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The term leadership means different things to different people. Although no ultimate definition of leadership exists (Yukl, 2002), the majority of definitions of leadership reflect some basic elements, including “group” “influence” and “goal” (Bryman, 1992). Leadership is one of the rare and precious human capitals. Without leaders to guide and shape decisions society would become stagnant. Within the arena of leadership there are good leaders, bad leaders, and effective leaders. All three coexist simultaneously in a world of followers.
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A good leader is someone who can motivate and excite people about a specific subject. They are the one who possesses many qualities. First and most important a good leader is to possess the ability to recognize what’s fair, good, and honest. A good leader always sets a good example of integrity, morals, and will lead his followers in accordance with these qualities. In addition to being just a good leader must be a strong thinker. Good leader inspire workers into higher levels of teamwork, there are certain things a leader must be, know, and, do. These do not come naturally, but are acquired through continual work and study. Good leaders are continually working and studying to improve their leadership skills.
Bad leaders have a tendency to turn a good organization around and burn it to the ground. They make rash decisions without discussing it with the team, for one. They don’t want to share the glory with anyone at all. They want to do everything and take the credit all by themselves.This is probably one of the biggest reasons that leaders lose the respect of their team. In an organization and in a team, leader has to work or need to communicate with the team.
An Effective leader is someone who manages to get people to do what they want. It could be defined as one who exerts influence to get others to achieve the leader’s objectives. An effective leader is a person with a passion for a cause that is larger than they are. The essential needs for the effective leaders are good communication, knowledge and understanding, team work, recognition and encouragement, vision, risk and innovation, ethics, flexibility with leadership styles and commitment.
2. Theories behind leadership
Leadership theories in management have evolved over time into various types, with their own lines of thought. Each theory provides a model of effectively steering an organization. Adding to Kurt Lewin’s (1945) observation that “there is nothing so practical as a good theory”, Whetten (2002) suggests that only a good theory is practical. Hence, we have two successive goals:
(1) we should understand the components that comprise theory; and
(2) we should incorporate this knowledge into the theory of leadership.
There isn’t one right definition of leadership. There are various leadership theories out there, and when you limit leadership to one definition, you also limit the value of true leadership. Leadership can be something very difficult to describe or explain. It is abstract. There isn’t a certain shape that it takes, or there isn’t one specific direction.
Depending on the leadership theory that you are talking about, one person could be considered successful and the other a failure. Leadership theories are founded on a person’s opinion.
Many theorists have put forward their own views and formulated their own theories regarding leaders and leadership. The author will explore some of the theories on the subject of leadership.
2.1 Great Man Theory
The Great Man Theory is associated most often with 19th-century commentator and historian Thomas Carlyle. This theory assumes that leaders are born and not made. Leaders usually were members from the aristocracy since they only got a chance to lead; hence, it was considered that good breeding contributed in making great leaders. The concept of a Great Woman was not explored and andocentric bias was never realized. In addition, the theory also states that when there is a great need, then a great leader arises, like Buddha, Jesus, Churchill and Eisenhower.
2.2 The Trait Theory
This theory assumes that human beings are born with inherited traits and the right combination of traits makes them a leader. Hence, leadership was a matter of traits whether inherited or acquired otherwise. Stogdill (1974) identified certain traits like adaptability, socially aware, achievement oriented, decisive, dominant, energetic, cooperative, assertive, self-confident, persistent, responsible, and capacity to tolerate stress. McCall and Lombardo (1983) identified four basic traits, namely, emotional composure and stability, intellectual breadth, highly developed interpersonal skills, and the capacity to admit errors.
Although leadership trait theories are popular, it is viewed by many as very simplistic. There are those that argue that trait theories attribute the success of leadership solely to his or her personality and physical traits or characteristics without regard to the situational context. The trait approach is considered too simplistic as an explanation of the complex leadership phenomenon.
2.3 Participative Leadership Theory
This theory assumes that the conclusion of many minds makes a better decision than the judgment of a single mind. Hence, the leader invites participation from the persons responsible for carrying out the work, since it makes them less competitive and more collaborative, thereby increasing their level of commitment. Participants may be subordinates, peers, superiors, or stakeholders. The extent of participation may vary. The leader may outline the objectives or goals and allow the team to decide how it can be achieved or the leader may allow a joint decision to be taken with respect to objectives and its method of achievement or the team may propose but the final decision is always of the leader. Many varieties exist, like consultation, democratic leadership, Management By Objectives (MBO), power-sharing, empowerment, and joint decision-making. The negative side of this theory is that when a leader asks for opinions and does not find them suitable, then it leads to cynicism, feelings of betrayal, reduced motivation and decreased level of commitment.
2.4 Lewin’s Theories
Kurt Lewin along with others conducted experiments in 1939 and came up with three styles of participative leaderships, namely autocratic, democratic, and Laissez-faire. In the autocratic style, the leader took the decisions without consulting others. In the democratic style, the leader took the decisions after consulting others or let the majority decide on what is to be done. In the Laissez-faire style, the leader lets others decide on the decisions to be taken. Lewin et al. discovered that the autocratic style led to revolution, the Laissez-faire style lacked enthusiasm and coordination, while the democratic style proved to be the most effective. Since these experiments were done on children, they still required further study and research.
2.5 Likert’s Theories
Rensis Likert (1967) theorized four styles, namely, exploitive authoritative, benevolent authoritative, consultative, and participative. In the exploitive authoritative style, the leader uses methods as threats, coercion, and other fear-based methods to enforce conformance. It is always a top-down approach and the views, feelings, of others are given no value. In the benevolent authoritative style, the leader becomes a ‘benevolent dictator’ and uses rewards to motivate performance. The leader listens to ‘rose-tinted’ views from the subordinates as they tell only what the leader likes to hear in the hope of gaining rewards. Trivial delegation of decision is done, however important decisions are always made centrally. In the consultative style, the leader seeks consultations, however, most upward flow of information is still rose-tinted and the decision is almost taken centrally. In the participative style, the leader invites participation across all levels, including the shop floor worker, and attempts to make the employees psychologically closer are made. Dissensions, arguments, feelings of betrayal all take place in this style. The leader becomes a ‘father figure’ and a ‘cult head’, whose saying ultimately becomes the final decision.
2.6 The Charismatic Leader Theory
This theory assumes that leaders gather followers simply by their charm, grace, and personality. If a leader is not a natural charismatic leader then that individual takes a lot of trouble in maintaining the image and developing requisite skills. They are usually very persuasive and use their body language very effectively. In a theatrical sense, charisma is played out as exhibited by politicians, religious and cult leaders. Conger & Kanungo (1998) have elucidated five characteristics of charismatic leaders, namely, clear vision and its lucid articulation, sensitivity to the environment, sensitivity to the needs of the members, ability to take personal risks to support their viewpoints, and ability to perform unconventional behavior. Musser (1987) noted that charismatic leaders wanted their followers to commit to absolute devotion to themselves. The charismatic leader may not want to change anything or transform anything unlike the transformational leader. If the charismatic leader is well-intentioned then they can contribute significantly to the growth of the entire group, however, if they are Machiavellian and selfish, then by the creation of cults, they can effectively rape the minds and bodies of their followers. Their own self-belief can lead them into psychotic narcissism and their self-absorption is so high, that their irreplaceability, intentional or otherwise, can guarantee no successors and thus they make a permanent mark in history.
2.7 The Transformational Leader Theory
The concept of transformational leadership was initially introduced by leadership expert and presidential biographer James MacGregor Burns.1 According to Burns, transformational leadership can be seen when ” leaders and followers make each other to advance to a higher level of moral and motivation.” Through the strength of their vision and personality, transformational leaders are able to inspire followers to change expectations, perceptions and motivations to work towards common goals.
Later, researcher Bernard M. Bass expanded upon Burns original ideas to develop what is today referred to as Bass’ Transformational Leadership Theory.2 According to Bass, transformational leadership can be defined based on the impact that it has on followers. Transformational leaders, Bass suggested, garner trust, respect and admiration from their followers.
This theory assumes that a leader with vision and passion can achieve great things by inspiring, injecting enthusiasm and energy, and thereby transform the individual or the group towards the attainment of individual or group goals. Transformational leadership is concerned with the performance of followers and developing them to their fullest potential.
Tesco is considered as the most successful retail company in the United Kingdom. The success of Tesco was heralded by the appointment of Terry Leahy as the Chief Executive Officer. Leahy is considered as a visionary and transformational leader who led the company into a series of organizational changes that aimed for the company to become more customer-focused and to develop the company’s workforce. Terry Leahy is revered as an excellent leader. Leahy was reported to say that he believes that the success of a leader depends upon maintaining a happy workforce. According to him, there are four things that a leader must provide to his workers and followers to satisfy and motivate them. These are:
A job that is interesting to do
A chance to get on in life
To be treated with respect
A boss who is some help and not their biggest problem
2.8 The Transactional Leadership Theory
This theory states that people work for reward and punishment. A clear chain of command with loyalty as the primary focus works best in social systems. The subordinate should only do what the leader tells to do without trying to find out the justification for it. The leader creates clear structures and the subordinates are required to follow. For successful completion of the work, they are rewarded whereas for unsuccessful completion, they are punished. The leader uses management by exception, that is, once the operation has defined performance expectations then it does not need much attention. Exceeding expectations gets praise whereas not fulfilling expectations gets corrective actions. The limitation of this approach is that it is assumed that the individual is a ‘rational man’ (a person who is largely motivated by money and hence whose behavior is predictable), which he may not be due to emotional and social factors. In such a situation, other approaches may prove to be more effective.
2.9 The Situational Leadership Theory
This theory assumes that the action of a leader depends on a number of situational factors, like motivation and capability of followers, relationship between the leader and the followers, stress, mood, etc. Yukl (1989) has identified six situational factors namely, subordinate effort, subordinate ability and role clarity, organization of the work, cooperation and cohesiveness, resources and support, and external coordination.
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3. Cross Culture Differences in Global Organisation
Leadership style is a part of cultural distinctiveness. The international business faces different challenges and obstacles in geographical, financial, legal, political and cultural environments. Culture presents challenges that make human interactions difficult. Cultural differences are found in areas such as language, values, and behaviors. The cultural environment in which an international business operates in has an enormous impact on the organization. Cultural differences according to Graham (2001) are often not obvious and associated problems are neither easily diagnosed nor corrected. Cultural differences have a huge impact on the efficiency of the international enterprise, and particularly on the management of people.
Every country has a different culture that sets it apart from the rest. Every country has a different history, government and laws. The more countries with which a firm interacts, the more complex and difficult conducting business becomes. According to Briscoe et al (2004) the primary cause of this complexity and high level of difficulty has to do with the importance and critical nature of the differences between various countries’ cultures.
Dutch business professor Geert Hofstede (2005) has described culture as a pattern of thoughts, feelings and actions that every individual carries within them, a pattern which is developed and learned through out ones lifetime. He also conducted what is considered as the most influential work on business cultures. Hofstede identified five cultural dimensions that affect international businesses. These dimensions are: Power Distance, Uncertainty Avoidance, Individualism vs. Collectivism, Masculinity vs. Femininity and Short-term vs. Long-term Orientation.
4. The Impact of Culture on Human Resource Management
Perhaps one of the area in the international business that is most affected by culture is Human Resource Management (HRM). According to Sims (2002) culture is essential to International Human Resource Management. The research conducted by Hofstede (1980) revealed that culture has huge implications for Multinational Corporations. According to Hofstede differences in culture may significantly affect HRM practices. Organizations that plan to establish businesses outside their home countries must realize that employing people with different culture and orientations might cause difficulties and collision between the organizations business practices and the culture of the host country.
In principle, it is believed that a large contradiction between the multinational company’s HRM practices and the host country’s culture is a main ingredient in failure. Wide-ranging cultural differences from country to country require corresponding differences in HRM practices among a company’s foreign subsidiaries. The mix of cultures in the subsidiaries of a multinational company and the level of cultural differences among the subsidiaries will restrict the IHRM approach taken by an organization (Sims 2002). International Human Resource Management is the process of procuring, allocating and affectively utilizing human resources in a multinational corporation. HMM managers in multinational corporations need to achieve two somewhat conflicting goals. First, they must integrate HRM policies and practices across a number of subsidiaries in different countries so that overall corporate objectives can be achieved. At the same time, the approach to HRM must be sufficiently flexible to allow for significant differences in the types of HRM policies and practices that are most effective in different business and cultural settings (Sims 2002).
5. Nestle’ UK and Nestle’ India cross culture case
The existence or presence of the Nestle’ Corporation in different countries around the world provides realization of the incidence of cross-cultures and cultural diversity in a particular business. The prevalence and practice of a specific culture in a specific company provides significant changes and differences in its approach in terms of production, operations, sales and market share. Thus, in this regard, organizational culture serves to be one of the major factors that affect the performance and communication in the entire organization, most especially in terms of operating and maintaining an international organization, such as Nestle.
Henri Nestle’ founded the company in 1867 in Switzerland, as a manufacturer of infant cereals. Nestle’ corporate culture is extended to all branches and locations of the company around the world. One of the most successful branches of Nestle’ Company in Asia is Nestle’ India Limited. The mother company set up its operations in India in 1912 as a trading company, and began as a manufacturing company in 1961 at the Moga factory. All manufacturing and marketing plants in India are in charge of the different brands produced in India, namely, milk and infant dietetics, culinary products, cereals, beverages and instant drinks, chocolate products and confectioneries, and chilled dairy products (2004). It employs over 3000 employees, and is regarded as one of the ‘Most Respected Companies’ and amongst the ‘Top Wealth Creators of India’ (2004).
On the other hand is Nestle’ UK, which started as a sales office in London in 1868. By 1901, Nestle’ opened its first factory in the United Kingdom, and by 1905 it merged with Anglo-Swiss Condensed Milk Company. Currently, it produces and manufactures brands such as Nescafe’, Kit Kat, Polo, Smarties, Aero, and Black Magic (2007). From this information, the different cultures that exist in both organizations and branches of the Nestle’ Corporation can be assumed.
It has been reported that Nestle’ India has been strictly adhering to the business objectives of its mother company. The business objective of the company is to manufacture and market products that would sustain and create value for the consumers, stockholders, employees, business partners, and the economy of India over a long and significant period of time. In this regard, Nestle’ India is conscious of the fact that its success is the reflection of the professionalism, conduct and ethical values of the entire management and employees of the company. As such, the company aims to make sure that the company’s operations and processes would be characterized with the highest standards of ethical and responsible conduct. In addition, the significant and distinct characteristic of Nestle’ India can be observed through its Corporate Business Principles and Management and Leadership Principles (2007). Based on Nestle’ India’s Business Principles, it can be perceived that the business practices of the company, particularly in terms of their respective decisions are characterized by typical Asian traditions, beliefs, and practices. It has been reported that one of the most successful departments or divisions of Nestle’ India is its chocolate and confectionery division. Being typically Asian, Indian workers in the company work altogether and collectively. Indians, like the rest of the other Asian nations tend to increase their interactions with one another, as with any other Asians, collectivism and group participation is an important aspect of work and interaction.
On the other hand, being Western, the culture in the chocolate division of Nestle’ UK may not be as similar as the culture of Nestle’ India. This is because British employees, in general, are individualistic, independent, frank, and very open-minded individuals. Unlike the Indian employees, British employees may be somewhat more individual and more independent, thus, require less interaction from co-workers and other colleagues. British employees are performance-driven and goal-oriented, thus, chatting during working hours are not their required form of interaction in the working environment. This is further strengthened by the fact that Nestle’ UK is one of the dominating chocolate manufacturers in the United Kingdom, being part of the 3.6 billion Euros revenue of the UK chocolate market in 2004 (2005).
Another distinct data or characteristics that can be differentiated between the two branches of Nestle’ are the differences between their languages, religions, cultural beliefs, economy, politics, and social status. The major language of India is Hindi, while the major language spoken by the British citizens is English. The major religion of India is Hindu, while majority of the British citizens are Christians. In terms of cultural beliefs, Indian beliefs are rooted from their religion, Hindu, thus, their practices and values as well. This is also similar with the British, who’s beliefs and cultural practices stem from Celtic and Christian beliefs. In terms of social, economic, and political status, India is considered a developing country, given its population and way of life, while the United Kingdom is regarded as one of the most powerful developed countries in the world. As such, in incidence of cross-cultural communication, discrimination, conflict, misunderstanding, and cultural ethnocentrism may exist.
In the event that a British national works in the Nestle’ India manufacturing plant, and vice versa, it can be assumed that problems and issues can be encountered, due to differences of approaches, culture, and language involved. In this regard, it can be assumed that changes in cross cultures may entirely affect business practices of an organization, even despite the influence and guidance of its mother company. This is because the approach of each Nestle’ company is customer-oriented, and based on the needs, preferences, and tastes of its consumers. In this regard, the sweetness, packaging, and taste of a particular chocolate confectionery in India, may be significantly different from the products in the United Kingdom. In addition, some products in the United Kingdom may not be present or available in India.
6. International Leadership
Leadership style is a part of cultural distinctiveness. Among the western nations, American leadership style has been developed in the United States and the German leadership style embraced in Germany. France has it independent style. Likewise, in Asia a variety is present, and, Japan has promoted its independent distinctive style.
Corporate leadership continues to be a quintessence of every nation’s old cultural legacy. UK follows a practical style of leadership. British leaders customarily stress upon social skills and practicality. Their courtesy, openness, self-discipline, and willpower are cultural assets. This guides them to be involved with interpersonal proficiency and advice. British leaders are more characteristic compared to their Portuguese or Spanish equivalents.
Leaders are quite job-oriented and, reticent and courteous, thereby creating impersonal and proper settings for business dealings. In addition, British leaders possess a shorter-term viewpoint for their business development compared to the Swiss, Japanese and Germans. The leadership style of Italy, in contrast, has increased levels of autocracy with stress on the hierarchical pattern. Decision competencies are more focused on the top leadership, who is concerned with every facets of the business.
7. Case study of McDonald’s operation in Europe
The McDonald’s Corporation is the largest food service operation in the world in terms of system-wide sales. At the beginning of 2000, it was operating more than 25,000 restaurants in 116 countries. A modest estimate of its current worldwide workforce would be around 1.5 million people, and 10 million people are estimated to have worked for the corporation since it was formed. More than one in ten Americans are considered to have got their first job at McDonald’s, and it has now taken over from the US Army as having America’s largest job-training programme (Vidal, 1997 cited in Royle 2000, p. 16). It is an incredibly successful multinational and is expanding at a breath-taking rate. It plans to open between 2,500 and 3,200.
In order to deal with different environmental factors in different countries, McDonald’s has established a head office in every country where it operates. The head office in the United States still plays an important part in the decision-making. The U. S. head office regularly monitors the activities of its overseas operations. It has an international division, and its US consultants sometimes take part in European meetings. Meetings frequently take place between various European heads to discuss matters of cross-national importance (Royle, 2000).
The structure of restaurant operation and administration in each country tends to follow similar pattern, but in some countries it appears to be more complicated than others. In some countries, some restaurants are operated as joint ventures or through holding companies. In most of the larger countries such as Germany and the UK, operations are usually split into several regions and are administered through regional offices in the major cities Royle, 2000). The heads of departments for each functional area are usually situated in the head offices (for example London and Munich), these functional areas being the executive, marketing, finance, personnel, purchasing, real estate, technical appliances and administration. Although there is a high level of central control, operations are normally administered directly from the regional offices. McDonald’s system is very flexible in overcoming cultural, political and economic differences and obstacles in different societies (Royle, 2000). Franchise restaurants are local in the sense that they understand local issues, local culture and the kind of obstacles likely to confront the McDonald’s system. Industrial relations, and specifically the relationship between the worker, the union, and the employer, vary dramatically from country to country. In Germany, for instance, codetermination is the rule. Here, employees have the legal right to a voice in setting company policies (Sims, 2002). The ability of trade unions to organize and gain recognition for collective bargaining at McDonald’s varies considerably in different European countries.
In the case we see that culture has a tremendous impact on the operation of a multinational company McDonald’s. The company operates worldwide. Although decision-making is still influenced by the head quarter in the United States, every country has a head office that deals with different issues particularly in the area of culture. We also see that the employees from different countries exhibit different values, attitudes and behaviours. These are derived from their culture. We see that McDonald’s has become successful by implementing a localized strategy. The culture of the host country is taken into consideration.
To conclude this leaders generally do not follow a single approach and they mix and match as per their needs and requirements. In critical situations, they are more dictatorial in nature as they face the prospect of failure. Leaders generally exhibit integrity, dedication (spending whatever time and energy that is required to get the job done, rather than giving it the available time), humility, openness (ability to understand new thoughts and ideas), and creativity .
In order for business to be conducted smoothly, leaders need to aware of international cross cultural and need to adapt flexibly. Successful business leaders must shape their organizations to be more nimble and flexible, less hierarchical, and more networked. The fate of future business rests, in part, on how well business leaders can anticipate change, demonstrate authentic leadership, maximize the power of their talent, and embrace social responsibility.
Today’s leaders are already facing challenges and changes that are rapidly transforming where, how, and with whom they do business. Leaders who are adapting their strategies are merely keeping pace with change. A more strategic view of agility is about leaders anticipating trends and proactively defining innovative strategies.
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