In today’s
business world, effective leadership is gaining
precedence over effective management. If effective
management principles alone were once considered
as the essentials of organizational and business
success, today the success of organizations and
businesses are equally or perhaps more dependent
on effective and futuristic leadership. With the
information and communication revolution of the
late 1990s, many glorious business corporations
of the past have been doomed to failure, the reason
often being attributed as the failure of the leadership
to lead and steer the organization through the
fast paced changes in the business scenario brought
about by the revolution. The paper presents an
analysis of the skills and qualities that contribute
to the success of present day leaders and business
organizations by studying the concepts and theories
of successful and effective leadership and decision
making, the significance of organizational assessment
and enhancing organizational culture and analyzes
Pfizer Inc as a case of effective and successful
leadership.
Before attempting to analyze the concepts and
theories of successful leadership, an understanding
of the concept of leadership, its distinction
from management, the importance of effective leadership
in present business scenario etc would be imperative.
Leadership and its Importance
Ever since the development of modern management,
business and management experts have considered
leadership as an important attribute to effective
management from a people management perspective.
Leadership essentially involves influencing people
to strive willingly for the accomplishment of
group or organizational objectives. Chester I
Barnard defines leadership as ‘the quality
of the behavior of individuals where by they guide
people or their activities in organized effort.”
This and other earlier definitions of leadership
emphasize the behavior of leaders in defining
leadership.
Later, James Cribbin identified leadership as
a process and imperceptibly suggests the external
and internal situations that would impact the
process of leadership, by defining managerial
leadership as “the process of influence
on a group in a particular situation at a given
point of time and in a specific set of circumstances
that stimulate people to strive willingly to attain
organizational objectives, giving them the experience
of helping to attain the common objective and
satisfaction with the type of leadership provided.”
[Cribbin, 1972] This definition, while emphasizing
the people management function of leaders, also
suggests the significance of decision-making in
leadership.
As said, Cribbin’s definition identifies
leadership as a process and focus on the relationship
of a leader with the subordinates. In modern management
practice, the nature of leadership is often discussed
in terms of the ‘interaction’ among
the people involved in the process -- both leaders
as well the followers. Accordingly leadership
does not imply the trait or action of a leader,
but a “collaborative endeavor,” by
the members of the team. Thus the core of leadership
is relationship and not the traits or behavior
of the leader [Rost, 1993]. The post-industrial
leadership models are exemplified by collaboration,
power sharing and empowerment, which make leadership
complex and diverse, mutually shaping and spontaneously
changing [Rogers, 1992] and hence highly challenging.
Thus the modern concept of successful leadership
rejects the idea that leadership revolves around
the leader’s styles, behaviors and/or charisma
and signifies the level of collaboration, power
sharing and empowerment that a leader extends
to the group. Appropriate decision making skills,
futuristic approach, envisioning ability etc are
other attributes of a current successful leader.
According to Caudell, a successful leader today
is highly sensitive to the forces, which impinge
on him; he accurately understands himself, his
followers and the impinging environment. [Caudell,
1994]
Leadership and Management
Since contemporary literature defines leadership
as a process, it is often mistaken with management.
According to John Kotter, leadership and management
are two distinct and complementary systems of
action, both being essential for success in today’s
business environment [Kotter, 1990] The complex
business organizations of the twentieth century
led to development of management discipline, so
as to primarily address organizational complexities.
Along with that, the last decade of twentieth
century witnessed wide-ranging changes in business
operations, brought about by globalization and
the technology boom, which brought the issue of
leadership to the fore. If effective management
helps to cope with complexities, effective and
successful leadership helps to cope with change.
It is worthwhile to note that organizations with
strong leadership and weak management and those
with weak or ineffective leadership and strong
management are equally unsuccessful. Thus both
are complementary and the real challenge is to
combine strong leadership and strong management
and use each to balance the other.
[Kotter, 1990]
The Importance of Leadership and Decision-Making
in Present Business Scenario
There is little disagreement among management
scholars and business experts today, regarding
the significance of successful leadership for
the effective and successful operation of a business
organization. [Goleman et al., 2001] The rules
of conducting business have changed since the
globalization of world economies. Though the advancements
in information and communication technologies
have significantly improved the productivity and
effectiveness of organizational management, many
businesses fail to steer ahead in the present
business settings characterized by tough global
competition and increasing diversity in workplaces.
Computer technology has revolutionized the methods
of production and distribution shifting from mass
standardization to mass customization and individualization,
and calls for highly innovative management practices.
Also, unlike in the earlier years of twentieth
century, workplaces are increasingly diverse as
a result of globalized workforce, and pose a challenge
to the leadership, both at the top level and divisional
level. High employee turnover rate, dealing with
global clientele/customer and adapting to fast
changing market requirement are further challenges
faced by management today, which calls for people-centered,
strategic, result oriented and visionary leadership
so as to be successful. Thus leadership today
involves a great level of right and timely decision-making.
During the pre-globalization years the decision-making
or the ‘what to do’ aspect of business
was relatively certain, and leaders focused more
on the ‘how to do’ aspect. However,
today businesses are almost daily challenged with
both ‘what to do’ and how to do’
aspects, making good leadership coupled with right
decision-making a necessity for business and organizational
success.
The Theories and Concepts of Successful Leadership
Effective leadership is explained within the framework
of three main theories as discussed below
- Trait theory – The theory proposes that
a successful leadership depends on certain personality
traits of the leader such as intelligence, initiative
and creativity, open mind, self confidence, vision
and foresight, sense of responsibility, human
relations skill, maturity etc. Though this theory
has led to the notion that ‘leaders are
born, not made,’ it is commonly considered
that the traits can be developed by training and
practice. However as Jennings remarks fifty years’
of research have failed to identify one personality
trait that can be used to distinguish leaders
and non-leaders [Jennings, 1961]
- Situational theory – The situational theory
suggests that leadership is a function of the
situation in which the leader operates. The three
situational variables include leader’s position
and power, leader-subordinate relationship and
task structure. However in current business scenario,
situational variable extends beyond these variables
to include many external factors.
- Behavioral theory – The behavioral theory
suggests that leadership effectiveness is a function
of effective role behavior; it depends on what
the leader does. However, the effectiveness of
a particular behavior depends on the situation
in which it is applied.
Based on the three theories discussed above,
many modern management experts and researchers
have developed several models and concepts of
successful leadership. Covey’s Principle
Centered Leadership, Goleman’s ‘Leadership
that gets results’, and Strategic Leadership
are discussed below, and would give a definite
idea about leadership and decision making skills
that is necessary for a leader to be successful
in present business settings.
Covey’s Principle Centered Leadership
According to Stephen R. Covey, principle-centered
leaders work on the basis of natural and permanent
principles or values and build those principles
into every aspect of their lives including business
and manifest in their management processes, business
dealings, as well as mission statements.
- Principles-centered leadership is practiced
from the inside out on four levels:
- Personal: relationships with oneself
- Interpersonal: interactions and relationships
with others
- Managerial: the responsibility to get a job
done with others
- Organizational: the need to organize people
– recruit, train and compensate people,
build teams, solve problems, and create aligned
structure, strategy and systems
[Covey, 1992]
To be effective principle centered leaders Covey
identifies 7 habits of which three are habits
of independence enabling private victory, three
habits of interdependence enabling public victory
and renewal
The 7 Habits of Highly Effective People
Private Victory
- Be proactive – Enhance resourcefulness
by expanding the circle of influence
- Begin with the End in Mind – Visualizing
the consequence of actions
- Put First Things First – Organizing and
executing around priorities
Public Victory
- Think Win / Win -- Seeking mutual benefit in
human interactions
- Seek First to Understand, Then to Be Understood
– Highlights the most essential communication
skill of listening
- Synergize – Synergy signifies that the
whole is greater than the sum of its parts. Synergy
is particularly important in leading today’s
culturally diverse business organization.
Renewal
- Sharpen the Saw – focus on self-renewal:
physical renewal by exercise, stress management;
mental renewal by reading, visualizing etc; emotion
renewal by enhancing social relationships; spiritual
renewal by mediation etc
[Covey, 1989]
Strategic Leadership
The future growth and prospects of a business
is dependent on leadership, hence successful leadership
implies strategic decision-making. Strategic leadership
offers the vision and direction by defining the
rationale for growth and the environment for the
success of the corporation. It facilitates “outside-the-box”
thinking so as to create future growth of the
organization. Strategic leadership is not about
micromanaging business strategies, it provides
the broader perspective for businesses to develop
appropriate strategies and aid the creation of
value.
Seven Functions of Strategic Leadership
- Vision: Providing direction for the organization
as a whole
- Strategic Planning: Instituting right strategy
and policy
- Administration: Overall management and executive
responsibility
- Assessing the Organization Fitness: Assessing
the organization, organizing or reorganizing to
inculcate appropriate work culture
- Confidence, Morale, Energy, Espirit de corps:
developing a corporate spirit
- Leading and Teaching -- choosing today’s
leaders and developing the leaders of tomorrow
- Stakeholders, Associates and Society: relating
the organization to other organizations as well
as the society
[Adair, 2003]
Results Based Leadership
Unlike other models, results-based leadership
emphasizes results and considers effective leadership
as a non-cumulative product of attributes and
results. Hence, in order to be successful, leaders
must strive for excellence in demonstrating attributes
and achieving results. The four areas of result
include
Employee results – developing human resources
Organization results -- innovation and continued
learning
Customer results –customer satisfaction
and delight
Investor results –ensuring cash flow
[Ulrich, Zenger, and Smallwood, 1999]
In his study, Leadership That Gets Results, Goleman
identifies six leadership styles adopted by leaders
to influence the followers
- Coercive— Demands immediate compliance
- Authoritative—Mobilizes people toward
a vision
- Affiliative— Creates harmony and builds
emotional bonds
- Democratic— Forges consensus through participation
- Pacesetting— Sets high standards for performance
- Coaching— Develops people for the future
After analyzing the financial results of leaders
with different styles of leadership and Goleman
observes that those leaders who adopted four or
more styles – authoritative, affiliative,
democratic and coaching – have the best
climate and business performance, in short, get
the best results.
[Goleman, 2000]
Assessing Organizational Fitness and Enhancing
Organizational Culture
It would be an understatement to day that leadership
impacts organizational culture. In fact organizational
culture is defined and determined by the leadership
style adopted by the management. Organizational
culture is considered as the values, beliefs,
behaviors, principles, practices held and followed
by the organization, and is defined and/or influenced
by the organizational leadership. In order to
be successful in dealing with the increasing diversity
in business organizations today, the leadership
needs to define an organizational culture, which
is more inclusive and effective in managing diversity
for organizational benefit.
A strategically oriented, result-based, effective
leader analyzes the Strengths, Weaknesses, Opportunities
and Threats of/to his organization considering
the factors, both internal and external to the
organization and fills the gap by facilitating
the appropriate climate required to change and
enhance the organizational culture to suit the
situational requirement
Pfizer Inc – A Case of Effective Leadership
Pfizer Inc, the world’s largest pharmaceutical
company, is one of the few old-economy companies
that have emerged successful, despite the business
slow down that hit American economy post 9/11
attack. Pfizer emerged third in the list of “Best
50 Performers” by Business Week in 2003.
The company and its management have received many
accolades and awards, prominent of them with respect
to the leadership and organizational culture include:
- Hank McKinnell, Pfizer Chairman of the Board
and Chief Executive Officer, was listed among
“Most Powerful People in Business”
by Fortune in July 2003
- Hank McKinnell was awarded 2003 Global Leadership
Award by United Nations Association of America
in October 2003
- Pfizer Pharmaceutical Sales Force was voted
as first overall in Verispan's "Pharmaceutical
Sales Force Structures & Strategies for 2003-2004”
by a survey of U.S. Physicians for the ninth consecutive
year in January 2004
[Author Unknown, 2004]
Thus, Pfizer presents an interesting case of effective
and successful leadership. Let us understand the
leadership qualities of McKinnel and the organizational
culture set by the Hank McKinnell that had made
him successful. In order to understand the leadership
qualities and organizational culture from outside
the organization, one needs to look into the organizations’
public language -- that is language used in the
policy documents that describe the organization’s
vision, values, and mission, and procedures manual
as well as the other brochures and publications
of the organization. [Denison, 1990]. By analyzing
these and other material available on Pfizer’s
website, Internet and other sources, the following
features emerge:
- Values of Integrity – Follow and demand
high ethical standards
- Respect for People – Treat people with
respect and dignity, value diversity
- Customer Focus—Constant focus on customer
satisfaction
- Organizational culture – Open and inclusive
- Innovation – Facilitates innovation by
tapping the collective knowledge, wisdom, talent,
and experience of its diverse employees
- Teamwork – Understands the need and importance
and promotes teamwork
- Performance-
- Leadership – Believes every employee is
a leader, empowering and visionary
- Quality – Value oriented work, products
and relationships
- Community—valuing the role of community
in the long-term health of the business.
[Author Unknown, 2004]
Mckinnel’s people centered, result oriented,
strategic leadership with customer focus is evident
in all his public statements –vision, mission,
public speeches et al. It is only reasonable to
conclude that this strong leadership coupled with
the strong management practices helped Pfizer
Inc, with an employee base of 130,000, to emerge
successful in the tumultuous business environment.
Retaining employees, and fast changing market
needs has been the biggest challenges faced by
managements during the turn of the millennium.
Had the leadership failed to value its people,
lost its result orientation or lacked the vision
to lead the organization to future growth, Pfizer
would not have emerged as successful as it did.
Conclusion
The importance of good leadership for business
success is little debated today. Management scholars
as well as business experts have developed many
models and concepts for successful leadership,
of which Principle based, People-centered, Result
oriented and Strategic Leadership models, when
considered together provide the framework of traits
and qualities needed for a leader to be successful
in today’s challenging business environment.
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