Example Research Essay On Leadership In Contemporary Organizations

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Carly Fiorina rose quickly through the ranks of AT&T and Lucent Technologies to become the most powerful businesswoman in the United States when she took the helm at Hewlett Packard in 1999. She became the first woman to lead a Fortune 20 company and was No. 10 on the Forbes magazine's list of The World's 100 Most Powerful Women for 2004. However, she was abruptly fired by Hewlett Packard in 2005.

What are the factors that contributed to Carly Fiorina's meteoric rise?

Carly Fiorina became the first woman to lead a Fortune 20 company and this ranking was based on the importance of a woman's business in the global economy, her clout in the company, arc of her career and her influence on mass culture and society. Quickly rising through the ranks of AT&T and Lucent Technologies, Carly Fiorina became one of the most powerful businesswomen in the United States. She was the group president of Global Service Provider business at Lucent Technologies Inc and was Mr Rich McGinn's choice to be the executive vice president of corporate operations of the company. She had excellent sales skills and an ability to build consensus. She would take a lot of risks. Carly Fiorina was known for being "comfortable in uncomfortable situations". (14-28) (http://www.businessweek.com/1999/99_31/b3640001.htm). She used the opportunity in AT & T and jumped to the Network Systems group and did amazingly well there. This was all because she was able to recognize the telephone equipment manufacturing business unit's potential for a growth in the markets. She added a personal touch that inspired intense loyalty among followers. She would praise the employees who achieved big contracts publicly by giving them flowers and balloons. This was not confined to business; she even helped sick family members of the Lucent Technologies employees get emotional support, medical advice and doctors on time. (14-28). She had a savvy approach to customers and there were instances when she achieved daring goals in a time span less than the targeted ones (14-28). In order to initiate a transformation in HP, someone was required. (14-29) So the executive-search committee established a set of criteria and she fulfilled four of them already which included an ability to formulate and communicate broad strategies, a deep knowledge of operations, a talent for creating a sense of urgency around change, ability to craft a compelling vision of HP's roles in the Internet economy, then communicate that vision throughout the organization. She took over as the CEO of Hewlett Packard in 1999. She had a strong ally in HP board member Richard Hackborn. Both believed that HP had to be reinvented. He fought hard for her appointment. To HP, she brought leadership and savvy marketing and sales techniques. Her understanding that what the customers ask for is not always the same as what they need was one of her strengths. When she entered HP, she knew that a lot of changes were required in the company. She had a vision and was not afraid of telling it to the world. She had a self-confidence that she only has the power and responsibility to do what she wanted with her life (p 14-27) and also knew the importance of facing up to your own feelings and stating what is on your mind. (p 14-27) She stayed away from the HP way and brought in a different leadership style and charisma. Her meteoric rise was also caused because of marketing and customer-relations savvy, her personal charisma which included features such as ability to laugh easily, direct gaze and her willingness to speak her mind and most importantly, her talent for making this happen quickly. (Ancona, Kochan, Scully, Van Maanen, Westney)(2005, p14-26) According to Fiorina, the quicker and clearer the truth about what needs to be done is realized and what is acceptable performance is clearly defined, the more effective a leader you would be. (14-27).This, she learnt from her parents and she believed that she gained strength from them. She believed in making changes at a real fast pace and according to the changes in the market. She made a strong emphasis on the creative use of communication. "Effective leadership requires an understanding that you don't own people, that you can't control people. They must want to, they must choose to be in the company of others, oriented towards a particular mission. That means. A great deal of communication; it means using communication vehicles really creatively." (14-31) cite it differently here)

What factors drove them to their spectacular fall?

Carly Fiorina made changes to HP's culture. This was against what was being practiced all the way long. HP had been found by two engineers and its management methods had been praised over time (14-29) as the company had set the standards by which other high-tech firms were judged. With the legendary success and reputation, HP was not keen in remaking the culture of the company. She made changes to the vision of the company as well by changing it from a company providing stand-alone products to a company that offered customers an integrated suite of information appliances, highly reliable IT infrastructure and e-services. In order to balance the changes in vision and strategy, she had to make changes in the organizational structure too. So she realigned it (14-30). She marketed HP's new identity as well. (14-31). She had never worked for HP before and unlike the company's founders, she was a marketer not an engineer. Her expertise was not in operations, it was in sales and marketing. Her critics believed that Carly was a rude outsider who was not following HP's established practices. She emphasized speed and suggested the merger between Compaq and HP. Some people felt that she was trying to do too much too soon (14-32). She had not been able to convince Walter Hewlett, a board member and son of co-founder of HP, the advantages of this merging and despite his disagreement she managed to get it implemented. This merging meant cutting down 15000 jobs and reorganizing the structure into four large units. Being a female, there was an issue of gender bias. It is very difficult for a powerful and influential woman to survive in a corporate world which is dominated by women. Another important reason for her downfall is that she centralized the decision making process. It was a decentralized process earlier and some of the insiders wanted more of explicit reasoning behind her decisions. She had message boards for communicating with workers but this was considered an act of being distant and out of touch. Despite Carly Fiorina's stellar track record of success- and popularity- when it came time to lead the giant engine of Hewlett-Packard, she displayed an errant overconfidence in her ability to run the train solo. (page 90 google books). Other members were needed too. But she never realized it. Once, she was photographed before a mock-up of the garage where in the HP founders had begun the business, she was accused of trying to connect herself to a legacy to which she had not contributed (14-31).These issues were all turning her employees and others against her or having doubts about her in their minds.

Implications for leadership ethics that can be drawn from the experience of Carly Fiorina:

Leadership ethics deals with fair practices with regards to management and it is powered via strong principles and values. Ethical leaders function as moral persons, behaving morally in their leadership roles and seen as honest and caring individuals with fair decision making skills. Ethical leaders must promote ethical conduct in followers. They create positive ethical climates (Johnson, 2007). Job security is important for every employee. Carly Fiorina encouraged her managers to fire the poorly working employees. Her merging HP and Compaq led to around 15000 people losing their jobs. This was unethical. After stepping in as a CEO, she prioritized financial performance to the employee satisfaction and growth. In one of her meetings she said, "Let me make something very clear. You will make your numbers. There will be no excuses. And if you can't make your numbers, I will find someone who can" (Burrows, 2003, p. 141). She kept good connections with employees who performed well by recognizing their achievements. Carly Fiorina offered support and care to her employee's sick relative. She was unable to maintain good relations with the company's founder's children. They were upset about the idea of merging between HP and Compaq. They stated that they would vote their shares but Carly Fiorina reacted in a fierce way by press releases and advertisements against them. Channel stuffing was taking place in HP soon where in the employees tried offering incentives to the customers in order to sell their products in a greater quantity. Carly Fiorina did not encourage or discourage it. Analysts, who had long looked to HP as a model of integrity, began to question HP's quarterly reports (Elgin et al., 2005). Compassion, humility and integrity were lacking in her. So she is an ethically neutral leader.(Trevino et al., 2000).

What leadership lessons can you learn so that you will be a better leader?

Firstly, the leader must possess the appropriate skills required by that job position, in this case, operational skills. A leader's success or failure depends pretty much on moral reasoning as it does on strategic thinking (Paine, 1996). The leader must also possess virtues such as integrity, compassion and humility. One of the mistakes committed by Carly Fiorina is the drastic change which she tried to bring about in the company in a very short stretch of time. Her vision was for the company's benefit but her strategies were not implemented with the consent of all members of the board. Also, before making a huge change to the cultural organization of the company, plans must be well- thought of. Emphasizing on speed, every decision was taken in a hurry. Decentralized decision making had been followed traditionally; suddenly translating this to a centralized approach did not really work out. This should have been thought of. The employees should be convinced to have faith in the company as well as their superiors. This leads to a sense of trust by the employees on their superior and also a team spirit. Job security should be provided. They should be recognized depending on their performance level. A company is enhanced by its motivated employees and managers and a huge company like HP requires many workers. It is not a good idea to strip them off their jobs because of company merging. Before thinking of strategies, the company background must be studied well and so should its performance levels, profits, loss and economic data. Leaders must take risks after considering market conditions and the company's capacity to withhold it. Ethics are not to be forgotten. Consumers are important and products must be invented according to the needs of the customer. The company's profit sharing plan followed earlier was better than the one introduced by Carly Fiorina where in all employees received bonuses if the company achieved its desired targets. The board of members must be more active, supervise the role of the CEO and see to it that ethical practices are alone conducted.

Dick Fuld rose from a lowly bond trader in Lehman Brothers to become its CEO in 1994. In 2006, Institutional Investor magazine named him America's top Chief Executive. In 2008, Fuld was named to Barrons' list of the world's thirty best CEOs and dubbed "Mr Wall Street." Yet, in 2008 Lehman declared bankrupt and the American Congress summoned Fuld to Washington for a deeply humiliating inquisition. "You're the villain today," one Congressman told him.

What are the factors that contributed to Dick Fuld's meteoric rise?

Dick Fuld started his successful career at Lehman Brothers in 1969. He was nicknamed 'Gorilla' because of his aggressive nature and tremendous inner and mental strength. Owing to his intense, smart nature, having an impressive education, served in the military, occupied a number of service positions professional boards, he was thought of as "When he walks into a room, its electric. He's electric."(5) http://books.google.com/books?id=t2JexBk5PXQC&pg=PA77&dq=dick+fuld&hl=en&ei=UccLTdS1EoTmrAfwkdmPDA&sa=X&oi=book_result&ct=result&resnum=2&ved=0CCgQ6AEwAQ#v=onepage&q=dick%20fuld&f=false "He exuded hostility," explained Ken Auletta, media critic for New Yorker magazine. But Fuld became a favorite at the company and also played a part in keeping Lehman's name intact." (3) Under Fuld's leadership, Lehman achieved great heights. His commitment to the success of Lehman Brothers and its shareholders was sincere. "As long as I am alive this firm will never be sold." Fuld told Wall street journal. And if it is sold after I die, I will reach back from the grave and prevent it."(8) http://www.director.co.uk/ONLINE/2010/11_10_dick-fuld-how-they-blew-it-lehman.html says:

The media painted Lehman as one big happy family, with all staff sharing in the success of the others. Yet in the hard-nosed world of investment banking this is rarely the case, and it was not the case with Lehman Brothers. The Lehman Brothers staffs were not doing too badly either. The staff received a disproportionately high percentage of their pay in Lehman stock and options.

The firm earned a reputation for its stellar management through three primary accomplishments: First, the company kept employees' salaries in line with earnings, with the ratio of compensation costs to gross revenues hovering around 51 percent. Second, Lehman maintained a strong focus on U.S. government bonds, global fixed income, and credit derivatives at a time when the equities and investment banking markets were losing propositions. Finally, the firm retained its best managers by handing them substantial portions of stock in the firm. In 1994 employees owned 4 percent of Lehman; by 2004 they owned 35 percent.

(http://www.referenceforbusiness.com/biography/F-L/Fuld-Richard-S-Jr-1946.html)

What factors drove them to their spectacular fall?

All cannot stay at the top and you need more than brute strength. Dick Fuld lacked patience and finesse which was very much required for his role. His major error was a mistake which many leaders do: he underestimated his rivals and overestimated his own strength. His stubborn and arrogant nature overpowered him and he ended up displaying confusion and ambiguity about how to address the credit crisis. However, the two main reasons to which his downfall can be attributed are: he failed to size up his opponent and refused to quit fighting. This blinded him from seeing any potential downfall or any signs of weakness in himself or Lehman.

http://money.cnn.com/2010/08/24/news/companies/dick_fuld_exile.fortune/index.htm says: In public, Fuld has tried to minimize what he cadged from Lehman. But the truth about Fuld's take seems to be much larger, and suggests that not only did Fuld receive compensation in excess of what Waxman suggested but that he also took out in cash more than $500 million. He was manipulating information and lying and nobody in the company was able to notice this.

http://www.director.co.uk/ONLINE/2010/11_10_dick-fuld-how-they-blew-it-lehman.html:In the quest for greater profits, more risks were taken and little heed was given to those brave enough to advise caution. In fact caution was not a word often heard at Lehman Brothers. The unbridled greed would lead to dramatic consequences.

There was too much of greed rising. A few, who could realize that something bad might happen, advised and warned. But this was to no avail.

Fuld was buying many firms as his trick was to repackage mortgage loans into bonds. With an increase in the strength of the housing market, the idea or strategy was looking promising. The company reported record earnings. Lehman's shareholders reaped a 17-fold increase. But everything had been built on quicksand: dodgy mortgages that could never and would never be repaid.

The most fascinating insight into Fuld comes from Andrew Gowers, a former editor of the London Financial Times, who in June 2006 joined Lehman Brothers in London as head of corporate communications. In a remarkable account of the final days of Lehman Brothers, published in the Sunday Times on 14 December 2008, Gowers cast a light on the culture of Lehman Brothers and the psyche of its boss. "To say he was surrounded with a cult of personality would be an understatement," said Gowers.

He called Fuld "almost unbearably intense", and said he inspired great loyalty and fear. "Those closest to him slaved like courtiers to a medieval monarch," Gowers said, "second-guessing his moods and predilections, fretting over minute details of his schedule down to the flower arrangements and insulating him from trouble-from almost anything he might not want to hear." How does a CEO run a business hearing only good news?

This was Fuld;s fault. There was slightly any chance where in anyone could or would challenge him. And while this might not have mattered in the 55 quarters of unbroken profit, Gowers said it bred "a fatal complacency". Basically, no one would like to be bossed over and be treated like a slave.

Fuld was getting a hint that trouble might loom around him soon. During a press briefing at the World Economic Forum, in the Swiss mountain resort of Davos, he told assembled newspaper editors "this could be the year when the markets crack'. If only he had trusted his own intuition. Fuld mentioned potential trouble in the US housing market, the problem of the excesses of leveraged finance and the danger of spiralling oil prices-and the explosive combination of all three. His statement to the editors comprised that the company was to be alert for some time and not invest too much. But others believed that the operational authority of the firm had been handed over by Fuld to a long standing associate called Joe Gregory. Now, this was not considered to be a good idea because Gregory was not a risk manager.

Gregory was actively urging divisional managers to place even more aggressive bets in surging asset markets such as the mortgage business and commercial real estate. In one Lehman-led deal in June 2007, it bid $15bn for America's biggest apartment company-a deal signed off by the entire executive committee and subsequently described as "the worst investment Lehman ever made".

The deal was known to be highly risky and ultimately collapse. But the board simply had no other options. Gowers characterized the corporate governance structure at Lehman as almost pre-programmed to fail: an overmighty CEO, a top lieutenant eager to please and hungry for risk, an executive team not noted for healthy debate and a power struggle between two key players. Furthermore, the board of directors was packed with non-executives of a certain age and woefully lacking in banking expertise. It was a toxic combination. The man in the middle was Dick Fuld.

Implications for leadership ethics that can be drawn from the experience of Dick Fuld:

Dick Fuld had wished to be an air force pilot but stopped thinking about it after he got into a fist fight with a commanding officer. Some say he did this in defense, protecting a younger cadet who was being mistreated. This shows his inability to tolerate injustice happening to others. Dick Fuld was well aware of the wealth he inflicted on others, but stubbornly ignorant to what might happen if he made a wrong move. (books.google.com) Fuld was a fighter for the underdog. He was a company man and not selfish. He was sincere in his commitment. He was not a quitter. It was a matter of pride for him when the company became bankrupt. There were many humiliating inquisitions taking place. But just because a force which was larger than his own had been bullying him, he wanted to fight till then end.

(http://www.director.co.uk/ONLINE/2010/11_10_dick-fuld-how-they-blew-it-lehman.html)in Ken Auletta's 1987 book Greed and Glory on Wall Street, Dick Fuld is described as "someone who spent so much time in front of his green screen or making rat-tat-tat decisions that he was no longer human". Fuld was big on references to warfare, seeing Lehman Brothers somehow as being at war with the competition. "Every day is a battle," he said, adding that staff should always "think about the firm, do the right thing, protect your client, protect the firm, be in it, be a good team member". As if to back this up, Fuld ended the practice of casual dress at Lehman Brothers. "If you dress sloppy, you think sloppy," he said, and he was particularly pleased one time when a journalist remarked that he could spot Lehman Brothers employees by their attire. The women dressed conservatively and the men almost exclusively in white or blue shirts and ties. The employees were the troops, in their uniforms, and Fuld was the leader.

He was still trying to implement military practices in Lehmen too. He wanted discipline and orders to be followed. The most fascinating insight into Fuld comes from Andrew Gowers, a former editor of the London Financial Times, who in June 2006 joined Lehman Brothers in London as head of corporate communications. Gowers cast a light on the culture of Lehman Brothers and the psyche of its boss. "To say he was surrounded with a cult of personality would be an understatement."

He called Fuld "almost unbearably intense", and said he inspired great loyalty and fear. "Those closest to him slaved like courtiers to a medieval monarch," Gowers said, "second-guessing his moods and predilections, fretting over minute details of his schedule down to the flower arrangements and insulating him from trouble-from almost anything he might not want to hear." How does a CEO run a business hearing only good news?

This culture would be Fuld's undoing. It meant that no one would, or could, challenge him. And while this might not have mattered in the 55 quarters of unbroken profit, Gowers said it bred "a fatal complacency".

http://money.cnn.com/2010/08/24/news/companies/dick_fuld_exile.fortune/index.htm says: In public Fuld has tried to minimize what he cadged from Lehman. Last year a team of researchers at Harvard Law School released a study that found that, between 2000 and 2007, Fuld cashed in Lehman shares worth $461 million and received cash bonuses of $61.6 million.

Another former Lehman executive thinks Fuld is misunderstood. "Dick is a very good person," he says. "He is a very good human being. I have watched him grow. The portrayals of him are so different than the way he is."

What leadership lessons can you learn so that you will be a better leader?

Weakness is strength unharnessed and strength is weakness well harnessed.

http://books.google.com/books?id=t2JexBk5PXQC&pg=PA77&dq=dick+fuld&hl=en&ei=UccLTdS1EoTmrAfwkdmPDA&sa=X&oi=book_result&ct=result&resnum=2&ved=0CCgQ6AEwAQ#v=onepage&q=dick%20fuld&f=false:

First pride, then the crash- the bigger the ego, the harder the fall. - Solomon

Derailed leaders seem to lack awareness of and concern for others. This type of insight informs us as to the needs, desires, hopes, and moods of others that we might respond appropriately. It involves empathy, consideration, and general attentiveness to the interests of others. It deals with understanding and humility.

Signals should not be ignored. A focus on obtaining the desired goal should not fail to make you see the signals of trouble. Board members, media and colleagues should not be ignored. Their words provide the signal which should be carefully paid attention to.

The leader must understand his style as well as the situation.

A leader's skill at communicating is highly important during times of crisis and changes (page 291- text) At such times, leaders should stay calm and listen harder as the leaders set an example to their team, they should be visible; people should be assured that their leader is with them, otherwise this has a negative impact on them. The leader should speak the truth and at the same time, control rumors. Finally, the leader should communicate a vision for the future, that is the people must have something worth awhile to look forward to. (292)

Also, there should be no fear of the leader. This makes people lose their power, have a low level of confidence, commitment and motivation. This way, problems are hidden, employees are scared of speaking up. This can include issues such as poor working coworkers, benefits or suggestions for the improvement of the organization. Leaders can act from love rather than fear to free employees and the organization from the chains of the past.(146-147)

Fear- based motivation: I need a job to pay for my basic needs. You give me a job, and I will give you just enough to keep my job.

Love- based motivation: If the job and the leader make me feel valued as a person and provide a sense of meaning and contribution to the community at large (fulfilling higher needs of heart, mind and body), then I will give you all I have to offer. (pg 149)

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