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BUSM3195 LEADERSHIP AND MANAGEMENT INTRODUCTION Procter and Gamble Co. (P&G) is an American multinational corporation (MNC) where its businesses focus on fast-moving consumer goods. Durk Jager, the former chief executive officer (CEO) of P&G, reorganised the company to meet the growing demand of globalisation. However, his drastic plans proved futile as thousands of followers were confused and demoralised by his move. As a result, P&G’s stock went into tailspin after reducing two earning projections (Tichy & Bennis 2007). Therefore, in 2000, Jager was eventually replaced by Alan George Lafley, who later transformed the company to its current state. In 2007, P&G was ranked as the 8 th largest corporation in the world by market capitalisation, the 14 th largest company by profit in the States and also the top ten in Fortune’s most admired companies list. Apple Inc. (Apple), a relatively younger organisation, is also an American MNC. However, it deals with consumer electronics and software product instead. Apple was in a dire state before Steven Paul Jobs, aka Steve Jobs, took the post of CEO. Under his charge, several popular products were created and some of them include the Macintosh computers, iPod, iPhone and Macbook etc. In 2008, Apple has achieved worldwide annual sales of US$32.48 billion in its fiscal

Transcript of Lm Assg New 1 Apr

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BUSM3195 LEADERSHIP AND MANAGEMENT

INTRODUCTION

Procter and Gamble Co. (P&G) is an American multinational corporation (MNC) where

its businesses focus on fast-moving consumer goods. Durk Jager, the former chief

executive officer (CEO) of P&G, reorganised the company to meet the growing demand

of globalisation. However, his drastic plans proved futile as thousands of followers were

confused and demoralised by his move. As a result, P&G’s stock went into tailspin after

reducing two earning projections (Tichy & Bennis 2007). Therefore, in 2000, Jager was

eventually replaced by Alan George Lafley, who later transformed the company to its

current state. In 2007, P&G was ranked as the 8 th largest corporation in the world by

market capitalisation, the 14th largest company by profit in the States and also the top ten

in Fortune’s most admired companies list.

Apple Inc. (Apple), a relatively younger organisation, is also an American MNC.

However, it deals with consumer electronics and software product instead. Apple was in

a dire state before Steven Paul Jobs, aka Steve Jobs, took the post of CEO. Under his

charge, several popular products were created and some of them include the Macintosh

computers, iPod, iPhone and Macbook etc. In 2008, Apple has achieved worldwide

annual sales of US$32.48 billion in its fiscal year ending September 2008 and Fortune

magazine had also named Apple as the most admired company in the States.

The successful revival of these two companies can be attributed to the effective

leadership of their CEOs, Alan George Lafley and Steve Jobs. They have received

worldwide praises about their leaderships for amplifying their market price and leading

their respective companies from a deteriorating empire to where it is now. Hence, the

characteristics of each leader, their transformational leadership, and how they developed

teamwork within their organisation and motivate their employees are significant to

leadership effectiveness.

APPROACH

Firstly, characteristics of leaders can be classified into three categories namely,

personality traits, leadership motives and cognitive factors (Dubrin, Dalglish & Miller

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2006). As recent studies had also recognised that these characteristics will facilitate and

determine the effectiveness of leaderships, and it is the integration of these personal

characteristics that cultivate a consistent pattern of leadership behaviours (Zaccaro, Kemp

& Bader 2004). Therefore, the characteristics that attributed to their successful realms are

relevant to their leaderhip effectiveness.

Secondly, transformational leaders employ a visionary and creative style, not only to

inspire the employees to be creative and innovative, but also to broaden their interest in

their work (Nielsen et al. 2008). They are also able to devote significant energy to lead

and respect the gifts and abilities of their workers (Bryant 2003). Furthermore, they focus

on what they accomplish rather than their personal characteristics and relationships with

followers, and it is especially important as leaders may have to lead people from across

the world (Dubrin, Dalglish & Miller 2006). Moreover, many organisations are facing

turbulent and intense competition. Thus, their transformational leadership, to manage the

chaos and restructure the organisation, are vital to the survival of the organisations in the

long run.

Lastly, motivation is a hidden force to induce someone to do something that is desired

through various approaches (Arnold 1988). Hence, it is essential to motivate employees

through the right approach in order to achieve organisational goals (McShane &

Travaglione 2007). Developing teamwork is another important leadership role that is said

to differentiate successful from unsuccessful leaders as it will influence the followers to

work effectively in a cohesive manner (Locke et al. 1999). Hence, their methods of

motivation and fostering teamwork would be relevant in determining their leadership

effectiveness too.

ALAN GEORGE LAFLEY

Traits

Lafley has shown lots of passion for his work and the people in the organisation. For

instance, even when it is Mother’s Day, he would meet the company’s head of human

resource, Richard Antoine, to go through reports on the performance of the company’s

senior executives every Sunday evening (Sosik et al. 2004). The fact that he could even

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sacrifice the time with his mother on Mother’s Day has shown his determination and

passion to preserve the company’s culture of valuing talents.

Additionally, Lafley has demonstrated his farsightedness by acquiring SpinBrush and

Clairol in 2001, shortly after taking over the post of CEO (Berner 2002). From the

acquisitions of these two companies, he actually strengthened the company core strengths

in hair and oral care, and also increased its market share and maintaining a balance

between sales and profit growth where analysts had also expected P&G’s operating

earnings to increase by 9% (Berner 2002).

Furthermore, Lafley is also soft-spoken, friendly and warm in nature. He displayed a high

level of emotional intelligence, especially his self regulation, by not screaming and

yelling at his subordinates because he believes that the messenger is just as critical as the

message (Berner 2003). Besides that, he also has the ability to build enduring

relationships as he relied a great deal on relationships he had built over the years to

transform P&G’s culture (George 2006). For example, when a student asked him a dull-

witted question, he showed patience and willingness to listen in order to understand the

question by returning to the student repeatedly, resulting in better relationships between

him and his followers (Krauss 2008).

Lastly, Lafley also has insight into people and situations when he by-passed dozens of

potential general manager and appoint Henretta to head the North America baby-care unit

(Tichy & Bennis 2007). Although there was almost a rebellion against his decision, he

upheld his decision and justified why Henretta was better than the other candidates

(Tichy & Bennis 2007). Despite all these, Henretta’s success has proven that Lafley has

chosen the right person for the post (Tichy & Bennis 2007).

Transformational Leadership

When Lafley took over as CEO, he realised the critical problem he was facing was not

about turning P&G from the losses of US$85 billion in market capitalisation to

profitability. Instead, the crisis confronting P&G was the loss of confidence in the

leadership as the organisation was in a state of chaos. Headquarters and business units

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globally were blaming each other for the problems created and employees were calling

for heads to roll (Tichy & Bennis 2007).

Thereafter, Lafley flaunted his transformational leadership by helping his followers

understand that the organisation needs to undergo major changes in order to survive and

eventually managed to transform the culture to a nimbler and more open one (Woolley

2005). He also created awareness and got them to face up to the reality that it is critical

for the organisation to change so that it will be more profitable, resulting in lesser

retrenchments (Tichy & Bennis 2007).

For instance, only ten days in office, he immediately flew to Europe to listen to the

complaints and address their issues in order to help them understand and be aware of the

changes that were ahead of them (Dyer, Dalzell & Olegario 2004). During such meetings,

he shared his core beliefs on the ten things he believed about the fundamentals of

business (Dyer, Dalzell & Olegario 2004). This helped his followers understand the need

for change. As a result, it rallied everyone to work more cohesively in order to achieve

organisational goals.

The corporate culture he advocated was revolved around innovation and creativity

(Hamstra 2008). He made it explicit that innovation in every facet of operations, from

inventing to distributing, is crucial to keep the company in existence (Berner 2008).

Subsequently, in 2001, Lafley allowed innovations to flow freely across the entire

organisation and encouraged outsourcing for innovators to make up at least fifty percent

of its innovations (Skarzynski & Gibson 2008). As such, the organisation has been able to

introduce numerous new products to the market that exemplify the innovation fortitude of

P&G (Skarzynski & Gibson 2008).

Therefore, it is evident that when Lafley mandated about the innovation imperative, he is

intensely transforming the organisation (Skarzynski & Gibson 2008). Furthermore,

Lafley was visionary and was not afraid to make changes. Hence, he is undeniably a

transformational leader who was placed in a situation to change and make things happen.

Motivation and Developing Teamwork

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Lafley motivates his employees by empowering the management team to make business

strategic decisions by just providing them the directions. This is similar to the motivator

factors advocated by Herzberg (cited in Sanford & Taylor 2006). On one occasion, he

even shook the hands of a student working in the company and told him that the work he

is doing is vital to the future of the organisation (George 2006). Another example of his

recognition of efforts put in by the followers is that he heaps praises on them, including

his division president, brand managers and other employees (Krauss 2008).

In addition to that, Lafley had used informal techniques to foster the teamwork of his

followers. For example, he had worked very hard to change the company’s new strategy

to be customer driven innovation (Saporito 2008). Through reiterating the new strategy,

the team will be able to develop a norm that innovation will become a routine for

everyone (Berner 2008). He also encourages his followers to compete with rivals so that

they will collaborate as a team to win the rivalry as a whole (Lafley & Charan 2008). On

another occasion, before the company started outsourcing, he adopted the consensus

leadership style by having various teams to give inputs and vigorously debate on the issue

(Lafley & Charan 2008). In the course of contributing inputs to significant decisions,

members will feel that they are more valuable to the team and resulting in improved team

effectiveness (Dubrin, Dalglish & Miller 2006).

STEVE JOBS

Traits

Jobs is a leader who is capable of influencing them to have strong desire for work as he

possesses a high degree of passion for his work. Even though he always yelled at his

followers, they appreciated his strong passion where he always spend long hours at work

(Kahney 2008). Additionally, through his passion for work, he was able to capture the

spirit of his followers and work cohesively towards a common goal (Young & Simon

2005).

Furthermore, Jobs is a leader with low emotional intelligence as he does not care about

his followers' feelings as he strives for perfection incessantly and will hurl verbal attacks

at those who failed to meet his demands (Lee 1994). Additionally, his reputation in the

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organisation further enhanced his deficiency in emotional intelligence as he screams at

his followers frequently and randomly fired those unlucky ones (Young & Simon 2005).

Additionally, Jobs had displayed his farsightedness when he reduced the product lines

and cut the wholesale cost with a year in office (Morris & Levinstein 2008). Even though

there were vast numbers of mobile phone models catered to suit the needs of the dynamic

consumer market, he stood on his solid grounds to launch the iPhone, which generated

tons of profits for the company (Burrows 2009). As a result, he not only prevented Apple

from further losses, he also turned Apple into a profitable business (Kahney 2008). In

another instance, he confidently opposed to the major accordance to launch the iMac

without a floppy drive and it proves that the floppy drive technology has diminished

(Kahney 2008).

Lastly, Jobs has the insights into his people and situation as he makes careful assessment

of the strengths and weaknesses of each staff (Dubrin, Dalglish & Miller 2006). He kept

his core team fairly small particularly the outstanding ‘A’ team of selected executives,

programmers and designers. (Kahney 2008). Throughout his stint at Apple, he kept the

talents to assist him with key assignments, such as the Mac project, and used different

leadership styles to influence them accordingly (Kahney 2008).

Transformational Leadership

When Jobs took over the position of CEO, due to the incompetency of the previous CEO,

the main crisis facing Apple was that there were too many non-profitable products

causing the organisation to be on the verge of bankruptcy (Burrows 2009). Thus, Jobs

held individual meetings with all product groups. During these meetings, they had to

convince him that the product was profitable or else they will be terminated and he

managed to make them understand the criticality of a change in order for the organisation

to survive (Kahney 2008).

As a result, he took a broad and long term perspective to sell those non-profitable

products. His intention was to focus on the core products to increase the profitability of

the organisation and expertise of his followers so that he can obtain the results he aimed

to achieve (Baldoni 2006). As such, he managed strengthen the brand name and

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reincarnate it to thrive in a disruptive age (Morris & Levinstein 2008). Another of his

long term vision for Apple is to convert Apple into a digital hub where digital

entertainments devices could be connected to this technology centrepiece (Kahney 2008).

Furthermore, he managed to convince all the employees that the organisation can develop

new businesses like cell phones despite the intense competition in the market (Burrows

2009). Subsequently, he also managed to convince them that they were in a distinctive

position where they will change the face of computing that no one had created before

(Kahney 2008). As a result, they will be more willing to accept responsibility for what

they have been doing (Baldoni 2006). Hence, ever since the introduction of iPod, his

followers are very much self-fulfilled as Apple has dominated the consumer electronics

market with the complements of iPhone and Mac products (Lyons 2008).

Therefore, Jobs has evidently transformed his followers to widen their interest in their job

by helping them to realise the self-fulfilment they will achieve. Moreover, his vision was

clearly communicated to his followers who helped to transform Apple into a digital hub.

Hence, he is definitely a transformational leader who managed to revive Apple to thrive

in the competitive market.

Motivation and Developing Teamwork

The way Jobs motivate his followers is comparable to Herzberg’s motivators as he

believes in giving capable followers the reins and chances to make good decisions

(Morris & Levinstein 2008). For instance, he recognised Cook’s ability and entrust the

company’s daily operations in his hands where he will only make the strategic decisions

(Lashinsky & Siklos 2009). He also respects Cook as the company has already coalesced

around him because he did almost nothing that would make people disrespect him

(Lashinsky & Siklos 2009). On another occasion, Jobs praised Ratzlaff for creating an

exciting design for iMac which gave him a sense of achievement because Jobs was a

person with very high expectations (Kahney 2008).

Additionally, Jobs foster the teamwork of his followers by one of the informal

techniques, demanding performance standards and providing directions. For instance,

during one design meeting, he took a telephone book and threw it on the table demanding

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them to build a computer of that size, where the size of the smallest computer back then

was twice as big as a telephone book (Kahney 2008). As a result, it actually serves as a

wakeup call to his followers stipulating them to work cohesively in order to satisfy his

demand (Kahney 2008).

On another occasion, he just gave directions to his team that he was counting on them to

deliver a software demo disk (Kahney 2008). They can only went back to their cubicles

immediately and start working as a team in order to deliver to their demanding boss as

they did not even had the chance to rebut (Kahney 2008). Therefore, he is said to give the

team lots of challenging goals which eventually brought the team together cohesively.

COMPARISON

A comparison which provides your evaluation of similarities and differences between the

chosen leaders, with regard to the relevant theory (700 words).

Similarities

So what if they are the same? What does it implies?

One of the similarities that both leaders have is their passion for work since taking over

the leadership. Lafley spent numerous off days to discuss how he could best manage his

staffs and Jobs would spend long hours at work in order to get the things right. Hence, it

suggests that if a leader has passion for his job, he should be able to bring about a

successful organisation.

Additionally, shortly after taking over the position of CEO, they also have the mental

ability to understand the long term implications of their actions as they made critical

decisions which helped to fortify the organisation's reserves in the long run (Dubrin,

Dalglish & Miller 2006). Thus, farsightedness is thought to be an essential characteristic

of an effective leader because it can help to develop vision and corporate strategy

efficiently (Dubrin, Dalglish & Miller 2006).

Furthermore, they were also able to assign the right people for appropriate jobs. Lafley’s

decision to put Henretta in a key assignment has proven a lot of other managers wrong as

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she is able to assist him in running the baby care unit successfully. Jobs is also a leader

who makes careful assessment of his followers before he appoint key assignments to

them. Hence, insight into people and situation is another essential characteristics of an

effective leader.

Moreover, being able to transform organisations from a low performance to a relatively

high performance one, they are both considered transformational leaders (Dubrin,

Dalglish & Miller 2006). Even when their followers were not ready to step out of their

comfort zone, the two leaders had managed to help their followers understand the critical

need for change in order for the companies to survive in the long run, thus keeping their

jobs. Therefore, transformational leadership is vital to organisation so as to produce high

performance followers.

Lastly, the two leaders similarly believed that if they desire positive attitudes and job

satisfactions from their followers, they will have to motivate them using Herzberg's

motivators, such as respect, recognition and sense of achievement (Herzberg 2003).

Lafley is a leader who recognises the efforts of almost everyone in the company as he

constantly heap praises on his followers. On the other hand, although Jobs seldom praises

his followers, he provided them with sense of achievement in order to motivate them to

produce better results. Therefore, it may be simplistic to suggest that the two leaders used

different ways to motivate their followers as the fundamental approach which led to

positive attitudes and job satisfaction is still the same (Herzberg 2003).

Differences

So what if they are different? What does it implies?

However, the difference in emotional intelligence distinguished the two leaders. Lafley is

a leader who has self regulation and social skill which allows him to be able to connect

with his followers and understand them, resulting in better relationship between him and

his followers (Dubrin, Dalglish & Miller 2006). Although he seems to be quite people-

oriented, he is very decisive when it comes to work (Berner 2003). On the contrary, Jobs

is a leader who does not empathise anyone and does not socialise with his counterparts.

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Lafley – High Emotional intelligence, self regulation, social skill. Foster teamwork by

developing a norm of teamwork

Job – Low Emotional intelligence, lack of empathy and social skill. Foster teamwork by

establishing urgency, demanding performance standards and direction setting

LAFLEY JOBS

TASK

ORIENTED

TRAITS

Passion

Emotional intelligence

Self regulation

Social skill

Passion

Emotional intelligence

Lack of empathy

Lack of social skill

COGNITIVE

FACTORS

Farsightedness

Insight into people and situation

Farsightedness

Insight into people and situation

LEADERSHIP

STYLETransformational Transformational

MOTIVATION Motivator Motivator

TEAMWORKDeveloping a norm of

teamwork

Demand performance standards

and direction setting

LEARNING SUMMARY & CONCLUSION

An approximately 700 words summary which gives an overview of your key

learnings, focusing on the three topics. (Which leader is more effective and why?)

(Traits)

From the above, it can be established that a leader’s characteristics have an influential

impact on the organisation and the different characteristics displayed by Lafley and Jobs

proved that characteristics are not the same with every leader, but is unique to the

individual.

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Although possessing the correct set of characteristics does not guarantee successful

leadership, but these are considered vital preconditions that an effective leader must

possess (Kirkpatrick & Locke 1991, cited in Pierce & Newstrom 2006). Therefore, in

contemporary organisations, the traits approach is definitely still very much appreciated

because when the situation becomes more complex, it will play a more significant role in

anticipating successful leaders (Zaccaro, Kemp & Bader 2004).

(Leadership Style) Transformational leadership is useful in organisations in crisis. This

was demonstrated in the case of P&G and Apple.

(Motivation)

Using recognition and praise to motivate others is deemed as a ‘direct application of

positive reinforcement’ and they are effective because the desire for recognition is a

natural human need, and employees want to know that their work is beneficial to

somebody (Dubrin, Dalglish & Miller 2006). Therefore, these will result in a higher sense

of achievement by his followers and thus producing better results as they will feel highly

motivated.

Leadership effectiveness model

In a nutshell, the characteristics of a leader do not guarantee his success, but it is a

prerequisite of an emergent leader. In addition, if a leader is transformational, able to

motivate his followers in the right way and foster them to work cohesively, he will

definitely be an effective leader.

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Herzberg, F 2003, ‘One more time: how do you motivate employees?’, Harvard Business

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Not Used

Already, a reported 20 percent of new product initiatives were externally generated, twice

of what P&G was reporting when he took office in late 2000 (Sanford & Taylor 2006).

Lafley capped all this in October with the $57 billion acquisition of Gillette. Lafley, 58 --

P&G now gets 35% of its product ideas from outside companies or inventors. It has also

outflanked rivals in design and innovation: The company had 5 of the top 10 best-selling

consumer-product launches in 2005, says market researcher Information Resources

(Woolley 2005). Lafley transformed a legendary but ossifying company by organizing

around innovation (Saporito 2008).

P&G is not just outsourcing—they are building core capabilities. They are expanding

their beauty care brands with the purchase of Clairol and Wella and leveraging their

brand and distribution capabilities by expanding their value web to include over-the-

counter healthcare products like Prilosec. To effect this sweeping change, A.G. Lafley

established and communicated a vision. He clearly stated the governance rules and

insisted they focus only on what P&G does best and nothing more. They are outsourcing

everything else and building capabilities through value web expansion (Sanford & Taylor

2006).

Traits of leaders can be classified into three categories namely, personality traits,

leadership motives and cognitive factors (Dubrin, Dalglish & Miller 2006). Personality

traits are a set of mannerisms that is inborn (Dubrin, Dalglish & Miller 2006). Although

possessing the correct set of traits does not guarantee successful leadership, but these

traits are considered vital preconditions that an effective leader must possess (Kirkpatrick

& Locke 1991, cited in Pierce & Newstrom 2006). Leadership motives are the desires

that a leader has to motivate him to lead, hence a leader without leadership motives have

been frequently identified as the less effective ones (Dubrin, Dalglish & Miller 2006).

Cognitive factors are typically mental abilities. With these abilities, leaders can easily

inspire followers, solve problems creatively and eventually bring about positive

organisation changes, thus effective leaders need to be mentally sharp (Dubrin, Dalglish

& Miller 2006).

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Jobs can be considered an extrovert because he enjoys human interactions, likes to meet

new people and spend time in social gatherings (Judge, Heller & Mount 2002). He is

always willing to accept interviews about his creation of Apple and post for front cover

photographs, and thus built a strong relationship with the world media (Kahney 2008).

General personality traits are observable within and outside the context of work (Dubrin,

Dalglish & Miller 2006). These traits contribute to satisfaction and success in personal

life likewise in the working environment.

Self-confidence indicates whether an individual is self-assured in his judgements,

decision making, ideas and capabilities (Lussier & Achua 2007). It includes a sense of

self-esteem and self-assurance and the belief that one can make a difference.

Lafley would exercise his referent power when required. For example, he by-passed

dozens of potential general manager and appoint Henretta to head the North America

baby-care unit. There was almost a rebellion as she had no experience in that area.

However, Lafley thought that she is a good leader with new. Lafley made a mistake by

not consulting his management beforehand. Instead of backtracking, he called for a

meeting for them to justify why their candidates would be better than Henretta

perspective. At the end if the meeting, he maintained his decision. To ensure that

Hebretta succeeds, he coached her and supported her, like replacing the people that she

deemed not suitable (Tichy & Bennis, 2007).