Strategic Management Leadership in Corporations

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Ricardo Semler, President and CEO of Semco, a giant, a manufacturing company, founded by his father Antonio Semler in 1912 in Sao Paulo, Brazil. With his unique style has change the meaning of leadership and management. He was the youngest graduate of the Harvard Business School. His employee friendly style is unique and famous around the globe. Since he took over the Semco, the sales grown to 24% per year, and profit has extreme rise and employment from 350 to 2500 now, He is also famous for his bestselling books ''Maverick: The Success Story Behind The World's Most Unusual Workplace (1993) first published in 1988 as Turning the Tables, and The Seven Day Weekend: Changing the Way Work Works (2004)'', as well as two articles he authored in the Harvard Business Review, Managing Without Managers, (1989) and Why My Employees Still Work For Me (1994). [1]

[1] http://www.academicleadership.org/
emprical_research/Ricardo_Semler_Creating
_Organizational_Change_Through.shtml

1.1 What is Management & Leadership:

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According to Kotter (1991),

Management: "Coping with complexity by planning and budgeting''

Leadership: "Coping with change by setting a direction through vision and strategy''

Leader is a person who has the power to leads others and shows them the way, and takes them to the goal,

Management & Leadership Style used by Ricardo Semler:

Ricrado Semler has use the unique style in the Semco, it is very to difficult to evaluate his style, many styles suits him from Autocratic to Democratic.

In Autocratic, that the manager makes decisions individually, and without much favour for juniors. As a result, decisions reflect the opinions and personality of the manager. This can project an image of a confident, well managed business. On the other hand, subordinates may become overly dependent upon the leaders and more supervision may be needed.

In Democratic style, the manager allows the employees or subordinates to take part in discussion so they reach the decision with the opinion of the majority. This style can help to come over the complex decisions need to be made.

1.3 Semler as Autocratic:

Semler had fired 60% of the top management of Semco when he took over the charge of the company from his father. No doubt the business was in deep trouble. Nobody could have guessed that the removals were the first stage in a progress that made Semco world-famous. Once one employee's wife got ill and he was unable to perform his work and system has eliminated him from Semco,[2]

[2] http://www.thinkingmanagers.com/management/management-strategy.php

1.4 Semler as Democratic:

According to Semler, "either you can adopt sophisticated, complex systems, or you can simplify everything''. [3] 

[3] http://www.thinkingmanagers.com/management/management-strategy.php

Semler style also seems Democratic, in Semco he has put trust on his employees and encourage them to make decision best suits them and to Semco. He hand over his firm to his staff, they are free to make decisions and able to decide the better progress of the Semco, which shows about 3000 employees set their own working hours and salaries. Junior employees hire and review their seniors, managers or supervisors. Tired workers can take nap at afternoons. And those employees who spend the Saturday evening in the office work can spend Monday as holiday. There are no organization charts, no 5 year plans, no corporate values statement, no dress code, and no written rules, no office uniforms, or policy statements no survival manuals.

Semler argued that handing the company over to the workers is the only way to free time for himself to go build up the customers, government and other relationships required to make the company grow. By literally giving up the fight to hold any control of internals, Semler is able to focus on marketing and positioning. [4]

[4] http://en.wikipedia.org/wiki/Management_styles#cite_note-rpi.edu-0

http://www.rpi.edu/dept/advising/free_enterprise/business_structures/management_styles.htm

1.5 Semco & Semler, afterwards….

Semlers style has changed the strategy of company from Autocratic era to Democratic style in the Semco. The structure of the Semco has been totally changed. His opinion is based on the idea of self-control and small hierarchies in the company. He has removed the security checks, and no dress rules. In his interview to CNN(Jun 2004) he added, "the point is that if we do not let people do things the way they want to do them, we will never know what they are really capable of and they will just follow our boarding school rules''

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Furthermore he believes that less hours work with good final results is better than so many hours without any useful result for the company.

In democratic style at Semco, all employees participles in the decision making process, He believes that Semco is a big family for every worker and all must take part in the decision making process. Semco has no receptionists, secretaries, or personal assistants. All employees, Semler included, receive their own guests, make their own copies, and draft and send their own correspondence. There are no private offices, workers set their own hours, and office attires at the discretion of each employee. Job titles carry little formal status since all workers are actively encouraged to question and practically condemn their peers and managers. Semco has reduced its management from 112% to 3 %, and corporate staff more than 75%. Also workers have unions, they can also hire and fire their fellow workers, and these workers also evaluate performance of their bosses. Infect Democratic Style has totally change the way of working in every aspect of Semco, [5]

[5] http://edition.cnn.com/search/?query=ricardo%20semlerHYPERLINK "http://edition.cnn.com/search/?query=ricardo semler&primaryType=article&sortBy=date&intl=true"&HYPERLINK "http://edition.cnn.com/search/?query=ricardo semler&primaryType=article&sortBy=date&intl=true"primaryType=articleHYPERLINK "http://edition.cnn.com/search/?query=ricardo semler&primaryType=article&sortBy=date&intl=true"&HYPERLINK "http://edition.cnn.com/search/?query=ricardo semler&primaryType=article&sortBy=date&intl=true"sortBy=dateHYPERLINK "http://edition.cnn.com/search/?query=ricardo semler&primaryType=article&sortBy=date&intl=true"&HYPERLINK "http://edition.cnn.com/search/?query=ricardo semler&primaryType=article&sortBy=date&intl=true"intl=true

Semler, R. (1993). Maverick: The Success Story behind the World's most unusual

Workplace. New York: Warner Books.

1.6 Semco's long term strategy with Semler's style:

Semler has totally change the structure of the Semco in every aspect, it's all because of Democratic style applied on Semco, now it is no more the same old company working on Hydraulic pumps only, now it is more merging with other companies, joint venture and alliances in the global market. Just because of Semlers significant decisions, Semco has grown from 35m$ to 160m$ in last 6 years, along with many titles like Business Leader of the year, in 1990 and 1992. All that Semler has done to strip away the blind authoritarianism that reduces productivity. Workers are self-governing and self-managing. In fact, workers have, in most cases, understood several jobs.

The Democratic style has push the Semco to its highest level with respect, honour and extraordinary and satisfied workforce, in fact Semco, Semler and democratic style has change the lives of Semco employees and the future of Semco is ever green. [6]

[6] http://www.thinkingmanagers.com/management/management-strategy.php

2.1 Different theories of Leadership and Management Styles:

Everybody has an opinion what makes a manger a good leader, there are many theories and articles that have been developed into leadership types, and according to management perspective each involves through getting things done through people, according to environment and culture, some methods works better, leadership and management can be considered as having almost same qualities, on the other hand one can say that leadership is about standing out, while management is bureaucratic in nature, sometimes we came across many theories which shows leadership is not management and manager is also not a leader, but they lies in position of bureaucratic authority, [7]

[7] http://www.ehow.com/about_7221408_leadership-theories-management.html

http://www.ehow.com/list_6536769_theories-leadership-management.html

2.2 The Link between Strategic Management and Leadership Theories:

Kotter (1990, what do leaders really do? Harvard Business Review, 68, 103-111.) Felt that leadership and management are two distinctive a complementary systems, each having its own function and its own characteristic activities, but both are necessary for the management of complex organisations. According to Kotter, management is about planning, controlling, and putting appropriate structures and systems in place, whereas leadership has more to do with anticipating change, coping with change, and adopting a visionary stance.

2.3 According to Fayol and Drucker:

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Fayol has organised his theory that managers can use in order to lead their organization susses fully, he added that effective managers needs to show best leadership in order for the employees to show reliability in the workplace and fairness, which is a combination of reflection and justice, unity of direction, which demands that's staff should take part in the same activities and should have the same goal. These principles are quiet similar to the theory of addressed by Drucker, he focused on dealing the employees with respect and care. Both theories shows the concept of the manager as signify leader, which has acknowledge as one of the most important factor of successful management system. Drucker furthermore insists Incentives and rewards to encourage the employees. He suggests that managers have to consider the employees constantly to their target work, and to keep the level high. These are the powerful tools of management. [8]

[8] http://70123505.nhd.weebly.com/fayols-theory.html

http://etudesproject.org/nonfpdata/cog/FS359/DOC0016.htm

2.4 Leadership Traits Theory & contingency Theory:

The trait leadership theory is theory which explains that people who inherit such qualities and abilities that make them a great leader. These theories often shows particular characteristic of personality and behaviour of the leaders, some of the major trait are as follows, i.e. Adaptable to situations, Alert to social environment, Ambitious and achievement-orientated, Assertive, Cooperative, Decisive and self-confidence etc. on the other hand Fiedler presents the Contingency Theory, that task-oriented leaders are more effective when the situation is either highly favourable or highly unfavourable, but that person-oriented leaders are more effective in the moderately favourable or unfavourable situations. [9]

[9] http://psychology.about.com/od/leadership/p/leadtheories.htm

Stogdill, R.M. (1974). Handbook of leadership: A survey of the literature, New York: Free Press

McCall, M.W. Jr. and Lombardo, M.M. (1983). Off the track: Why and how successful executives get derailed. Greenboro, NC: Centre for Creative Leadership

Graeff, Claude L. "The Situational Leadership Theory: A Critical View. "Academy of Management Review8 (1983): 285-291.

2.5 The 7-S framework of Mckinsey:

McKinsey's 7S framework was developed in the early 1980s by Tom Peters, and Robert Waterman, two consultants working at the McKinsey & Company. The basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful under Leaders and Managers. It is the best example which shows the link and similarity between Leadership and Management in an organization. Most of the factors of the Mckinsey are works effetely on Leaders and Managers.

The 7S model can be used in a wide variety of situations under Leadership and Management.

The key factors of Mckinsey framework are:

To improve the performance of a company.

To examine the likely effects of future changes within a company.

To align departments and processes during a merger or acquisition.

To determine how best to implement a proposed strategy.

In the above diagram the three factors of the Mckinsey structure "Strategy'', "Structure'', and "System'', are those factors who totally suits on managerial structure of an Organization.

Strategy: the plan devised to maintain and build competitive advantage over the competition. 

Structure: the way the organization is structured and who reports to whom. 

Systems: the daily activities and procedures that staff members engage in to get the job done. 

And the rest of other four factors are perfect for leadership in organization namely, "Shared Goals'', " Staff'', " Skills'', "Style''.

Shared Values: called "superordinate goals" when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic. 

Style: the style of leadership adopted. 

Staff: the employees and their general capabilities. 

Skills: the actual skills and competencies of the employees working for the company.

These 7 factors of Mckinsey are interlink with each other and they help the organisation's strategy and long term plan more effetely. [9]

[9] http://www.mindtools.com/pages/article/newSTR_91.htm

2.7 Impact on Organizational Direction:

planning,

strategy,

organising,

commanding (best of staff)

REFER prints relating Q2

3.1 Leadership requirements at Semco:

Semco is the world renowned company with its unique infrastructure and policies for its employees and management. There are many factors that still need to run, support and continue such a unique organization. There are few highlighted factors that are mention below.

3.1.1 Analysing the Circumstances:

Infect Leadership is a function or a process. It is a complex relationship within the situation and the leader in an organization. Semco Leadership should always analyse the situation that are about to crack on it and it has to keep its eyes open to solve it in the advance and keep the pace ahead. Anyhow different circumstances require different strategic steps.

3.1.2 Determine the direction and scope of the issue:

After analysing the issues the (Semco) leadership should overcome the problem and focus on the strategy that such issues must not be appeared in the organization again and they need to make long run decisions. Also formulate the specific strategy and to plan and carry out strategy implementations.

3.1.3 Outline the task and relationship:

Semco leadership has to determine the key areas to work for the workforce and must have to establish relationship with achievement. Also it has to create barriers that make it hard for others to copy their superiority advantages like culture, product design and marketing strategy.

3.1.4 Defining the Resources:

Semco has to determine its recourses to maintain the balance in every respect like man power, human resource, technology, assets, revenue and finance to keep the pace with the global community and to keep its self on cutting edge peak point.

3.2 Leadership Core Competences that required at Semco:

Following are the factors of the core competences that are required for leadership of the Semco,

Skilled Negotiator:

Semco leadership have to be extremely skilful negotiator, if Semco is about to start a joint venture with any other company or they are going to start the new business, they must know what they need to know and how they have to come over the challenges they might have to face in the present and also in the long run, they need such abilities so when starting new joint venture or starting business they must have the knowledge of that specific business line.

Flexibility:

For example, If Semco has just begin joint venture or took over the company, it has to be flexible in management line special, it should take along the existing work force and all sources along with it, if necessary than changes can be made, because it will be not a good way, if Semco replace the working style of new company to its own unique style.

Financial:

Semco leadership should keep in mind that it's financial condition and evaluation of new business financial conditions. Like how much revenue should be used to buy new company or joint venture. Semco needs to have a closer look on market trends and also it has to make a target for the expected profit.

Implementation:

Semco leadership should have such a courage and ability to enforce its rules and regulation over the entire organisation, each and every individual employee has to follow it, but infect there is no written rules and regulation in the company.

Legal:

Semco leadership should follow the rules and regulation of the following country in which it has the business or going to start the business, also it has to be aware of tax, customs and import, export regulations.

3.3.1 Leadership Core Competence for People:

There are few prospects which Seems to follow by Semco leadership towards people (employees). Few are discussed below.

Motivation:

Semco leadership should look after the employee's behaviour and their productivity and leadership should motivate the employees to work hard with honesty.

Ability to deal with diversified work force:

Semco leadership should be able to work with employees with different background origin of the world and gender, race and style of their work and ability. They should maintain the balance and equality among the rest of them.

Problem Solver:

Leadership should focus and look after the problems inside the workforce and on the company floor. They should maintain check and balance and maintain justice in every respect. And leadership should solve the problem with honesty, so no one should get hurt.

Applying STEEPLE analysis on Semco's Leadership:

Social: Semco is such a unique company which has its own professional lifestyle. Its employees are enjoying freedom in every respect. Semco also has shown flexibility in offering new jobs. Now any one can apply for the job at his favourite department. Its employees have introduced colour cards culture for the colleagues; they are Red, Green and Yellow cards which indicate their mood.

Technological: Semco is expanding its business now. Its main motive is to avail every opportunity to increase its profit. Therefore it has expanded its technology in every respect like IT and telecommunication.

Environmental: Semco has started Bio Fuel project which is alternative of natural fuel resources. This Bio Fuel will help to decrease environmental pollution.

Economics: Semco is highly stable company it has grown from 4$m to 212m till 2003.

Political: Semco cares about the political interests of that country in which it is running a business. Because each country has policies in import, exports.

Legal: Semco has faced few legal issues in the past with Government departments and also had faced many hurdles in import and export of their goods. Such issues need to be solved in advance.

Ethical: Semco leadership and work force always stayed stick to this motive, "Do the right things''. And also there is a zero tolerance to non-performers in the company. And Semco Value for work more than money.

http://www.slideshare.net/PragneshChitalia/maverick-presentation

Heller, Robert. "How the Maverick Boss Keeps Himself on His Toes." Mail on Sunday. January 8, 1995.

Semler, Ricardo.Maverick :The Success Behind the World's Most Unusual Work place. Warner Books (New York:1993).

http://www.scribd.com/doc/294210/Semco-unique-self-organziation

4.1 Leadership and Organizational Behaviour of Semco:

The Leadership of Semco have to be based on philosophy, values, vision and goals. In this way it can drive the Semco's culture which is composed of formal organisation, informal organisation and the social environment. These cultures can determine the types of leadership, his communication and group dynamics in the organization. Semco leadership can also motivate the workers and set direction for them. All these elements can build a structure of a splendid organization. [&]

[&] Cunningham, J. B. & Eberle, T. (1990). A Guide to Job Enrichment and Redesign. Personnel, Feb 1990, p.57 in Newstrom, J. & Davis, K. (1993). Organization Behaviour: Human Behaviour at Work. New York: McGraw-Hill.

4.2 Organisational Development of Semco:

According to Newstrom, Davis: "Organization Development is the systematic application of behavioural science knowledge at various levels, such as group, inter-group, organization, etc., to bring about planned change''. Organisational Development of Semco can be a higher quality of work life, productivity, adoptability and effectiveness. It can accomplishes this by changing attitudes, behaviours, values, strategies, procedures and structures so that the organization can adapt to competitive actions , technological advances in every aspect, and the fast pace of change with in the internal and external environment.

There are seven characteristics of Organisation Development according to Newstrom, Davis, which are:

Humanistic Values: Semco Leadership should believe on its workforce. And leadership should look after their needs and it needs to motivate them, also McGregors theory Y applies on Semco leadership, according to this leadership is self-motivated and capable of meeting any sort of challenge. At Semco employees set their own working hours and targets. Workers can make decision with along with managers.

Systems Orientation: The structure of entire Semco is essential to work altogether like workforce and technology etc.

Experiential Learning: Semco Leadership would learn lesson from the mistakes they made in the past in every part of its organisation from management to marketing, human resource to finances, and they should teach to new comers who join the company. And these teaching should be experimental based not just the oral lessons.

Problem Solving: After identifying the problem and error and collecting the data. The next step is to solve the problem by the Leadership.

Contingency Orientation: Leadership has to decide what actions to take for the situation according to the condition at Semco.

Change Agent: Semco leadership needs to rouse, simplify, and direct the change.

Levels of Interventions: At Semco, the problems can occur at one or more level in the organization so there will be a required strategy to involve one or more involvements.

4.3 The Learning Organisation:

The Semco Leadership needs to maintain its levels of progress and remain at reasonable pace. Also it has to be placed at better level to respond the outside pressure and to keep knowledge to better link the resources to customer needs. It also needs to improve the quality of its output at all the levels and also keep improving the business image by becoming more people to concern with. Furthermore it has to increase the pace of change within the organization. [&]

[&] Pedler, M., Burgogyne, J. and Boydell, T. 1997. The Learning Company: A strategy for sustainable development. 2nd Ed. London; McGraw-Hill.

McHugh, D., Groves, D. and Alker, A. 1998. Managing learning: what do we learn from a learning organization? The Learning Organization. 5 (5) pp.209-220.

4.4 Applying the Learning Theory at Semco:

There is also need to relate Learning Theory at Semco few aspects are as follow,

The Behaviourist:

Semco leadership can achieve greater benefits of learning through strong statements, facts presented visually, use of a variety of techniques and media.

[&] Laird, D. 1985 Approaches to training and development Addison-Wesley, Reading, Mass.

The Operant Condition:

In Semco there should be such a platform where the workforce should receive practical trainings and each training need to be passed before moving to the next. And there should be rewards and incentives for extra ordinary employees.

The Cognitive:

In Semco the Cognitive approach somehow is more appropriate. As its employees are knowledge based and active so they always learn from their experiences and also share their valuable experience to other members during meeting and all members get awareness and form a knowledge network. As Semco has to get involved itself in different business and they keep on changing the front-runners to different department so it becomes quite helpful to transfer and share knowledge and also can get a chance to come across different people in the world and to communicate on different issue. It is a very valuable approach to possess at Semco.

4.5 Development Plan of Leadership:

A plan is typically any procedure used to achieve an objective. It is a set of intended actions, through which one expects to achieve a goal. [&]

[&]http://en.wikipedia.org/wiki/Plan

Objective Setting:

Objective setting should straight forwarded by the organization. The leadership should design smart plans and techniques to get better results. They need to focus on the strategy for long term or short term but each strategy should be result oriented.

Performance Metrics:

The Leadership needs to apply check and balance on every step of performance of the employees, quality of their work, and leadership should focus and maintain Key Performance Indicator of the all employees to evaluate them. The KPI of the employees can be maintained on daily, weekly or monthly basis to evaluate that whether they are above, behind or on the target set by management.

Rewards:

After maintaining the KPI of the employees, the employees are awarded with the increments, incentives and bonuses, on monthly or annual basis.

Short term Trainings:

The current employees can provided with on job training if they need to.

4.6 Conclusion:

Semco is successful because of its unique working style and its managerial behaviour with its workforce, the workforce has liberty to perform work on their own way that is pretty amazing approach. Semco has to long enough to go beyond, many companies of the world and copying this lifestyle, Semco leadership and management has to perform some check and balance on the employees task, to avoid corruption and misuse of the resources. They need to encourage job trainings and need to introduce learning skills among the workforce.