Professional Documents
Culture Documents
management style
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Introduction
Background
The company under case study is dealing with challenges involving poor
performance of one unit of business in spite of a competitive remuneration package
offered to the banking CEO. Most executive directors in the company earn high
salaries and share values and this is justified by the growth in performance and
profitability of the company. Critics explain that although the company performs well
and its board is competent, there is no evidence showing that it is outstanding in its
performance and deserves such high remuneration. However, there are certain
CEO's who receive these high remuneration packages and yet their performance is
poor. Jonathan is one of these and he is the CEO for merchant banking. In spite of
the high remuneration received, his unit is a poor performer. Performance has
dropped to the bottom ranking in the segment of industry managed by Jonathan.
Although he re-shaped the cost structure, there are no results to show for it.
There are many opportunities for growth which have not been taken advantage of
and an independent analysis has shown that innovation is low in the bank. The bank
is also slow in following market trends and developing products which suit the
trends. This has affected its long term performance and threatens long term survival
in the competitive industry (Gill & Johnson, 2006 p 88-91). In addition to these
challenges, many experienced senior managers have been taken by competitors and
this has left Jonathan with a new team with little experience. The staff has problems
in challenging his decisions and discussions on the strategic direction of the bank are
rarely held. This may be due to the authoritative leadership style practiced by
Jonathan.
Aim
The aim of the paper is to evaluate the problems facing the company with focus being
on the banking section. Strategic management is a key concept which will guide the
writing of this report. The challenges faced by Jonathan and his staff will be
discussed in the paper. Various interventions which should be implemented to deal
with the challenges will be evaluated and their pros and cons discussed. The most
practical and effective solution will be recommended to the board for
implementation. The discussed issues will be summarized at the end of the paper.
Scope
The report will be limited to the issues which have been discussed in the case study.
The report will also be limited to the challenges facing Jonathan and the banking unit
Analysis
Difficulties in strategic management when little
debate in a senior management team is allowed
There are various challenges which arise in implementation of strategic management
if there is little debate on issues or if all stakeholders are not appropriately involved
in the process. Strategic management involves strategies developed and
implemented by managers to improve performance of firms (Boxall & Purcell, 2008,
p 1-10). For strategic management to be successful there needs to be active
involvement of all organizational stakeholders. A strategic plan should also be
formulated and implemented to meet certain objectives (Albert, 2004 p 66-68). In
addition, periodic evaluations should be done after implementation of the plan to
assess whether it is effective in meeting its goals. Communication between all
organizational stakeholders is key to achieving strategic management goals.
When little debate between senior management is allowed when implementing
strategic management, various challenges arise. The first challenge is a lack of clear
definition and understanding of strategic management goals. Active debate ensures
all stakeholders are aware of the strategic management goals and they work towards
them (Smythe 2007 p 11-17). When there is little debate, goals are not clearly defined
and each manager may work towards achieving personal goals which are not in line
with organizational goals. In such a case, organizational performance is likely to be
adversely affected.
Another challenge which is likely to emerge is opposition to implementation of
management strategies. In many cases, employees oppose organizational change
since they are unsure of the effects it will have on their careers (Kroeger 2010 p 7779). Unless they are involved in change through dialog and communication, they are
likely to oppose change. Strategic management involves organizational change. With
little debate between senior employees, strategic management goals are likely not to
be met due to opposition from staff.
In Jonathan's case, there is low debate due to various reasons. The first major reason
for low debate is the leadership style. Jonathan's leadership style appears to be
authoritative in nature. This form of leadership has a negative effect on employees
since it involves undertaking instructions without questioning orders from the
management (Bratton et. al., 2004 p 45-47). Employees are not involved in decision
making and this lowers their motivation levels (Diller, 2006 p 22). Since Jonathan
applied the authoritative leadership style, employees were not motivated to
participate in debate. They knew that decisions would be made by Jonathan
regardless of their input. They also knew that he did not tolerate opposition of his
views and they therefore saw no need to engage in debate. The lack of debate on
strategic management of the company in turn led to poor performance and
profitability.
Another key reason for lack of debate is the inexperience of new managers in
performing management responsibilities. It had been discussed that many senior
managers had left the company to work for competitors. This may be attributed to
low motivation levels when working with Jonathan. Since Jonathan was left with
inexperienced executives, they were unlikely to engage in meaningful and strong
debate due to their relative inexperience in management maters. Finally, low
motivation from the overall organizational culture of the bank may be to blame for
the low debate on the management team (Gronroos, 2004 p 4-32). In addition to the
authoritative leadership style, poor communication, high employee turnover rate,
poor organizational performance and inability of employees to participate in decision
making all have a negative impact of lowering employee motivation levels (Keller
2002 p 77-79). When their motivation levels are low, they are unlikely to participate
in debate with their CEO.
Another important lesson learned is that the leadership style has a great impact on
the employee motivation and perception (Hannagan, 2005 p 68). The authoritative
leadership style used by Jonathan is not appropriate under the circumstances since it
discourages employees from being fully involved in strategic management.
Employees are unable to question authority under this leadership style and this
lowers their motivation. They are therefore unlikely to fully participate in
implementing the decisions made by the CEO. Finally, it is clear that the
organizational culture plays a very important role as far as achieving organizational
goals is concerned. In order to achieve the goals of strategic management, the
organizational culture has to be conducive for employees and the stakeholders at
large. Various aspects of organizational culture should be present and these include
the democratic leadership style, effective communication at all levels, low employee
turnover rate, and active participation of employees in decision making (Zaleznik
2007 p 2-14). The absence of most of these factors in the banking department can be
attributed to low employee motivation, lack of participation in debates with Jonathan
and poor performance by the bank.
However, there are demerits associated with sacking the bank CEO. The first is that
Jonathan has experience dealing with employees and banking issues and it will take
time before the new CEO fully familiarizes himself or herself with these aspects of the
organization. During this period, the bank may suffer as a result of inexperience.
Another demerit is that employees may view his dismissal as a step towards cleaning
up the management system and they may view themselves as future candidates for
dismissal (Mulcaster, 2009 p 68-75). This may reduce their motivation levels and it
may affect the performance by the bank.
Conclusion
In conclusion, employee motivation is very important when implementing strategic
management. If employees are not highly motivated, they are unlikely to meet the
organizational goals and perform effectively (Schlesinger & Heskett, 2001 p 3-10).
The leadership style and organizational culture plays an important role in improving
employee motivation (Abell 2002 p 21-28). Jonathan used an authoritative approach
which is ineffective in motivating employees. He did not allow them to participate in
decision making and this affected their motivation levels. The management should
bring in an external consultant who will help Jonathan deal with his challenges. The
consultant will help him embrace the democratic leadership approach. Reducing his
remuneration and working on a performance contract will motivate him to improve