Leadership Case Study Overview

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Introduction

Leadership is a crucial component of organizational behavior. While the importance of leadership is difficult to underestimate, there is no certainty about what makes a good leader. In other words, it is unclear what is the actual role of leaders in organizations and how they should be fulfilled. The present paper defines leadership and analyzes a case study provided by Oxford Leadership. The Metro Group case study overviewed in the present paper demonstrates how a change in the leadership model can affect the corporate culture and performance of the company. Additionally, it provides background information that helps to define the role of leaders. The present paper claims that the central role of leaders is to ensure that all the followers have the same vision and can contribute to achieving it.

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Definition of Leadership

Even though leadership is a matter of discussion by numerous scholars and practitioners, there is no unified definition of the term. Nelson Mandela (1994) gave one of the most vivid definitions of leadership in his autobiography: “A leader…is like a shepherd. He stays behind the flock, letting the most nimble go out ahead, whereupon the others follow, not realizing that all along they are being directed from behind” (p. 28). The majority of scholars agree that leadership is “a process of influencing, in which an individual exerts intentional influence over others to structure activities and relationships in a group or organization” (Daniëls et al., 2019). In other words, leadership is the ability to influence the opinions of other people to achieve a certain goal (Robbin & Timothy, 2019). Thus, leadership is a complicated matter that can be viewed from different sides.

In organizations, managers are not necessarily leaders. The provision of rights and formal positions do not guarantee that the appointed employee will be able to lead the people effectively. Management and leadership are two different ideas that should be distinguished. Therefore, all the definitions of leadership fail to include that a person needs to be sanctioned to have a formal influence on others. Organizations need both leaders and managers to be effective: leaders are to unite people to achieve a vision, while managers need to create detailed plans, execute them, and monitor the daily activity of employees (Robbin & Timothy, 2019). In summary, even though managers often lead people towards achieving a common goal, leadership and management are not synonyms.

Case Study Overview

The present paper will discuss a case study provided written by Brian Bacon (2016), chairman and founder of Oxford Leadership. The case study discusses Metro Group, a Düsseldorf-based company that owns cash & carry stores in 22 countries around the globe (Bacon, 2016). The case study describes the Leadership for Growth (LFG) initiative, the main objective of which was to transform the leadership style to enable a collaborative leadership team that felt comfortable taking risks (Bacon, 2016). The LFG model included two steps that were designed to change the DNA of the company to promote a culture of empowerment instead of a culture of control. During the first stage, senior leaders of the company conducted a sincere dialogue with local leaders and regular employees in all 22 markets (Bacon, 2016). The stage aimed at lowering the barriers within Metro, forging personal connections, and ensuring the commitment to transformation (Bacon, 2016). The primary objective of the second stage was to transform cognitive capability learning into an experiential learning process that was effective and applicable to all issues (Bacon, 2016). Additionally, the second stage focused on seven mission-critical capabilities, including building trust, celebration, appreciation, dialogue, team dynamics, coaching, giving and receiving feedback, and fasted decision-making (Bacon, 2016). The program was developed by specialists of Oxford Leadership and implemented in close collaboration with Heiko Hutmacher, the CHRO of Metro Group.

The results of the initiative were outstanding, as the program transformed the company into a constantly improving, customer-centric organization. More than 100,000 employees around the world engaged in the process of transformation by participating in direct dialogue with upper management or receiving appropriate training (Bacon, 2016). More than 1,500 managers participated in the leadership program to acquire skills in leading meetings, communication, respecting different perspectives, and collaboration (Bacon, 2016). The company managed to turn to the collaborative leadership model, which resulted in developing a culture of continuous transformation (Bacon, 2016). The organization became more prepared to face transformational challenges that emerge as the environments change (Bacon, 2016). This was achieved through the promotion of trustful relationships and accepting the experimental learning model (Bacon, 2016). In summary, the new leadership model proved to be beneficial for Metro AG on all levels.

Analysis of the Case Study

Utilization of Contingency Theories

The case study discusses the importance of leadership constantly reviewing the current leadership style and altering it according to the goals, time, place, and circumstances. This implies that the approach utilized by Oxford Leadership and Heiko Hutmacher was aligned with the principles of the Fielder contingency model and the situational leadership model. According to Robbin and Timothy (2019), the Fielder model is a theory claiming that the effectiveness of leadership depends upon “a proper match between a leader’s style of interacting with subordinates and the degree to which the situation gives control and influence to the leader” (p. 425). According to the theory, every situation needs to be assessed in terms of leader-member relationships, task structure, and the position of power (Robbin & Timothy, 2019). The initiative described by Bacon (2016) aimed at unifying the leader-member relationship by developing an atmosphere of trust. It also changed the task structure by allowing the employees to be more creative. Finally, the program aimed at shifting the position of power by empowering every employee to take responsibility and make competent decisions.

The situational leadership theory emphasized the importance of the followers’ readiness (Robbin & Timothy, 2019). This theory was central for planning the change process, as its first step aimed at preparing the employees to accept the collaborative leadership style, which was decided to be the most effective for the company. After all the employees were ready to accept the new model, the company started to train the leaders to utilize the new leadership model.

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Transformational Leadership

The analysis of the case study demonstrated that the LFG model developed by Oxford Leadership is a process of transitioning from transactional leadership to transformational leadership. Transactional leadership is characterized by establishing precise goals and clarifying roles and tasks (Robbin & Timothy, 2019). This leadership style is associated with contingent rewards and management by exception, which means searching for deviations from standards and interfering only when they are not met (Robbin & Timothy, 2019). Transformational leadership is inspiring followers to transcend their self-interest to benefit the organization (Robbin & Timothy, 2019). This is achieved by decentralization of responsibility, trustful relationships, and risk-taking (Robbin & Timothy, 2019). The description of the transitional model is very close to the objectives of the initiative described in the case study.

Transitional leadership is a more favorable leadership model for Metro Group in comparison with the transactional model. According to the 2018/2019 annual report, Metro AG faces a myriad of challenges associated with the fast-changing environments. In particular, the company needs to adjust to quickly changing regulatory norms, macroeconomic and political risks, sustainability demands, changes in customer preferences, trade regulation alterations, and tax changes (Metro AG, 2020). This implies that the company needs to embrace innovation and constant change as the primary principle of doing business. According to Hussein (2018), there are significant correlations between innovation and organizational performance, which emphasizes the importance of innovation on all levels. Therefore, Metro AG needs to utilize the most appropriate leadership model to stay competitive in the dynamic environment of the food industry.

Both transactional and transformational models can be used to promote innovation and creativity in employees. A study conducted by Prasad and Junni (2016) confirmed that both leadership models promote firm-level innovation. However, the results of the research demonstrated that the transitional model is preferable for dynamic environments. Similarly, a study by Afsar et al. (2017) revealed that transformational leadership helps to achieve a greater level of innovation through psychological empowerment, while transactional leadership negatively affects innovation. Ma and Jiang (2018) claimed that psychological empowerment is the key to improving the effectiveness of operations.

While recent research favors the transactional model for innovation, some considerations should be made. Hansen and Pihl-Thingvad (2019) argue that it is beneficial to utilize both transitional and transactional models, depending on the situation. This statement is coherent with the contingency theories, as followers need to be prepared for the utilized leadership model.

Relevant Statistics

The implemented change had a positive impact on Metro AG in terms of the promotion of innovation. As a result, the company managed to improve its profitability between 2012 and 2016. Table 1 below demonstrates the changes in sales, income, and assets, and Figure 1 visualizes the data. The data shows that the company managed to preserve financial stability in an unfavorable environment. After finishing the first stage of the initiative in 2014, the company experienced a significant rise in revenues from negative €183 million to positive €562 million. The company also decreased its total assets by reducing its liabilities. Thus, the change in the leadership model seemed to have a positive effect on the company.

Table 1. Financial performance of Metro AG (Metro AG, 2014; Metro AG, 2016; Metro AG, 2017)

2012 2013 2014 2015 2016
Total Sales 65,679 63,035 59,937 59,219 58,417
Income -30 -126 -183 578 562
Total Assets 28,811 28,004 28,156 27,656 24,952
Financial performance of Metro AG
Figure 1. Financial performance of Metro AG (Metro AG, 2014; Metro AG, 2016; Metro AG, 2017)

Conclusion

The analysis of the case study demonstrates that the leadership model is a crucial element of the corporate structure. The utilized leadership model affects every aspect of organizational performance, either directly or indirectly. The case study revealed that organizations need to carefully assess the environment in which they operate and adjust their leadership model accordingly. For companies that operate in dynamic environments, it is beneficial to utilize transformational leadership, as it promotes innovation. The utilization of the model can stabilize the financial performance by adapting to the needs of the customers and the regulatory requirements. While preparing for the change process, it is crucial to consider all theoretical frameworks, including contingency theories, to ensure that the process goes smoothly. In conclusion, the case study and the analysis of scholarly literature revealed that the utilized leadership model should promote a culture of continuous change to stay competitive.

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My Role as a Leader

The case study demonstrated that my role as a leader is to inspire my follower to fulfill the corporate mission. Similar to Heiko Hutmacher and Oxford Leadership team, I need to ensure every employee takes the corporate vision personally and sees how it is beneficial for everyone. I need to develop an atmosphere of trust and sharing, where calculated risks are welcome. At the same time, I should assess the readiness of employees to accept change and use the most appropriate leadership model to maximize organizational performance. In short, as Nelson Mandela would put it, my role as a leader is to make the people around me cooperative by making them feel important (Mandela, 1994). Such an approach helps the followers realize their value for the organization and their importance to the corporate mission.

References

Afsar, B., Badir, Y. F., Saeed, B. B., & Hafeez, S. (2017). Transformational and transactional leadership and employee’s entrepreneurial behavior in knowledge-intensive industries. The International Journal of Human Resource Management, 28(2), 307-332.

Bacon, B. (2016). Case study: Changing the firm’s DNA to enable Collaborative Leadership. Oxford Leadership.

Daniëls, E., Hondeghem, A., & Dochy, F. (2019). A review of leadership and leadership development in educational settings. Educational Research Review, 27, 110-125.

Hansen, J. A., & Pihl-Thingvad, S. (2019). Managing employee innovative behaviour through transformational and transactional leadership styles. Public Management Review, 21(6), 918-944.

Hussein, A. S. (2018). The importance of knowledge management orientation behavior and innovation on business performance: A lesson from Indonesia creative economy sector. Asia Pacific Management and Business Application, 7(2), 95-108.

Ma, X., & Jiang, W. (2018). Transformational leadership, transactional leadership, and employee creativity in entrepreneurial firms. The Journal of Applied Behavioral Science, 54(3), 302-324.

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Mandela, N. (1994). Long walk to freedom: The autobiography of Nelson Mandela. Little, Brown and Company.

Metro AG. (2020). Annual report 2018/2019

Metro AG. (2017). Annual report 2015/2016

Metro AG. (2016). Annual report 2014/2015.

Metro AG. (2014). Annual report 2012/2013

Prasad, B., & Junni, P. (2016). CEO transformational and transactional leadership and organizational innovation. Management Decision, 54(9), 1542-1568.

Robbins, T., & Timothy, A.J. (2019). Organizational behavior. Pearson.

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