010). According to (Hellriegel et al., 2011) there are some initiatives that contributing to effective change management and most of them it is possible to identify in Mulally’s management as follow:
-          Motivating Change, example he creates a readiness for the change among the leaders and employees;
-          Create a vision, putting in the card for everyone a very objective and clear goal;
-          Developing political support, arranged the wall by area of responsibility with a photo of the executive in charge he make it possible to access the change-agent power;
-          Managing the transition by planning and managing the structures in the Thursday’s meeting;
-          Sustaining the Momentum, for example when he reinforce the idea to come back with Taurus.
            Therefore, trough one plan and one goal he motivate positive job attitudes and behavior from the employees that result in one very effective practiced leadership able to rebuilt the Ford in extremely challenging economic conditions. Although at the end of this year he would complete the one goal and then at this point will be important to develop a new goal and might remodel the plan. However he should continue with the same leadership style because in a globalization will always be necessary to implement some changes to be ahead of the competitors.

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Rana, Omar. (2011). Ford’s Alan Mulally named 2011 Chief Executive of the Year. EGM          CarTech, Posted: Jun 29, 2011. Access at 08/04/2011 at:         http://www.egmcartech.com/2011/06/29/fords-alan-mulally-named-2011-chief-     executive-of-the-year/
Mulally, Alan. (2010). A Message from Alan Mulally, President and CEO. Ford Motor   Company. Excerpt from the 2010 Ford Motor Company Annual Report. Access at        08/04/2011 at:  http://corporate.ford.com/news-center/news/press-releases/press-r      eleases-detail/message_from_alan_mulally

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