Theoretical Links Between Leadership And Organizational Performance Business Essay

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Q: Describe an important leadership situation that you have witnessed in the last twelve months. What style(s) did the leader adopt and how effective were they? With this and other examples, critically evaluate the theoretical links between leadership and organizational performance.

The important leadership situation I want to discuss concerns a family-run business in the health care sector, which employs around 100 people. The managing director and head of the family (Mr A) is now aged 70 and wanted to improve the performance of his management team, so that he could spend more time outside the business with his family. I was contacted by him to help facilitate this, because 5 years ago as a consultant, I implemented a successful strategy and business plan, which has since improved profit performance by over 600%.

In my experience, effective leadership is a critical factor in the success of an organisation and its performance, however there is much debate on what constitutes effective or even great leadership and what the factors are that create this. Mostly, leadership is seen as a position of power, influence and status, and usually attributed to one person in an organisation. Ralph Stogdill (1950) "defined leadership as an influencing process aimed at goal achievement". I agree with this general concept, however if an organisation is to be truly successful, and that according to Ogbonna "every member that has responsibility for staff is a leader", leadership must also exist at the various levels within it. This relationship, inclusive of cross-functional influence with the leader, is critical to the achievement of the organisational goals. In my experience, leadership at these different levels, impacts directly on performance and a key factor of a coherent strategy is the combination of leader and manager. An important consideration in this situation, was also succession, since although three members of the family were directors, none had much involvement in the daily management process.

The different style(s) of a 'leader' can be defined, even though there are so many variables in what makes a 'good' or a 'bad' leader and why can leaders can come from different backgrounds and cultures? In trying to identify these characteristics, it is worthwhile exploring the analysis of each style and Buchanan and Huczynski (2010) suggest that there are "six perspectives of leadership which should be considered:

Trait-spotting personality traits and attributes of effective leaders, "Great Man Theory" (but this does not take into account the influence of environment);

Style-counselling leadership behaviour patterns (but ignores individuals and situational factors and is simplistic about relationships);

Context-fitting contingency theories dependent on organisational and cultural settings (but if you do not have power you will be unsuccessful);

New leadership heroic and inspirational visionaries who give purpose and direction to others;

Distributed leadership leadership behaviour across the organisation; and

Who needs leaders? Can middle managers with change implementation skills be more effective?"

Ken Parry and Alan Bryman (2006) identified an interesting chronological order to these perspectives, which reflects the changing and developing nature of organisations, as each seeks to gain competitive advantage in its markets and to recruit staff who meet its future requirements.

Great (successful) leaders are special people, who have both vision and passion and who can communicate effectively within and outside the organisation. In my experience, they do not have to be universally liked, however they should be respected and should inspire others.

The style adopted by Mr A was exploitative autocratic (style behaviour), with occasional legitimate power (trait behaviour), visionary without great attention to detail (new transactional behaviour) and micro-managing work, often not allowing managers any freedom to make decisions. Mr A was therefore a complex character, whose style often stifled creativity and had a negative effect on performance. My initial conclusion was that in order to improve management performance, I first had to improve the leader's performance.

In my work background I had relevant experience with some great leaders and managers and I reflected on what made these leaders successful and how did they translate this to company performance? As a graduate trainee in the 1970's, I worked for Sir Alex Page, Chairman and CEO of Metal Box Ltd, who was a truly inspirational leader during one of the most successful periods in the company's history. Sir Alex was approachable, knowledgeable, charismatic, focused and respected throughout the industry. After he retired, his replacement struggled to maintain progress, which combined with recession in the 1980's, forced the company into a series of mergers in order to survive. It could be argued that Sir Alec had not planned his succession too well.

In the 1980's, following an aggressive takeover of the Debenhams Group, I worked for Sir Ralph Halpern, who in my experience was a good example of a charismatic leader and why there is little relationship between personality traits and leadership.

In the mid-1980's, following the deregulation of the financial markets ('Big Bang') I joined Spicer & Pegler, a respected firm of chartered accountants in the City, which later merged with Touche Ross & Co. in 1990. Following the merger, I had the opportunity to work for John Roques and John Connolly, through my Director of Administration and get first-hand experience of how great leaders think. In my experience, John Connolly is a great leader, who initially with John Roques, then on his own, created the modern Deloitte., the largest partnership of its type in the world. John Connolly is certainly an alpha male with the exception that he is also a great strategist, visionary and executor. In my opinion, he has "political intelligence" as described by Roderick Kramer in his Harvard Business Review (2006) "The Great Intimidators", without being a "Know it all". He was particularly feared by partners, who saw their careers disappearing overnight if they failed to satisfy.

In both cases Page and Connolly achieved high levels of focused, rational decision-making, but always dependent on the quality of the information provided and there were always the cases where a 'bad' decision was not let go, proving that leaders are human too.

In my first meeting with Mr A, I was able to help him see the direct effect on performance, if management were able to make decisions without always referring these to him. Mr A also agreed that the benefits to him of this approach, would be less stress, more free time and possibly better executed decisions, since managers would 'own' the decision. We also agreed to reference performance against a competitor that was respected in the industry. According to Lewin, Lippet and White (1934) the Democratic style of leadership is ultimately the most effective. It was my hope that Mr A would adopt this style as his confidence grew in the management team.

I am reminded of the critique of Professor Maarten du Plessis who argued that "leadership means respect and dignity for others" and the process of Ubuntu in South Africa helps to stabilise the different cultures who have to work together.

Following a series of meetings with the management team, sometimes without Mr A, new action points were created (known as the MAP or Management Action Plan), which has proved successful in the following ways:

Mr A now has more time to spend with his family.

The managers now 'own' the decisions and are implementing them efficiently.

Morale has increased and both Mr A and management are working harmoniously.

Managers have cascaded their renewed enthusiasm to their staff.

Performance has improved yet again and profitability has increased.

Kramer, Roderick M. "THE GREAT INTIMIDATORS." Harvard Business Review 84, no. 2 (February 2006): 88-96. Business Source Premier, EBSCOhost (accessed December 11, 2010).

Letter fro Apple CEO Steve Jobs, 5th January 2009,

Apple historical share price,

Apple net income ""&HYPERLINK ""annual

Burns, James McGregor, Leadership, Transactional and Transforming Leadership, (1978), p133-134, Harpers Collins Publishers Inc.

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