Leadership Resilience and Tolerance for Ambiguity in Crisis Situations by Dr Hunter - Article Example

How does research on the Leadership Resilience and Tolerance for Ambiguity in Crisis Situations contribute to the management of high performance organizations and what its implications for HR management? Introduction: The purpose of this paper is to understand the implications on a business’s performance during a crisis that is faced by the said organization. In this paper, the researcher will first try to introduce the risks that are faced by an organization while it operates in the global business setup. From here, the paper moves towards the research that has been conducted on the topic at hand and an attempt is made to ascertain the types of responses seen in a firm’s management when facing a crisis. Finally, the paper concludes with the impact that this change has brought to the business system; especially the effects seen in the firms operating in Australia. Literature Review: In this section of the paper, the previous literature about the topic has been analyzed with particular emphasis towards the central piece of research that is the article by Dr Hunter’s titled, ‘Leadership Resilience and Tolerance for Ambiguity in Crisis Situations’ opinions to be the response to a crisis faced by their organization. It is a generally accepted notion that situations where the degree of risk is exorbitantly high and the probability of such instances occurring is very low is such that they can neither be prepared against nor can the be predicted with any degree of certainty or pattern of recurrence. When one such event is to transpire, it is essential that the correct manner of leadership is at the helm in order to survive from these situations and Dr. Debra Hunter claims that effective leadership and tolerance of ambiguity are critical factors in the purport-rated survival of firms in the global economic setup. (Moore et al, 2004) Before, further light is shed on the matter, it is important to understand the critical definitional imperatives of the words that are mostly commonly used by Dr. Hunter in her paper: Resilience: In literal terms, resilience is the property of any material to absorb energy in the instance that it is elastically distorted and subsequently, upon unloading to have this energy recovered. However, our emphasis is more towards physiological resilience which basically infers that ‘Resilience in psychology is the positive capacity of people to cope with stress and catastrophe. It is also used to indicate a characteristic of resistance to future negative events. In this sense "resilience" corresponds to cumulative "protective factors" and is used in opposition to cumulative "risk factors". The phrase "risk and resilience"' in this area of study is quite common. Commonly used terms, which are essentially synonymous within psychology, are "resilience", "psychological resilience", "emotional resilience", "hardiness", and "resourcefulness".’ (Carrol et al, 2006) Ambiguity: ‘Ambiguity is the property of being ambiguous, where a word, term, notation, sign, symbol, phrase, sentence, or any other form used for communication, is called ambiguous if it can be interpreted in more than one way. Ambiguity is different from vagueness, which arises when the boundaries of meaning are indistinct. Ambiguity is context-dependent: the same linguistic item (be it a word, phrase, or sentence) may be ambiguous in one context and unambiguous in another context. For a word, ambiguity typically refers to an unclear choice between different definitions as may be found in a dictionary. A sentence may be ambiguous due to different ways of parsing the same sequence of words.’ (Demsetz et al, 1985) Leaders in the modern world are faced with immense tests of character, judgment and mental swiftness almost on a daily basis. Decisions have to be made in real time by these leaders and they don’t enjoy the luxury of making a mistake and not having to pay for it. In addition, according to Dr. Hunter, these leaders have to exhibit resilience; or physiological resilience as explained earlier, demonstrate forbearance towards ambiguity that they face and be able to inspire those around them with their charismatic leadership if they are to be considered true pioneering figureheads of their field. Dr. Hunter’s paper discusses the hypothesis that is being proposed with regards to the relationship between resilience, tolerance for ambiguity, and charismatic leadership in crisis situations. The crux of her argumentation hinges on the viewpoint that those leaders who are intrinsically resilient will have the ability to endure the uncertainty that is part and parcel of decision making in the business world and those leaders who have this endurance will have the makings of a charismatic leader. (Diannah, 2006) Managers of different organizations around the world are made to consider the point of view that pro-active as opposed to ad-hoc planning and preparations are critical elements of staving off any crisis that might be faced by the organization. It is a commonly held notion that the threats faced by an organization can be known and unknown. Dr. Hunter agrees, in no uncertain terms, that the greater the predictability of the threat, the greater likelihood that the organization would be well prepared to deal with this specific situation. On the other hand, Dr. Hunter says that it must be noted that it is not possible for any organization in the world to optimally prepare for every inconceivable crisis event without having to expend a colossal amount of resources. (Fama, 1980) Herein, the researcher feels that it is important to introduce the propositions that Dr. Hunter tested and subsequently proved in her dissertation: Proposition Three: There is a positive correlation among individuals who score high on tolerance for ambiguity and charismatic leadership. Proposition Four: There is a negative correlation among individuals who score low on tolerance for ambiguity and charismatic leadership. Proposition Five: There is a positive correlation among individuals who score high on the big five-personality factors and tolerance for ambiguity. Proposition Six: There is a negative correlation among individuals who score low on the big five personality factors and tolerance for ambiguity. Source: Hunter, Debra (2006) ‘Leadership Resilience and Tolerance for Ambiguity in Crisis Situations’ The Business Review, Cambridge; Sep 2006; 5, 1; ABI/INFORM Global pg. 44 In another article by Dr. Debra Hunter titled ‘Does the Captain go down with the ship? Ethical decision making in crisis situations’, she takes this discussion a bit further. On the notion of what qualities are necessary for a manager to be effective, Dr Hunter says that effective resource management was the key for any manager to be effective. Resources themselves were subject to the area of business that the manager was looking after. In a technical department these resources could be pertinent and pragmatic resource allocation or worker time management; all of which have to be done in order to achieve the final output which the specific department has been set up to achieve. On the applicability of this notion of effective resource allocation towards departments that were not technical, Dr Hunter was of the opinion that a simplex structure of resource allocation remained the same; the only difference was that the type of resources changed across the board. Suffice to say, the ultimate goal for any manager in his opinion was goal optimization given the specific set of constraints that are faced by every manager. (Hunter, 2006) On the specific skill set is requisite for handling crisis situations; Dr Hunter says that the most important thing in any managers would be commitment to the cause. Without that any manager would be unable to perform to their maximum capability. In addition to this, skills on a macro level were important for any managerial position. Inter-personal skills, basic reasoning and interpretational skills would comprise of a standard set of skills that must be present in all line managers. When addressing the notion of the difference between a leader and a manager, Dr Hunter quite impulsively put forth the idea that there was a huge overlap in these two entities, in accordance with a large volume of work done by researchers in this field. His understanding of a leader was someone who could motivate their team, have the ability to be a role model for those who are working under their auspices. (En-shun, 2007) A manager in contrast should also have these said capabilities in addition to being a good worker and also have a skill set like the one which has been described earlier in the interview. (Hyeon, 2004) These managers should have the ability to develop the inner capabilities and good characteristics of the people who are working under them and must also have the ability to pick themselves and their peers and sub-ordinates up whenever they face any failures in the work practices. Dr Hunter also points out that there are many instances of people who are efficient workers and the better performers in a group. These people have the ability to become better managers as they have mechanism that is their greater productivity to inspire and motivate those around them and also have the ability to make better decisions with regards to their area of expertise. Therefore, there is a large overlap between these two concepts but there certainly a palpable difference between these two concepts, therefore, they cannot be said to be completely over-lapping. (Hunter, 2006) On the specific type of leadership role that is requisite for handling crisis situations in light of Mintzberg’s theory that is Informational, Interpersonal or Decisional, Dr Hunter says that leadership style must be a conglomeration of all three types, which was a requisite for any manager in contemporary business practices. In addition, she stressed on the importance of quick decision making abilities as a key ingredient of this skill set as a manager. (Jing Du et al, 2009) She further expands by discussing the issue of proactive or ad-hoc with regards to decision making in an organization by suggesting that better to be pro-active in any condition because it always better for a manager to be one step ahead of the game rather than wait for key indicators to change before the manager takes a certain definitive step. This also goes in line with the notion that a manager must have the ability to foresee events before they actually take place in order to better prepare for the event and prepare contingency plans in case anything goes wrong. Despite the fact that ad-hoc nature of operations provides a better rationale base for decision making, waiting for triggers in such a cutthroat environment is not a pragmatic decision as decision time is getting smaller and smaller by the day and any time lags can have cataclysmic implications on the well-being of an organization. (Hunter, 2006) Literature on the subject offers the following opinion whereby managers in crisis situations are placed into two sections: Those who combat the change Those who embrace the change Combating the Change: Organizations or entities who vehemently combat changes or advancements are usually representatives of that group who want to remain in the comfort of familiarity that is in the conditions that they have grown accustomed to operate in with regards to their specific organizational tasks and activities. Suffice to say, they are the ones who aspire to maintain the status quo and prevent the equilibrium from shifting as best as they can. (Kenneth, 2009) Embracing Change: Contrary to those who have already earlier, the business professional who fall under this category that is who wholeheartedly and appreciatively accept any new system or technological changes that take place in the business setup, are usually those who find their kicks by taking risks and pushing the envelope all the time. They belong to the group of innovators who are always seeking to create better business practices and aim to harness every single opportunity that comes their way which is usually founding in changing existing practices of conducting business. (Ness et al, 1995) Impact on organizational human resource management for firms in Australia: In this section, the researcher shall look at the impact that this line of argumentation has had on the human resource practices especially for firms operating in Australia. The answer to this question is rather simple: there has been a significant shift of organizations towards human resource outsourcing; which encapsulates perhaps the most critical impact on human resource management. Outsourcing: Outsourcing is the relocation of key management and/or day-to-day executions of a complete business utility to an external service provider. The client and the service provider enter into a contractual agreement that determines the type and scope of the relocated services. Under this agreement, the supplier of the services obtains the means of production which are requisite for the completion of the relocated services and the client agrees to purchase these services for the duration of the contract. Most usually functions such as IT, HR, real estate management and accounting are outsourced to third party vendors. However, it has been noted that a large number of firms outsource their customer services and call centre to external providers as well. An extension concept to outsourcing is the concept of off-shoring; which basically is the outsourcing of business activities to third party vendors who are located outside the country of origin of the client organization. This form of outsourcing is particularly effective in labor intensive business functions as ‘cheap’ labor is available from developing or underdeveloped countries for the use of the client firms as well as business functions that require inputs available from certain geographical areas e.g. a pharmaceutical company outsourcing the production of a new medicine to a firm in Brazil which has the plethora of medicinal resources from the Amazon at is disposal. (Smith, 2006) Implications for HR management: Outsourcing is most usually implemented to achieve gains or deal with some of the following concerns: Decreasing the overall expenses incurred by the firm by looking at the scope of the operation, quality standards and cost re-engineering. Off-shoring through ‘labor arbitrage’ also aids this process as the wage disparity between developed and developing countries is made use of. Another reason is concentration on central business: Company resources are directed towards central business functions and subsidiaries functions such as perhaps IT, HR are outsourced to save people, investment and other resources. Increasing quality levels is another reason: Increasing the quality level by bringing in external vendors who are specialists of that particular business function. Knowledge generation and creation is a pivotal factor: Conglomeration of intellectual property and greater experience and knowledge. External service providers are bound by contracts to deliver to the letter of the law or else face penalty. This is not usually the same for in-house development. (Norihito et al, 2007) Conclusion: Gaining operational proficiency is a significant factor as is capacity management: Contact with business function best practices which may be very time-consuming and costly to build in-house and the firm is not liable to any changes in the requirement of the business functions which are outsourced; the perils of supply and demand are borne by the external supplier. Catalyst for change and the improved ability to innovate serve as key organizational goals for outsourcing: As intimated by the title, a firm can enlist the use of an external vendor in order to revolutionize a particular business segment or in some instances the entire business on a holistic level. Firms use the help of external knowledge providers to sustain and subsequently improve the ability to innovate the output of the firm. Some other business factors include reduced lead time, managing business risk, external sources of finance and tax benefits of production: Faster development or production of the final output from the skill and aptitude brought in by the external service providers. A commonly implemented technique to diversify the risk faced by a firm is to create an alliance with a partner who can better allay the risks faced by the firm. In this instance, the external service provider actually supplies the investment required for the creation or sustenance of a business unit. Many countries offer protective shields to firms for undertaking a specific business activity e.g. some countries may have a tax rebate on producing cement, so construction companies from all around the world could outsource their requirements to this cement manufacturers in the said country. (Belcourt, 2006) Bibliography: 1. Belcourt, M. (2006). “Outsourcing: The benefits and the risks. 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Cucuzza, “Tapping the potential of ABC”, Harvard Business Review, Vol. 73, Iss. 4, July-August 1995. 13. Norihito Furuya, Michael J. Stevens, Gary Oddou, Allan Bird, and Mark E. Mendenhall, ‘The effects of HR policies and repatriate self-adjustment on global competency transfer’ Asia Pacific Journal of Human Resources, Apr 2007; vol. 45: pp. 6 - 23. 14. Smith, A. (2006). “Overcoming four HR outsourcing obstacles. Strategic HR” Harvard Business Review, 5(4), 28-31. 15. Hunter, Debra. (2006) ‘Does the Captain go down with the ship? Ethical decision making in crisis situations’ College of Business, Troy University, 1117 Perimeter Center West, Atlanta, GA 30302, The Business Review Read More