Case Study: Who is Afraid of a Little Mud?

Introduction

Business is a rather complicated sphere of human activities that lives and develops according to its own rules and laws. However, such concepts as leadership and ethics are eternal for all types of businesses because a properly led and ethically built company has all chance to succeed in the world of business. Accordingly, the case under consideration is a proper opportunity to examine how leadership and ethics are interrelated with each other and with the basics of business on the whole.

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Case Summary

Thus, the case titled Who is Afraid of a Little Mud? considers the development of one of the world’s largest hog butchers Smithfield Foods Inc. In more detail, the case is all about the CEO of the company, Joseph W. Luter III, whose practices cause a lot of controversy in the U.S. society. On the one hand, this person manages to achieve a hundredfold increase in the company’s share price over two decades. On the other hand, Mr. Luter pays little attention to the concerns of others, whether these are business competitors or environmentalists.

Leadership Style

Leadership Theory

Thus, the first and foremost point that causes controversy surrounding the personality of Joseph W. Luter III is his leadership style. Some people argue that Mr. Luter does everything for his company to prosper and that is why he is a perfect leader. Others claim that Mr. Luter pays no attention to the competition rules, needs of his employees, and the overall ethics of business conduct. To better understand who is right and who is wrong in this controversy, it is possible to address the theory of leadership as discussed by Noe (2008) and Northouse (2009). On the whole, leadership is defined by Northouse (2009) as “a process whereby an individual influences a group of individuals to achieve a common goal” (p. 3). Using this definition, one cannot call Mr. Luter a leader at all, as in the whole case the idea of common goal is not even mentioned as if Mr. Luter is driven not by his employees’ needs but only by his own business ambitions.

However, if the contingency theory by Fiedler is taken into consideration, as cited by Northouse (2009), one can see that Mr. Luter displays the features of a good situational leader. The essence of theory lies in the fact that leaders are assessed according to the fitness of their work approaches and results to the situation in which they have to manifest their leadership skills (Northouse, 2009, p. 111). From this viewpoint, Mr. Luter can be called a good “task motivated leader”, as Northouse (2009, p. 112) notices, as he managed to transform the company that was in debt in the early 1970s into a hog butcher giant by 1981.

Leadership Styles

Further on, Mr. Luter’s leadership skills can be assessed using the leadership styles developed by scholars like Mankiw (2009) and Northouse (2009). These authors define four distinct categories of leadership styles. These are the directing, the coaching, the supporting, and the delegating styles (Northouse, 2009, pp. 91 – 92). The essence of the directing style lies in the fact that the leader only instructs his/her subordinates and then supervises their performance directed at goal achievement (Northouse, 2009, p. 91). Mr. Luter, or at least the data that the case study provides on his leadership methods, displays no features of the directive leadership style in this meaning, as far as he makes decisions himself based on the data that his managers provide him with.

If the coaching style is considered in the meaning that Northouse (2009) attributes to it, Mr. Luter’s style has also no resemblance to it. The coaching style is the goal achievement instruction combined with the reader’s attention towards the issues and needs of his/her employees (p. 91). Obviously, the leadership style that Mr. Luter uses cannot be called the coaching one as this leader cares more about the result than the needs of the employees in the process of its achievement. The point when Mr. Luter cut the whole layer of management trying to restructure Smithfield Foods Inc. is a bright example of this statement. The supportive style is not about Mr. Luter either, like this style, according to Northouse (2009), presupposes that the leader facilitates corporative behaviors and develops his/her employees’ skills without direct goal achievement instructions (p. 92). However, the delegating style is the one that seems to perfectly fit, according to its definition by Northouse (2009), the methods of leadership that Mr. Luter exercises.

Mr. Luter’s Leadership Style and Its Effectiveness

In more detail, the delegating leadership style is the one that gives the highest extent of freedom to the employees, but at the same time puts greater responsibility for the results of their activities (Northouse, 2009, p. 92). This is what Mr. Luter does according to the case study under analysis (Forster, 2001, p. 112). According to Foster (2001), “Luter conducts much of his business from an apartment on Park Avenue in Manhattan, leaving day-to-day operations to the presidents of each of Smithfield’s subsidiary companies. He can go weeks and weeks without talking to them” (p. 112). Accordingly, these data allow saying that Mr. Luter exercises the delegating leadership style in his management of the Smithfield Foods Inc.

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At the same time, the effectiveness of this leadership style in Mr. Luter’s work is a controversial point. On the one hand, the company under his leadership obviously reached great progress and expanded globally. On the other hand, the current situation with Smithfield Foods Inc. is rather problematic, as it faces expansion obstacles, environmental concerns, and considerable debts because, as Foster (2001) argues, the company’s debt-to-equity ratio is 1-to-1 (p. 113). Drawing from this, the overall assessment of the effectiveness of the leadership style exercised by Mr. Luter is more negative than positive, because the long-term results of this leadership prove to be negative for the developmental perspectives of the company. Accordingly, the ethics of this, as we found out delegating, leadership style is also rather doubted because of the numerous controversies in the society.

Ethics of Leadership

Theoretical Considerations

The discussion of the ethics of the leadership exercised by Mr. Luter should be started by the consideration of the theoretical ideas expressed by Ciulla (2004). According to this author, ethics is a purely social phenomenon that emerges in every, even the smallest, community where the interests of people are contrasted and confronted (p. 6). Thus, when the leadership of any kind is concerned, ethics becomes crucial as leadership is the process of uniting and guiding people towards a common goal. The same is true about the sphere of business, where people interact again to reach the common goal their organizations pursue. Based on this, Ciulla (2004) claims the prominent role of ethics in the practice of leadership, irrespective of the style of leadership that a specific leader might prefer and implement (p. 4).

On the whole, Ciulla (2004), Noe et al. (2008), etc. argue that the issue of ethics in the topic of leadership is focused on only one major question that sounds like “What is a good leadership?” (Ciulla, 2004, p. 18). In more detail, ethical leadership can be considered such in various cases if different stakeholders, i. e. people benefiting from leadership or subordinated to it, are concerned. For employees, ethical, and respectively a good, leadership is the one that takes care of their needs and is not too strict in respect of fines and sanctions. For partners and higher officials, a good leadership practice is one that allows the leader to control his/her organization and achieve effective performance. Finally, ethical leadership might be the one that respects the rules of the competition and is environmentally friendly, which is especially important in the modern business world (Ciulla, 2004, pp. 20 – 21).

Ethics of Mr. Luter’s Leadership

Accordingly, based on the above theoretical considerations, the ethics of the delegating leadership displayed by Mr. Luter in his Smithfield Foods Inc. is also a controversial topic for analysis. On the one hand, the company under the leadership of Mr. Luter prospers and plans for the further development of its production line and market share increase. This means that, according to the views by Ciulla (2004, p. 18), such a leadership is good, and ethical at the same time, for the major stakeholders and investors of Smithfield Foods Inc. These people expect the proper performance and considerable income from the money they invested, and Mr. Luter’s leadership allows them getting the results they planned to. Obviously, the employees also benefit from the proper development of their company, and Mr. Luter’s leadership can be considered good for them as well.

At the same time, the competitors of Smithfield Foods Inc., as well as the environmentalists, are concerned about the controversial business and production practices Mr. Luter adopts in his company. The former might argue that, for instance, concentrating in his hands both the raw materials and the facilities to generate ready-made products is a monopoly created by Mr. Luter, and such a leadership practice is unethical. The environmentalists also accuse Smithfield Foods Inc. of its reluctance to operate in an environmentally friendly manner and the claims about the emissions that the hog butcher facilities by Mr. Luter make into the rivers Neuse in North Carolina. Accordingly, one can see that the ethical character of Mr. Luter’s leadership style is a controversial point, and the definition of ethical or unethical it can be given only in a specific situation and from a specific point of view of those whom this leadership affects in it.

Conclusions

So, the case study discussed in this paper allows considering the theory and practice of leadership and ethics as its integral part. The details of the case prove that Mr. Luter exercises the delegating leadership style in his attempts to further promote Smithfield Foods Inc. in the international and domestic market. The controversial point about this leadership style is its ethics, and this is the main obstacle on the way of this company towards its steady expansion.

Works Cited

Ciulla, Joanne. Ethics, the heart of leadership. Greenwood Publishing Group, 2004. Print.

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Forster, John. “Who’s Afraid of a Little Mud,” Business Week, 2001, pp.112-13.

Mankiw, Gregory. Essentials of Economics. Cengage Learning, 2009. Print.

Noe, Raymond et al. Fundamentals of Human Resources. McGraw-Hill, 2008. Print.

Northouse, Peter. Leadership: Theory and Practice. SAGE, 2009. Print.

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