Effective leadership is a crucial component of running any business. The leader is responsible for making key financial and business decisions, motivating employees and their performance, as well as relationships with clients and other stakeholders. All these features are determined and shaped by the leader, since despite any form of hierarchy, they guide the development of the company. However, the personal qualities and experiences of people determine their leadership styles, which can vary significantly.
These differences do not make any style more or less successful, but they must match the specifics of the company to be effective. Otherwise, management fails its task and does not bring success to the company. This paper will examine the communication and leadership styles of two well-known entrepreneurs, Sir Richard Branson and Robert Nardelli, to demonstrate how their differences have become effective and ineffective for their companies, respectively.
Communication Approaches of Sir Richard Branson and Robert Nardelli
Sir Richard Branson and Robert Nardelli are entrepreneurs who have achieved significant success in their professional careers. However, while Branson has become one of the most influential business leaders and ensured the success of his company Virgin, Nardelli is widely criticized for his management and leadership skills, especially at Home Depot. This contrast can be explained by the significant difference in the approach to communication between the two leaders, since Branson was attentive to his employees, while Nardelli made decisions based on numbers but not people.
Nardelli’s approach to communication and its flaws are evident in many verbal and non-verbal details. First, one of the first Nardelli solutions at Home Depot was to standardize all operations, customer service approaches, and staff performance (Griffith, 2005). Before Nardell, the company’s staff had freedom and autonomy in making most decisions; thus, in general, standardization could be an effective solution if Nardelli took into account the interests of the staff. However, instead, he hired a new head of Human Resources for the company, as well as 1,300 HR managers to fill this position in each store (Griffith, 2005).
The new assessment system has resulted in the layoff of many employees with significant work experience (“Home unimprovement,” 2007). Such a move not only alienated employees but also reduced the quality of customer service, since new and part-time employees did not have the necessary experience.
Moreover, Nardelli also made mistakes in non-verbal communication with investors and employees. According to Lussier and Achua (2016), non-verbal communication cues are just as important as verbal messages because they demonstrate the leader’s attitude towards employees. Nardelli’s decision on the amount of his remuneration sent a signal that diminished employee confidence and trust. The increase in Nardelli’s options, coupled with the decline in share prices, has undermined employee and investor morale (“Home unimprovement,” 2007).
At the same time, Nardelli used numbers and focused on achieving net profit in decision-making. In the short term, cost cuts brought profit to the company; however, these changes were implemented by hiring part-time employees and reducing the range of products, which had adverse long-term effects (Cutlip, 2020). Thus, this one-sided approach to communication with employees and investors showed Nardelli as an ineffective leader and caused his resignation.
At the same time, Sir Richard Branson is an example of a leader who uses communication as the primary tool for human resources management and company development. Branson says: “Most people want to be listened to and appreciated at work, and focusing on these attributes as a leader will work better for everyone in the long run” (Coleman, 2019, para. 5). This quote fully characterizes Branson’s approach to communication that makes his management effective. The main features of this approach are the ability to listen, delegate tasks, and give feedback to employees.
Listening, taking an interest, and considering employees’ ideas are key to Branson’s communication. According to Lussier and Achua (2016), listening and responding are central to the message-receiving and decision-making processes and, judging by Branson’s success, he takes all the necessary steps to do so. For example, the leader is interested in the problems and successes of the employees, including personal, and discusses with them how to achieve any goals (Geekmaster, 2021). This involvement of employees in the work of the company helps assess the capabilities of the team, anticipate problems, and increase the motivation of personnel.
Furthermore, delegation, according to Branson, is one of the key points for gaining employee loyalty and a comfortable leader’s work. However, skillful delegation requires knowing the strengths and weaknesses of employees and monitoring their progress to provide assistance when needed (Kruse, 2020). These methods of communication show that the leader cares about the employees as he coaches them but, simultaneously, does not increase their level of stress due to constant control.
As a result, employees who receive informative feedback contributing to their development are more motivated to improve their performance and benefit the company (Lussier & Achua, 2016). Thus, Branson’s communication with employees is a key aspect of his effective management, while its absence was the reason for Nardelli’s failure as a leader at Home Depot.
Leadership Styles of Branson and Nardelli
Branson and Nardelli’s approaches to management demonstrate that they have vastly different leadership styles. Branson employs charismatic and transformational leadership that is fully aligned with the company’s environment and meets the interests and needs of employees. At the same time, while Nardelli exhibits some of the transformational leadership traits, his approach to communication and decision-making characterizes him as an autocratic leader. This style was inappropriate for Home Depot, which demonstrated Nardelli as an ineffective leader, although this approach was appropriate in General Electric (Cutlip, 2020). One can see and analyze the features of the leadership styles of entrepreneurs in the principles of their work and the decisions made.
Branson is one of the most famous entrepreneurs with a reputation for being an effective leader who gained the respect and trust of his employees. One might note that Branson combines the traits of a charismatic and transformational leader. Branson’s charisma combines the qualities of an entrepreneurial “hero” who successfully achieves a goal, inspires his followers, and demonstrates confidence in all his actions (Lussier & Achua, 2016). The unique characteristics that attract his followers are that he is not afraid to take risks and move from the status quo, has a passion for his work, and strives to learn from mistakes (Half, 2018).
This approach makes Branson’s followers feel absolute confidence and trust in their leader and take great risks, which is one of the critical features of a charismatic leader (Lussier & Achua, 2016). For example, Branson and his team created a rocket plane for short commercial space travel (Amos, 2021). Thus, Branson’s influence on his employees and the public characterizes him as a charismatic leader.
At the same time, Branson’s management style has many of the traits of transformational leadership. For example, according to Lussier and Achua (2016), a transformational leader wants to change the status quo and improve the company by analyzing and articulating current problems to form a new vision. Changing the status quo, constant communication, and the formation of promising but achievable goals are the main features that characterize Brandoson’s leadership. Simultaneously, the feature of a transformational leader is that he inspires and directs followers to take actions but leaves them autonomy in their execution, which is Branson’s approach (Lussier & Achua, 2016; Kruse, 2020).
Branson also encourages teamwork, collaboration, and innovation, which is another trait of a transformational leader (Lussier & Achua, 2016). At the same time, this leadership style was most appropriate for a company that requires employees to be autonomous and flexible and take the initiative to improve the quality of service. Consequently, the combination of Branson’s charisma and transformational approach to management has helped him become an effective leader and achieve success for his business.
However, Nardelli’s leadership style cannot be described as charismatic or transformational due to flaws in communication and decision-making. Nardelli’s management has one trait that would characterize him as a transformational leader as he saw the problems in the organization with standardization and wanted to use them to improve the quality of employees’ work (“Home unimprovement, ” 2007; Lussier & Achua, 2016). However, Nardelli did not try to inspire and engage employees in decision-making but made changes according to his vision.
Standardization and restrictions, layoffs, hiring new managers, and cost-cutting demonstrate an autocratic leadership style, as Nardelli put his ideas ahead of other stakeholders. This type of management has been effective at General Electric, where Nardelli has achieved significant success (Cutlip, 2020).
General Electric focused on productivity and production rather than the constant interaction and communication with customers as a retail area. However, Home Deposit employees, accustomed to autonomy and participation in decision-making for their stores, could not work under autocratic leadership, in which the manager makes all decisions regardless of the specifics of the departments. Thus, the choice of management style showed Nardelli as an ineffective leader and led to the decline of Home Depot.
Therefore, this analysis of the work of Branson and Nardelli demonstrates the importance of effective leadership for entrepreneurs. The main differences between Branson and Nardelli are their approach to communication, as Branson provided two-way communication with employees, unlike Nardelli. For this reason, Branson was able to gain the trust and loyalty of employees, as well as understand their interests and the direction of the company’s development. Simultaneously, Nardelli has lost the employees’ and investors’ trust due to a reluctance to consider their interests and concerns.
In addition, Branson displayed the traits of a charismatic, transformational leader, inspiring followers with his enthusiasm and innovation, involving them in decision-making processes, and encouraging their cooperation and autonomy. This leadership style has provided Brandston with the support and high performance of his team that is essential to the business’s success. At the same time, Nardelli adopted an autocratic leadership style that ruined team morale and reduced the flexibility the company needed in the retail industry. Thus, the paper demonstrates that communication and business understanding are critical aspects of effective leadership.
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