Leadership Style and Organisational Effectiveness

20 July 2012

SHANMUGA PILLAIYAN (010194)TAN CHEE HOAW (010120)KEVIN CHOO (010226)HELMMY SHAHNY MOHD MUSTAFA (010268)AMRI MOHD SOFIAN (010563)GURMEET SINGH (002967)

Agenda

1. Introduction – What is Leadership?

2. Leadership Models & Styles

3. Case Study – Apple Inc

I. Historical Milestones

II. Steve Job’s Management Style

III. Impact on Organisation Behaviour

IV. Evidence of Organizational Effectiveness

4. Comparisons with Other Leaders

5. Conclusion

Slide 2July 2012Nottingham Malaysia

Nottingham Malaysia

What is Leadership ?

“The ability to influence a group toward the

achievement of goals” (Robbins 2003)

July 2012Slide 3

Robbins, Stephen. Organizational Behavior. 10th ed. Upper Saddle River, NJ: Prentice, Hall, 2003.

“Management is doing things right,

leadership is doing the right things” (Warren Bennis and Peter Drucker)

Nottingham Malaysia

Leadership TheoryThe Evolution of Leadership Theory

1940 1950s 1960s 1970s 1980s 1990s

July 2012Slide 4

Trait Theory

Behavioural Styles Theory

Contingency Theory

Transformational Theory

Transactional Theory

Nottingham Malaysia

Leadership TheoryTransformational Leader

1. Leaders stimulate and inspire(transform) followers to achieve extraordinary outcomes

2. Characteristics:

I. Leadership is proactive

II. Works to change the organizational culture by implementing new ideas

III. Employees achieve objectives through higher ideals and moral values

IV. Motivates followers by encouraging them to put group interests first

V. Intellectual stimulation: Promote creative and innovative ideas to solve problems.

July 2012Slide 5

People will follow a

person who inspires them.

Nottingham Malaysia

Leadership TheoryTransactional Leader

1. Leaders promote compliance of his followers through both reward or punishment.

2. Characteristics:

I. Leadership is reactive

II. Works within the organizational culture

III. Employees achieve objectives through rewards and punishments set by leader

IV. Motivates followers by appealing to their own self interest

V. Management-by-exception: maintain the status quo; stress correct actions to improve performance

July 2012Slide 6

Subordinates are not

self-motivating

Nottingham Malaysia

Leadership TheoryContingency Theory

1. According to the contingency approach of leadership, a single leadership style is not applicable to all situations.

2. The 3 contingency models of leadership styles.

I. Fiedler’s Contingency Model

II. Hersey and Blanchard’s situational theory

III. Path Goal Theory

IV. Tannenbaum and Schmidt’s leadership continuum

July 2012Slide 7

a single leadership style is not applicable

to all situations

Nottingham Malaysia

Leadership Style

Research done by the consulting firm Hay-McBer Associates (Harvard Business Review, 2000) , found six different leadership styles as the following:

1. The coercive style

2. The authoritative style

3. The affiliative style

4. The democratic style

5. The pacesetting style

6. The coaching style

July 2012Slide 8

Nottingham Malaysia

Leadership Style-Details

  Coercive Authoritative Affiliative

Mode of OperationDemand immediate compliance

Mobilize people toward a vision

Create emotional bonds and harmony

The style in a phrase “Do what I tell you.” “Come with me.” “People come first.”

Advantage Efficient and effective

Maximizes people's commitment toward organisation goal, enhance clarity and flexibility

Drives up trust and flexibility, build up sense of recognition and belonging.

DisadvantageErode flexibility, motivation and responsibilty.

Failed when a leader is working with a team of experts who are more experienced than him

Allow poor performance to go uncorrected, and leaves people rudderless

When the style works best

In a crisis, to kick start a turnaround, or with problem employees

When changes require a new vision, or when a clear direction is needed

To heal rifts in a team/ motivate people during stressful circumstances

July 2012Slide 9

Nottingham Malaysia

Leadership Style-Details

  Democratic Pacesetting Coaching

Mode of OperationBuild consensus through participation

Expect excellence and self-direction

Develop people for the future

The style in a phrase “What do you think?” “Do as I do, now.” “Try this.”

Advantage Drives up flexibility and responsibility

Fast pace, focus and result oriented.

Coaching improves flexibility, responsibility and commitment.

Disadvantage

Endless meetings and elusive consesus. People end up feeling confused and leaderless

Erode Flexibility and responsibility. Lack of commitment.

Time consuming

When the style works best

To build buy-in or consensus, or to get input from valuable employees

To get quick results from a highly motivated and competent team

To help an employee improve performance or develop long-term strengths

July 2012Slide 10

Nottingham Malaysia

Organisational Climate

The term organisational climate was first defined by psychologists George Litwin and Richard Stringer. It refers to six factors that influences working environment:

1. Flexibility- How free employees feel to innovate.

2. Responsibility- Sense of responsibility to the organization.

3. Standards- The level of standards that people set.

4. Rewards- The sense of accuracy about performance feedback and aptness of rewards.

5. Clarity- The clarity people have about mission and values.

6. Commitment- The level of commitment to a common purpose.

July 2012Slide 11

Nottingham Malaysia

Leadership Impacts Company PerformanceLeadership has a direct impact on Organisational Climate and Organisational Performance.

July 2012Slide 12

ORGANISATIONALCLIMATE

1. Flexibility2. Responsibility3. Standards4. Rewards5. Clarity6. Commitment

LEADERSHIP

1. Leadership Models

2. Leadership Styles

ORGANISATIONAL EFFECTIVENESS

1. Product Innovation

2. Profit3. Share Price

Nottingham Malaysia

Apple Inc.'s Historical Milestones

July 2012Slide 13

Nottingham Malaysia

Steve Job’s Leadership Style

July 2012Slide 14

Nottingham Malaysia

Steve Job’s Leadership Characteristics*

Visionary

Persuasive

Gifted

Inspirational

Detail Oriented

Passionate

Relentless

Blunt

Manipulative

Rude

Dismissive

Spiteful

Hostile July 2012Slide 15

Transformational

Leadership

Autocratic and

Pace-setting

Approach

*drawn from comments and quotes from friends,

colleagues, employees, fans, anc competitors

Nottingham Malaysia

Steve Job is a Transformational Leader

• When Jobs returned to Apple in 1997, his assessment was that the company was ninety days from going bankrupt

• In May 1998, Jobs announced the new direction for Apple to focus on just four core products: laptops for consumers & professionals & desktops for consumers & professionals. The direction was simple & clear.

• The high value placed on ideas is one of the things that Steve burned into the Apple culture & it will likely to continue to guide the company into the future

• Steve Jobs

became a steward of creative thinking & became its greatest advocate while expecting such behaviour from each employee

built an organization that recognized the needs for creativity,

July 2012Slide 16

Nottingham Malaysia

Impact on Organizational BehaviourIndividual

1. Emotions: Most employees at Apple are fans of Steve Jobs, and tend to “hero-worship” him from afar. Senior and middle management personnel who have regular contact with Steve, approach him with a mixture of reverence (because of their immense respect for him and his vision) and fear (because of his “take-no-prisoners” style of management)

2. Attitudes: Apple sets the tone of the work culture within the organization from day 1, and focuses on developing the higher levels of their employees’ hierarchy of needs, which are Esteem and Self Actualization.

3. Values: Employees with a high nAch* disposition appear to thrive at Apple, due to the focus on Motivators instead of Hygiene Factors

July 2012Slide 17

* nAch – Need for achievement

Nottingham Malaysia

Impact on Organizational Behaviour Feedback from Apple employees:“Steve Jobs is revered at the company.” – Apple Employee “Watching Apple grow in the Steve 2.0 era has been nothing short of astonishing.” – Apple Network Engineer “ I am proud to say that I work for Apple. The products speak for themselves and it is great to be able to use them.”  - Apple Project Manager (Austin, TX) “Great products and phenomenal co-workers! An awesome work environment that cultivated creativity and competition. I woke up every day and could not wait to get to work!” – Apple Account Executive (Atlanta, GA) “Apple is an amazing company with a very successful management. Innovation is at the heart of all decisions. Successful organization. And great products.” – Apple Employee (location n/a) “Apple is an amazing company, with cutting edge products, unparalleled customer service focus and a place that cultivates a family atmosphere. Very enjoyable working environment.” – Apple Employee (location n/a) Apple is an amazing place to work. There are so many opportunities to grow and learn. “- Apple Employee (Cupertino, CA)

July 2012Slide 18

Nottingham Malaysia

Impact on Organizational Behaviour Group: Communication

• The approach to management & talent development is top-down

with an all-knowing CEO aided by a powerful executive team – ET

o the purpose of the ET is to coordinate things & set the tone for the company through effective communication platforms

• The company maybe top-down, but the executive –team format engenders a system of managing up

teams throughout the organization are in a constant state of communication by preparing their boss or their boss’s boss to present at an executive team meeting

July 2012Slide 19

Nottingham Malaysia

Impact on Organizational Behaviour Group: Conflict

Given Apple’s product silo structure in a relatively flat organization, internal conflicts are usually resolved within the small teams in each silo independently. The thoroughness of Jobs’ vision and mandates, as well as his blunt manner, usually precludes conflicts from significantly affecting day-to-day operations, leaving the onus of satisfactory conflict resolution to the various stakeholders of the organization.

July 2012Slide 20

Nottingham Malaysia

Impact on Organizational BehaviourOrganisation Structure

The Organization

Organizational culture: Loyalty, Evangelistic, Hero-Worship

Decision Making: Top down approach, tempered by upwards management

Change: The organization is resilient and adaptable to changing circumstances due to a strong structure and culture.

July 2012Slide 21

Nottingham Malaysia

Job’s Impact on Organizational BehaviourOrganisational Climate

1. Flexibility- Apple employees are encouraged, even expected to continually innovate, but always within the boundaries of Steve’s vision

2. Responsibility- Most Apple employees proudly feel a deep, abiding sense of responsibility towards the company and behave accordingly

3. Standards- Steve sets very high standards for performance and innovation, and every Apple employee is expected to adhere and exceed those standards

4. Rewards- Apple’s remuneration is on par with market trends, and they do not seem to be focused on obtaining and retaining talent through hygiene factors

5. Clarity- Every Apple employee has a clear sense of what they need to do on a day-to-day basis

6. Commitment- Despite his brusque manner, most Apple employees remain committed to realizing Steve’s vision

July 2012Slide 22

Nottingham Malaysia

Evidence of Organizational Effectiveness

July 2012Slide 23

Steve Left Steve Came Back

Steve Left

For Good

Nottingham Malaysia

Staff force for Apple, Microsoft and HP.

July 2012Slide 24

2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Staff Force (2001-2010)

HP

Microsoft

Apple

(Source: Financial Reports)

Nottingham Malaysia

Profit per employee

July 2012Slide 25

(Source: Yahoo Finance)

1. With 46,600 employees and a turnover of 20 billion dollars in 2010, each Apple’s employee generates a turnover of 419 528 dollars per year.

2. While, Microsoft with 244,831 dollar at 3rd place. And HP with 28,096 dollar per year.

Nottingham Malaysia

Comparisons with other Leaders

July 2012Slide 26

• Born in September 1954

• A UCLA drop out

• Six time Forbes Businesswoman of the year

• First female CEO of a fortune 20 company with a mandate to shake things up

• Also known as “Fiorina Shakeup”

She is Carly Fiorina

CEO of Hewlett-Packard (1999 to 2005)

Nottingham Malaysia

Comparisons with other LeadersCarly’s Leadership

Carly’s leadership traits

• Fostered a top-down approach to management (Transactional). Conflicted with the old-style of HP: a completely decentralised management approach

• Exhibited a truly coercive – pace-setting leadership style

• Dynamic and headstrong leader

• Highly motivational speaker

• “Consummate” Saleswoman – Customer satisfaction

July 2012Slide 27

Nottingham Malaysia

Comparisons with other LeadersCarly’s Leadership

Carly’s downfall as a leader

• Was not able to delegate tasks

• Move too fast and too drastic with changes for the organization to cope

• Neglected to foster employee needs resulted in high turnover

• Was not able to form and communicate a cohesive, convincing and powerful vision of HP’s future

July 2012Slide 28

Nottingham Malaysia

Comparisons with other Leaders Carly’s Leadership - A Transactional Leader

Conclusion

• Carly failed to execute HP’s strategy and deliver improvements in HP’s profits and stock price

• Was asked by HP’s BOD to resign due to lack of leadership skills needed to take advantage of emerging market opportunities

• Indeed, Carly was a very good businesswoman but she could not prove herself as a leader.

• She saw her downfall when she could not relate to her employees, and without followers, there cannot be a leader

• Perhaps, Carly could be a successful leader by adding more people centred leadership skills into her highly dominant job centred leadership style.

July 2012Slide 29

Nottingham Malaysia

Comparisons with other Leaders Carly’s Leadership

Hewlett Packard’s Organizational Effectiveness

July 2012Slide 30

Carly left HP

Carly helm as CEO 1999 to 2005Carly joined HP

Comparisons with other Leaders Bill Gates’ Leadership

1. Co-founded Microsoft with Paul Allen2. Philosophy – his vision turned to his philosophy which

ultimately the focus is about running software in every computer

3. Fast in taking in ideas and turned them into a successful product – ‘95 Microsoft response to internet with the launch of MSN

4. Transformational Leader – visionary, and inspirational5. Authoritative, and Democratic – free hand to research

and create teams for more product development & launches BUT careful in control and judgement

6. Microsoft 2005 from 7 decentralised business unit converted to 3 centralised units.

July 2012Nottingham MalaysiaSlide 31

Comparisons with other Leaders Bill Gates’ Leadership

Characteristics

1.Intelligent 2.Visionary 3.Passionate4.Innovative

5.Risk Bearer6.Continuous Learner

July 2012Nottingham MalaysiaSlide 32

Nottingham Malaysia

Comparisons with other Leaders Bill Gates’ Leadership - Organisational Effectiveness

•Microsoft IPO in 1986 at $21.00 (13 March 1986) Close at $28.00

•Pays a quarterly dividend of $0.20

•Stocks has split 9 times over 26 years July 2012

Slide 33

Nottingham Malaysia

Comparisons with other Leaders

July 2012Slide 34

Nottingham Malaysia

Conclusion

1. Industries that experience a high rate of change and uncertainty (in terms of products, paradigm shifts, business climate) like computing, internet services and telecommunications benefit more from transformational leadership than any other leadership model. The success of an organization within these industries depend heavily on the vision of its leader to successfully navigate the inherent uncertainties.

2. Transformational Leaders who are proven visionaries are able to easily gather around them people who are willing to buy into their visions and passionately commit to making them a reality.

3. Both Jobs and Gates are considered Transformational Leaders because of their ability to inspire high levels of innovation, creativity and productivity from their employees through their visions

4. A leader can afford to be autocratic, even dictatorial and still lead an organization successfully as long as the leader continues to be successful in his role as a visionary.

July 2012Slide 35

Thank You

All rights reserved @ 2012