Impact of management and leadership styles strategic decision
“Managers are who do things right and leaders are who do the right thing”
The general concept according to my understanding from various literature reviews are that “Leaders’ leads people and managers manage all things in organization, furthermore to my concepts the important point is that leaders are the people who bring changes in organizations and managers may be considered as people who sustain the day to day organisational activities.
The main point in this task 1, to explain the link between Leadership and management of an organisation, here I am elaborating leadership and management of Martin McColl, this organisation having approximately 1,000 outlets and 50,000 employees across United Kingdom, the main focus of the company is on Books, Cards, Magazines, Confectionary, Toys and Drinks etc.
Link between strategic management and leadership:
Orders which are passed down from leader and the manager's role is to pass orders down the 'chain of command'
A leader is described as someone who has the capacity to create a vision, and to translate it into action and sustain it (Bennis, 1989), this statement can also be justified as there are differences between management and leadership, although functionally they can be combined in the same individual (John Kotter, 1990).
Leadership without Easy Answers by Ronald A. Heifetz, According to “In business, we see an evolution of the concept of leadership. For decades, the term leadership referred to the people who hold top management positions and the functions they serve. In our common usage, it still does. Recently, however, business people have drawn a distinction between leadership and management, and exercising leadership has also come to mean providing a vision and influencing others to realize it through non-coercive means.”
Roosevelt says about link between leaders and managers that People ask the difference between a leader and a boss, the leader works in the open, and the boss in secret. The leader leads and the boss drive.
This report review explains the relationship between leaders and managers that they perform on their position within the organization, they work together to achieve the goals of organization.
Leaders think about goals and are active instead of reactive in shaping ideas. Managers act to limit choices.
Leaders develop fresh approaches to long-standing problems and open issues to new options. A manager is a problem solver- “what problems have to be solved and what are the best ways to achieve results?”
Link between leaders and management has strong impact in organization.
Follow the established course.
Establish the course that managers follow.
Ensure that people do things.
Ensure that people want to do things.
Ensure that people do things.
Ensure that people do the right things.
Ensure that people do things better.
Ensure that people do better things.
Source: international business-society management by Tulder, Zwart.
Example in Mc Coll:
As I explained the literature review above, I am evaluating these literatures with the help of Martin McColl example.
Martin McColl under the Steve Leadership management is very successful. There is a strong link between leader and management. Leader and managers keeps link through video conferences, mails and telephone. Meetings for internal discussions are kept to a set of guidelines intended to maximize productivity, and minimize cost, to achieve a result. Focus is on external parameters, particularly the customer and the image of the company. Priority in Martin is given always to activity that enhances the customer experience, improves efficiency or increases revenue and profitability. There is an enormous level of mutual respect built between the leadership group and the teams. People are appropriately motivated, and rewarded for their performance based upon their motivational modality. It is important to remember here, that not everyone is motivated by a monetary reward, or a standard trophy. A Truly Great Leader understands this, and uses to their advantage.
On 28 Nov 2010 major snow fall hits Scotland. There were problems with many routes. Managers must come on time that’s manager’s responsibility. On the day of snow martin McColl managers came on time in all branches while travel was very difficult due to the heavy snow but all managers reached on time and have done their work because it was not easy for anyone to come out house. So that was a great achievement under the best leadership.
Managers are also leaders. Link between leaders and management has strong impact in decision making in organization and this impact effect in every place and every area in McColl such as finance, marketing, policies.
Impact of management and leadership style on Strategic Decision:
“Decisions are at the heart of leader success, and at times there are critical moments when they can be difficult”
Organizations all over the world are deeply concerned with understanding, searching and developing leadership. Regardless of the type of organization, leadership is discerned to play a vital role in establishing high performing teams. Leaders are facing greater challenges than ever before due to the increased environmental complexity and the changing nature of the organization. The current era not only demands having a competitive edge and sustained profitability but also the maintenance of ethical standards, complying with civic commitments and establishing a safe and equitable work environment. Leadership is one of the critical elements in enhancing organizational performance. Being responsible for the development and execution of strategic organizational decisions, leaders have to acquire, develop and deploy organizational resources optimally in order to bring out the best products and services in the best interest of stakeholders. In short, effective leadership is the main cause of competitive advantage for any kind of organization (Zhu et al., 2005; Avolio, 1999; Lado et al., 1992; Rowe, 2001)
In Martin McColl autocratic leadership style portrays that manager retains as much power and decision making authority as possible. These leadership styles utilize different sources of power and impact differently on the levels and extent to which staff consider them as making a contribution to organizational decision making. Both the quality and extent of staff participation in decision-making tends to wane. Each store of McColl has a store manager who can make certain decisions concerning their store. The store manager is responsible to a regional manager senior managers have time to concentrate on the most important decisions.
Collaboration with group members:
Martin McColl leader makes decisions in collaboration with group members, often using majority rules or similar social decision schemes, whereas a consultative leader makes decisions, after talking with group members about their opinions.
McColl managers tend to be more focused on productivity targets and achievement of objectives. Their power is based on their ability to achieve targets, often as a result of quick decisions. Decision making is a form of empowerment. In McColl stores Empowerment is increase motivation and therefore means that staff output increases.
People lower down the chain have a greater understanding of the environment they work in and the people (customers and colleagues) that they interact with. This knowledge skills and experience may enable them to make more effective decisions than senior managers.
Participative styles in McColl enabling departments and their employees to respond faster to changes and new challenges. Whereas it may take senior managers longer to appreciate that business needs have changed.
1.2 Example in Martin McColl:
Martin McColl is UK based corporate company. Martin McColl has a democratic leadership where subordinates involve in decision-making. Company has a board of directors and Steve is a head of directors. It is seen that Martin has authoritarian systems in which their people work as directed.
Merger and acquisition continued in martin McColl. In 1998 Forbuoys acquired Martin Retail Group which was before RS McColl. In 1999 company launch new convenience concept McColl’s. In 2004 the company acquired Dillon stores. In 2005 company changed its name to Martin McColl Retail Group and now martin is the UK’s leading neighbour retailing group.
These changes allow leaders and managers to makes good decisions which give the strength to business. These changes brought many changes such as economic condition been changed, development changed, competition increased this changes brought new markets like stationery stores, specialist card shops. Furthermore supermarkets like Tesco and Sainsbury’s were selling everything that Martin did. So there was a big competition.
Knowledge sharing and strong communication always been there so the strategy of Martin was focus on its core activities and increase, improving buying power sell higher margin items and makes their with sales of newer lines. Company have a wide variety of roles at two head offices in Scotland and Brentwood. Here company centralise core business divisions including Central Retail Operations, Trading, Marketing, Finance, Supply Chain, Business System etc.
In all these above cases, management and leaders realized that changes were occurred and react actively. And in all these cases, they responded only when the competition forced them to do so.
In making decision, consider the fit between leadership style and the characteristics of organization. Even more important, remember that things change. Look for flexibility. The very best leaders are those who have learned how to shift from one leadership style to another as circumstances demand. If one candidate shows evidence of being able to move smoothly among several of these styles, that may tip the balance.
1.3: Leadership style adaptation to different situation:
“Leadership style is the typical approach of a particular person used to lead people.”
Management theorists try to discover one best leadership style for all situations. Researchers say that there are internal and external environments that have significant impact on leader effectiveness. For example in limited external opportunities leaders are constrained by competition, legislation, technology, changing markets and limited resources when making strategic decisions. Fiedler (1967), who conducted extensive research on the situational aspects of leadership effectiveness, identified factors that determine what style of leader performed best. He examined correlations between test scores of leaders and their performance related to situational factors. The relations-motivated leader performs best where the leader position is not strong. Task-motivated leaders perform best when the leader-member relations are good and the leader power position is strong. The latter category represents poor member relations and a weak leader who is attempting to deal with a poor situation. Because that situation is unfavourable, Fiedler's model would require a task-oriented leader to keep the situation from falling apart. An obvious alternative would be to replace the leader.
To deal with the issue of matching style to the situation, Vroom and Yetton (1973) developed an approach that deals with leader-subordinate interaction. He recognized that an effective style depended on situational variables including the leader's expertise, the task structure, and the employees' willingness to accept a solution. They found that the key elements in sharing of leader power are the maximization of technical effectiveness and subordinate motivation or acceptance. If technical effectiveness is not crucial and motivation and acceptance are not important, the decisions are made by the leader alone. On the other hand, if the technical difficulties are important but motivation is low, the leader attempts to obtain more information. When technical effectiveness is unimportant but motivation and acceptance are high, delegation becomes a useful approach. Finally, if the problem is high on the technical level and there is a need for acceptance, then the decision is shared with the group.
The situational determinants of leadership show that there is frequently, but not necessarily optimally, a consistency in the behaviour of a leader when he or she performs in different situations.
As the organization grows, team building and the exchange of ideas become more important. Involvement tactics are used more frequently. Now the organizational units are formed and the biggest question is how the work should be divided. This requires negotiation. Once the company is into production, tasks are more routine, but time is critical. This calls for more direction. Throughout, indirection, enlistment, redirection, and repudiation may be used. The tactics and when to use them are summarized in Table 2.
According to Daniel Goleman six styles of leading have different effects on the emotions of the target followers and each style appropriately as the circumstances. Which are:
Visionary leader, Coaching leader, Democratic leader, Affiliative leader, Pace-setting leader, Commanding leader.
As Goleman provides a good framework of leadership styles so I can say that it’s absolutely true that no leader always leads in a particular style but adapts to situations.
Few styles are there including Goleman styles, these styles are generally the most effective. Attached table 1.
There are five basis of power Coercive power, Reward power, Expert power, legitimate power, and Referent power. These five bases of power introduced by French and Raven in 1959. Among the five bases of power there are three bases in which the Steve leadership is founded. These are legitimate power, expert power and referent power. Through his position he is able to lead the company’s people. His experience in the company makes him very knowledgeable of the company and its customers. He motivates people and constantly empowers them. He is also charismatic.
Example of Martin McColl:
As a participating leadership in the past few years Martin performance and profitability have been transformed by employee engagement; which show a clear improving engagement and improving performance of employee. Martin engaged employees indicate they have a good understanding of how to meet customer needs.
Individual employees in companies with strong engagement strategies described to us how their working lives have been transformed for the better.
Customer focused strategy:
Martin leaders have vision that’s why they set objectives of company and have customer retention strategy for this they having promotional sale and delivering newspaper. Martin McColl customers are familiar with what newspapers and magazines in their local store and know the prices they normally paid. As a result, Martin delivering ordered newspapers at their home. Early experiments in began and, by the end of 2008, Martin was making 200 deliveries a week in an area – a very small beginning.
McColl leadership thinking ethically and behaving ethically in UK that’s why they are taking responsible decisions. They reduced to use of plastic bags. Martin corporate social responsibility is concerned with the ways in which an organization exceeds the minimum obligations to stakeholders specified through regulation and corporate governance. Martin negotiating better promotional prices from suppliers that small individual chains are unable to match. The product and service development processes of the martin have been substantially re-engineered, to facilitate better management of product lifecycles and more efficient delivery of wide ranges of products to customers. Product activity has focused on enhancing core ranges and introducing quality products. Martin’s innovative ways of improving the customer shopping experience, as well as its efforts to branch out into finance and insurance have also capitalized on strong brand reputation
Under great leadership a strong financial performance has been shown by the company over the years, which underlines its strategic capabilities. According to Data monitor (2010), Martin is a £ 30billion turnover company recording an increase of 14.9% when compared to 2008. The foremost strategy that has been adopted by the company is the product and services customization in accordance with the market demands. The efficiency in performance of the company over the last decade can be summarised with the help of growth in following key indicators (Fame, 2010)
In the past, Martin approach to emerging markets has tended to be almost exclusively from their own perspective, seeing them simply as markets, with little real empathy for the new customers’ needs and desires.
One of the big problems is that the vast majority of senior managers in corporations come from the ‘‘home county but Martin Company and their leaders always ready to cope with such diversity at top executive level.
In environmentally as Martin entered into more and more partnerships or joint ventures – many of which are formed with companies from different cultures. So leaders who are able to create and sustain such relationships give their company a valuable’ ‘collaborative advantage.
In my view, this relationship approach to business represents a major challenge to Martin. By senior executives Martin establishing good personal relationships in which trust and mutual understanding can develop.
Company ways of doing things
A good understanding of situation trains leaders to change their style, like a driver changes gear in a car.
Martin’s success had come, despite many siren voices, from persevering with its original model, and Bradley, the company’s chief operating ofﬁcer, puts that down to the personal backing of Windsor, Martin’s low-key chief executive. One solidly based on experience, trust, and judgment.
Dynamic changing situations require different leader behaviours. These behaviours can take the form of patterns of behaviours termed leadership style, or leadership tactics. Selecting leaders with different leadership styles is inefficient. It is far more effective to select flexible leaders who have the capability of using different tactics under different conditions. While the leaders may occasionally learn to change their styles to suit the circumstances’, leadership styles are likely to remain fairly stable overall. Therefore, a certain style affects the leaders/managers managerial decisions over extended periods, with a particular style being more effective under a specific set of circumstance.
Review the impact that selected theories of management and leadership have on organizational strategy
Create a leadership strategy that supports organizational direction
2.1 Impact of Theories on organizational strategy:
When we think about management and leadership, the image comes in our mind that these are powerful dynamic individual who commands people.
Yesterday principles and theories are contemporary and sophisticated. Some overlap and gaps occurs. Current theories fill these gaps and after to study that people are dealing to current situation.
There are many theories of management and leadership, these are defined as:
Behavioural theory, Contingency theory, Functional theory, Great man theory, Situational theory, Trait theory, Transactional theory, Transformational theory.
Major models and approaches are:
Adaptive leadership and appreciative leadership
Many leaders and managers have his or her own style. Some common styles are:
Autocratic, Bureaucratic, Democratic, and Laissez-faire.
There is a difference between theories and leadership models that leadership theory is an explanation of some aspect of leadership, these are used to better understand and control successful leadership and leadership model is an example for use in a given situation.
Each one has strengths and weaknesses, and each one has its appropriate uses.
Here I am selected two current management and leadership theories which are Transactional leadership and Transformational Leadership. Transactional and transformational leadership has been of great interest to many researchers in the current era. Adopting either transformational and transactional leadership behaviour helps in the success of the organization (Laohavichien et al., 2009). This might be the reason that different authors of the recent past considered transactional and transformational leadership as predicating variables and investigated their relatedness with other criterion variables. Both transformational leadership and transactional leadership help in predicting subordinates’ satisfaction with their leaders (Bennett, 2009)
Transformational leadership theory has captured the interest of many researchers in the field of organizational leadership over the past three decades. This theory was developed by Burns (1978) and later enhanced by Bass (1985, 1998) and others (Avolio & Bass, 1988; Bass & Avolio, 1994; Bennis & Nanus, 1985; Tichy & Devanna, 1986). The major premise of the transformational leadership theory is the leader’s ability to motivate the follower to accomplish more than what the follower planned to accomplish (Krishnan, 2005). Transformational leadership has four components: idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration (Bass, 1985). Burns postulated that transformational leaders inspire followers to accomplish more by concentrating on the follower’s values and helping the follower align these values with the values of the organization. Research has also shown that transformational leadership impacts employee commitment to organizational change (Yu, Leithwood, & Jantzi, 2002) and organizational conditions (Lam, Wei, Pan, & Chan, 2002). Due to its impact on organizational outcomes, transformational leadership is needed in all organizations (Tucker & Russell, 2004). Transformational leadership identifying and developing core values and unifying purpose, developing leadership and effective followership, utilizing interaction-focused organizational design, and building interconnectedness” (Hickman, 1997, p. 2). Transformational leaders work to bring about human and economic transformation. Within the organization they generate visions, missions, goals, and a culture that contributes to the ability of individuals, groups, and the organization to “practice its values and serve its purpose” (Hickman, 1997, p. 9). These leaders are reliable leaders who generate commitment from followers which results in a sense of shared purpose (Waddock & Post, 1991). The leader’s ability to inspire, motivate, and foster commitment to a shared purpose is crucial (Bass, Waldman et al., 1987). According to Bass and Avolio, transformational leaders display behaviours associated with five transformational styles wich are attached in table 4.
According to Schein (1985, 1995), the leader’s beliefs, values, and assumptions shape the culture of the organization and these beliefs, values, and assumptions are then taught to other members of the organization. Schein also stated that leaders have the power to embed organizational culture through various methods such as mentoring, role modeling, and teaching. Bass and Avolio (1993).
Transformational leadership has four components: idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration (Bass, 1985) which involves motivating people, establishing a foundation for leadership authority and integrity, and inspiring a shared vision of the future (Tracey & Hinkin, 1998). Idealized influence and inspirational motivation are connected with the leader’s ability to formulate and articulate a shared vision (Dionne, Yammarino, Atwater, & Spangler, 2004).
Transformational leadership creates a desire for people to work as a team, in an enjoyable and non-threatening culture, yet always with an expectation of excellence. It creates a 'How To' approach to problem solving and development of new concepts, it allows for early warnings of imminent threats and weaknesses in the organization and strongly encourages celebration of strengths and aggressive pursuit of suitably qualified opportunities. Transformational Leadership is demonstrated from the highest level in the organization, and rewarded all the way through the management layers. It is charismatic, passionate and inspirational and attracts the very best candidates for available roles. Everyone in the organization clearly understands the culture, goals and expectations of the organization.
Transactional leadership is cantered on leader follower exchanges. Followers perform according to the will and direction of the leaders and leaders positively reward the efforts. The baseline is reward which can be negative like punitive action, if followers fail to comply with or it can be positive like praise and recognition, if subordinates comply with the intent and direction settled by a leader and achieve the given objectives. Four core facets of transactional leadership as described by Schermerhorn et al., (2000) are contingent rewards, active management by exception, and passive management by exception.
Example of Bill Gates and Steve Jobs Leadership Styles:
Bill Gates is a businessman, and chairman of Microsoft, the software company he founded with Paul Allen. Gates is one of the best known entrepreneurs of personal computer revolution.
Steve jobs business magnate and inventor. He is well-known for being the co-founder and chief executive officer of Apple. Both have Transformational leadership style but both transformation styles have different impact on business in same industry.
Bill Gates and Steve Jobs Leadership style:
Bill Gate’s leadership is participative style because he involves his subordinate in decision making. He is a flexible person and he recognized his role was to be visionary of the company. Whenever needed he bring professional manager for managing and well structure of the organization? Gates is a strong and energizing person his enthusiasm, hardworking
nature, judgment skills reflect his personality. His motivating power and involving his friends to working with him became the success of Microsoft. On the other hand, Steve Job’s leadership is autocratic style, because he centralizes the authority, he never given a chance to subordinate to involving decision making. He thinks that whatever he do is right. His
relation with employees not good, he fails to motivate his employees in many times. Sometimes he acts as anti-Gates, and sometimes request Microsoft to develop software for his computer. His cocky attitude and lack of management skills became a threat of APPLE’S success.
Bill Gates and Steve Jobs both gave their heart & souls to developing their vision to develop personal computer, but the way they choose was different from other. Bill gates develop computer language new Altair 8080 pc which became the foundation of Microsoft. Bill continuously develops two other computer languages. When IBM develops their first pc and which need operating system to run the computer, Microsoft develops MS-DOS for IBM.
Gates adopting the changes very fast that are his enthusiasm vision and hardworking give him the success. Gates always recognized him as a visionary he always recognize professional management, he decentralize authority to make organization structure better.
On the other hand Steve Jobs started apple computer which is hard ware making company. His vision to develop computer with affordable cost and easy to use. When Bill offer the basic to jobs then he rejected jobs proposal and try to develop their own basic without knowledge of programming, he fail and accept license with Microsoft basic. Jobs play duel personality sometimes he oppose Microsoft sometimes request Microsoft to develop software for their operating system. Jobs force people to choose between Microsoft-IBM operating system and his MAC-operating system. Lack of proper management skills and relation
with employees became a barrier of APPLE’s growth.
Impact of Management and leadership theories on organizational strategy.
With the success of windows, Office Application and Internet explorer Microsoft became a house hold name and Bill gates became as business genius. Bill Gates adopting the changes very fast his innovative mind all time busy to developing products. Recent Microsoft develops a number of products like smartphone with loaded Microsoft window.
On the other hand APPLE goes wrong direction in 1990s. Because Steve Jobs is very slow to adopting changes that’s the main reason falling the market share. When Jobs realize changes is the only way to survive the market then apple develops innovative iMac which is internet friendly & stylist computer. After sometime Apple gains market. With the iPhone,
Apple TV, and name charges job & co are setting a new course for the outfit
once knows only for its computer.
The new name and device represent APPLE’s strategic shift away from its
origins as a personal computing company that has at point struggled both survive and to set the computing world’s agenda.
2.2 Leadership strategy that supports organizational direction:
Transformational leaders also help in the acceptance of organizational change (Bommer et al., 2004) Transactional leadership style provides high satisfaction and organizational identification. (Wu, 2009; Epitropaki and Martin, 2005). Transformational and transactional leadership strategy support organizational direction in term of efficiency, reliability, innovation and adaptation, turnaround leadership etc.
In apple company Transformational leadership more effective at creating and sharing knowledge at the individual and group levels, while transactional leadership is more effective at exploiting knowledge at the organizational level.
Computers are an important investment and in today's economy, more than ever, it's important for consumers to know the reliability of the product they are purchasing. Apple reliability report, Rescuecom revealed that Apple scored the highest with 700 points, with Panasonic following in on its footsteps with a score of 489. In a descending manner, Lenovo, Toshiba, and HP were listed with scores cumulating 393, 299, and 184 points, respectively.
Steve Jobs focuses Apple innovation on competitive pressures and value propositions. It’s basic to his DNA and core to his management style to relentlessly focus organizational energy on customer cantered innovation and customer experience. In a nutshell Apple’s innovation “secret” (if it can be called that) is the relentless pursuit of innovation around the customer experience. As early as 2002 Steve Jobs told the world what his competitive strategy was, and it is clear that as CEO he was carefully evaluating competitive pressures and opportunities in the marketplace:
For those paying attention after Jobs’ return, the CEO was telegraphing Apple’s trajectory. “I would rather compete with Sony than compete in another product category with Microsoft… We’re the only company that owns the whole widget–, the hardware, the software, and the operating system. We can take full responsibility for the user experience. We can do things the other guys can’t do.” (Comments to Time in early 2002).
Lashinsky, Adam, “The Decade of Steve – How Apple’s imperious, brilliant CEO transformed American Business,” Fortune Magazine, pg. 96. November 23, 2009.
Just after the Y2K scare, while the world was buzzing about the tech bubble burst; speculating about Apple’s survival with Steve Jobs return; watching the AMD and Intel Chip wars heat up–, Apple strategically avoided a battle with its “logical” arch-rival Microsoft. Instead Steve Jobs made a conscious decision to “take his marbles” and play a completely different game.
Rather than taking a weak company that was struggling to stay afloat and challenge the dominant market maker Steve Jobs defined the Apple innovation strategy to focus on the integration of technology and entertainment. Apple’s core competence at the time was in PCs and Laptops, but as Jobs said, they were the only vendor that did it all, hardware, software, and operating system. He took that same approach with music, helping to develop the ecosystem to support the IPod and to transform digital music distribution through ITunes and the online purchase of songs.
The PC wasn’t new, but Jobs’ leadership and his approach to customer centred innovation was. The music player wasn’t new, but the IPod certainly was, and it was focused like a laser on the end of Sony Walkman dominance. Selling music “singles” wasn’t new, but Jobs’ focused Apple’s innovation on the ITunes store together with the widespread use of the IPod. He created the device to play the music and he created the channel to distribute the music. The cell phone wasn’t new, and while Blackberry and Nokia owned the market, the IPhone focused like a laser on innovative customer experience.
Steve Jobs as the Apple CEO has become quite skilled at setting strategic direction along a future timeline. As the calculus of the recent attack on Microsoft’s new Windows 7 operating system shows Steve Jobs is also very adept and skilled at holding back to determine the right timing to attack a market. Steve Jobs as Apple’s CEO understands competitive pressures and value propositions. Steve Jobs gets it, plain and simple he understands that the primary role of the CEO is to set strategic direction and long term goals. He understands the real reason executive participation creates project success.
Market segmentation strategy:
Under Steve leadership Apple made Market segmentation strategy that enabling a company to drive complete, unified product solutions that are harmonious with messaging, customer outreach, and channel strategies for selling and supporting customers.
In this regard, Apple's product strategy is a study in market segmentation. Versus merely trying to stuff a product, burrito-style, with as many different features as possible, they target specific user experiences, and build the product around that accordingly.
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