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Essay: Transformational leadership – General Motors

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Strategic Leadership and Organisational Transformation (MAN7068)

Individual Report – Debarun Maitra — S17159950

Dr. Abdul – Razak Alhassan & Dr. Imran Akhtar

Part One: Critical Review of Academic Material (1068 Words)

Part Two: Critical Appraisal, Evaluation and Justification of Change within an

International Organisation (2004 Words)

Total: 3072 Words

Abstract

The following critical review serves as impetus to help the reader comprehend and understand about the association between a transformational leader with respect to change within a particular organization.

The first part of the review outlines the role of a transformational leader and their characteristics.

The second part of the review implements those theories in an international organization which has been introduced as a case study.

Keywords: Transformational Leadership, Change Management, PESTLE, Porter,

Change Management, Strategic Leadership, General Motors, External,

Internal, Leadership

Part One: Critical Review of Academic Material (1068 Words)

Introduction

In today’s competitive world, an effective leadership style has become the need of the hour. Only with the help of an effective leadership style can an organisation be propelled towards achieving their goals. This can be attributed to the fact that leadership style has a direct effect on the productivity as well as the performance of the workforce. As Cribbin, et al., (1981) suggests, leadership is an influence process that enables managers to get their people to do willingly what must be done, do well what ought to be done. We can call someone an effective leader when that person is able to influence their followers in a desired manner in order to achieve the respective set of goals. Leadership is thus seen as a very important resource for any particular firm and is showcased by the person who is called the leader with direct accordance to a wide scope of aptitudes and talents. At the same time, leadership is not limited to an individual as such.

Leadership Styles

Leadership can be seen as a process of social influence, where the leader generally seeks out to their subordinate employees to willingly participate in order to accomplish the company’s collective set of goals. This can be attributed to the fact that leadership is the art of influencing others to their maximum performance to accomplish any task, objective or project. (Cohen, 1990) In today’s modern and altering world, the companies need effective leaders who are able to comprehend and act upon the dynamic global environment. Effectiveness is much higher in case of tasks that are highly structured as well as when the leaders have a good rapport with the respective followers. Barchiesi, et al., (2007) measure effectiveness of leadership, its role, as well as the direct or indirect influence it has on the leadership behaviour, performance and attitude of the organisation overall. It was hence found out that high leadership indexes are not directly interlinked with the performance records of the past, instead was rather related to higher potentiality of amplified performance as well as to the higher stature of that particular firm, which clearly indicated to the fact that it has a meaningful impact of behavioural convolution and dynamics on the leadership apprehended level.

There are different types of leadership styles and they are detrimental to the organization’s overall performance. An individual’s leadership style has an effect on how smoothly a firm moves towards their desired set of goals. This is why Conger, et al., (1992) has indicated that leaders are individuals who establish direction for a working group of individuals who gain commitment from this group of members to this direction and who then motivate these members to achieve the direction’s outcomes. On exploring the interlink between the culture of an organisation and the leadership styles, several factors come into account like organisational culture, transactional as well as transformational leadership styles. Voon, et al., (2011) had conducted a research and understood about the influence leadership has on the workforce of an organisation. Several factors like wages, job security as well as autonomy and flexibility at office were used. They concluded that transformational leadership style had a better direct relationship with job satisfaction.

Transformational Leadership

The transformational leadership style focuses on the nurturing of the respective followers as well as on what they actually need. This concept was first brought down by James MacGregor Burns, et al., (1978) in which he insists on the fact that how transforming leadership is a process in which “leaders and followers help each other to advance to a higher level of morale and motivation”. The leaders with transformational leadership style pay attention to growth and development of the value system of the workers, with their ingenuity level and ethics with the prologue of their capability. The extent of a transformational leader can be measured by the fact that how well can that individual influence the performance and motivate the follower. As suggested by Bass, et al., (1977) that the primary aim of a transformational leader is to ‘transform’ the employees as well as the company in the very literal manner, that is to change the way of their thinking in the mind and heart as well as broadening their vision and insight. It also means changing their way of comprehension making their behaviour in sync with the values of the organisation. This henceforth leads to changes deep within which are permanent in nature, self-sustaining and also builds a sense of momentum.

Conclusion

It is thus observed from the above and several literary texts, that all the researches that are done are related to the large sectors, which further indicate that the different styles of leadership, commitment towards the organisation as well as satisfaction at workplace are all dependent on each other. Therefore it can be concluded that the different styles of leadership directly impacts the quality and nature of work life in an organisation. The followers of a transformational leader harvest a sense of trust, loyalty, respect as well as admiration, which gradually builds up towards the leader and in light of the calibre of the transformational leader; the followers are ready to work more intensely than expected by the leader. Such an outcome eventually occurs as the transformational leader extends their followers something much more important than just working for one’s own benefit; an inspirational mission and vision is offered to them as well to accomplish and thus give an identity of their own. The leader is able to induce motivation and transforms the followers with the help of their charisma, intellect and personal consideration to the respective followers. Further, the leaders promote creativity and thus put forward innovative ways of working on the regular processes and also induce a creative environment leading to the path of success. As indicated in the beginning of this literature review, there are two sides of a leader, the first one being the optimistic and bona fide transformational leader, and the other one being an artificial pseudo-transformational leader. Both of them though being contradictory in nature to the other, depends on a particular case where a particular notion may benefit only a particular type of employees as opposed to the other and vice versa. The next part, Part B is an insight into the critical aspects of a transformational leadership style with the help of the example of the change management exercised in General Motors.

Part 2: Critical Appraisal, Evaluation and Justification of Change within an

International Organisation (2004 Words)

Introduction

As mentioned in the previous section, this part of the literature review will take a quick preview of the change management at General Motors in line to the detrimental change that was carried out in their structure and it was critical for such a big automobile manufacturing firm to carry out a change in their leadership style.

Founded in 1902 by William Durant, General Motors (GM) is one of the biggest automobile manufacturers across the globe and has enjoyed a huge presence in the automobile industry for almost over a century. On July 10, 2009, the organization’s name changed from ’General Motors Corporation’ to ’General Motors Company’. This led to the organization in experiencing real changes, for example, huge wage cuts for the employees, shutting down of twelve offices, and so on. So as to appraise the extreme change experienced by General Motors, both internal as well as external factors had harbingered the way to change. Although there was a supposed immunity from change, GM needed to quickly assess the circumstance and devise new methodologies on the most proficient method to move ahead. The attainment of the advancement of an authoritative change is chiefly reliant upon the initiative of senior administration (Porter, Smith and Fagg, 2006). That time the CEO of the company used to be Mr. Fritz Henderson, but looking at the circumstances he was quickly replaced by Mr. Edward Whitacre in the year 2009. Mr. Whitacre was previously the Chairman and CEO at AT&T for the timeline of 1990-2007. He was a very accomplished man and was at that time serving on various prestigious boards in the industry, hence had a great deal of influence. Apart from that, he was even associated with The Business Council. Despite the fact that pioneers of General Motors were still struggling to find stability, the alteration leading the way to such an big change could have been more professional and convincing.

Leadership Theories

A true leader is able to effectively inspire their followers, which can be the subordinates in the case of an organisation. While previously the concept of leadership was based on the leader’s personal innate attributes and personality, later on several researches and theories indicated the fact that the immediate environmental factors plays a detrimental role in the effectiveness of the same.

Further, an expression used to distinguish a leader who is has a great sense of influence on people, is extraordinary in his work, talented, and also herculean is known as charismatic leader. Some distinctive qualities in a charismatic leader are conviction, capability, being an achiever, and influential. A transformational leader can thus possess all the characteristics of being a charismatic leader and the other way around. Since a transformational leader imparts the vision onto the followers, he or she can do the same as such in a charismatic way.

External and Internal Factors

Organisations are likely to encounter changes because of the uncertainty and irregularity of their subsequent internal as well as external environment. Changes in an organisation is generally induced with the help of some main propulsions like reduction in efficiency and resources, significant reductions in the budget offered, vital new markets and customer base, and so on (Barbara and Fleming, 2006). The actual causes of changes must be comprehended with the help of an internal and external examination of the organization. The Porter’s five forces and PESTLE analysis can be utilized to lead an environmental study. Subsequently, several targets and planning can be devised and implemented to execute the changes.

PESTLE Analysis

PESTLE analysis is a system which includes political, efficient, social, mechanical, legal, and environmental factors. From the very start, General Motors has regularly been influenced by the legal and government ordinances. The vast majority of the guidelines are related with the subsequent environment and need for safe vehicles. For instance, the European Union as of late limited the use of substantial metals because of environmental issues. General Motors has taken a firm position in Corporate Social Responsibility to substantiate their business and be in line with the government regulations. Activities like planting of saplings and trees at the workplaces was a major step, usage of inexhaustible and recyclable materials in their production, then also the creation of eco-friendly automobiles and trucks, and lesser emission coming out of the exhausts which normally comprises of ozone depleting substances. Also, the society is hardly materialistic in nature and is rather much more driven by business. General Motors knew about this clearly ad thus laid their focus on the rich and the higher status quo. The last segment in the PESTLE analysis is the innovative segment. The ascent of the web worldwide has had a direct impact on the automotive industry, as well as numerous other industries at the same time. General Motorscould utilise the world wide web and thrive by using the same to their advantage, this will allow a larger number of people to access their resources and hence create a much bigger consumer base.

Porter’s Five Forces

Porter’s five forces of competition framework can be used to analyze the intensity of competition and the level of profitability (Grant, 2005). These five forces include competition from substitutes, entrants, power of suppliers, power of buyers, and established rivals. In supplant of buying cars, shoppers can utilize open transportation, for example, transports, prepares, and bikes. Additionally, shoppers can likewise look over other car items that are not GM-related making the danger of substitutes high-hazard. High obstructions to section, for example, expansive capital permit the danger of new participants okay. In the car business, the dealing intensity of providers is viewed as low, since these providers depend on the automakers to buy the crude materials, for example, steel, paint, glass, aluminum, and so on. With respect to the haggling intensity of the purchasers, the hazard is high. Clients can pick from other car producers, as well as from many vehicle merchants that exist. At last, there is a high contention existing among the contenders of General Motors. The real contenders incorporate Toyota Motor Corporation, Honda Motor Co., Ford Motor Company, Mazda Motor Corporation and a few different automakers. (Datamonitor-GM)

Change Theories and Its Application to General Motors

While these weights for change are consistent, preferences of a changing association are better joining, collaboration, regular qualities, and outlooks. Every one of these advantages adds up to accomplishing a superior association with more proficient and compelling results. John Kotter clarifies that a few powers for change are more noteworthy monetary coordination, development and log jam, innovation, and fall of communist nations and their reorientation toward industrialist economies (Palmer, 2006).

Several change management theories depict the way toward building up an arranged way to deal with the progressions occurred in an association. The principal display is John Kotter’s 8 stages, which was distributed in 1995 in the Harvard Business Review. Initially, setting up the requirement for direness alludes to performing market examination by deciding the issues and openings. The second step, guaranteeing there is a ground-breaking change gathering to direct the change can be performed by making group structures to help drive the change and ensuring the groups have adequate capacity to manage the change. Thirdly, building up a dream can be done by giving concentration to change. At that point, the vision must be conveyed by utilizing different channels to continually impart this vision. The following stage is enabling the staff by evacuating authoritative approaches and structures that restrain the accomplishment of the vision. When this is done, the association must engage the staffs which helps bolster the requirement for change and give inspiration. Merging increases is the seventh step.

Nonetheless, while the Kotter’s 8 stages plot the administration of an authoritative change, the Bridges Transition Model proposes that change won’t be fruitful if progress doesn’t happen. For this situation, progress is characterized as the consummation of something, which is the main stage. The second stage is the nonpartisan zone, which is a confounding state between the old reality and the new. Amid this stage, individuals are not prepared or agreeable to welcome the fresh starts. Much significance must be given amid this stage, on the grounds that the change may be endangered if the association chooses to rashly get away. Although, if the unbiased zone is finished effectively, numerous open doors for innovative change can be exhibited. The last stage is acknowledgment of the fresh starts and distinguishing proof with the new circumstance (Bridges, 1995).

Changes in General Motors

In 2007, General Motors proclaimed record sales of in excess of nine million vehicles for the third back to back year. Regardless of that this organization had such an accomplishment, ecological turbulences, for example, the worldwide retreat in 2009 constrained GM to bow out of all financial obligations. This was considered as the greatest disappointment of a mechanical organization in US history (BBC site GM prepared to document). A few causes paving the way to this shocking occasion are high creation expenses and fall in credit markets and shopper spending. Besides, the automaker was moderate in moving far from the creation of gas-chugging SUVs when buyers were searching for more eco-friendly vehicles (BBC-Website, 2009). Despite the fact that rebuilding of the organization was important, the progress and protection from change were presented testing.

Resistance to Change

While the new GM figured out how to leave the impartial zone of the change procedure, it was drawn out on account of the protection from change. A few reasons why people oppose change are standard, security, monetary variables, dread of the obscure and specific data handling (Porter, Smith and Fagg, 2006). On account of General Motors, administration and workers were limited to the conventional method for the organization’s activities. Significantly more along these lines, they realized that rebuilding and cutbacks would happen; hence, they lost their feeling that all is well with the world and enabled tension to assume control.

Interrelation of Leadership and Change

The change specialist is otherwise called the leader of the association. Amid the progress of the old GM to the new GM, Mr. Ed Whitacre was assigned as the CEO. He promptly perceived the significance of authoritative advancement by changing its structure and the general population inside it. A fruitful change is joined by the redistribution of intensity inside the organization with the goal that the basic leadership is moved towards shared power (Porter, Smith and Fagg, 2006). Mr. Whitacre along with other directors and managers needed to cooperate as a group with a specific end goal to complete the progressions effectively. They may even have needed to wind up embracing the part as a transformational leader. As leaders, they are capable in having an unmistakable ability to have their head set towards a specific end goal to keep the company moving ahead on track towards the set targets and objectives. Be that as it may, leaders can’t achieve a successful change without support from others. They have to likewise rely upon the subordinates, which can be accomplished by empowering collaboration, strengthening, and acknowledgment of specific lack of success (Porter, Smith and Fagg, 2006).

Conclusion

While General Motors could quick track the change procedure with the correct leadership set up, specific activities could have been done any other way to augment proficiency and limit obstruction. Palmer recommends that protection from change can be overseen by correspondence to the adherents, cooperation from everybody included, arrangement between the leaders and the subordinates, and unequivocal or understood intimidation (Palmer, 2006). Despite the fact that Mr. Whitacre consequently conveyed a companywide email when the organization was in unrest, it was not really successful.

To conclude and summarise the above, General Motors could distinguish their inconsistencies and solidly chose to change the association with a specific end goal to achieve its objectives and targets. All the more significantly, it acted rapidly and understood that present leadership ability did not have the capacities to manage the extreme change. Therefore, General Motors was doled out an alluring, transformational leader to control it through change, take care of complex issues, and work for what’s to come.

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