leadership styles in responsiveness to the changing in business environment during time of crisis

8/7/2019 Leadership Styles in Responsiveness to the Changing in Business Environment during time of Crisis

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SBS TBS903 Intake A- 2011

Managing People in Organisation

Leadership Styles in Responsiveness to the Changing in

Business Environment during time of Crisis

Your student name: Abdel Razzaq A.AbuShahout

Your student number: 3954808

15th February 2011

Sydney Business School

University of Wollongong


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This research has been conducted to show how is different leadership style is affecting the organization

environment, either internally or externally during crisis. In recent time many businesses after the last economic

crisis has declared bankruptcy, many still surviving and many are fully recovered. Logically that can be referred

to one of various aspects that could affect the leader to cope with the crisis positively or negatively. The leader

who is defined as the one who has a high self-confidence, a clear vision, engage in unconventional behaviour,

and act asa change agent, while remaining realistic about environmental constraints (Mclaurin, J & Alamri, M

2008). Leaders usually have different leadership styles that assist them to meet their organizations goals.

Therefore, Leadership defined according to John Maxwell (2007) who says Leadership is influence - nothing

more, nothing less. As simple as this definition we can understand that the good leader who has the adequate

personality characteristics to leave an impression on his/her followers and inspire them to follow where ever

they attended to attain in the future.

Leadership styles are diversified from one to another as they relied on many factors, mainly on the leader

personality characteristics. Nevertheless, we are going to examine three types of leaderships those are used

quietly often by the leaders such as autocratic, democratic, bureaucratic style. However, a good leader should be

able to use all these types on a daily basis operation with one of them are normally the dominant (Lewin, K

1939). In the light of leaderships, there are some factors that persuade the leaders to identify the style to be used.

Firstly, leaders should consider the time availability before making the final decision, according Jack Welch the

former CEO of general electric said once Speed is everything, it is the indispensable ingredient of

competitiveness (Kotelnikov, V 2010). Secondly, the relationship with the followers is it considered poor or

strong based on Fielders contingency theory that describes the leadership style in compatibility with situation

for the leaders as motivational disposition to be task / relationship oriented (Miller, Ret al. 2004). Thirdly,

whatever the relationship with the employees or the availability of time it is important to examine how staff

training can impact employee happiness, with responsiveness to their leader inspiring style and in turn customer

happiness (Kepes, B 2010).

1. Autocratic leadership style

Usually companies examining this type of leadership in times of extreme situation that require fast

response, whereas, leaders tend to be more dictatorial in their ways of doing the job. As they will retain as much

authority to make the final decision, without involving any of their followers to contribute in the decision


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making process. In view of that, the employees should expect from the leader an order of tasks to be

accomplished due the exact time. seeing that the leader who is the only person within the organization is

responsible for the final decision, Jeff Rich, CEO of Affiliated Computer Services (ACS) which has more than

36,000 employees say Purely autocratic leaders ultimately become bottlenecks because people learn that the

best survival skill is to ask the boss first before making a decision (Jones, D 2003). Therefore, in some cases

the autocratic style could be useful for leaders to follow. The result from, many of the subordinates during the

crisis time prefer to get exactly consequence of steps what to accomplish. Accordingly, "People learn to wait for

directives from the boss, for instance, they will become terrified about making the wrong decision"(Jones, D

2003).

However, even in the daily operations some leaders tend to act autocratic and get involved in each single detail.

This style positively works in cases of hiring new or untrained staff, as well the staff could not response to any

other styles as they used to get instructions to complete their tasks. Thus, it is very important in a congenial

work environment where everyone is friendly. It also can lead to disagreements and protests, if a group or

company is led by an autocratic leader (Foram, S 2010). Whereas, their leaders principally believe in theory X

by Douglas McGregor that says people are lazy, lack of ambition , dislike taking responsibility and need to be

told what to do (Bourne M & Bourne P 2009).

There are two famous business leaders who are known to be autocratic, Martha Stewart the founder of her

own Entertainments Empire and Howell Raines the executive officer in New York Times newspaper between

2001- 2003. Stewart as the founder of her own entertainment company Omnimedia, using her leading style to

involved in each detail in the companys decision-making (Nayab, N 2010). Known by the year of her

endeavours in work and leading successful corporate during many situation. However, after September/11 as

one of many US corporates being affected by tragically drop in the American economy, Stewart had to made her

last decision to lay-off 550 employees, saving around 401ks pretending of saving the shareholders of more

loses, to cover on selling some of the company stocks. That what start a spark of anti-Stewart backlash of her

employees and shareholders, and been convicted at the end of insider trading (Phillips Business Information

2004, p.1).

Although, autocratically leaders sometimes could help the corporate in cases of crisis, Albert J. Dunlap

considered to be a good example, as the CEO of Sunbeam Corporation, his strategy for downsizing his

workforce aimed to fire more than 11,000 employee, around 40% of the workforce achieving high stocks prices


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and allowing the remained staff to feel more secure and motivated in their current jobs to increase their

productivity (Nayab, N 2010).

2. Democratic leadership style

In contrary, the democratic leadership style is the most recognized and favourable style used by business

leaders worldwide. Those who tend to encourage the staff to be a part of the final decision process. John Gastil

(1994) said The first function of democratic leadership is the distribution of responsibility. For instance, its a

way to empower the followers and keep them informed with each single detail that could affect their work

status. Moreover, hold some meetings to share ideas while sometimes the best ideas comes from unexpected

person to contribute to the discussion. Thus, creating a successful and positive work environment that will

motivates the employees to work in teams or individuals. Besides, satisfying their needs of security and

increasing their self-confidence as well as increasing their work productivity are the main reasons to survive

during crisis. Keith Solinsky, CEO of Coker group (2003) we have a responsibility to do our best to create an

environment where the vast majority of our staff truly enjoys coming to work each and every day. In addition,

giving the staff the opportunities to be able develop their personal skills growth and a high level of satisfaction.

As a consequence, most of the successful democratic leaders aim to make highly expertise leaders of their

followers at the end (Gastil, J 1994).

In the light of this style, 3M CEO George Buckley was leading the corporate during the last global

economical crisis, Buckley (2009) said in a 2% recession, you have 98% of the business left. In a 5% recession

you have 95% of the business left. You have to focus on what's left, not on what's gone. Hence, from a view of

a democratic leader that means focusing on the employees development their own personal managerial skills,

even if the company facing tough time and cutting managerial costs, spending on training employees should

never stop (Buckley, G 2009). Accordingly, those employees will be able to handle and taking some

responsibilities in crisis time. For that reason, it all goes wrong when leader get too deep in the operations and

take all responsibility for things that should be delegated to followers (Clare, J 2008).

Carlos Ghosn one of the successful democratic CEOs in the world, currently the CEO of NISSAN the

Japanese car manufacturer, in 1999 called the father of the year as he saved the corporate when it was in spiral


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death, with his managerial savvy developed with multicultural background with a successful long experience in

unfamiliar cultural terrain coping, made him to be suitable CEO in its crisis time. Nissan in 1999 was in real

dept around 5.8$ billion, Ghosn has had to make some hard decisions contributed to the company well-being.

Therefore, he announced a plan that states reducing the general costs by 20%, reducing capacity and closing five

Nissan plants around the world. In addition to laying-off 20,000 employees and reducing the number of Nissan

steel suppliers from 5 to 3. However, the biggest challenge for Ghosn was the unexpected denial from inside the

company with the new management. Conversely, his strategy and his leading capabilities enabled him to take

off with Nissan to gain 2.9$ billion profit organisation in number of years (Ghosn, C & Ries, P 2005).

3. Bureaucratic leadership style

The core idea about this style is that the leader is responsible to determine which task has to be done first

due to a specific time according to the corporate rules and policies. The father of the modern management Perter

Drucker said "bureaucracies are about rules, not results"(Riggio, R 2010). Therefore, following these rules the

employees have to report their daily operation results to the boss above them all the way from bottom

management to the top management. Whereas, each employee have different task to work on based on standards

to meet. In the light of that, the coordination and control process located just above the level where the task been

done at (Aughton, P& Emery, M 2009). Consequently, if the subordinates being told what to do and how to do

the job the plan will be done on time. However, if this situation has been happening for long time in any level of

the organisation, were the employees been doing the job over and over they will feel of high level of boredom.

For instance, it will lead to a high level of frustration, absenteeism and low motivations and intrinsic motivators

to be creative. Thus, leaders should expect a lower productivity and raising the managerial costs (Aughton, P &

Emery, M 2009).

However, the problem cause not by bureaucracy itself rather than by being over-bureaucratization.

Whereas, todays business environment changes rapidly as the technology does. Therefore, leaders in

bureaucratic corporations must to consider of minimizing the level of bureaucracy in their business. Thus, they

will be able to cope with the changing in the corporate environment under any circumstances that appears to

sluggish the daily operations.


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According to small personal experience while we were working as a team in an international treading

company called Relay Trading Company (RTC). Simply after two months from joining their field marketing

team. The board of directors hold a meeting discussing many issues. More importantly, after that meeting each

one of the employees has received an email explaining new relation and communication channels to be used

from the date of receiving that e-mail. Whereas, the company has launched some promotional campaigns for

their products, we noticed the communication becoming dawdling. As we have to contact the marketing

manager, so in her role have to contact the sales department to get the needed information for us. As a result, we

have lost many profitable onsite deals and wasted many hours waiting for information, increasing the cost of

communication, all that was about having some concerns of the company information privacy and relationship

seniority from the board of directors. Nonetheless, after they noticed a snag in sales profits and the campaigns

effectiveness as our productivity, in the next couple of months they regress on that communication polices,

going back to the democratic style leaving the communications ways for us to deal with.

In conclusion, even though many of the leaders are using different styles of leadership depending on how

they estimate the strength of the situation facing the company. In my personal view the best leaders those who

will be able to adapt and combined different styles, which suit each work circumstances to boost the followers.

Nonetheless, its a matter of time for any leader to leave a positive or negative impact on their followers who are

seeking for prosperity and developing personal skills to be satisfied, as an old proverb a smooth sea never made

skilled mariner ( George, B 2009).


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