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TERM PAPER

ON

MANAGEMENT PRACTICES
AND
ORGANISATIONAL BEHAVIOUR

TOPIC: LEADERSHIP FAILURE

Submitted to: Submitted


by:

Faculty of MPOB
B31, 11008093
RS10
03
PREFACE

AS MBA Degree requires equal attention practical as well as theoretical aspect of the
business, various problems are to be dealt with in these courses, that is why research
programs are there to give deep as well as through knowledge of the subjects.

I have attempted to live up these requisites while preparing this term paper. It is part of
professional courses. With the help of term paper we can able to understand the deep
knowledge about the specific topic assign to us.

It is hoped that this report meets the given expectations and various requirement of the
research.
Acknowledgement

I take this opportunity to present my votes of thanks to all those guidepost who really acted as
lightening pillars to enlighten our way throughout this term paper that has led to successful
and satisfactory completion of this study.

I am very grateful to Silky Sehdev Mam for her support and valuable time given without
which the project would not have been a success.

Lastly, I am thankful to all those, particularly the various friends , who have been
instrumental in creating proper, healthy and conductive environment and including new and
fresh innovative ideas for us during the project, their help, it would have been extremely
difficult for me to prepare the project in a time bound framework.

Name: - ANKITA

Reg. no: - 11008093

Roll No: - B31


CONTENTS:

 Introduction to leadership & leadership failure

 Objectives of study

 Causes of leadership failure

 Review of literature

 Research methodology

 Analysis

 Limitations of study

 Conclusion

 Reference
LEADERSHIP

Leadership is the art of getting someone else to do something you want done because he
wants to do it. Leadership brings together the skills needed to do these things. Leaders help
themselves and others to do the right things. They set direction, build an inspiring vision, and
create something new. Leadership is about mapping out where you need to go to "win" as a
team or an organization. Leadership is dynamic, vibrant, and inspiring.
LEADERSHIP FAILURE:

Leaders fail for a variety of reasons—product lines no longer interest customers, services are
no longer required, and companies reorganize and downsize. Nevertheless, a number of
leaders fail for personal rather than structural or economic reasons. They may be skilled in a
particular area, such as accounting, engineering, or sales. They fail because they can no
longer rely solely on their own skills and effort; that is, they have been promoted into
positions that require them to work through others to be successful. Because they are unable
to build a team, their management careers come to a halt. Derailment is curiously
understudied given the frequency with which it occurs. Leadership failure occurs when a
leader get unable to perform well. This may be due to various factors like lack of proper
communication, lack of coordination, poor communication skills, weak relationships, person
or job mismatch, unclear expectations and sticking with old habits. Besides these factors
stress and adaptability to new environments may be some major factors in the determination
of failure or success.
OBJECTIVES OF THE STUDY:

The main objectives of this study are:

1) To study why leaders fail in the organisations

2) To find out the factors responsible for the decline in the performance of the leaders in
the organisation and high rate of failure of leaders (Like CEO’s) in the organization.

To discuss the various issues like moral issues regarding the failure of leadership and the role
of top management in determining the success and failure of leadership

LEADER: AN INTRODUCTION

Leader is a person who gets his works done with the help of other people. Personality traits
are of utmost importance in defining a leaders’ personality. A leader is a person who is
agreeable, extravert, conscientious, emotionally stable and open to experiences. These factors
are known as Big Five traits (Goldberg, 1981). These five traits define the personality of a
leader. Research on Big Five has found relationship between these personality dimensions
and job performance (M.R. Barrack and M. K. Mount, 1991). Individuals who are reliable,
well planned and organized, hardworking and achievement oriented are more successful in
handling a job task efficiently and effectively. A charismatic leader is the one who has a
clear vision and the one who can express his vision in terms which can be understandable to
others and who can take high personal risk, sense others’ ability and feelings and can engage
in unconventional norms (J.A. Conger and R.N. Kanungo, 1998)
CAUSES OF LEADERSHIP FAILURE

The following are some possible causes of business failure

• A shift in focus
• Poor communication
• Risk aversion
• Ethics slip
• Poor self management
• Lost love
• Cash flow problems
• Poor business planning
• Fall in demand for the product
• Rise in costs or a lack of control of costs

We will give a brief overview of each.

 A Shift in Focus
This shift can occur in several ways. Often, leaders simply lose sight of what’s important.
The laser-like focus that catapulted them to the top disappears, and they become distracted by
the trappings of leadership, such as wealth and notoriety. Leaders are usually distinguished
by their ability to “think big.” But when their focus shifts, they suddenly start thinking small.
They micro manage, they get caught up in details better left to others, they become consumed
with the trivial and unimportant. And to make matters worse, this tendency can be
exacerbated by an inclination toward perfectionism.

A more subtle leadership derailer is an obsession with “doing” rather than “becoming.” The
good work of leadership is usually a result of who the leader is. What the leader does then
flows naturally from inner vision and character. It is possible for a leader to become too
action oriented and, in the process, lose touch with the more important development of self.

 Poor Communication
A lack of focus and its resulting disorientation typically lead to poor communication.
Followers can’t possibly understand a leader’s intent when the leader him- or herself isn’t
sure what it is! And when leaders are unclear about their own purpose, they often hide their
confusion and uncertainty in ambiguous communication.
Sometimes, leaders fall into the clairvoyance trap. In other words, they begin to believe that
truly committed followers automatically sense their goals and know what they want without
being told. Misunderstanding is seen by such managers as a lack of effort (or commitment)
on the listener’s part, rather than their own communication negligence..

 Risk Aversion
Leaders at risk often begin to be driven by a fear of failure rather than the desire to succeed.
Past successes create pressure for leaders. In fact, the longer a leader is successful, the higher
his or her perceived cost of failure.

When driven by the fear of failure, leaders are unable to take reasonable risks. They want to
do only the tried and proven; attempts at innovation — typically a key to their initial success
— diminish and eventually disappear.

 Ethics Slip
A leader’s credibility is the result of two aspects: what he or she does (competency) and who
he or she is (character). A discrepancy between these two aspects creates an integrity
problem.

The highest principle of leadership is integrity. When integrity ceases to be a leader’s top
priority, when a compromise of ethics is rationalized away as necessary for the “greater
good,” when achieving results becomes more important than the means to their achievement
— that is the moment when a leader steps onto the slippery slop of failure.

Often such leaders see their followers as pawns, a mere means to an end, thus confusing
manipulation with leadership. These leaders lose empathy. They cease to be people
“perceivers” and become people “pleasers,” using popularity to ease the guilt of lapsed
integrity.

 Poor Self Management


If a leader doesn’t take care of him- or herself, no one else will. Unless a leader is blessed to
be surrounded by more-sensitive-than-normal followers, nobody will pick up on the signs of
fatigue and stress. Leaders are often perceived to be superhuman, running on unlimited
energy.

While leadership is invigorating, it is also tiring. Leaders who fail to take care of their
physical, psychological, emotional, and spiritual needs are headed for disaster.

 Lost Love
Leaders need to heed is a move away from their first love and dream. Paradoxically, the hard
work of leadership should be fulfilling and even fun. But when leaders lose sight of the
dream that compelled them to accept the responsibility of leadership, they can find
themselves working for causes that mean little to them. They must stick to what they love,
what motivated them at the first, to maintain the fulfilment of leadership.

 Cash Flow

For many small and newly formed businesses, this is often the single most important
reasons for the failure of business. The problem arises when the money coming into
the company from sales is not enough to cover the cost of production. It is important
to remember that it is a case of having the money to be able to pay debts when the
debts are due, not simply generating enough revenue during a year to cover costs.

Some firms have periods of time when they do not receive much revenue- a good
example is company of toys. The peak times for toy sales is November and
December –it may be 80% of all the revenue it receives in a year is received during
these two months. The firms have to survive for the rest of the year – it will have
staff , rent, insurance, taxes, energy and so on to pay for as well as costs incurred in
manufacturing products throughout the year.

 Poor Business planning

Many new businesses will have to put together a new business plan to present the
bank before it receives loans or financial help. The time and effort put into these
plans is crucial for success. Bad planning or poor information on which the plan is
based is likely to lead to difficulties for the firm and will lead to a leadership failure.

 Fall in Demand

There are a number of reasons why demand might fall. Some of these might be to do with the
business taking their eye of the ball not paying attentions to their customers need- perhaps the
production is not upto scratch, perhaps the quality is poor, may be the price is too high- most
of these things are within the business control.

Falling sales might be a sign that there might be something wrong with the product or the
price or other aspect of the marketing mix. Sometimes the fall in sales might be as a result of
the competition providing a better product or service- in part the business can do something
about this they have to recognise it in the first place.

Changing tastes, technology and fashion can cause demand for products to fall-the business
needs to be aware of these trends.
Demand might fall for other reasons not in the firms’ control. It might be due to a change in
economic climate of the country. If the economy experiencing a downturn then may be
people may not have as much money to spend on the businesses products and services. Other
factors might also lead to a fall in demand – the product may have gone out of fashion ,may
be peoples taste have changed –all of these things could be an explanation.

The important thing for a business is to try and recognise when demand changes and to
understand why it is changing. If it does not then it can be too late and the business may fail
leading to leadership failure.

 Rise in costs and lack of control over costs

Costs of production can rise for a number of reasons. There may have been wage
rises ,raw material prices might have increased, the business might have had to spend
money on meeting on some new legislation or standard and so on .In many cases, a
firm can plan for such changes and is able take them into account but if the costs rise
unexpectedly, this can catch a firm off guard and tip them into insolvency

Some firms face difficulties because they do not keep a close eye on their cost.
Wastage in the workplace is a good example of this. Every price of paper, every nut,
bolt ,screw, light left on tap left dripping and so on represents a cost to a business. If
it does not keep control of these costs the problem can get worst. Staff using
telephones to make personal call sending emails that are nothing to do with the
business ,wasting paper or leaving PCs switched on all might be areas where a
business might want to exert some control to keep cost control.
REVIEW OF LITERATURE

LITRATURE REVIEW: 1

Bentz (1985) essentially founded modern derailment research while analyzing the correlates
of executive performance at Sears. He reported that among the persons with the appropriate
positive characteristics (i.e., intelligence, confidence, ambition), a subset failed. Bentz
catalogued the themes associated with failure (e.g., playing politics, moodiness, dishonesty)
and concluded that the failed executives had an overriding personality defect or character
flaw that alienated their subordinates and prevented them from building a team

LITERATURE REVIEW: 2

A study by James Bolt (1996), a consultant specializing in executive education, advocates a


three-dimensional framework (business, leadership, and personal) for developing future
leaders. The personal dimension is based on the belief that individuals cannot be effective
leaders if they are ineffectual in their personal lives. The personal dimension concentrates on
helping to clarify and develop the individual's purpose, vision, values, and talents to integrate
work goals and priorities into his or her personal life. A leader can be successful if he is
organised and can manage his personal life.

LITERATURE REVIEW: 4
Reports of Goleman (1995) and Cherniss (2004) suggest that EI might even play a larger
role in leader success than IQ. Whether IQ or EI contributes the most in leader performance
is still debatable at this point. However, EI has been shown to play a significant role at all
levels of leadership. Failure to adapt to the new environments and new positions is another
big reason for the failure of leaders in the organizations. Study of Shannon Klie (2009) shows
that there are many new leaders who fail because they rely on the behaviours which got them
to the new position and don’t want to learn new behaviours.

LITERATURE REVIEW: 4
Research of Schmidt & Hunter (1998), Sternberg (2001) and Thompson (2007) shows that
cognitive ability of a leader directly effects performance of the leader. Schmidt and Hunter
(1998) reviewed 85 years of leadership research and found that general mental ability (IQ)
was a strong predictor of leadership success. Over the past few years emotional intelligence
has also become a important determinant for the determination of the failure or success of a
leader. A large amount of data is available which shows that emotional intelligence is
important to be considered for success or failure of a leader.

LITERATURE REVIEW: 5
Studies of Brown, Annie H. (2005) indicate that failure of leaders is related to lack of
commitment, insensitivity, and lack of knowledge, close mindness, cultural differences, and
lack of integrity, lack of support, lack of fairness, vision disparity and selfishness. So failure
of leadership is not driven by a few factors. Rather it depends on a lot many factors.
LITERATURE REVIEW: 6

Challenger, Gray & Christmas (2005) studied that CEOs are being replaced at a record high
rate of 7.6 per business day. Over 28% of these CEOs were in position less than three years,
and 13% less than one year. Sometimes performance of the leaders who were performing
really well in the past start declining suddenly. Some leaders find themselves unable to
handle their new positions and end up leaving their jobs. This is because the skills and
strengths that help someone climb the executive ranks aren't the same ones needed to survive
and thrive once there. To succeed, leaders need to know which old behaviours and beliefs to
let go of and which ones to pick up.

LITERATURE REVIEW: 7

According to a 2006 study by Indiana University's Kelley School of business in


Bloomington, IN the most common reasons for leaders not working out are: poor
communication skills, weak relationships, person or job mismatch, unclear expectations and
sticking with old habits. But then question arises what is in the case of leadership at big
picture like at Enron? Research shows that this is due to stress and its impact on emotional
and cognitive abilities (Thompson, 2005)

LITERATURE REVIEW:8

Study of Henry L.Thompson (2007) signifies that Tleaders often make bad decisions because
of high levels of stress. When a leader face a stressful situation, various hormones and
neurotransmitter which help him/her gain a short term increase in strength, concentration and
reaction time. But if these conditions persist for long time, they can bring with them some
unwanted effects. The stressful conditions which stay for longer durations effects the Pre
Frontal Cortex (PFC). If stress level reaches its extreme, it “turns off” the PFC which further
decreases IQ. Along with this stress “turns on” another portion of brain which is called
amygdale. This portion of brain causes a high state of emotion and a very highly sensitive
mental state. So a leader loses his control on emotions in this state. This results in wrong
decisions and failure of leadership.

LITERATURE REVIEW: 9
Studies of Pierre Casse and Eoin Banahan (May 2010) suggest that some leaders get failed
due to “Trap of success” . With the great power comes great responsibility. But at the core of
leadership there are three symptoms which signify the loophole in leadership. These are: self
delusion, complacency and ego. Self delusion results in a belief of self invincibility in leader.
He starts believing that people who don’t agree with him are wrong. So he requires yes men
around him. Complacency is the feeling of satisfaction with whatever you have. When a
leader start being complacent, he starts to feel comfortable in the way things are. This
resistance to change can be a big reason of failure. It is often the case that deep down inside
and sometimes it is not so deep inside, the leader knows he should change. He is clever
enough to be aware of the new balance in the situation and the need to re-invent him but that
requires actions that can be very difficult for the leader who has been the origin of a big
success. He will have to admit that what worked in the past is no longer valid, he is lost and
does not have the new answers, he needs help. To admit such truths is an assault on the
leader's ego. This trap leads to failure which can be catastrophic for leader and the
organization.

LITERATURE REVIEW: 10

Study of Natalia Hakimi, Daan Van Knippenberg and Steffen Giessner (Sep 2010) show that
Leader empowering behaviour is an important criterion for leadership effectiveness.
Conscientious of leader is an important factor for determining his effectiveness. Success or
failure of leadership depends upon various factors. It can be the trust of leader in the
follower’s performance or the level to which persons think a leader is reliable.

RESEARCH METHDOLOGY

The methodology used was secondary research. Data and findings from the research papers
and articles of other people was selected by exploratory methods and reviewed. Brief review
of all the articles and papers studied has been given in the Review of Literature. These all
articles were studied deeply to gather maximum knowledge of the know how’s of the
Leadership failure. There have been only a few studies on leadership failure in general but a
lot of studies were available discussing various factors which contribute to the success and
failure of leadership.

ANALYSIS
After conducting this study it was found that failure and success depends upon various
factors. Leaders fail because of the lack of adaptability, poor communication skills, weak
relationships, person or job mismatch, unclear expectations, lack of commitment,
insensitivity, lack of knowledge, close mindness, cultural differences, lack of integrity, lack
of support, lack of fairness, vision disparity selfishness and unbearable level of stress. Big
Five traits are required in a good leader and they reflect the bright side of personality of a
leader but there is a dark side of the personality of a person which can make subordinates
feel like aliens and can prevent them from acting as a team . The leader with the Big five
traits might posses this dark side too. This will result in the failure of leadership for sure.

Leadership competences are assessed as emotional,


managerial, and intellectual competences (EQ, MQ, IQ, respectively). Persistence is defined
as a main characteristic of successful leaders. Persistent people stick to an idea or to a task
and see it through to its logical conclusion. Successful individuals and organizations learn not
to accept initial setbacks and continue pursuing a goal. The personality of the executive
manager and the team he is selecting is the key to determine the success or failure of leaders
and teams. Managers with an average level of cognitive skills tend to select managers with
the same or lower level of cognitive skills and style. So the skills of a leader and team do play
important role in the success or failure of leadership.

Trap of success also at as a major reason


for the failure of leadership. Leaders who attain new positions in the firms feel uncomfortable
to change the way they worked at their previous positions. Sometimes they suffer from self
obsession, complacency and ego. This results in the ignorance of suggestions and respect of
subordinates. A leader who is not able to keep his team aggregated has more chances of
failure than any other leader.

LIMITATIONS OF THE STUDY:

This study focused on the failure of leaders due to individual reasons mainly. There are many
other factors such as organization’s condition, environmental conditions and structure of the
organization which can lead to failure of organization and leadership. So further researches
on this topic can focus on these aspects to explore more information about this topic.

CONCLUSION

Failure of leadership is something which can be of great concern for the people and
organizations concerned. No one sets out to do a bad job as a leader. After all it has probably
taken you years of hard work and personal sacrifice to achieve a leadership role. Sadly for
many the excitement of achieving a leadership role is often short lived. At top levels failure
level of leaders has been quite high in past few years. Success and failure of leadership
doesn’t depend upon a bunch of factors only. A leader is a person who has makes sure that
everything is being done though through others only, still it is a thing which everybody can’t
do. So when a leader fails to manage his team, it poses a threat for the success of the task
assigned to that team. So all these factors like stress, adaptability, lack of commitment, lack
of confidence and lack of Big Five traits accounts for the failure or success of the leaders.
Factors like Big Five traits matter to be viewed only at the time of recruitments to select right
person for the right job. But there are some factors which account for success or failure of
leaders in the real life situations. These include persistence, emotional intelligence, level of
cognitive skills of leader and the team he has chosen. Leader should be strong enough to
handle any situation but not rude. A good leadership traits are- kind and humble but not
weak, proud but not arrogant, humorous but not silly. Leaders should avoid trait like bad,
arrogant, corrupt, evil etc.

REFERENCES

1) Challenger, Gray & Christmas, Inc. (2005). Biggest CEO turnover year on record.
http://www.challengergray.com

2) Thompson, H. (2005). The impact of stress on the Bar On EQ-i® reported scores and a
proposed model of inquiry. High Performing Systems, Inc., Technical Report 15-5.

http://www.hpsys.com

3) Schmidt, F. L., & Hunter, J. E. (1998). The validity and utility of selection methods in
personnel psychology: Practical and theoretical implications of 85 years of research
findings. Psychological Bulletin, 124, 262- 274.

http://www.hpsys.com

4) Sternberg, X. (2001). http://www.hpsys.com

5) Cherniss, C. (2004). The business case for emotional intelligence. Retrieved June 10,
2005, from The Consortium for Research on Emotional Intelligence in Organizations.
http://www.eiconsortium.org

6) Goleman, D. (1995). Emotional intelligence: Why it can matter more than IQ. New
York, NY: Bantam Books

http://www.hpsys.com

7) Shannon Klie. Canadian HR Reporter. Toronto: Apr 20, 2009. Vol. 22, Iss. 8; pg. 12, 2
pgs, Failing to adapt linked to leadership failure

http://proquest.umi.com/pqdweb

8) Brown, Annie H., Ph.D., Walden University, 2005, A study of leadership failure:
Perceptions of leaders within a community college system

9) 'Success' - a leadership trap


Pierre Casse, Eoin Banahan. Training Journal. Ely: May 2010. pg. 46

http://proquest.umi.com/pqdweb

10) leader Empowering Behaviour: The Leader's Perspective,Natalia Hakimi, Daan Van
Knippenberg, Steffen Giessner. British Journal of Management. Chichester: Sep
2010. Vol. 21, Iss. 3

http://proquest.umi.com/pqdweb

11) Bolt, J. (1996), "Developing three-dimensional leaders", in Hesselbein, F.,


Goldsmith, M. and Beckhard, R. (Eds), The Leader of the Future, Jossey-Bass, San
Francisco, CA, pp. 161-74.

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