Cohesiveness in the teams especially in Top Management Teams (TMT) is one of the most significant factors that influence the Superior Performance (SP) and strategic competitive advantage of the organization. There are many factors that influence cohesiveness of teams and this essay is especially going to focus on an organizational factor, Top Management Style (TMS).Many researches proved that TMS is a crucial factor which influences the cohesiveness of the organizations, particularly new ventures. The literature review in this essay will explain how the TMT in new ventures can influence the cohesiveness and in turn the Superior Performance (SP) of the organization. Furthermore, this essay will analyze how practically TMT of my previous organization successfully established a highly cohesive team and made cohesiveness as a strategic asset of the organization. The essay also analyze how cohesiveness in TMT facilitate the successful decision making and on the other hand, how a highly cohesive TMT experienced impaired decision making in few scenarios because of the concept of the 'group think' and suggests what could be a possible solution to improve decision making in those scenarios.
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My previous organization is UST-Global which is one of the most successful and young organization in the Information Technology (IT) services Industry. UST-Global was established on 1999 with only 14 members and currently spread across 4 regions (North America, Europe, South America and AMEA) and 15 countries globally with the employee count of around 7000.Comparitively the organizations' growth rate in profitability, financial position and number of employees is phenomenal. In my observation, the TMT is the primary reason for this success. Recently the organization successfully established a joint venture with General Electric Company (GE) in Chile, South America. Established with strong culture and values the organization is build with high cohesiveness and as a result showing superior performance in the market. The organization achieved $500 million yearly sales mark with 15-20% net margin in few years after establishment and continues to growing better. Organizations' head count and sales is increasing by more than 15% each year which clearly shows the SP of the organization in the market.
UST-Global is one of the best young companies in IT industry to analyse cohesiveness because of the culture and values established in the organization.
Cohesion is a multifaceted asset of a group and strong forecaster of the group behavior which has been defined and analyzed in many different ways by researchers. Cohesion can be defined as the measure of the ability of a group to exert a pull on its members and encourage them to remain as a part of the group. "In essence, cohesion would serve as a strong centripetal force binding a team together in the presence of strong centrifugal force like conflicts" (NV 371)
Relationship between TMT and Cohesion:
There are many factors that can influence the cohesiveness. These factors have been classified by (Rollinson) as group factors, environmental factors and organizational factors. According to (Homans 1950) there are many organizational factors like technology usage, management style and personal background of members are influencing the cohesiveness. Many researches show that especially the TMS can greatly contribute to the cohesiveness of the organizations. This section will explain how the TMT of an organization can influence the cohesiveness of the organization. A TMT is a group of high level managers accountable for devising and executing the firms' strategies. The power to organize the direction and performance of the organization possibly makes TMT as most crucial and prominent team in the firm (LS 6). In particular, the new venture TMT consisted of those people identified as the CEO, president and critical line or staff function executives (NV 373). By establishing appropriate culture, member criteria, technology usage and work environment and other important factors, TMT has the ability to influence on group cohesiveness of the organization. (LS 5)Michael suggests that "both task leadership and social leadership can provide positive contribution to the cohesiveness by keeping the team focused on the task and by maintaining good relationship and team harmony."
In essence, effective leaders maintained group harmony and cohesiveness of the organization by attending both to mission-specific task outcomes and to the personal qualities of crew members. (LS 4)
Relationship between Cohesiveness and Superior Performance of organization (SP)
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The cited references and many theories show that cohesiveness is positively related to the SP of the organization. According to Resource Based View (RBV), resources are key drivers of sustainable competitive advantage. The most precious resources referred to as strategic assets are concurrently valuable, rare, complex and costly to imitate and non substitutable. Resources are valuable when they permit the firm to take advantage of opportunities and/or neutralize threats in external environment. (LS 6).Thus in relation to RBV logic, the available empirical evidence converges to suggest that cohesion in teams especially in TMT should constitute a highly valuable resource to the firm (LS 7).
In essence, cohesiveness in teams, particularly Top Management Teams (TMT) is positively associated with Superior Performance (SP) of the firms.(LS 8)
Relationship between Cohesiveness in TMT's and SP of the organizations:
In new ventures, Top Management Team Cohesiveness (TMTC) is especially important because of the complex and ambiguous nature of the teams' task. (NV 368). This section will explain how cohesiveness in TMT associated with the conflicts experienced during decision making process and in turn relate with the SP of the firms. Studies shows that cohesion in the TMT related directly to ROI and sales growth which are main factors in SP of the organization (NV 372). Moreover, theories show that the cohesiveness in the TMT is related to the conflicts experienced in the teams during decision making. Recent research shows conflict to be multidimensional, the cognitive dimension of conflict is considered to be generally functional, this occurs when the team members consider a number of alternatives from variety of diverse perspectives in decision making. On the other hand, the affective dimension of conflict is generally dysfunctional and occurs when personally oriented disagreement focusing on interpersonal dislikes and disaffections. (NV 369).Generally cohesion will relate positively to the level of cognitive conflict and negatively to the level of affective conflict experienced during decision making.(NV 370,371).Top Management Team Cohesion (TMTC) also have the potential to operate as an intangible strategic asset by helping the TMT to reach consensus on strategic direction and organizational controls, as well as by facilitating communication and commitment to shared organizational goals.(LS 2)TMTC appears to possess all the attributes of a strategic asset and thus according to the RBV and previous empirical findings, TMTC should be positively related to superior firm performance.
Theories explain that, surprisingly another dimension of cohesion leads to shrink the level of cognitive conflicts in decision making process because of the concept of 'group think'. As the groups become highly cohesive, and in the presence of dominant leader, group members, may in fact, with hold useful ideas that may contradict the popular opinion in order to maintain their positive status in the group (Janis 1982 NV382).
As an essence, the literature review discussed that, especially for new ventures, Top Management style is one of the crucial factor significantly associated with cohesiveness in the organization, which in turn is significantly associated with sustainable competitive advantage and SP. Furthermore, high cohesiveness in TMT may also lead to 'group think' which lead to impaired decision making and affect the SP of the firm.
Analyzing how the TMS influenced the cohesiveness in UST-Global:
From my observation, the following are the important factors established by the TMT improved the cohesiveness of the firm significantly.
The TMT established values and culture in the company which offers dignity to every employee and enforced the employees to treat everyone in an unbiased manner. "We give respect to people and an opportunity to accomplish their maximum potential in an atmosphere where there is no fear and also initiative and creativeness are truly encouraged"(Sajan). Thus the social leadership perspective (LS 5) of TMT in UST-global enhanced the cohesiveness in the organization by encouraging respect for team members and maintaining group harmony by clear behavioral norms and imposing these norms by rejecting deviant behavior.(Fedman 1984 LS 5).Moreover, the TMT formed a harder membership criteria to improve the cohesiveness. The organization attracts best talents from all over the world. The medium and high level management team consists of people from best business schools and knowledge workers are hired after four level of filtering interview processes. "Competent people working in harmony will produce the best results. Both 'competence' and 'harmony' are equally important" (Menon).
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The TMT improved the communication and cooperation between team members by introducing highly interactive communication technologies. This shows the effectiveness of the TMT's Social leadership((LS 5). The TMT also created a world class task tracker software which improved the task management significantly which in turn explains the effectiveness of Task leadership(LS 5)."we are setting an example by showing how heavily we are using IT for our own internal operations"(Sajan).Furthermore, The TMT provide a working environment where people assist each other and able to perform in a team environment. This environment enables employees to deliver their best and at the same time get highest job satisfaction. "IT employees are knowledge workers.If the environments supports the employees to use their creativity and ideas, that is what satisfies them and enables them to provide outstanding service to the client".
Thus the Top Management Style (TMS) in UST-Global facilitated the cohesiveness throughout the organization by establishing appropriate culture, member criteria, technology usage, work environment and other important factors, and bring the firm highly successful with in a short span of time.
Analysing how cohesion in teams especially TMT influenced the SP:
In my observation, the Top Management Team (TMT) in UST-Global is highly cohesive and this fact was also accepted by my interviewee in TMT that, "Job fulfillment is our key to attracting people and that is something we have been capable to accomplish because of our Values and Culture. That's is the reason, UST-Global TMT has even CIOs of many firms not only joined but are in fact energized to be a part of the company"(Sajan). "Organization has built a powerful higher level team to focus only on clients which includes Robert D, former General Manager of Reebok IT department, Marsha B, former VP and CTO of safway, and Paul M, former VP of AIG Technology department". In my observation, the similarity between the team members in terms of background experience, TMT in UST-Globlal become truly a unique composition, where competitors lag behind a lot, especially harder for competitors to imitate. Also,It was accepted by my interviewee that The TMTC is a crucial strategic asset for UST-Global.
Conflicts arising during decision making is an obvious one. "Inevitably some disagreement will happen in decision making but, all of our team members consider the conflicts as a alternative solution in decision making". According to (NV 369) "Those TMT are able to take advantage of the disagreements by keeping it task focused and constructive should outperform those for whom the disagreement becomes personally focused and destructive." So it is evident that UST-Global TMT is able to take advantage of disagreements in decision making which leads to the SP of the organization.
Most of the decisions made by the TMT were highly successful. For example, the decision of "fewer clients and higher attention" gave the organization a high strategic competitive advantage in the service market."Fortune 500 clients of UST Global like the attention they receive when the company's priority is on client share as opposed to market share. To ensure relentless attention to its clients the company targets only a few clients in a year for a long-term business relationship and concentrates and invests on them fully. "This was a conscious decision we made in the very early days of the company. Even if there is a short term opportunity for revenue we ignore it"(Dan)
Even though the organization TMT is highly cohesive and successful in decision making I can notice that in very few scenarios the decisions of TMT went less effective. I am explaining three of the ineffective decisions by the TMT which I have noticed below.
In last six years the TMT has changed the organization name three times for several reasons. Although the TMT explained the reasons for the name change, this affects the recognition and brand value of the company in the market. Furthermore, the organization hired more number of people to achieve the expected growth and not able to manage the huge talent pool and end up with many HR related issues. Particularly, the TMT has announced to the media that it will go public by first quarter of 2009 but the TMT was not able to make it up until now. Sajan told that "Going public is expensive, more expensive than ever before, so we want to get a critical mass"(Article UST_Global)Although the TMT explains the reason of uncontrollable external environmental changes and other factors as reason, This affects the image of the company in the market and among employees.
Even though only a very less decisions made by the TMT in UST-Global became ineffective and this will generally happen in every fast growing organization, the above issues explained are clearly because of the ineffective decision making in the TMT. Also, in my personal observation and with my interviews, it is clear that there was more cognitive conflicts happened in decision making process and helped the TMT to be more effective in decision making. So in my opinion, the effect of group think could be the possible reason which led the highly cohesive TMT to make the above impaired decisions which affects the performance of the organization.
High Cohesiveness in teams is a competitive advantage to achieve the common objectives but while taking important decisions the TMT should highly reconsider the decision and make sure that the high cohesiveness doesn't led to group think and affect the decisions.