Greenfield Initiative: Bulgaria vs. Panama

As opposed to an acquisition, a Greenfield initiative requires a different set of parameters when selecting a country for expansion. Companies use a different set of priorities when establishing wholly owned subsidiaries through Greenfield initiatives as these initiatives are much riskier than direct acquisitions. Advantages of building a Greenfield site include establishing local goodwill by creating jobs, premises designed specifically to your operation's activities taking advantage of the newest technologies, a greater choice of locations, and sales will likely increase in this area. If a company embarks on a Greenfield initiative early in an areas development, then the company will enjoy a lack of competition however there is more risk involved. These risks include building and site opening delays, cost overruns in developing the site, and difficulties in estimating what expected sales will be in the new region.
Neto, Brandao, and Cerqueira identified certain country characteristics as being more favorable to foreign direct investment, (FDI), Greenfield initiatives than merger and acquisition initiatives, (M&A): notably that Greenfield initiatives increase as uncertainty avoidance and cultural distances increase, while as uncertainty avoidance and cultural differences decrease as traditional M&A activities increase, (2010). It is more appealing for a company to acquire another company when they know the cultures are similar and the society will tolerate the company’s management, even though there are still inherent risks involved with a Greenfield initiatives those risks are more tolerable and it is more appealing to build a company from the ground up when cultural differences are more noteworthy and there may be less tolerance for a company’s management. Additionally, Neto et al note that while economic growth potential is an important factor in attracting FDI Greenfields, it is not a factor in attracting FDI M&A activity; alternatively while investor protection is important for both M&A inflows and outflows, it is not as important for Greenfield initiatives, (2010). Most importantly, Neto et al note that variables such as a country’s governance, openness, economic size, literacy, life expectancy, and per capita wealth, have no effect on whether a company chooses either an acquisition or a Greenfield initiative, (2010). Clearly when a company chooses to embark on an FDI Greenfield initiative they are aware of the risks involved, and rather than seeking to expand market share, they are more importantly seeking to create and control new markets.
When reviewing different FDI Greenfield initiatives, although risks are planned, protecting stakeholder values is still important and the inherent risks of doing business in some foreign countries are more tolerable than others. In a ranking of 133 economies Panama was rated in a 2009-2010 as number 59 and Bulgaria as number 76 by the World Economic Forum Index, (Blanke, Geiger, Browne, Mia, Hanouz, & Sala-I-Martin, 2009). Both counties occupied a similar ranking on the 2008-2009 Index, with Panama moving down one place one the index and Bulgaria staying the same indicating a certain amount of stability despite the global economic crisis of the past year, (Blanke et al, 2009). At number 76 Bulgaria is the lowest rated member of the European Union in the World Economic Forum Index. Bulgaria’s currency is pegged to the euro while Panama uses the U.S. Dollar.
Both Bulgaria and Panama are listed by the United Nations Development Program as developing countries with high human development, indicating that people living in these nations have similar literacy rates, education levels, life expectancies, and standards of living, (UNDP, 2009). Notably, Panama is rated as number 60 on the list and Bulgaria as number 61 on the list of 182 countries. In each country the literacy rate is nearing 100%, the life expectancy rates and education enrollment rates are similar, and at $11,391.00 and $11,222.00, the GDP per capita of each country is nearly identical, (UNDP, 2009). According to the CIA World Factbook, the unemployment rate increased in Bulgaria in 2009 from 6.3% to 9.1%, and is therefore now substantially higher than Panama’s 7%, however, with over 7 million people Bulgaria has more than twice the population than Panama with less than 3.5 million, and while 28.6% of Panama live in poverty only 14% of Bulgarians live below the poverty level, (2010). Additionally the CIA World Factbook notes that the GDP composition by sector of each nation are similar, with Panama’s economy comprised of 5.9% agriculture, 17.2% industrial, and 76.8% services, and Bulgaria’s comprised of 7.5% agriculture, 27.6% industrial and 64.9% services, (2010).
While most of the preceding information indicates a great deal of parity between doing business in Panama and doing business in Bulgaria, the World Bank however ranks the ease of doing business in Bulgaria as 44th out of 183 countries, while Panama ranks 77th. The most noticeable disparities are employing workers in Panama ranked at 177th on the list, while employing workers in Bulgaria is ranked as 53rd, while in trading across borders in Panama ranks 10th place and Bulgaria ranks 106th, (2010). The World Bank gives Panama a score of 78 out of 100 on difficulty in hiring workers while Bulgaria receives a score of 17. The World Bank gives Panama substantially poorer scores on rigidity of hours, difficulty and costs of redundancy, and rigidity of employment. Clearly managing workers in a particularly rigid employment environment would be more difficult for a Greenfield initiative and legislatively is indicative of a more developed economy. Although the World Bank notes that it is substantially easier, more timely, and less costly to trade across borders when either importing and exporting from Panama than from Bulgaria, as noted previously this activity is more conducive to an M&A initiative than to a Greenfield initiative. The World Bank data notes that although starting a business is easier in Panama than Bulgaria, (scoring Panama a 27 out of 100 and Bulgaria a 50 out of 100), paying taxes and protecting investors are substantially more difficult while enforcing contracts, registering property, and getting credit are moderately more difficult in Panama. These factors are again more indicative of a country that is conducive to M&A activity rather than Greenfield development.

Bulgaria’s recent inception into NATO in 2004 and its recent accession to the European Union in 2007 has promoted rapid economic development in industrial areas that has abated only slightly over the last year in light of the global economic recession. Bulgaria attracted $4,467 million in FDI flows in 2009, down from $9,795 million in 2008 and a high of $12,388 million in 2007, (due to a slowing down in M&A activities). Meanwhile 2009 recorded a record high of inward FDI stocks, indicating that although investment flow is slowing down it is still an attractive and stable, although not a wholly new, economic investment environment, (UNCTAD, 2010). As such, Bulgaria is a better opportunity for a Greenfield investment initiative than Panama.











References:
Blanke, J., Geiger, T., Browne, C., Mia, I., Hanouz, M., & Sala-I-Martin, X. (2009). World Economic Forum: Global Competitiveness Report 2009-2010 (30th ed.). Retrieved from http://gcr.weforum.org/gcr09/

Bulgaria. (2010, June 24). In U.S. Central Intelligence Agency World Factbook [online]. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/bu.html

Panama. (2010, June 24). In U.S. Central Intelligence Agency World Factbook [online]. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/pm.html

Neto, P., Brandao, A., & Cerqueira, A., (2010, June). The macroeconomic determinants of cross-border mergers and acquisitions and Greenfield investments. IUP Journal of Business Strategy, 7 (1/2), 21-57. Retrieved from ProQuest ABI/INFORM Complete.

United Nations Conference on Trade and Development. (2010). World Investment Report 2010 Country Fact Sheet: Bulgaria. Retrieved from http://www.unctad.org/sections/dite_dir/docs/wir10_fs_bg_en.pdf

United Nations Development Program. (2009). Human Development Report. Retrieved from http://hdr.undp.org/en/statistics/

World Bank Group. (2010). Doing Business: Measuring Business Regulations Economy Rankings. Retrieved from http://www.doingbusiness.org/economyrankings/

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Advantage of an M&A initiative within the Eurozone

The European Union or EU, as we know it today, was formed through a series of treaties specifically designed to protect the businesses, economies, and citizens of its Member States. Although the Treaty of the European Union was not signed until 1992, the first of the series of treaties leading up to its formation, the Treaty Establishing the European Coal and Steel Community, (ECSC), and was signed in 1951. These treaties are agreed upon democratically and voluntarily and updated as countries accede and as European society develops, (Europa, n.d.). Criteria to become an EU Member State are stringent, as such currently only 27 of approximately 50 European countries are members; of these only 16 countries comprise the “euro zone”, those countries which are able to operate utilizing a single monetary unit called the “euro”.

As such, protectionist policies and trade barriers can exist between the 27 countries that form the EU today and the U.S. An example of such a protectionist policy was the 1993 EU implementation of a trade limitation of imports of fruit from Latin America in preference of imports of fruit from their former colonies in Africa, the Caribbean, and the Pacific, (the ACP). Prior to the import limitation Chiquita Brands International controlled almost 30 percent of the market for fresh fruit in the EU. In 1995 when the World Trade Organization ruled the policy was discriminatory Chiquita had already lost 1/3 of the market. Dole Food Company, already the largest producer of fresh fruits, had previously established relationships with many of these former colonies and as a result gained 4% of Chiquita’s lost market share during this two year period: to date Chiquita’s European market is still in decline due to the continued resistance of EU Member States to accept the ruling, (Bucheli, 2007). Noticeably, this is an example of how the European social climate can affect EU policies and can be a disadvantage to foreign companies operating within the Member States that do not share or have divergent social concerns.

Although the barriers to doing business in the EU are generally low and the member nations are stable politically, U.S. exporters do continually face difficulties to entry in EU markets, specifically regulatory and technical standards if U.S. standards are different, (U.S. Commercial Service, 2008). Similarly, an advantage of the acquisition of a firm within the EU can be access to a relatively large, secure, and stable economic market through a firm that is already knowledgeable regarding EU standards. Additionally the free flow of goods throughout the 27 Member States can be beneficial if a firm is in compliance with EU standards.

Acquiring a company within the EU can be a difficult and laborious task for an American firm as that firm needs to comply not only with EU regulations and directives, but also the laws of the individual Member State. The market opportunities, however, clearly outweigh the market challenges once the acquisition is complete when considering the portability of capital between EU Member States, even those that do not utilize the euro. Although each Member State currently maintains separate customs policies, and other Member State laws still apply, the EU Treaty places virtually no restrictions of capital movements and payments between the Member States and there are few restrictions between the Member States and third countries like the U.S., (U.S. Commercial Service, 2008). A country that is not an EU Member State would not necessarily allow this unrestricted movement of capital throughout Europe and to third countries.

Another significant advantage to selecting a company that utilizes the euro is that business transaction costs are minimized, questions regarding the stability of the currency are mitigated, and transparent pricing is assured among the 16 euro zone countries, (Eiteman, Stonehill, & Moffett, 2007, p.47). Although barriers to openness still exist between the euro zone countries and the other Member States of the EU, adoption of EU standards still greatly facilitates trade among these countries. Due to these overwhelming advantages, doubtlessly the acquisition of company that is headquartered within the EU and already uses the euro is adept in EU standards. As such, all other criteria aside, acquisition of a company headquartered within the EU and uses the euro would be preferable to the acquisition of a company that is not headquartered in an EU Member State and does not use the euro.



References:

Bucheli, M. (2005, November). Banana war maneuvers. Harvard Business Review, 83(11), 22-24. Retrieved from EBSCOhost Business Source Complete.

Eiteman, D., Stonehill, A., & Moffett, M., (2007). Business Finance for the Multinational Corporation. Upper Saddle River, NJ: Pearson/ Prentice Hall.

Europa, The EU at a Glance: Treaties and Law. (n.d.). Retrieved from http://europa.eu/abc/treaties/index_en.htm

U.S. Commercial Service. (2008, February 14). Doing Business in the European Union: 2008 Country Commercial Guide for U.S. Companies. Retrieved from http://www.buyusa.gov/europeanunion/doing_business.html

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Leadership Influence Processes and Factors that Affect Them

Abstract
The importance of commitment, as opposed to compliance or resistance, when leadership attempts to utilize influence processes. Compliance tactics that appeal to workers logically, emotionally, and cooperatively are examined that can assist leaders in focusing their influence processes. Specific influence processes utilized by Andrea Jung, Indra Nooyi, and Brenda Barnes are compared.

Introduction
Although there are many different styles of effective leadership, all leaders must be able to exert influence over their employees in order to achieve results. Employees can exhibit a variety of reactions to the attempts of leadership to influence them, from resistance or compliance, to commitment. Employees must be committed to leadership that they find credible, otherwise influence methods leaders utilize are ineffective.
Influence Processes and Factors that Affect Them
In order for leaders in an organization to achieve desirable results they must be able utilize their power effectively and they must be able to influence their followers. The three most common reactions to a leaders attempt to exercise their power or authority over their subordinates are; resistance, when employees actively or passively resist the leader’s authority and take action to subvert their requests, compliance, when employees accept the leadership’s authority and requests but do so without personal acceptance, or commitment, when employees not only accept leadership’s authority but also welcome their requests willingly, (Nahavandi, pp. 160-161).
Resistance is, of course, the least desirable reaction and it occurs when subordinates either directly oppose or secretly resist leadership’s requests and attempt to sabotage the outcomes, (Baldwin & Grayson, 2004). Kouzes and Posner state that leadership can overcome this reaction by decreasing resistance through “small wins”, a consistent and incremental process where demonstrated success is achieved, as employees will innately want to be associated with future successes, (p. 211). Baldwin and Grayson describe compliance as a less than ideal reaction in that although subordinates might implement leadership’s requests, they do so as a result of the acceptance of positional authority and without any real acceptance of the leader’s reasons. Compliance occurs when extrinsic motivation exists through external rewards rather than intrinsic motivation through an employee’s internal desires to accomplish, (Kouzes & Posner, p. 112). Compliance may be satisfactory initially when attempting to influence routine actions however it does not result in a change in employee attitudes concerning the authority of the leadership, and it is therefore an unsuitable reaction for the leader who wants to accomplish significant achievements. Commitment, the only truly desirable reaction, is vital and results when leaders influence employees towards self-motivation. Leaders inspire commitment from their employees and can change attitudes only when employees find leadership credible, (Kouzes & Posner, p. 34). Commitment occurs only when employees accept the influence, and therefore the authority, of a leader they deem credible and then follow through and endorse and support that person’s leadership. Baldwin and Grayson maintain that when a leader gains commitment from their employees there is less need to monitor them, there is a greater sustained effort from them, the leaders objectives are endorsed, and working relationships improve, (2004).
Baldwin and Grayson further outline three specific tactical skills that leaders can utilize to be successful through understanding the personalities, objectives, and roles and responsibilities within an organization: 1. appeal to employees logically through rational and intellect, 2. appeal to employees emotionally through promoting feelings and belonging, or 3. appeal to employees cooperatively through reciprocity and mutual goal setting, (2004). Leaders should utilize a combination of those tactical skills that they are most comfortable with to gain their employees commitment in order to achieve organizational success through influence processes that reflect their own personal style and values. Without the commitment of their subordinates an upper echelon leader has little chance of affecting an organization and implementing changes.
Comparison of Leadership Styles and Influence Methods
Andrea Jung of Avon, Indra Nooyi of PepsiCo, and Brenda Barnes or Sara Lee are similar in that they are all authentic and charismatic leaders with high LMX who are working to transform their organizations, though there are some subtle differences in the ways they lead their companies. As general strategic guidelines, Nahavandi outlines the following processes leaders can utilize to impact their organizations: direct decisions, allocation of resources, reward system, selection of other leaders, promotions, and role modeling, (2009, Figure 7-4). Upper echelon leaders can make direct decisions that affect organizational structure and strategy. Specifically, when Andrea Jung took over as CEO of Avon she reduced senior staff by 25%, (Ding dong, 2009), Additionally she has removed eight levels of management in her tenure and reduced staffing costs by $300m, (Georgia, 2007). An example of an upper echelon leader making a direct decision that affected an organizational strategy would be Brenda Barnes’ decision to divest of Sara Lee’s non-food based businesses to improve economic performance, (Sterrett, 2009). Indra Nooyi similarly chose to divest PepsiCo of their fast food restaurant market operations and also made significant business acquisitions furthering their investment in the bottled beverage market, (Useem, 2008). Although direct decisions need not only affect organizational strategy and hierarchy, these types of decisions are almost exclusively the domain of upper echelon leadership. Allocation of resources is another area which typically defines the role of upper level leadership. When Brenda Barnes, who is noted to be a strong marketer, first stepped into the role of CEO she allocated an additional $250m towards R&D and marketing, an increase of 35%, in order to grow annual sales between 2% and 4%, (Jargon, 2005). Barnes subsequently reduced Sara Lees’ 2009 fiscal year marketing budget by 21% to expand profit margins, after she had increased it by 4.9% in the 2008 fiscal year, (Sterrett, 2008). Nahavandi credits Andrea Jung’s allocation of resources into research and development as partly responsible for an increase in Avon’s sales by 45% in 2004 that resulted in a 164% increase in stock prices, (p. 223). Additionally Jung considers the current recession a growth opportunity for the company and announced in March of 2009 they would be spending $400m in advertising in the coming year to promote Avon as a career potential for recently out of work women, the largest hiring initiative in the firm’s history, (Ding dong, 2009). Indra Nooyi influences through the allocation of resources as well, redirecting about 1/3 of Pepsi’s marketing dollars this year towards social media and digital promotions that included her “ReFresh Project” campaign, a $20m grant program seeking to award community building projects, (Zmuda, 2010). Nooyi takes her community building seriously as she describes talent sustainability at PepsiCo a force for doing good in the world by providing employees with the training, tools, and opportunities for their development; going on to describe the firm as a “meritocracy”, where hard work is recognized and rewarded, (Bingham & Galagan, 2008). Big rewards have always been a staple for top sellers in consumer direct sales organizations and this is not exception at Avon. Jung rewards her “top sellers” by sending them on extravagant summer holidays to places like Cyprus, Madeira, and Tenerife, (Hill, 2003). At Sara Lee, a company with a history of disjointed business endeavors, Brenda Barnes has relegated the idea of a developing a unified system to tie employee performance to a reward system and training to Stephen Cerrone, a newly hired executive vice president of human resources, (Sterrett, 2007). In addition to the direct hire of Cerrone, Barnes is noted for shaking up leadership having spent the previous years at Sara Lee pulling apart the existing corporate culture, (Sterrett, 2007). Furthermore Barnes had already worked to make diversity a key to bonus awards, (Burns, 2007). The other leaders maintain tight control over the selection and promotion of new leaders within their organizations. Indra Nooyi has been the subject of much criticism over the way that she micromanages marketing leadership at PepsiCo, the company has countered that although many executives have left due to her involvement, many have been brought in as well, and the situation in marketing mirrors what is going on throughout the firm, (Zmuda & York, 2009). Andrea Jung states that it is the responsibility of CEOs to increase the representation of women and minority leaders in business, noting that Avon has more women leaders than any other Fortune 500 company, with six of her thirteen top level executives and five of her eleven board members now women under her leadership, when previously they were all men, (Reilly, 2009). Jung has gone so far in modeling Avon as to change the company’s motto to “The Company for Women”, she is driven by vision to elevate other women in the economic community and a passion to make a difference in the lives of women by enabling them to become self-empowered. So too has Nooyi remodeled PepsiCo into her vision of corporate diversity including speaking engagements, developing programs to help women manage their careers, and sponsoring events to showcase the company’s diversity, (Nahavandi, pp. 64-65). Barnes, who notably left PepsiCo in 1997 to spend more time with her family, as well has modeled her role as working mother and executive actively promoting work-life balance issues at Sara Lee and promoting the value of family by re-launching the firm’s “women’s network “, (Burns, 2007).

Conclusion
Because their employees are committed to them and find their leadership credible these leaders can successfully utilize these influence methods. By virtue of the charisma and authenticity, they have inspired their workers to share in their personal visions and mission and commit to the success of these organizations. All three leaders, Andrea Jung, Indra Nooyi, and Brenda Barnes are successful due to the fact that have inspired employees to commit to the changes that they want to achieve in their respective firms.

References
Baldwin, D. & Grayson, C. (2004, March/April). Positive influence: how leaders get others to see it their way. Leadership in Action, 24(1), 8-11. Retrieved from EBSCOHost Business Source Complete.

Bingham, T. & Galagan, P. (2008, June). Doing good while doing well. T+D, 62(6), 32-35. Retrieved from ProQuest ABI/INFORM Complete.

Burns, G. (2007, October 14). Tribune profile: Nobody's business but her own. Knight Ridder Tribune Business News. Retrieved from ProQuest ABI/INFORM Complete.

George, B. (2007, November 12). A new makeover for an old retail face. U.S. News and World Report, 68. Retrieved from Lexis/Nexis Academic.

Hill, A. (2003, June 15). Avon calling. The Observer Magazine, 25. Retrieved from Lexis/Nexis Academic.

Jargon, J. (2005, July 25). Sara Lee boosts R&D, ad budgets-a bit. Crain’s Chicago Business, News 2. Retrieved from Lexis/Nexis Academic.
Kouzes, J. M. & Posner, B.Z. (2003). The leadership challenge (3rd ed). San Francisco, CA: Josses-Bass.

Nahavandi, A. (2009). The art and science of leadership (5th ed.). Upper Saddle River, NJ: Prentice-Hall.

Reilly, N. (2009, November 2). The foundation for a new prosperity; the CEO of Avon on unleashing the economic potential of women worldwide. Newsweek, 154(18), B6-B7. Retrieved from ProQuest ABI/Inform Complete.

Sterrett, D. (2007, August 13). Putting Sara Lee back together; can Barnes, deputy unite jumbled units to run 'like a normal company'? Crain’s Chicago Business, 30(33), 1-9. Retrieved from EBSCOHost Master File Premier.

Sterrett, D. (2008, September 1). Barnes puts clamps on ad spending; Sara Lee chief targets marketing, focusing dollars on key brands. Crain’s Chicago Business, 31(35), 3-11. Retrieved from EBSCOHost Master File Premier.

Sterrett, D. (2009, September 28). Sara Lee lags, but Barnes lingers. Crain’s Chicago Business, 32(39), 3-8. Retrieved from EBSCOHost Master File Premier.

Ding dong! empowerment calling; face value. (2009, May 30). The Economist, 391(8633), 70. Retrieved from ProQuest ABI/INFORM Complete.

Useem, M. (2008, December 1). New ideas for this Pepsi generation. U.S. News & World Report, 145(12), 49. Retrieved from Lexis/Nexis Academic.

Zmuda, N. (2010, February 8). Pass or fail, Pepsi's Refresh will be case for marketing textbooks. Advertising Age, 81(6), 1. Retrieved from Lexis/Nexis Academic.

Zmuda, N. & York, E. (2009, August 10). Marketing meddling sparks brain drain at chaotic Pepsi. Advertising Age, 80(27), 1. Retrieved from Lexis/Nexis Academic.

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Authentic Leadership vs. Charismatic Leadership

Authentic leaders have strong values and a sense of purpose, and rather than trying to be all things to all people, concentrate on providing a positive role model by developing his or her own strengths, (Nahavandi, p.p. 211-212). Charismatic leaders concentrate on crafting a messages, managing their images, and becoming role models for their followers by focusing on their needs and appealing to them emotionally, (Nahavandi, p.p. 197 -198). While history has shown us charismatic leaders who are authentic, I believe that this is rarer phenomena than charismatic leaders who are not authentic, and overall, truly charismatica leaders are relatively rare. Leaders with high LMX are sometimes considered charismatic, however charisma is much more than having good interpersonal skills and powers of persuasion. According to the noted sociologist Max Weber, the personalities of truly charismatic leaders exhibit "charismatic authority" the components of which include exemplary character, and extraordinary insight and accomplishment.

There are notable differences between the manifestations of self-confidence in the two leadership styles. While authentic leaders develop their self-confidence through knowing and articulating their values and developing their strengths, (Nahavandi p.212), charismatic leaders develop their self-confidence through encouraging their followers who in turn encourage the leader thereby increasing the leader’s self-confidence, (p. 196).

While I do not dismiss the importance of charisma in establishing good interpersonal relationships as an important part of transformational leadership and other leadership styles, I tend to distrust leaders and managers who appeal to people purely on an emotional level rather than on an intellectual level. The key to being an authentic leader is in knowing oneself and leading by example, while the key to being a charismatic leader is in knowing ones followers and leading through a potentially ideated image that is presented to them. Nahavandi maintains that while authentic leaders do not need to be charismatic to be successful and that they can lead either by being task or relationship oriented, charismatic leaders necessarily have to have an “element of authenticity” to be effective, (p. 214). Personally, I am cynical and my initial reaction is to distrust those who try to lead emotionally through charm and charisma, I seek credibility and prefer to be led by someone I know is capable.

I believe leaders who rely purely on charisma, rather than self-knowledge, could potentially be challenged and threatened by the authenticity of values displayed in the workplace and subsequently thwart productivity if it doesn’t align with their perceptions and the vision that they attempt to portray. Kouzes and Posner maintain that it is not enough to deliver rousing speeches and talk about lofty ideals, as charismatic leaders are apt to do, constituents are more deeply moved by leadership by example, something that is associated with authentic leadership, (p. 77).

Nahavandi states that the applied theory of authentic leadership can be traced back to Roger’s and Maslow’s concepts of self-actualization, and that this is a relatively new concept and more research needs to be done, (p. 212). Additionally Nahavandi states that although the results can be inconclusive, the leader and follower relationship under charismatic leadership has been widely studied and there is a strong indication that positive results can be realized through this leadership style, (204).

References:

Kouzes, J. M. & Pozner, B.Z. (2003). The leadership challenge (3rd ed). San Francisco, CA: Jossey-Bass.

Nahavandi, A. (2009). The art and science of leadership (5th ed.). Upper Saddle River, NJ: Prentice-Hall.

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Changing to participatory leadership

Implementation Model:

Lewin’s Force Field Theory: 3 step process to increase the forces for, or decrease the resistance to change.


1. Unfreezing: Promote Understanding of Need, Motivate and Prepare to Overcome Resistance

2. Changing: Implement New Practices, Teach New Skills and Behaviors

3. Refreezing: Coaching , Training, and Rewarding to Solidify Implementation


Lewin’s Force Field Theory: To successfully implement change leaders must increase the forces for change or decrease the resistance through a three stage process: unfreezing, changing, and refreezing, (Nahavandi, p. 302). In order for an organization to change something must upset the balance between the forces that drive change and the forces that resist change, to implement a more modern participative leadership style, then increasing the drive to change would be my proposal. To “unfreeze” the organization leadership needs to clearly communicate throughout the firm that the change is necessary and they must do so with a sense of urgency, and with the desirable end result in mind, in order to drive the change and upset this balance, (Holt, Dorey, Bailey, & Low, 2009). The organization’s employees confidence will be bolstered if the benefits of the change to both the organization and its individuals are well communicated, and if the employees are allowed to participate in the planning and introduction. Kouzes and Posner state that change needs to be broken down into small doable steps, by doing so you encourage your employees to say yes to the change numerous times at each step in the process, rather than just once, (p. 208). The “change” step then needs to be accomplished in incremental steps in order to be effective. Finally, “refreezing” after the change can be accomplished by presenting a compelling vision to the employees through positive role models that work to reduce learning anxiety, (Stragalas, 2010). Leadership needs to ensure that current management is committed to its vision of participative management teams in order to accomplish this process step, actively encouraging the employees to embrace the learning process, and demonstrating that the rewards will be greater success for the organization holistically. Significantly, Nahavandi notes that a specific barrier to change is not rewarding employees for successful change initiatives, (p. 307).

Implementation Process Steps:

Unfreezing Steps:
1. Recognition of Need
2. Development of Ideas

Changing Steps:
3. Adoption of Ideas
4. Implementation

Refreezing Steps:
5. Allocation of Resources
6. Evaluation


To accomplish a planned change to adopt participative management teams the following implementation steps should be utilized:

Recognition of need: Alerting followers to leadership’s vision and clearly communicating the reasoning behind the change. As stated previously this should be communicated with of a sense of urgency. Leaders and followers must be aware that the change is important to the survival or effectiveness of the organization, (Nahavandi, p. 304). Activities include firm-wide written and oral corporate communications from leadership to all employees explicitly stating their concerns and expressing the need and the urgency for the change. A series of meetings should be scheduled and announced to employees letting them know you will be addressing their individual and collective concerns. Employees should be notified at these meetings that leadership will be encouraging their participation in the change process through forums in preparation for the next step.

Development of ideas: Include followers in this process step so that change messages are delivered implicitly and followers are invested in the change process. Nahavandi states that encouraging input and participation by those who are most affected will ease implementation, (p. 304). Leadership needs to promote an open and honest atmosphere that is conducive to the sharing or ideas where leadership can listen and respond to concerns expressed by followers. Activities include forums and brain-storming sessions between the various levels of leadership and management, and also by managers and their subordinates, in small groups or teams. Especially consideration needs to address the concerns of those who express cynicism regarding the change in these forums so that leadership can set the groundwork for establishing credibility in the next step.

Adoption of ideas: Leadership selects the ideas from various sources that are the most conducive to the change and formulates an implementation plan from these ideas. Leadership gains credibility through participation of members in this development process, (Holt, Dorey, Bailey, & Low, 2009). Activities include evaluation of ideas and then a written confirmation outlining the process steps of the change, clearly defining the new behaviors and skills that are expected of all employees, and leading to the thoughtful distribution of implementation steps throughout the firm in the next step of the process.

Implementation: Leadership needs to demonstrate commitment to followers, and be able to correct the course of action as needed, while maintaining the importance of the change during this phase, (Nahavandi, p.303). Activities include alerting employees to the implementation steps in advance and then coaching and teaching followers to adopt new behaviors and skill sets. Additionally groups should meet periodically to discuss the progress of the implementation and evaluate any unforeseen obstacles so that leadership can make subtle changes. Leadership should be evaluating how to reward successful implementation at this point.

Allocation of Resources: Existing resources must be redistributed or new resources must be supplied to “freeze” the change demonstrating leadership’s commitment to the change, (Nahavandi, p. 305). Activities include budgeting for follow up training sessions to reinforce the change. Additionally, an identified reward system should be activated during this step of the process and employees should be notified that leadership will continually be monitoring the successfulness of the implementation to prepare employees for the next step.

Evaluation: So that change is maintained evaluation needs to be a continuous process, (Nahavandi, p. 305). The change needs to be evaluated to ensure that the participative teams are communicating effectively. Activities can include written and oral surveying of employee attitudes concerning the effectiveness of the change and sanctions against employees who resist.

Conclusion:

Lewin’s 4 Key Characteristics of Change:

1. Importance of Recognizing the need for Change

2. Inevitable Presence of Resistance to Change

3. Focus on People as the Source for Change

4. Need to Support New Behaviors


Kurt Lewin identified four characteristics of change: recognize and communicate the need, understand the employees will initially be resistant, focus on your employees as the key to successful change, and support their new behaviors by rewarding them, (Nahavandi, p. 304). By following the preceding six process steps that effectively address these key characteristics, a corporation should be able to successfully change the current hierarchical leadership style to a more modern participatory leadership style. Unsuccessful implementation of these steps will cost in the long run by either having to repeat the change process and delaying the change, or by the loss of productivity through not changing and maintaining their current leadership style.

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gender and transactional vs. transformational leadership

Although women more frequently exhibit traits that are conducive to currently preferred participative leadership styles, these traits are not mutually exclusive to women nor are they necessarily found in women who assume leadership roles. Nahavandi discusses that research indicates that women naturally exhibit traits associated with transformational leadership, including interpersonal skills such as consideration, expressiveness, and cooperation, (2009, p. 208). This, in and of itself, does not however suggest to me that women make better leaders than men, as men too can exhibit these traits. Additionally there are many women who are leaders who do not exhibit these “feminine” traits.

When discussing masculine and feminine traits in leadership styles, what is referred to are those specific traits that are traditionally or stereotypically associated with gender. Transactional leadership styles, where an authoritarian leader is in complete control over followers, are at the opposite end of the spectrum from transformational leadership styles, and are identified with traditionally masculine traits. Transactional leadership, with clearly delineated roles for leaders and followers, is far more common in our country.

Transformational leadership is comprised of three factors: 1. charisma, which inspires an emotional bond between leaders and followers, 2. intellectual stimulation, which motivates followers to solve problems, and 3. individual consideration, which allows the development of personal relationship between leaders and followers, (Nahavandi, p.206). While transformational leadership is conducive to large-scale organizational change and is inspirational, transactional leadership is conducive to short term immediate outcomes and does not inspire followers.

When President Clinton expressed that we need a “new gender of leadership”, I believe he was referring to a need for an increase in transformational leadership, and I agree that we need to balance these two different styles of leadership within our organizations more effectively, ("Clinton pledges fidelity", 1992).

Although Nahavandi states that the research is inconclusive as to the importance of any specific trait within the big five personality dimensions, (2009, p. 128), I believe that a successful blending of personality traits is far more important to successful leadership than gender-specific traits, especially as none of these traits are actually specific to one gender. Successful leaders, whether their style is transactional or transformational, are conscientious, extroverted, open to new experiences, emotionally stable, and agreeable.


References:

Clinton pledges fidelity to 'new gender of leadership' at women’s caucus. (1992, July 15). The Salt Lake City Tribune, p. A2.

Nahavandi, A. (2009). The art and science of leadership (5th ed.). Upper Saddle River, NJ: Prentice-Hall.

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Leadership in action - high LPC vs low LPC leadership

According to Fiedler’s 1967 theory of the Contingency Model of Leadership, leader’s fall into different leadership styles based upon a scale he devised to assess effective leadership called the least-preferred coworker, (LPC), scale. According to Fiedler’s model there are high LPC leaders, those who focus on interpersonal relationships and draw their self-esteem from these relationships, and low LPC leaders, those who are task oriented and draw their self-esteem from the successful completion of tasks, (Nahavandi, pp. 70-71).
With her company’s focus on god and family before career, Mary Kay Ash was clearly a high LPC leader who concentrated on providing a matriarchal archetype for the employees of her company Mary Kay Cosmetics, (AIU Online, n.d.). Diametrically opposed to Mary Kay Ash, Bill Gates of Microsoft Corporation was a low LPC leader, who was concerned with performance, competition, and innovation rather than with the work-life balance of his employees, (AIU Online, n.d.). Microsoft Corporation, especially under the leadership of Bill Gates, was noted for poor employee member relationships. In 1992 Gates replaced Michael Hallman, after less than two years of service because the two could simply not get along, with a three member team that included Steve Ballmer whom Gates trusted and had a history of being able to get along and communicate with Gates despite his brusque style, (Microsoft: three’s company, 1992). Additionally the article notes that while products are Microsoft’s strength, weak relationships are almost the hallmark of the corporation, and relationship building is left up to Steve Ballmer, (Microsoft: three’s company).

Under Fiedler’s model effective leadership is observable during a crisis situation and defined as situational control. Situational control arises from a combination of the following three factors in order of importance: 1. the relationship of the leader to the member, LMR, 2. how well structured the task is, TS, and 3. the leader’s position, or legitimate, power, PP. As leader-member relationships are the most important factor in the contingency model, with all other factors being equal, in a high situational control condition group performance under a leader with a high LPC and good LMR, like Mary Kay Ash, would outperform group performance under a leader with a low LPC, like Bill Gates, whose LMR was bad.

Both Mary Kay Ash and Bill Gates were highly task structured, as evidenced by Ash’s clear heavily goal oriented reward structure and Gates highly structured corporate environment. Additionally, both held the absolute ultimate power positions within their firms as evidenced by their strength as figureheads of their corporations. The chief difference in these two leaders lied in Ash’s ability to motivate and connect with her workforce through interpersonal relationships while Gate’s apparent lack of this aptitude. Each leader, however, was ultimately effective and successful because they understood their abilities and modeled their organizations to accommodate their styles: Mary Kay Ash maintained a highly accessible and nurturing role for her employees while Bill Gates maintained a heavily detailed task orientated role that concentrated on innovation and his own performance.

As I prefer a more task oriented environment and lifelong learning I believe I would have preferred working for Bill Gates. I find working on and completing projects invigorating, while generally I find interpersonal relationships at work, with the possible exception of mentoring relationships, tedious and enervating.

References:


Microsoft: three’s company. (1992, February 8). The Economist, 322 (7745), 72. Retrieved from ProQuest ABI/Inform

Nahavandi, A. (2006). The art and science of leadership (4th ed.). Upper Saddle River, NJ: Prentice-Hall.

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Corruption and ways to prevent its occurrence

We often encounter the abridged biblical proverb “pride comes before a fall” in our daily lives, but in few arenas is the destructiveness of pride more evident and the subsequent fall more abrupt than in the business world. Leaders who don’t practice humility can become arrogant and believe they are infallible simply by not engaging others within their organizations and understanding that other employees are making valuable contributions as well. On discussing the inherent problems associated with leadership, James Kouzes and Barry Posner write that no problem is more insidious to a leader than the “treachery of hubris”, and go on to maintain that leaders who focus on their follower’s achievements are more likely to be able to avoid the temptations of power. (2002, pp. 396-397). Afsaneh Nahavandi concurs that power changes how leaders view themselves, causing them to distance themselves from their followers, and resulting in them making unethical decisions, (2006, p.171).
Former Enron CEO Jeffrey Skilling, routinely described as arrogant by the media, used this distance as a defense in his trial by claiming that he was unaware of his employee’s actions in manipulating the firm’s accounts. The accounting manipulations ultimately caused the collapse of Enron and resulted in losses of $60 billion in shareholder value. Skilling’s arrogance, displayed throughout his career at Enron, was apparent to observers at his trial as well, where he appeared controlling, refused the advice of his attorneys, and was even witnessed telling his attorneys what to do from the witness stand, (Clark & Lavelle, 2006). Observers of the trial could not perceive that someone in need of so much control was unaware of what was going on within the company. Power had so corrupted Jeffrey Skilling’s sense of self-confidence that he had become arrogant, he believed himself infallible to the extent that he hindered his own defense.

In his seminal article on the subject, Daniel Goleman defines emotional intelligence as a competency that allows a leader to effectively implement change and lead others, (1998). Through researching leadership at 200 global companies, Goleman states that there are five components to emotional intelligence that make a leader successful: 1. Self-awareness, the ability to realize how your emotions affect others, 2. Self-regulation, the ability to think before acting, 3. Motivation, a passion to work towards realizing ones goals, 4. Empathy, the ability recognize the emotion make-up of others, and 5. Social-Skills, the ability to manage relationships. Goleman elaborates that the basic hallmarks of these components respectively as: self-confidence, integrity, organizational commitment, sensitivity, and persuasiveness. Summarily, although intelligence and skills matter in leadership, without the traits that comprise emotional intelligence someone can never be a great leader. Additionally leaders with these personality traits are less prone to becoming corrupt.

Leaders with narcissistic or Machiavellian personality traits are more prone to corruption as leaders as individuals with these personality traits are more likely to abuse power. Nahavandi states that the behavior of these personality types can wreak havoc within an organization by terrifying their colleagues and subordinates and eroding trust, (p.172).

Goleman states that evidence suggests that some people are born and raised with higher levels of emotional intelligence; that it naturally increases with age through maturity, and also can be learned but that the process of learning requires “sincere desire and concerted effort”, (1998). Organizations can facilitate this effort by establishing codes of conduct that raise the ethical and moral behavior of employees, facilitating training on these standards, and implementing a response initiative that encouraged employees to report ethical abuses.


References:

Clark, K. & Lavelle, M. (2006, June 6). Guilty as charged. U.S. News and World Report, 140 (21), 44-45. Retrieved from EBSCOhost Business Source Complete.

Goleman, D. (1998, November/December). What makes a leader? Harvard Business Review, 76 (6), 93-102. Retrieved from EBSCOhost Business Source Complete.

Kouzes, J. M. & Pozner, B.Z. (2003). The leadership challenge (3rd ed). San Francisco, CA: Jossey-Bass.

Nahavandi, A. (2006). The art and science of leadership (4th ed.). Upper Saddle River, NJ: Pearson Prentice-Hall.

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Leadership challenge, juggling cultures

Saudi Arabia is a society of paradoxes with an ever increasing number of contradictions between their modernized economic system and their repressive and rigid socio-political system, (Clarke, 2007). Women and men are still segregated today in all public arenas, as they have been since the government was founded in 1932. Saudi women currently represent only 7% of the workforce, with 80% of them working in governmental jobs, however they are becoming increasingly more educated and prominent in business and the Saudi government is working on creating additional jobs for educated women, (Mansour, 2008).

As the purpose of the negotiation is to draft a new deal it is absolutely necessary to send your most skilled negotiator which would be the female executive. Presumably if negotiating the deal is successful, at some point in time the Saudi’s would have to deal with female executives in the firm. It would be important to let the Saudi’s know from the onset that your company is diverse and if they want to work with your firm then they will have to adapt as invariably this same situation will arise in the future.

Definitely the most experienced and skilled negotiator should be sent to meet with the Saudi Arabians, regardless of that person’s gender. If the best negotiator isn’t sent, then the message leadership sends throughout the company is inconsistent, as both men and women are allowed to practice as negotiators and ultimately the action would be discriminatory.

In order to ensure that the deal is not put at risk I would first contact the Saudi company to make sure they are understand and are aware that a woman will be sent to negotiate. As Saudi’s still segregate men and women, even in business; if this is not done then leadership would be disrespecting Saudi culture and this would put the deal at risk. If the Saudi company is not equipped to allow a female executive into the negotiating room then I would seek a solution that would be acceptable to both cultures. If the Saudi company doesn’t have female executives, as negotiations often take place over prolonged periods of time, then the American female executive can be partitioned, as is customary is Saudi society, or seated in another conference room. The American executive’s male “second in command” could then be sent back and forth to communicate between the female executive and the Saudi executives. Regardless, to preserve the dignity of the female executive, and also the dignity of the company and all other women working for the company, it would be absolutely necessary to make sure that the Saudis knew you were sending a female executive to negotiate.

Afsaneh Nahavandi maintains that leadership is central to bringing about cultural and organizational change in order to create multicultural organizations that value all individuals including women and minorities, (2006, p. 53). For a leader to work to build a multicultural environment, and then allow that effort to be subverted in certain circumstances as business dictates, would be counterproductive to building an open and inclusive organizational culture.



Clarke, K. (2007, Fall). A modernization paradox: Saudi Arabia’s divided society. Harvard International Review, 29 (3), 30-33. Retrieved from ProQuest ABI-Inform complete.

Mansour, M. (2008, September). Women job satisfaction in Saudi Arabia: an exploratory analysis. Journal of the American Academy of Business, 13 (2), 204-208. Retrieved from ProQuest ABI-Inform complete.

Nahavandi, A. (2006). The art and science of leadership (4th ed.). Upper Saddle River, NJ: Prentice Hall.

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Leader-member exchange model and in-group vs. out-group experiences

Abstract:
An evaluation of the leader-member exchange model and the devastating effects of being an out-group member after a corporate transfer, despite a long history with the same firm as an in-group member in other offices is presented. Additionally, the bi-directionality of groups is examined noting that both managers and subordinates have the ability to contribute to in-group and out-group status.

Introduction:
As people choose interpersonal relationships in life, inevitably and unavoidably, so too do people choose interpersonal relationships at work. Leaders in the workplace are not immune to the phenomena of preference, seeking higher quality relationships with some subordinates over others. All relationships are bi-directional in nature, but while generally leaders define the direction of, and are responsible for, relationships with their subordinates in the workplace, the relationship with a leader can be defined by the subordinate as well.
In The Art and Science of Leadership, Afsaneh Nahavandi identifies the concept of high and low quality relationships within the workplace as leader-member exchange, (LMX); qualifying high-quality relationships as in-group and low-quality relationships as out-group, and discusses the phenomena as it is influenced from the direction of the leader. Nahavandi characterizes in-group relationships as involving mutual respect, trust, and higher interaction leading to expected higher performance, with leaders tending to overlook the errors of the in-group members, (2009, p.87). Diametrically opposed to this, out-group relationships are characterized by Nahavandi as having lower interaction between the leader and the subordinates with lower expectations and prophecies of failure, (p.88). Generally, a leader’s perceptions of the performance of in-group members or out-group members are neither fair nor accurate due to these relationships, with in-group members receiving undo praise and out-group members receiving undo criticism and can ultimately be detrimental to an organization.
The leader-member exchange is not always controlled by the leader; subordinates sometimes work to set their bosses up in dysfunctional situations in which they will ultimately fail.
Jean-Francois Manzoni and Jean-Louis Barsoux describe the phenomena and detail what leaders can do to prevent out-groups from harming their success; evaluating it from the role the subordinates play in the relationship, and detail that subordinates can provoke their leaders passively or actively, (2009). Passive provocation occurs when subordinates view their leaders as difficult or incompetent, which incoming leaders generally are, and they either withhold information or limit contact that would allow the leader to make appropriate decisions. Alternatively, active provocation occurs when the subordinates inappropriately and overtly blame new leaders for what they feel are past transgressions by previous leaders and expect them to correct them. In either case, the employees more readily communicate with each other regarding the out-group leader and place these leaders in no-win situations. Manzoni and Barsoux maintain that new leaders can subvert being placed into an out-group by understanding where they stand with new employees, investing early in their subordinates by spending one on one time with them, being mindful of their behavior to prove early on that they are fair, and intervening early if they feel their subordinates are not engaging them, (2009).
As a member of a virtual team working for a large multinational I began my career in Boston and was transferred to Miami and subsequently to Atlanta. Although my ultimate performance manager was in Minneapolis, area managers also contributed to my performance review and my personnel file. I had the opportunity to be part of the “in groups” when I operated out of both the Boston and the Miami offices. This was a great position to be in as I was able to get support for my team and our initiatives from these offices. Being a successful member of the in-group in these locations, these managers not only contributed positive comments to my performance reviews, but also commendations to my personnel file and additionally I garnered numerous performance awards. Ultimately it is doubtful that I would have been transferred if my personnel file hadn’t indicated that I was a conscientious and effective worker. While in Boston I was able to identify a gap and effectuate a successful training initiative for employees that later became a part of the job description for my team. While in Miami I was asked to be a representative for South Florida on the Local Action Committee that was responsible for improving the work-life balance for employees in those offices. I had numerous other successes in these offices and I was known as a creative and supportive hard worker, it was acknowledged that I was easy to get along with.
Atlanta had always been a difficult office for my team leader to staff; previously three of my peers had been terminated from this office. When my leader asked me if I would consider relocating and handling the mid-South and the Carolina offices I readily accepted as Atlanta was one of the four largest offices in the country and I thought it would be an opportunity to deliver much needed services to this area of the country. I arrogantly made the mistake of believing that my co-workers that had served in these offices were unsuccessful because they were lacking in necessary skills. I expected my reputation and my previous record of successes would bode me well and that I would be readily accepted. My popularity however changed abruptly and noticeably when I was relocated, my performance was constantly under attack by the local members of the in-group, and I attempted to resolve this by working harder. Ultimately my efforts were unsuccessful as the office was predisposed to not appreciating the efforts of my team and although I gave my best efforts initially I was immediately relegated to the position of an out-group member in this office and eventually my performance suffered. Initiatives that I knew were needed and would have been readily accepted in my previous offices and areas, were met with only lukewarm success at best and more often than not they were entirely unsuccessful. I only found out when I was terminated that the local manager, claiming that she was in fact my performance manager without my performance manager’s knowledge and approval, had consistently been submitting fraudulent complaints concerning my performance to my personal file in this office. By the time of my termination, through non-renewal of my contract, my self-esteem was low, I was feeling dejected and I was so dissatisfied with the company due to this experience that accepted the termination quietly, I wouldn’t even accept the assistance of my actual performance manager by allowing her to intervene. I only realized in retrospect that I did the firm a disservice by not making them aware of the inconsistencies in the performance reports of the local manager: I should have illustrated to human resources before it came to this how detrimental the local manager had been.
I, my team, and my team leader had some truly great initiatives and services that could have benefitted the employees of the Mid-South and the Carolina offices. The services we were delivering were only changed for the better during this period of time, so I can definitely state that the actual tasks we were performing had little or nothing to do with the viability of our assistance, however the delivery of the tasks was interrupted due to my status as an out-group member. Due to the local manager’s efforts, and my inability to change her and the in-group members, many of whom were my subordinates, preconceived notions regarding the value of my team, the firm’s employees in these locations ultimately suffered.

Conclusion:
I have to say that I had been warned that this local manager was extremely difficult to work with. Arrogance due to my previous successes and my confidence in my ability to be an accepted in-group member prevented me from heeding these well intended warnings and acknowledging that the same thing could happen to me that had happened previously to my co-workers in this office.


References:

Manzoni, J. and Barsoux, J. (2009, Summer). Are your subordinates setting you up to fail? MIT Sloan Management Review, (50) 4, 42-52. Retrieved from ProQuest ABI/Inform Complete.

Nahavandi, A. (2006). The art and science of leadership (4th ed.). Upper Saddle River, NJ: Pearson Prentice-Hall.

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Employee reactions to leadership sources of power

Abstract:
Five different sources of power utilized by leaders in organizations: coercive, reward, legitimate, expert, and referent are examined and each power sources is distinguished as eliciting different reactions from employees. Examination of management of interpersonal conflict, subordinate compliance, and employee satisfaction indicate that employees react to the assertions of these different sources of power by being resistant, compliant, or committed to the leader and the organization.

Introduction:
Effective leadership mandates not only that the power exercised produce the desired behavioral results in subordinates but also achieves a lasting commitment to the leader and the organization from subordinates as well. The different types of power utilized by a leader produce different reactions from employees, eliciting responses that can be characterized as resistant, compliant, or committed. In The Art and Science of Leadership, Afsaneh Nahavandi examines the five different sources of power exerted by leaders in organizations that were first identified by John French and Bertram Raven in 1959, and also examines the reactions of employees to the exercise of these different sources of power.
Nahavandi distinguishes an individual’s organizational powers between those powers that are bestowed upon an individual by virtue of placement within their environment, and those powers which arise from an individual’s own characteristics, (p. 164). Position based power sources include legitimate power, reward power, and coercive power, while personal sources of power include expert power and referent power. Legitimate power is based upon the subordinate’s belief that the supervisor has the right to control their behavior by virtue of their position, while reward power is based upon the belief that the supervisor can bestow rewards for desired behaviors, and coercive power is the based upon the belief that the supervisor can punish employees for undesirable behaviors. Personal power sources, expert power and referent power, are influence related and derive out of the employees respect for the individual that wields the power. Expert power is based upon the subordinate’s belief that the supervisor has experience and ability, while referent power is based upon admiration for the supervisor and the supervisor’s likeability. Utilizing different power sources produces different expected results with employees either resisting the authority, complying with the authority or committing to the authority and the organization. Nahavandi maintains employees display resistance to reward and coercive power, compliance with legitimate power, and more readily display commitment to the influence of expert and referent power. Gary Yukl and Cecilia Falbe, agree with Nahavandi’s assessment, noting that subordinates rate the effectiveness of managers with personal power more strongly than the effectiveness of managers with position power, (1991). Additionally, Yukl and Falbe distinguish the effectiveness of power sources between managers and supervisors, (defined as lower level managers), indicating that position based power sources including legitimate power, reward power, and coercive power are more effective tools for managers than for supervisors. Yukl and Falbe also note that subordinates view reward powers and coercive powers are the least important sources of influence, while they view legitimate power as the single most important source of influence in lateral and downward relationships, (1991).
Influence Tactics for Operational Business Problems – Interpersonal Conflict
A major operational problem for an organization is how management chooses to handle interpersonal conflict. If managed incorrectly through poor leadership interpersonal conflicts can be prolonged and even exacerbated. Afzalur Rahim and Gabriel Buntzman identify five different tactics for handling interpersonal conflict: integrating, obliging, dominating, avoiding, and compromising, and maintain that leaders handle conflicts either by satisfying their own concerns, the concerns of others, or both, (1989). Integrating indicates a high concern for both self and others, it is identifiable by an open exchange of information to reach a mutually agreeable solution to resolve differences, and is most associated with a referent and expert sources of power. Obliging indicates a lower concern for self and a higher concern for others, attempting to play down differences between individuals and it is most often associated with a referent source of power. Dominating is considered a forcing behavior and indicates a high concern for self and low concern for others and, although it can be associated with expert power, it is primarily associated with legitimate power. Avoiding indicates both a low concern for self and for others and indicates management is withdrawing from the resolving interpersonal conflict, it is consequently not associated to a high degree with any source of power though it is linked to reward source of power to a lesser degree. Compromising indicates an intermediate concern for self and others, is identifiable by a mutual decision making process, and is associated exclusively with referent power. It is interesting to note that the coercive source of power is not identified with any of the tactics for successfully handling conflict. Clearly the leader utilizing legitimate, expert, or referent power sources will be the most successful when dealing with interpersonal conflict within an organization. Additionally, Nahavandi indicates that these same three power sources lead to compliance and commitment from employees, (p. 164). Ideally, leadership would utilize the integrating tactic, which indicates both a high degree of concern for self and others, and is most associated with expert and referent power sources.
Influence Tactics for Administrative Business Problems – Subordinate Compliance
Subordinate compliance indicates the willingness of employees to follow the instructions of their superiors. Subordinates that cannot be counted upon to conform to the influence of their leaders pose an intrinsic threat to the values to an organization’s administrative principles. Rahim and Buntzman write that the most effective evaluation of the use of power within an organization is the ability to measure the compliance of employees to leadership, (1989). In their study the highest correlation existed between referent power and subordinate compliance, and although the authors found a positive correlation between legitimate power sources and compliance they found that this was not correlated with the employee’s satisfaction with their supervisor. Clearly the leader that utilizes a referent power source has the greatest success of achieving organizational goals by ensuring that they influence their subordinates and their subordinates comply with their instructions.
Influence Tactics for Ethical Business Problems – Employee Satisfaction
Valentine, Varca, Godkin and Barnett indicate in their 2008 research study that there is a positive correlation between a positive employee job response, indicating job satisfaction, and higher levels of ethical behavior, (2010). Valentine et al measure 92 pairs of managers and subordinates responses and correlated between the employee’s positive job responses and their intention to stay with an organization and their manager’s evaluation of their ethical performance. Afzalur and Buntzman indicate that employee satisfaction is positively correlated to both expert and referent power sources, while it is a negatively correlated to coercive power sources, and there is no consistent correlation evident to either reward or legitimate power sources, (1989). Additionally the authors indicate that only referent power sources were positively correlated with employee satisfaction, behavior, and attitude. Clearly employees respond consistently positive when they are supervised by leaders with either expert or referent power sources, this is reflected in increased job satisfaction as evidenced by satisfaction with their supervisors and is most apparent when they are supervised by ethical leaders.
Conclusion:
Employees clearly react more positively when managers utilize personal power sources to solve conflicts between employees, provide instruction to them, and supervise them, rather than managers that rely upon organizationally conferred power sources. Managers that utilize referent, expert, or legitimate power sources more successfully manage their subordinates, with referent power sources clearly being the superior method for managing interpersonal conflict, promoting subordinate compliance, and increasing employee satisfaction. Additionally, leaders demonstrating leadership skills derived from personal power sources produce employees that are more committed to the leader and to the organization.















References:
Afzalur, R. & Buntzman, G. (1989 March). Supervisory power bases, styles of handling conflict with subordinates, and subordinate compliance and satisfaction. Journal of Psychology, 123(2), 195-210. Retrieved from EBSCOhost Business Source Complete.
Nahavandi, A. (2006). The art and science of leadership (4th ed.). Upper Saddle River, NJ: Pearson Prentice-Hall.
Valentine, S., Varca, P., Godkin, L., and Barnett, T. (2010, January). Positive job response and ethical job performance. Journal of Business Ethics, 91(2), 195-206. Retrieved from EBSCOhost Business Source Complete.
Yukl, G. & Falbe, C. (1991, June). Importance of different power sources in downward and lateral relations. Journal of Applied Psychology, 73(3), 416-423. Retrieved from APA PsychArticles.

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Preparing to transition to self directed work teams, (SDWTS)

Abstract:
A self directed work team, (SDWT), initiative can effectuate a change within an organization from a traditional management controlled organization, to an environment where management develops leadership skills and act as team advisors to enable employee empowerment. Appropriate change management through training of managers in leadership skills is necessary to successfully implement this initiative. Additionally a credible commitment to the initiative from the CEO must be visible to all employees.

Introduction:
The implementation of a self directed work team, SDWT, can increase an organization’s flexibility by empowering employees and allowing them to make decisions that affect customers, however, an employee empowerment initiative such as this can be fraught with problems from an organizations management. Employee empowerment programs can fail due to managers feeling threatened when it is implemented and can ultimately result in a loss of productivity. It is up to the organization’s chief leadership to ensure that SDWT employee empowerment programs are implemented with appropriate training to ensure that all employees are comfortable with these transitioning responsibilities. If managers and their subordinates feel threatened rather than empowered by these responsibilities then an organization may not realize the productivity gains expected from these programs.
When attempting to empower the workforce, issues of trust can arise within the manager/subordinate relationship. Boggs, Carr, Fletcher, and Clarke state that it is not logical to suggest that supervisors empower employees by relinquishing their own control, they further state that managers would rather promise less empowerment than break promises to their subordinates to avoid encountering mistrust from their employees, (2005). This necessitates that a firm proceed cautiously when implementing an SDWT employee empowerment program in order to remain productive throughout the transition and to achieve the desired end result of increased employee productivity. The resulting employee resentment of the SDWT empowerment initiative can be successfully avoided through careful implementation of the program as well. In additional consideration is that managers may fear that increased employee decision making will reduce the need for management positions, (Peach, 2009). Managers must assured that they are in fact gaining leadership skills, rather than losing supervisory skills in order to thwart this. Managers, as opposed to leaders, will attempt to hold onto control of decision making by attempting to further restrict an employee’s involvement. The resulting implications within the context of an empowerment program can ultimately be destructive on an organization’s productivity by causing employees to distrust management and the organization. Pech elaborates that employees who are tightly controlled by management will feel threatened and will feel increasingly vulnerable. To avoid this scenario the manager must be trained to ultimately become team’s advisor and leader rather than a traditional authoritarian figure. Ceasar Douglas argues that managers must become leaders and must utilize leadership influence tactics to promote team member empowerment when transitioning to an SDWT model to avoid negatively affecting their subordinate’s productivity, (2002). When managers are fearful of losing the control that they have in the workplace, their behavior can result in employees losing their sense of security by feeling forced into making decisions they do not wish to make.
Stainer and Stainer take this concept further by postulating that employee empowerment can increase organizational productivity only if managers demonstrate confidence in their subordinates, (2000). An employee empowerment initiative can be perceived by employees as a device to manipulate them by management into performing increased workloads if they do not wish to participate. Employees can be resistant to empowerment programs for this reason alone and an actual shift in corporate governance must accompany employee empowerment programs for them to be ethical, (Stainer & Stainer, 2000). Such an important shift in corporate governance must necessarily be mandated by the firm’s chief leadership.
It is important to note that during an SDWT implementation period managers are in transition as much as subordinates. Transitioning from traditional management roles to the role of team leader, managers must learn to encourage interdependence among team members through advising and coaching, (Douglas, 2002). Afsaneh Nahavandi maintains that although the role of a leader and the role of a manager are different, effective and competent managers often also act as leaders within an organization. (2007, p. 25). The concept of managers acting as leaders is especially important when implementing an SDWT employee empowerment initiative. Appropriate leadership training is necessary to train the firm’s managers to act as leaders rather than in their traditional supervisory capacity to effect the change to an SDWT employee empowered firm.
SDWT initiatives transform the roles of both managers and employees in the workplace and can take up to 24 months to implement, (Douglas, 2002). This is substantial barrier to employee empowerment in that both subordinates and managers are required to act outside of their traditional roles. Managers may feel cautious about employees having to make difficult quality decisions. Additionally, an appropriate implementation period is needed so that all employees can be trained to access the necessary operational knowledge. Traditionally management controls the flow of information throughout a firm. In order to implement an SDWT empowerment program, management must be trained to freely share pertinent and important information with their team members so that appropriate decisions can be made by their subordinates. Ford and Fottler distinguish between content, or the tasks and procedures of a particular job, and context, or the reason organizations need the work performed; maintaining that content is more easily conferred upon workers than context, (1995). Both content and context indicate levels of shared information that management must be willing to confer upon their employees. Ford and Fotler further postulate that empowerment must be awarded incrementally to employees by leaderships who willingly give up their authority and trust their subordinates enough to empower them. This further demonstrates the need for an appropriate transitional period to accomplish the SDWT transition within the firm.
An additional consideration is that employees may feel during an SDWT transition that they aren’t being compensated to make management-type decisions and if those employees feel that the commitment from leadership isn’t genuine they will feel less empowered. Such employees can become increasingly dependent upon their managers and this can lead to an opposite end result. To realize a successful implementation, the transitioning of a manager’s role to leader is especially important as the team accepts more responsibilities and looks to management for cues on how to proceed, as the team is aware that their work environment is changing (Douglas, 2002). Management must be prepared, through thorough training, to accept and anticipate that they will have less decision making responsibilities and instead be prepared that they will be working to influence the decision making skills of their subordinates through advising and coaching.
One of the most important aspects of instituting an SDWT change is that both management and their subordinates must view the initiative as believable by observing a consonance of behavior throughout the firm, especially emanating from the CEO. Kouzes and Posner maintain that “credibility is the foundation of leadership” and if employees don’t see consistency emanating from leadership they conclude that a leader is at best not serious about the change and at worst hypocritical, (2003, p. 37). Managers and their subordinates within the firm will look for evidence that a real commitment to a forward seeking change such as an SDWT employee empowerment initiative is credible from the CEO. If evidence of credibility is lacking then leadership is found to be duplicitous while if evidence of credibility is found then employees are more willing to trust leadership with their careers.
Conclusion:
Managers attempting to empower their workers in an inconsistent manner, where management is not fully committed to the empowerment process, can cause misgivings and actually result in lost productivity rather than the anticipated gain. In order to fully commit the firm’s management to the process of an SDWT employee empowerment initiative it is contingent upon leadership that ample time and training be devoted to the endeavor, for both managers and their subordinates. Additionally this process should not appear to be forced upon them. It is especially important that the transition to an SDWT environment should be positioned to management as a growth opportunity, one that will enable them to develop real leadership skills. If appropriate change management through training is foregone, managers may feel the transition is forced upon them and the management team may instead feel threatened by the initiative. The managers ensuing reluctance to adopt the initiative will be apparent to their subordinates and the firm’s productivity will be decreased instead of increased. Appropriate leadership training should be provided to management to avoid this and to encourage this effective organizational change.

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