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If an organisation is looking to achieve its corporate goals, then addressing its leadership culture is perhaps the best place to start. This traditionally means starting at the top of the organisation with those who can most greatly influence and shape culture.
Increasing leadership effectiveness at both the corporate and individual level is that enduring, impactful leadership within organisations must start at the top and become part of an organisation's culture. The best leadership development initiatives at the individual level will not benefit the organisation long-term, if the organisation cannot provide the supporting organisational culture, including structures, process and systems necessary for individual leadership to develop within a corporation.
Mullins concludes that 'it will be important to develop skills in empowering leadership, innovation, communication, aligning performance for success and strategic decision making'. (Mullins: 2005)
Developing a culture of innovation and productivity requires a leader with a vision to understand the market dynamics and to move people in the organisation to change. Once the vision is set, leaders have to join in to get the organisation where it needs to be.
Organisational culture is the foundation which outlines how work is done in an organisation; this is established through goals, plans, measures and rewards. Aligning organisational culture with strategy is a powerful means of gaining competitive advantage and leadership.
The senior executive team, has requested a report on the process carried out by the human resources in recruiting and selecting future leaders, who can create and lead the appropriate organisational culture together with the development and management of new products according to the organisation changing needs. All this is to support the achievement of the organisation corporate goals.
Research has been devoted to understand the relations and association between leadership and culture of the organisational theory and how these concepts might have an impact on the organisational performance.
The aim of this report is to give practical evidence of the links between organisational culture, leadership style and product development. This is achieved through research from books, journals and internet. The study shows that the relationship between leadership style and performance is interceded by the nature of organisational culture.
3.0 Recruiting and selecting future Leaders
Recruitment is an essential role of the human resource personnel. An effective recruitment function will assist the level of performance in the organisation.
Strategies for recruitment are developed and followed by organisations to engage the best people for their organisation and to make use of their resources optimally. A recruitment strategy should be well designed and useful to attract the most knowledgeable candidates to apply in the organisation.
Recruitment processes involves a logical process from selecting the candidates to arranging and preparing for the interviews. This requires resources and time. The recruitment process starts when a manger instigates an employee request for a specific or an anticipated vacancy.
According to Flippo, (1984) "Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation". Beach (1975), states that, "Recruitment is the development and maintenance of adequate manpower resources".
3.1 The Recruitment Process
The following processes are needed for a recruitment to be successful:
To have in place a recruitment policy together with functional systems that give existence to the policy.
An assessment is needed to establish the organisation's present and future human resource requirements. For this activity to be effective these requirements must be assessed and a priority is assigned for each job category and for each unit and or division of the organisation
Identifying the potential human resource team and the likely competition for the knowledge and skills available within the organisation.
Carrying out a job evaluation and job analysis to classify the individual aspects of each job and calculate its relative value.
Assessment of qualifications profiles, drawn from job descriptions that identify responsibilities and required skills, abilities, knowledge and experience.
The power of the organisation's capability to pay salaries and benefits within a specified period.
The actual process of recruitment and selection to be identified and documented as to ensure fairness and loyalty to equal opportunity and other law.
This is a very delicate area within the business - it was recommended to get information on the recruitment process from a financial institution. This exercise was done to evaluate a 'real' recruitment process. Therefore, a one to one meeting was organised with the Human Resources Manager of APS Bank Ltd - Malta. An analysis of the processes used was carried out and the most important elements were identified. Â The outcome of this meeting is detailed in 'Appendix A'.Â Â
3.2 Recruiting future leaders
Leaders are the solution to the success of any organisation. Selecting future leaders is a very important process within an organization as one has to make sure that the leadership recruitment process is right. Handy (1999) states that, "leaders are needed at all levels and in all situations"
What are the best qualities in future leaders to look for?
The qualities to look for in a good leader are: aptitude, confidence, honesty, dedication, imagination, willpower, intelligence, emotional toughness and emotional resonance, adaptability, Through the recruitment process, it is possible to evaluate candidates for these qualities as they go from resumed screening to interviewing.
3.2.1 Looking for leadership qualities
Aptitude. A leader needs good aptitude in order to understand his mission and help others to understand it. Intelligence is the easiest quality of leadership. This can be measured by previous academic performance.
Confidence. A leader should be confident in what he performs. Does the manager who is being recruited believe in the organisation? Confidence has to be established in the actual situation. If we simply ask a person about the level of confidence, he or she may misinform us by replying what we want from them. Sometimes, one can justify the person's personality from his manners and behaviour.
Honesty. A leader should be an honest person. If this is lacking, he or she cannot be trusted. This quality is very difficult to judge during recruitment, but there are some indications to reflect on: During the multiple interviews, is the candidate constant in their discussions or replying depending on the interviewer? On a more positive note, are there indications in the candidate's background that they take honesty seriously?
Dedication. A leader should show dedication to what he is doing, and is capable to convince others to make commitments. Here is where past involvement can be analyised: Are there any long-term commitments done by the candidate such as charities, hobbies, or activities? Did the candidate perform leadership role in any of these tasks?
Imagination. For the accomplishment of a mission, a good leader must have a good sense of imagination to resolve problems and change directions where needed. Since imagination is not easy to ascertain, formal tests and puzzles exists, these will give an overview about the thinking skills of a person and his or her approach to challenges. The applicant's work and school records may confirm.
Will Power The model leader should take decisions both timely and acceptably. Does the candidate take decisions quickly? Or are all decisions difficult to take? This is difficult to measure, although this can be measured during the probation period.
Emotional toughness and resonance. A leader should be firm and have guts to face difficulties. This is referred to as emotional toughness. An applicant for a managerial role can be asked when he or she showed courage and the evidence of emotional toughness. Simultaneously, a leader should be able to comprehend and understand the feelings of others; this quality is referred to as emotional resonance. The leader should know when his subordinates are frightened in hard times and satisfied in good times. When necessary, the leader should be able to measure inappropriate feelings. Emotional resonance cannot be calculated, however, it can be noticed in a planned setting.
Adaptability. A leader should be adaptable so that to handle changing needs easily. Adaptability can be evaluated in many different ways. Was the candidate in an agreement to losing his or her job or to other important changes in their life? Did the applicant manage an organisational change in the past? Where there any changes in the recruitment process? What was the candidate reaction to these changes?
Quinn Mills (2007) states that "it makes sense to look for these qualities not only when an organization is recruiting for future leadership, but also when it is assessing its management team for leadership development". "Few candidates or managers will possess all of these qualities naturally, but many of them can be developed and enhanced through training, experience on the job, and exposure to new challenges".
4.0 Leadership and organisational culture.
The key role of strategic leaders is to retain and create the appropriate organisational culture that rewards and encourages collective effort. What is actually meant by organisational culture? What effect does it have on the organisation? What is the role of the leader to build, influence or change the organisation's culture and finally to achieve the desired corporate goals?
Organisational culture is a group of values, beliefs and behavior patterns that distinguish an organisation from another. It also helps to determine its member's behavior. This is described by Deal and Kennedy (1982) "as a set of values that underlie how we do our things around here"
Culture is very important in an organization, why? Edgar Schein (1985), suggests that an organisation's culture develops to help it cope with its environment. Nowadays, organisational leaders are faced with complex issues during their challenge to reach the organisational goals. For a leader to be successful, this depends upon his or her understanding to the organisational culture.
Schein argues that leaders are facing problems which can be traced to their inability to evaluate organisational cultures. If leaders are inconsistent with the organisation's culture, their strategies will fail when trying to apply new strategic plan to achieve the corporate goals.
The creation of the appropriate culture occurs if leaders correctly study the organisation's present culture and assess it against the cultural quality needed to achieve strategic goals. Therefore, leaders must first identify and take the necessary measures to reach the organisation objectives. These two objectives alone are difficult, especially for the financial services sector that are experiencing changes rapidly.
The leader's role is to conduct a study of the organisation's, ideologies, values and norms. Leaders should ask two important questions:
(1) Are the present relationships, beliefs and behaviors applicable to the organisation's achievement of corporate objectives?
(2) Are organisational members facing doubt about the present work processes and the external environment that can only be explained clearly by the organisation leaders?
Bass (1985) explains the relationship between leadership and culture by studying the effect of different styles of leadership on culture. He observes that "transactional leaders tend to operate within the confines and limits of the existing culture, while transformational leaders frequently work towards changing the organisation's culture in line with their vision". Likewise, Brown (1992) comments that, "good leaders need to develop the skills that enable them to alter aspects of their culture in order to improve their organisational performance".
4.1 The commitment of a leader in the Organisation
Muthuveloo and Rose (2005) stats that, "an organisational commitment is the motivation of employees to accept the goals and values of the organisation, and to work towards the achievement of these corporate goals. A committed leader of an organisation is the one who has consolidated the values and goals of the organisation and is willing to participate fully in all that the organisation does towards the achievement of its stated goals".
Herscovitch and Meyer (2002) also see it as a degree to which a leader identifies the corporate goals of the organisation, and is prepared to help the organisation to achieve these goals by putting all his efforts.
Meyer and Allen (1991) recognised three different types of commitments; affective, normative, and continuance. In today's business word the most significant commitment for the right leader is the affective commitment. Affective commitment is:
the trust and the recognition of the organisation's values and goals.
a motivation to focus effort on helping the organisation to achieve its goals, and
a need to maintain membership in the organisation.
An appropriate way for the leader to be directly in touch with his or her subordinates is "Management by walking around". A leader must practice what he preaches: to use Total Quality Management (TQM) in his own processes, example by organising meetings with middle managers reviewing their personal efforts. An affective leader is the one that studies the nature of the work and develop some excitement in the employees' minds about new methods of working. All involved work groups requires TQM training. Both, horizontal and vertical communication training may be essential for the groups to communicate together. Team building is an important element of the process as to make sure that staff members are involved to have an effective problem solving.
A leader is committed to insist on objective measures and to look for observable improvement, but not optimization. An affective leader is capable to produce immediate results in terms of monetary and time savings.
Leaders who are affectively committed are employees loyal to the organisation and to its corporate goals.
4.2 The role of leadership to achieve corporate goals
A leader is to create and maintain the organisational characteristics that encourage reward joint effort. The most fundamental is organisational culture. "The grand total of all the objects, ideas, knowledge, ways of doing things, habits, values and attitudes which each generation in a society passes on the next is, what the anthropologist refers to as the culture of a group" (Nord, 1972)
Leaders in the financial services industry must identify that they hold the following leading roles; this observation will improve their motivation to give their full efforts and commitments to reach the organisation's corporate goals.
Social skills, are the diplomacy that leaders monitor and thereby warn non performing employees. Awareness must be made so discreetly not to harm the pride of those in question.
Shared leadership, every leader in all departments must have the initiative to offer the right leadership that will help towards the achievement of the corporate goals set by the organisation. Therefore, even though leadership is reposed in the Vice-Chancellor or President, in actual practice, leadership must be perceived to be diffused and contextual (Opare, 2007).
Accountability, every leader has to accept the fact that every employee in the organisation is accountable to the team for tasks assigned to them. Within their role, leaders are individually and severally accountable to the organisation. They are responsible to lead in the quality direction, by keeping sub-ordinates accountable and by monitoring one another. On the other hand, nonperformers can be recognised and made aware of their non performance.
Group processing, leaders of the organisation must meet very often and reveal the methods and ways for achieving their goals and monitor the performance of the organisation's employees. On a regular basis, example quarterly or semi-annually, a self-appraisal exercise is carried out to establish the success of the business both as a corporate entity and as individually.
Interdependence, is the acknowledgment that no leader can succeed in their tasks unless everyone within the organisation is successful. Leaders must accept the fact that as they do their best to achieve effective management of their organisation, they can be faced with challenges that can either promise them success or fail them, depending on the total result of their individual efforts.
Interaction, is the shared help that colleagues put forward to each another as they cooperate as members with the same objective. Colleagues should ask questions, share experiences, offer or receive explanations and seek clarifications. Leaders within the organisation must talk and meet about their experiences, problems, and successes with their colleagues so that they can learn from each other.
Equal participation, leaders must recognize that all colleagues give the same input to the organisation. Everyone is perceived to be involved.
5.0 The Management of a product development
Nowadays, the most important criteria for success in financial services organisations are the ability to successfully identify and develop new products. This activity can be divided into two aspects, the product development process and the ability to maintain the level of innovation to keep on the long-term success, this achievement depends on the management of the team and the team work spirit applied within the organisation. According to Mullins (2007), "Team work, integration of functional and departmental efforts, delegation and pro-action are the four goals to be achieved with the new-products strategy".
"The Marketing concept is not a theory of marketing but a philosophy of business. It affirms that the key to meeting the objectives of stakeholders is to satisfy customers. In competitive markets this means that success goes to those firms that are best in meeting the needs of customers". (Doyle, 1994)
5.1 The process of new product development
A successful product development launch depends on the level of the organisation's innovation, following market segmentation and market research. Traditional innovation suggests that financial organisations innovate by improving or developing new products to the market. Innovation in banking lies more in processes, product development and organisational changes.
When a product development is undertaken, the organisation management will assign responsibility to a new leader and form a new team called New Product Development team (NPD). From an early stage in the product development cycle, the leader within this team is responsible to facilitate informal communication, sharing of requirements, constraints and ideas.
Process 1: Idea Generation
Various sources should be required in generating new ideas. The most effective are:
Management and Employees: Top management is an appropriate source as they are aware that proposals are to be associated with the corporate goals. In an organisational culture, employees are allowed to give their opinions and suggestions on the development of new products. The organisation may create a internal suggestion questionnaire to encourage knowledge-sharing amongst employees. In a bank's branch, the customer care representatives and cashiers experience is a very useful tool as they may give their opinion through their daily activities and experience as they are working directly with the customers and can collect useful information on the financial organisation's products.
Customers: Ideas may be encouraged from focus groups with customers. The company's sales force may encourage customers to give their comments and suggestions via questionnaires, website forms and free phoning. Secondary data sources my give insight on the competitive product developments.
Outsourcing: Marketing research agencies may provide the organisation with the necessary secondary data to support in the process of market segmentation and research, through their expertise they can provide specified consultations together with continuous feedback and e.g. the best medium to advertise new products.
Process 2: Screening
The NPD team should identify and ascertain that effort is exclusively made on new products that are in sequence with the corporate goals and strategies.
A set of questions are asked for each idea and the outcome is screened to determine the movements through lifecycle process e.g. a bank loan targeted for customers who are interested to purchase environment friendly products such as solar water systems:
What are the needs for the product?
What is the target market share?
What is the loss if this product is not provided?
Are the development and promotion cost within the organisation's budget?
Are the necessary knowledge and expertise available within the staff?
Ideas are shaped down to a few attractive options; an idea potential is measured in terms of production costs, sales, potential profit, and competitors' response if the product is introduced. All ideas are moved to the next step if these are acceptable.
Process 3: Concept development and testing
At this stage the organisation concentrates on the product's design, quality and features. The concept of a product instigates a customer to purchase. Example, the development of an internet banking account with competitive charges, attractive interest rate, flexibility and better accessibility, this account has the following concepts:
No need to call at the branch to carry out banking transactions, this can be done at the customer's leisure from the comfort of his or her home 24x7.
Earn a higher interest rate.
No charges are applied for any banking transaction.
Free credit card for the first two years.
All product ideas passed are developed into product concepts. Feedback from users is obtained at this stage.
At this stage, feedback is obtained from the market and the concept of the product is tested. This is made available to a small group of representatives and customers of the market targeted. This is a delicate stage and must be done in the least time possible since competitors may obtain and develop the bank's ideas.
Process 4: Business Analysis
The Marketing Department at this stage has potentially reduced the number of ideas down to two or one option. This stage is very dependent on market research to analysis the feasibility of the product ideas. The key objective is to analysis the market size, production costs, turnover and profit. Additionally, the product is determined if it will fit within the organisation's strategy.
Process 5: Development of the product and marketing mix
Ideas generated from process 4 (Business Analysis) are seriously considered for development. At this stage a marketing plan for the product is designed and unlike the concept testing process stage, customers gets the idea of the real product as well as the marketing mix aspects, example, promotion, price and place. Customer's feedback will help the marketing manager decisions to introduce the product or otherwise, the product is in need of some adjustments to meet the marketing mix elements.
Process 6: Product Launch
When the product is ready to be launched, some decisions are taken of when and where to launch the product (marketing mix), to whom (market segmentation) and how (market tactics). At times, some organisations may roll-out the product in the market gradually; this allows the organisation to increase sales in a more controlled way and to adjust the marketing mix as the product is distributed to new places.
Staff members are informed and if necessary training is given on the new product. The successful of new products depends on the sales team who sells and services them.
Promotional material, advertising and delivery channels are in place and the product is launched. At this stage high costs are incurred, however, this should be compensated by profit in the next stage of the product lifecycle.
5.2 The importance of product development in financial services
Product management in financial services institutions is responsible to develop new products and services in new areas were growth is available. In order to stimulate growth, the product management activities should be linked to the corporate strategy.
In the financial services industry, product management includes all the activities associated with customer's financial needs. The product leader finds out what customers want, drives the creation of products that meet customers' needs, and preferably generates profit.
In today's world, product development will increasingly shape the organisation and determine the types of managerial skills needed to obtain and develop new products to survive in the middle of a highly competitive market. The success of the organisation's corporate goals depends on the creativity with which financial institutions are managed.
The understanding of organisational culture is a vital skill for leaders trying to achieve strategic results. Strategic leaders have the best perspective, because of their position in the organisation, to see the dynamics of the culture, what should remain, and what needs transformation. This is the core of strategic success. Successful organisations engage and empower their people, build their organisation around teams, and develop human capability at all levels.
Finally, the results of this report are limited and constrained by the measures adopted to determine organisational culture, leadership style and product development. It seems likely that the relations between these three will remain confusing to both practitioners and theorists. Indeed, Schein notes that "leadership and culture are so central to understanding organisations and making them effective that we cannot afford to be complacent about either one" (Schein, 1985)