Effects of Poor Leadership

Introduction

In the modern-day business environment, organizations are constantly forced to exhibit innovation and enhanced performance so as to remain relevant and profitable in an ever-increasingly competitive arena. The input of both the individuals and groups in the organization is invaluable to the achievement of organizational goals. Whereas the potential of groups and teams is monumental and crucial and as such indispensable to the organization, there comes a time when the fate of the organization may hang on the very shoulders of an individual.

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This study shall be based on the argument that the dysfunction of leadership at the head of a company can bring a multimillion-dollar company to its knees. The study shall begin by giving a brief outlook of the environment in which leaders are to function. It shall then proceed to define the aspects that may make these leaders turn around the fate of the organization. A discussion articulating the conditions under which the person may fail in his attempts to impact the organization positively shall also be given. This shall be in an effort to elaborate that good leadership ability is mandatory for an organization to achieve maximum potential.

Leadership in an organizational context

Management often refers to the effective and efficient utilization of resources that are available to an organization to achieve organizational goals and objectives. It involves planning, organizing, leading, and controlling the organization’s activities and resources. Leadership on the other hand most often refers to a process through which one person uses the help and support of others towards achieving a particular goal or task. In the article by Warren Bennis “The Leadership Advantage”, the author aims at highlighting the factors and characteristics that complement a good leader and consequently, effective leadership. He descriptively states that several core attributes make for a good leader. They include being a knowledgeable professional in the field of expertise, having a proven track record of achieving set goals and objectives, and the ability to motivate and delegate effectively. Leaders also ought to be able to cultivate and identify talent and exhibit sound judgment even under pressure (22).

Bennis further contends that the success of any organization depends mainly on the effectiveness and ability to inspire its leaders (20). Studies have it that the stock prices of well-led companies increased by over 900% in 10 years as opposed to a bare 74% growth recorded by those companies that lacked good leadership. This fact effectively underscores the importance of good leadership in any organization.

The article however does caution that a leader is deemed worthless if he lacks the backing and support of a team. It is therefore important that all leaders work towards cultivating and generating intellectual capital for their firms. This duly gives them a competitive advantage over other competitors in the market. In most organizations, only a fraction of the capability of the workforce is utilized. Bennis acknowledges that managers cannot gain much by coercing the employees to work harder. Instead, an increase in productivity can be achieved if the leaders invest highly in retraining programs, ensure availability of essential resources, and provide motivational attributes like bonuses, promotions, and even pay increments to act as incentives (23).

An exemplary leader should ensure that his organization has a sense of purpose and is working towards the achievement of some organizational goals. He/she should also set out to generate and sustain trust between the administration, employees and clients. Such endeavors heighten the levels of optimism within the organization all the while boosting employee’s morale and guarantee future success in all organizational endeavors.

Creativity is one of the skills in a leader that can be used to make a difference in the organization. Over the last decades, creativity and innovation have progressively become the defining factor of successful and failing organizations. Shavinina asserts that this innovation has become paramount to the survival of organizations(607). She goes on to note that on most occasions, innovation springs from an individual’s initiative. It can thus be argued out that an individual possessing creativity and innovation can use this ability to positively impact the organization. However, many organizations still fail to grasp the whole concept which in turn fails in their organizations. Rick Wagoner reflected a lack of strategic oversight in his term as the CEO of General Motors. This flaw saw the stocks prices of this organization fall by 90%. This incident was highly attributed to the fact that his strategies were simply not forward-looking and as a result, “GM lagged behind in terms of competition as regarding cutting costs and innovativeness” (Ellington, 27).

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In certain circumstances, the preservation of the corporate culture of the organization can make a difference in the organization. This is especially so when the culture has been responsible for the successful execution of tasks in the organization over a long time. This being the case, it is obvious that the success of an organization can be jeopardized by any move that threatens to weaken the corporate culture of the organization. Morgan states that corporate cultures develop “as an ethos created and sustained by social processes so as to bury out differences (128).” This means that the culture is a means by which the various disparate members of the organization can forge some form of alliance and thus work towards it. Jenster and Hussey assert that a strong culture may be further reinforced in an organization by a strong charismatic figure (201). Andrew Carnegie stated that “you do not have to be expert in your company’s field to be able to lead a company brilliantly”. He openly gave credit to his management team claiming that they had more knowledge in the steel manufacturing process than he did. His honesty as a leader played a pivotal role in motivating his team. In addition to this, it fostered an organizational culture that reflected on his own respect towards his employees.

During the past recessionary period, the world witnessed as major financial institutions especially in the United States failed. Business analysts were quick to diffuse the situation claiming that it was due to poor regulatory policies in the banking sector. However, George states that poor leadership was the main cause of this demise (96). He claims that up to date, many of the bank leaders still avoid taking responsibility for their actions which led to the failure of the businesses. It is a known fact that most banks prior to the financial crisis were involved in hazardous business practices. In an audit report presented by the World Bank, “Lehman Brothers investment bank failed due to bank management’s lack of oversight and failure to control risk in its loan portfolio.” Richard Fuld the CEO of Lehman Brothers investment bank took excessive risks and exercised poor management which consequently pulled the bank down to its knees. Sahskin articulates that actions that produce a feeling of charisma towards a leader figure will invariably lead to an increase in the likelihood of the followers to ape the actions of the leader (178). In this case, the employees would have easily followed the footsteps of their leaders no matter how risky they were which consequently led to the closure of this bank.

At the present, most economies in the world are working towards recovering from the credit crunch that hit almost all countries in the world. It is a reasonable assumption that most organizations were forced to make changes that included cutting on costs or laying off employees so as to remain profitable. In such times, there is need for a flame of optimism to be fanned in the organization. Bolden et. al state that an optimistic nature is one of the defining behaviors associated with a transformational leader (16). A person who can enthusiastically talk about the needs of the organization and draw a compelling image of the bright future that all in the organization can look forward to is capable of making a difference in the organization. In all organizations, there arise contentious issues which elicit different reactions at some point in time. How these issues are diffused may spell out the difference between the subsequent success or failure of the organization. The presence of a leader who can diplomatically manage the crises may be crucial to the success of the organization. Diplomacy entails the using of power and authority carefully to achieve positive outcomes by being unanimous or arriving at a consensus (London, 259).

It should be noted that leaders are first of all human and as such, they too are subjected to making mistakes. However, there are situations whereby some leaders have overstepped their organizational boundaries regarding their duties and responsibilities. Pfeffer and Sutton state that “Most corporate disasters and financial scandals, including those perpetrated by Jeff Skilling and Andy Fastow at Enron, Al Dunlap at Sunbeam, Hank Greenberg at the large insurer AIG, and Dennis Kozlowski at Tyco, happened not simply because these people were greedy, immoral, or unethical, but because such people were in leadership positions with so much control that no one could challenge them” (107). Such assumptions from leaders not only frustrate the employees but consequently cost the organizations that these leaders represent hefty losses.

On the same note, such problems often arise due to the fact that these leaders have excessive control over the decision-making processes as well as the operational procedures established by an organization. Pfeffer and Sutton acclaim that when such leaders make decisions, they assume that their decisions are better than the rest. As a result, the employees lack that sense of involvement in the organization and at times may not follow through with such decisions leading to the failure of the organization. Therefore, giving too much control to leaders may lead to fallouts during the implementation of business prospects causing losses or even less productivity.

In addition to this, ignorance, lack of proper communication channels as well as failure to address diversity in any business environment can be detrimental to the results and subsequently the success of an organization. In a recent case in Penang, the chief Minister admitted to turning down a multimillion-dollar investment in his country due to the fact that he feared that he could not provide the investor with the 1,000 engineers that the investment required to kick off its operations in the region. A good and effective leader would never let such an opportunity pass by due to such a flimsy excuse. This decision made by Lim Guan Eng showed a lack of oversight from the leader as well as ignorance since other companies related in the same field such as Intel, AMD, Bosch among others have invested in Penang and have employed tens of thousands of engineers. In addition to this, the universities in the region also produce a lot of engineers not to mention the fact that he would have simply liaison with the human resources ministry in order to find the necessary engineering resources required.

Reflectively, Motorola recorded losses of over $345 million at the end of 2008 due to poor decision-making by the financial managers. Instead of working on new products like smartphones which are high in demand, they decided to invest in Sigma Finance Corporation. This investment has been costing Motorola a lot of money with no hope of returns especially now that most people have lost confidence in the money market and are still recovering from the recession. The decision to invest in the financial sector especially during the recession shows a lot of ignorance from the leaders and also indicates that the company might soon head into financial constraints due to poor performance in the electronics industry. Also, it shows that the managers in the Company are subjecting the fate of the company to poor decisions which may in the end lead to its failure. It is therefore imperative that the leaders in all organizations ensure that they are well versed with the current economic trends in a global context. This is because lack of insight on how the competition works, resource allocation and distribution, and financial bearings by leaders may have devastating effects on the success and survival of the company; attributes which may see an organization fail.

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Conclusion

This study has argued that the role of a leader can make a difference in the organization if properly directed. The paper has discussed the prominent aspects in present-day organizations that make the role of such individuals more pronounced as compared to past times. It has been proposed that an individual possessing certain character traits that are mostly attributed to leaders can make a difference in an organization. However, it has been articulated that some of these traits can be detrimental to the organization’s beings. As such, a compromise should be struck to ensure that those skills and traits which yield positive trends are capitalized on while the negative traits are minimized. From the discussions presented in this paper, it can be authoritatively stated that while the role of the leaders is crucial to the success of the organization, it should always be looked at with respect to its effect on the entire team since the organizational goals can only be effectively achieved with the support of all the members of the organization.

Annotated Bibliography

Bennis, Warren “The Leadership Advantage.” Leader to Leader. 12 (1999): 18-23. Print.

In this article, the author brings out the various advantages that are accrued to leaders. He claims that leadership in any organization commands a high amount of respect from the subordinate staff. He explains the characteristics that an effective leader should posses. Further on, he reiterates that these attributes enable the leader to be rational, reasonable and interactive; aspects which contributes highly to the success of any organization.

Bolden, Gosling et al. “A Review of Leadership Theory and Competency Frameworks.” Leadership-Studies. Web.

Bolden et al have in detail reviewed the concept of leadership through this article. They have highlighted the various theories developed that best explain what leadership entails. Also, they have given advice on how leaders ought to handle the workforce in order to sustain competence in the organization. From this article, it is evident that the success of any organization lies behind its leader’s ability to forecast, organize the workforce and plan activities.

Ellington, Jelani, H. “The optimization of General Motors’ warranty system by reducing mean time to discover failure.” 2005. Massachusetts: Massachusetts Institute of Technology. Print.

The author of this book embarks on the issues that faced General Motors in their production processes. This is one of the many issues that led to the troubles that GM faced and is still facing. Such problems occurred due to poor leadership and lack of adequate supervision during the manufacturing of these products. She claims that most vehicles produced by GM took time to manifest their shortcomings and as a result, this led to increased losses to the corporation as clients complained and demanded for compensations. This book elaborates on the techniques GM adopted in order to ensure that such glitches are minimized.

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George, Bill. “Seven Lessons for Leading in Crisis.” 2009. USA: John Wiley and Sons. Print.

This book discusses the various traits that leaders should employ while dealing with a crisis. The author suggests that in troubled times, many leaders are bound to make mistakes due to pressure and limitedness of time. As such, the author gives detailed instructions as to how leaders should behave through such times in order to either salvage the situation or recover from the negative effects that might have arisen during such times.

Jenster, Per, V and Hussey, David. “Company Analysis: Determining Strategic Capability.” 2001. Chicago: Wiley. Print.

The authors state that for effective leadership, every leader must have a strategy which guides the workers towards achieving the organizational goals. They have given various examples in which lack of a strategy has led to the failure of businesses. In addition to this, they claim that a good leader must ensure that the strategies they employ cover all aspects of the business. They state that having multiple strategies act as a failsafe in times of crisis.

London, Manuel. “Leadership Development: Paths to Self-insight and Professional Growth.” 2002. USA: Routledge. Print.

The author in this book has effectively elaborated the techniques through which an individual can use to discover the leader within. He states that leadership should not be viewed as a role but as a process which requires self dedication and commitment. In addition to this, he mentions all the prerequisites that an individual must posses in order to realize full professional growth within the organization.

Morgan, Gareth. “Images of Organization.” 2006. USA: Sage. Print.

Morgan insists that the image that an organization projects to the public determines whether it will succeed or fail. In this book, he explains that a leader’s traits are reflected on how the employees behave as they represent the organization in the public arenas. He insists that a charismatic leader develops a great image of the organization through the establishment of an organizational culture based on integrity and ethical behaviors. He also warns advices the leaders to be precautious when handling the workers because dissatisfaction in the working place can affect the way in which employees interact with the clients leading to devastating results.

Pfeffer, Jeffrey and Sutton, Robert, I. “Hard facts, dangerous half-truths, and total nonsense: profiting from evidence-based management.” 2006. USA: Harvard Business Press. Print.

The book talks about different organizations and their ability to accept responsibilities in times of crisis. The authors explain how different organizational leaders lead their organizations into turmoil and use excuses to justify their actions. In addition to this, they explain how some leaders make profits for their organizations through dubious and hazardous means of operation. They dwell on the repercussions of such poor leadership to the lives of the employees and the total welfare of the organization.

Sashkin, marshall. “Leadership that matters: the critical factors for making a difference in people’s lives and organizations’ success.” 2003. USA: Berrett-Koehler Publishers. Print.

It is a useful guide to leaders who aspire to succeed in their endeavors. The book discusses the various types of leaders that exist in the world. It then categorizes them according to the situations that would best fit their leadership style. The author explains how leaders can influence the lives of their workers as well as their perceptions in order to facilitate success of the organization.

Shavinina, Larisa, V. “The International Handbook on Innovation.” 2003. LA: Elsevier. Print.

The author attributes the success and continual growth of any organization to innovation and creativity. She asserts that an innovative leader has the ability to foster the same attribute to his/her workers. She further claims that innovation is key to success in the ever so competitive business environment. Also, lack of innovation among other attributes in any business only spells doom.

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