Leader Importance in Change

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Table of Contents

Introduction
Change Management Tools
Employee Motivation in Corporate Sector
Role of Leaders and Managers in Corporate Sectors
References
Footnotes

Introduction

It is a well known fact that leading change is a difficult task. Let us take for example, the situation in the modern organizations, it is common to here leaders talk about employees who are always resisting any new changes. On the other hand the employees talk mainly about the changes as a mistake or a blunder. These are common talks among the leaders and employees in their respective circle and make it obvious that change is occurring in most of our organizations. Kotter (1996) states that “The rate of change is not going to slow down any time soon…[it] will probably speed up even more…change is inevitable and to resist is at best unproductive…the key is in your response to change”.

In the 21^st century the most of the organizations are undergoing substantial changes. The terms such as privatization and “downsizing” have become a common in the public sector. While these processes continue in most parts of the world, in recent years this sector has a desire to improve its capabilities. As a result these sectors have taken up capacity building, or institutional or sectoral development. However, this has resulted in significant changes to, and within, individual organizations.

New sets of organizational forms have emerged. Besides, new managerial processes are linked with human resource management or management information systems (CeFiMS, N.D.). Hence, today it has become an important task to manage the change in corporate sector. This paper discusses the issues related to managing change in corporate sector and its impact.

Corporate managers in the organizations are often required to initiate major change or transformation in their agencies (Kee and Davis, 2006). Hence these managers are often required to possess a unique leadership called the “change leadership”. This concept of leadership is different from the normal leadership or management of a corporate agency. They need to carefully assess the risk and rewards, and a skill to manage risk in a way that protects the leader, the agency, and other stakeholders.

There are several influences on corporate managers that demand change leadership. Corporate managers at different levels of government are under pressure to be more performance oriented. This includes various performance-based approaches such as performance-based budgeting, the federal Government Performance and Results Act, and a variety of pay for performance plans. To encourage competence and improve effectiveness, corporate managers need to be competitive and entrepreneurial, including efforts at contracting-out, competitive sourcing, and various public-private partnerships.

Government officials need to quickly respond to changing demands brought about by globalization, new threats, such as terrorism, and uncertain events, such as Hurricane Katrina. One of the common factors in all of the above factors is the need for agencies to change themselves which is not easy. Though potential rewards may be good enough, change carries risks for the agency, the manager, and other stakeholders.

In contrast to private sector, public sector leaders have considerably more stakeholders. They include those within the organization, such as the trade unions, and those outside the organization, such as political leadership, suppliers, citizens/consumers and others. The most important aspect of change in corporate sector is that it must be transparent, involves extensive consultation, and is generally conducted in a highly visible arena. While changes are inevitable in the corporate sector just as in private sectors, it brings along with it several risks.

Kee and Davis (2006) identified and classified these risks. Change-related risk is a function of three factors: the level of complexity of the change being undertaken; the type and degree of individual’s and/or organization’s perception of their stake (their potential gain or loss) in the change outcome and the change capability of an individual and/or organization. These factors represent the level of risk involved in any given change in a corporate sector.

High-risk changes involve greater chances that the change process or the outcome will may be negative with unacceptable consequences where as low-risk changes involve lesser chances that the change process or outcome will involve such consequences. By assessing risk in this manner, a manager’s change leadership efforts most probably fall in optimal action. On the other hand the efforts by the manager or a supervisor that occur without the knowledge of change risk factors are much more unpredictable and potentially counterproductive. For instance, pushing for too much change, too fast, could be risky for both the corporate manager and the organization itself. Besides, pushing too slowly may also be dangerous—organizations may miss major opportunities or be viewed as unmanageable and ineffective (Kee and Setzer, 2006).

Change Management Tools

The use of quality management has become widespread among public and private sector organizations. In today’s world of global competition and increasing demand by customers it becomes very essential for organizations to produce quality service. Though the aims of business may differ, but the basic concept of satisfying the customer remains same. Corporate sectors are implementing several programs designed for continuous improvement, participative management, and self-directed work teams which in turn seek to energize employees by making them a more integral part of the workplace.

During the past few decades, quality management has emerged as a major competitive edge in business and a source of long term profitability. Different techniques and concepts have evolved to improve product or service quality, including Zero Defects, Six Sigma, quality circles, TQM, Quality Management Systems (ISO 9001 and others) and continuous improvement. Essentially, it means setting up systems and processes that ensure product or service quality and that people are rewarded for doing the right thing, thus keeping their highest-quality performance strong and accurate. This paper attempts to compare, contrast and analyze two such techniques i.e. Six Sigma and Total Quality Management.

Bill Smith, a senior engineer and scientist at Motorola in the year 1986 introduced the concept of Six Sigma (Quinn, 2002). The main purpose was to standardize the way defects are counted. Six Sigma provided Motorola the key to addressing quality concerns throughout the organization, from manufacturing to support functions. The application of Six Sigma also contributed to Motorola winning the Malcolm Baldrige National Quality award in 1988 (Motorola University, 1994). Six Sigma not only improved Motorola’s products and processes, it also saved the company more than US $15 billion in the 10 years after it began the program (Microsoft Office System, Operation Agenda, N.D.).

Six Sigma is not a quality management system, such as ISO-9001, or a quality certification system. Instead it is a methodology for reducing defects based on process improvement. Six Sigma is a methodology to manage process variations that cause defects, defined as unacceptable deviation from the mean or target; and to systematically work towards managing variation to eliminate those defects. The objective of Six Sigma is to deliver high performance, reliability, and value to the end customer¹.

Six Sigma is a statistically-based process improvement methodology that aims to reduce defects to a rate of 3.4 defects per million defect opportunities by identifying and eliminating causes of variation in business processes. In defining defects, Six Sigma focuses on developing a very clear understanding of customer requirements and is therefore very customer focused. The Six Sigma methodology is based on a concept called DMAIC: Define, Measure, Analyze, Improve, and Control the framework that provides a stronger platform for deployment and execution (Mekong Capital, 2004).

TQM is a set of management practices throughout the organization, geared to ensure the organization consistently meets or exceeds customer requirements. This is also applicable to public sector organizations. TQM places strong focus on process measurement and controls as means of continuous improvement. Total Quality Management is an approach to the art of management that originated in Japanese industry in the 1950’s and has become steadily more popular in the West since the early 1980’s².

According to Dale et.al. (2001) TQM is described as an umbrella of concepts and ideas in various fields related to quality management. It involves the mutual cooperation of every one in an organization in order to produce products and services which meet and even exceeds customers expectation (Dale, 1999). Total Quality is a description of the culture, attitude and organization of a company that has an objective to provide, its customers with products and services that satisfy their needs. The culture requires quality in all aspects of the company’s operations, with things being done right first time, and defects and waste eliminated from operations.

Studies found that several companies have difficulties in implementing TQM. Surveys by consulting firms have found that only 20-36% of companies that have undertaken TQM have achieved either significant or even tangible improvements in quality, productivity, competitiveness or financial return. Hence if TQM is used as a management tool in the corporate sector, it can be very useful to bring about changes in a positive direction. Important aspects of TQM include customer-driven quality, top management leadership and commitment, continuous improvement, fast response, actions based on facts, employee participation, and a TQM culture.

TQM is a customer oriented management technology. The customer, not internal activities and constraints, comes first. Customer satisfaction is seen as the company’s highest priority. The TQM Company is responsive to customer requirements and responds quickly to them. In the TQM context, ‘being sensitive to customer requirements’ goes beyond defect and error reduction, and merely meeting specifications or reducing customer complaints. The concept of requirements is expanded to take in not only product and service attributes that meet basic requirements, but also those that enhance and differentiate them for competitive advantage².

Employee Motivation in Corporate Sector

Many researchers have found that in spite of any theory of employee motivation, the high motivation among them invariably depends on interesting work, pay, good working conditions, appreciation that they receive from their superiors, and job security. These factors are important factors in helping to motivate employee even in the corporate sectors (BPIR.com, 2002). When we look at the advantages of employee it can be pointed out that motivational and inspirational experiences in their organizational life improve employees’ attitudes, confidence and performance. Managers and leaders in the corporate sectors are expected to have exceptionally good leadership qualities and good people-motivation skills and inspirational techniques that will help to improve total productivity.

There are several motivational methods. It may range from inspirational quotes and poems, to team building games and activities, warm-ups and exercises for conferences, workshops, meetings and events, which itself can often be helpful for motivation of most of the employees. According to the McGregor’s XY Theory of motivation, motivated people perform better. Douglas McGregor who was an American social psychologist, in his 1960 book ‘The Human Side of Enterprise’ proposed the famous X-Y theory.

Theory x and theory y are even today referred to in the field of management and motivation. McGregor’s X-Y Theory remains a valid basic principle from which to develop positive management style and techniques. Hence it is important for all the managers in the corporate sectors to follow some of the basic principles of this theory because McGregor’s XY Theory still remains central to organizational development, and to improving organizational culture.

This theory is a simple reminder of the natural rules for managing people, which under the pressure of day-to-day work are easily forgotten. According to McGregor there are two fundamental approaches to managing people. In general it is found that many managers follow theory x, and sometimes get poor results. Other managers use theory y, which produces better performance and results, and allows people to grow and develop (businessballs.com, 2006).

Motivation is a complex area and it is different for each person. It is important to get the alignment and values right, and motivational methods work better. Motivational methods of any sort will not work if people and organisation are not properly aligned. People are motivated for something if they can relate to and something they can believe in (businessballs.com, 2006). Today the challenges faced by the corporate sectors are quite different from the olden times. People are expecting more in terms of opportunity, income, facilities etc. In terms of the role played by managers and leaders it is quite different and it is important to differentiate between them.

Role of Leaders and Managers in Corporate Sectors

According to Bernard Bass “Leaders manage and managers lead, but the two activities are not synonymous…. Management functions can potentially provide leadership; leadership activities can contribute to managing. Nevertheless, some managers do not lead, and some leaders do not manage” (Bass and Stogdill, 1990).

Although managers and leaders functions and roles overlap in the corporate sectors considerably, the term manager connotes that authority has been formally granted to an individual by an organization. Management involves power legitimate formal authority that is granted to the occupant of a position by a higher organizational authority.

The Goleman (2002) study of 4000 executives highlighted that the fundamental task of leaders is to ‘prime good feeling‘ in those they lead and this positivity impacts significantly on an organisation’s emotional climate and brings out the best in people. His research indicates that a leader’s emotional states and actions do affect how the people they lead will feel and therefore perform. In other words the leader is the one who manages meaning for a group and acts as the group’s emotional guide.

Responsibility and accountability for the use of organizational resources accompany the power accorded to a manager or director. In contrast, the term leader implies effective use of influence that is somewhat independent of the formal authority granted to an individual because of position. Leadership cannot be granted to a person by a higher authority; rather, those who decide to follow bestow it on an individual. While managers have formal authority, leaders have the informal ability to get things done by attracting and influencing followers. Effective managers in any corporate sector must be leaders, and many leaders become managers, leaders, and directors. The two sets of roles and functions, however, differ (Steven, 2001).

Traditionally managements the term “management” refers to the activities involved in the four general functions i.e. planning, organizing resources, leading a group of people, and controlling and coordinating the organizations system. One of the common views of management is getting things done by a group of individual. To most employees, the term “management” probably means the group of people who are mainly responsible for making decisions in the organization (McNamara, 1999).

In any corporate sector, different levels of managers are present they include top managers, middle managers and first-line managers. Top managers are responsible for overseeing the whole organization and typically engage in more strategic and conceptual matters, with less attention to day-to-day detail. Top managers have middle managers working for them and who are in charge of a major function or department. Middle managers may have first-line managers working for them and who are responsible to manage the day-to-day activities of a group of workers (McNamara, 1999).

Managers also require well developed interpersonal skills relating to working with others, with the component abilities encompassing everything concerned with managing and leading people. Katz (1974) despite classifying all three categories as ‘skills’, heralded the importance of distinguishing between the learnable technical skills of management versus the more abstract personal characteristics found in his ‘human’ and ‘conceptual’ skill categories.

Managers and leaders in a public sector organization have specific roles to play when it comes to motivating employees. While managers motivate by providing guidelines, encouragement and appreciation, leaders walk the talk and work along with the employees to spread their motivation to others. Therefore both these people are very important for any organization for its success.

Leadership has become an urgent issue in most of the corporate sector as a consequence of rapidity and unpredictability of change. Corporate sector have to be more well-organized, more efficient, more innovative and, in the case of business, far more competitive. Above all the workforce is changing. Today employees demand respect, fair treatment and an opportunity to contribute. And if they are denied of these they look out for other options and quit the organizations (The Conference Board of Canada, N.D.).

Organizational behavior is a field of study that is of particular importance to enterprises and those in management positions. One of the major issues that corporate sector firms have to deal with is the problem of motivation. Motivation is the power that makes us do things. This comes from the result of personal needs being fulfilled so that one has encouragement to complete the assignment or the assigned work. The needs vary from person to person as everyone has his/her individual needs to motivate themselves. One may think that motivation for an employ is higher salary, mostly it is wrong because of the reason that it might not satisfy all employees to a lasting level (bizhelp24.com, 2005).

Psychological research has discovered the following positive personality variables associated with strong leadership that includes warmth, friendliness, self-confidence, ability to stand up to pressure. These researches have also found that the absence of the negative qualities of arrogance, hostility, boastfulness, egotism, and passivity are correlated with positive leadership (Romney, 1996). Building a strong leadership is all about building a performing team in corporate sectors.

Organization wide change requires dealing with the sources and uses of governance, diffusion and reluctance to rethink what the strategy and purpose. The diversity of forces represented by different challenges requires a diversity of leaders. A coordinated effort from the local line leaders, internal networkers and executive leaders are vital in any corporate sector for influencing the overall environment within which innovations and learning occurs (Senge, 1999).

People around the world today are seeking to understand the concept and practices of leadership. There are several reasons for the popularity of this topic, including that corporate sector is faced with changes like never before. The concept of leadership is applicable to any aspect of ensuring effectiveness in corporate sector and in managing change. Managing demands a new type of leadership in today’s multifaceted place of work especially in the corporate sectors.

Hence it is essential that the 21^st century managers must lead as visionaries and entrepreneurs, mentors and role model for change, team builders and servant-followers. To succeed, they must be aggressive in this competitive world, improve customer service, nurture a diverse workplace and meet unprecedented global, ethical, and business challenges. Organizational success depends on developing and using the leadership skills that move corporate sector and people forward toward common goals and objectives.

Organizations undergoing rapid change need to keep the organization structure flexible. Good organizational leadership requires committed “ego-less” leadership from the executive suite down to the employee level and an organizational culture that encourages and rewards this behavior is very essential for growth and positive change. Each and every organization requires leadership and management because all of them are affected by their contexts, philosophies, governance structures, value systems, and the legal ground rules under which they operate. These are the forces and factors that control their leadership and management needs.

Over the years, the significance ascribed to the roles, functions, and traits of leaders has led many to ask a common question as to what makes an effective leader and why? Many of the social and behavioral scientists have tried to offer answers to this question. Leadership, however, is a surprisingly complex and elusive concept that requires in-depth understanding and explanation.

In order to design a successful strategy of change it is important for the leaders and managers to become expert at analyzing and finding out the forces pressing for change and the resistances among the employee group to change. Change can be of any small or large issue. It might be either focused on a few individuals, or a group or the entire organization or it can also be one or more aspects of the organization’s setup. For instance, if the company facing an immediate threat to its survival due to competition, it is important that leaders and managers of that organization get together to plan effectively and diagnose the external and internal forces that threaten the company’s survival due to competition. Then they must assess and implement strategies for fighting these forces.

It is essential for leaders who manage change in an organization to focus attention, specifically, on resistances to change–both organizationally and those of individuals within the organization. Since it is a well known fact and a general argument that when confronted by rapid change, people in an organization get frustrated, freeze up, get rigid and rebel against the changes in one way or the other. Leaders and managers must be equipped at addressing the inevitable resistance of staff to a change. If we look at the subject of change management it mainly deals with the most effective way to make needed changes to identify existing resistances to change and to focus efforts on removing or reducing as many as possible.

People around the world today are seeking to understand the concept and practices of leadership. There are several reasons for the popularity of this topic, including that organizations are faced with changes like never before. The concept of leadership is applicable to any aspect of ensuring effectiveness in organizations and in managing change.

Managing demands a new type of leadership in today’s multifaceted place of work. Hence it is essential that the 21^st century leaders and managers must lead as visionaries and entrepreneurs, mentors and role model for change, team builders and servant-followers. To succeed, they must be aggressive in this competitive world, improve customer service, nurture a diverse workplace and meet unprecedented global, ethical, and business challenges and for all these things change is a must. Managerial success depends on developing and using the leadership skills that move organizations and people forward toward common goals and objectives. Today in every company special training programs are conducted to improve the leadership qualities among the managers and the staff. This would also help in change management.

References

Bass, B.M. and Stogdill, R.M. (1990). Bass and Stogdill’s handbook of leadership: Theory, research, and managerial applications. New York, NY: The Free Press. p. 383.

Bizhelp24.com, (2007) Motivation in the Workplace. [Online] Web.

BPIR.com, (2002) Employee Motivation: Implementation – How to motivate your staff, [Online] BPIR.com Limited & Massey University, Web.

businessballs.com, (2006) Motivational theory. [Online] alan chapman. Web.

CeFiMS, (N.D.) Managing Organisational Change [C206], [Online] Web.

Dale, B.G., Wu. P.Y., Zairi, M., Williams, A.R.T., and van der Wiele, T. (2001) Total quality management and quality: An exploratory study of contribution. The TQM Magazine. Vol 12. No. 4. pp 439-449.

Dale, B.G. (1999) Managing Quality. Third Ed., Blackwell publishers Ltd. Oxford.

Goleman, D., Boyatzis, R. and McKee, A. (2002). The New Leaders , transforming the art of leadership into the science of results. London: Little Brown.

Katz, R., (1974) Skills of an Effective Administrator. Harvard Business Review, Boston: 1974, Vol. 52, No. 5: 90-102.

Kee, J. E. and Davis, M. (2006), The Leadership Challenge of Managing Change Related Risk, The Federal Manager, forthcoming.

Kee, J.E. and Setzer, W. (2006) Change-Centric Leadership: Managing The Risks Of Public Sector Change, A Publication of The Center for Innovation in Public Service, 2006, Washington, DC.

Kotter, J.P. (1996). Leading change. Boston, MA: Harvard Business School Press.

McNamara, C. (1999) Basics – Definitions (and Misconceptions) About Management. [Online]Web.

Mekong Capital, (2004) Introduction to Six Sigma. Mekong Capital Ltd., Vietnam. pp 1-17. [Online]

Microsoft Office System, (N.D), Six Sigma: High Quality Can Lower Costs and Raise Customer Satisfaction. Operation Agenda.

Motorola University, (1994) About Motorola University: The Inventors of Six Sigma, Motorola, Inc. Web.

Quinn, D.L. (2002) What is Six Sigma? [Online] Web.

Romney, P. (1996), Being a Leader, [Online] Web.

Senge P.M. (1999). Leadership in living organizations. In F. Hesselbein, M. Goldsmith, I. Somerville, (Eds). Leading Beyond the walls. The Drucker Foundation, 1999, Jossey-Bass, Inc. (a subsidiary of John Wiley & Sons Co.).

Steven, J.O. (2001) Understanding Nonprofit Organizations: Governance, Leadership, and Management. Westview Press, Boulder, CO. 93-95.

The Conference Board of Canada, (n.d.) Effective Leadership, [Online] Web.

Footnotes

1 Six Sigma. Web.

2 Total Quality Management (TQM) Web.

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