Leadership Styles Used In Multinational Companies - Essay Example

LEADERSHIP STYLES USED IN MULTINATIONAL COMPANIES Name Course Instructor Institution Location Date Introduction In the present day, there are numerous companies that run on a multinational dimension, and a number of stakeholders and critics might develop the view that with globalization of enterprises and the enhanced national connections mean reduced effect and consideration of the many cultural differences that have been merged. However, it is vital to note that with increased business interaction and reduced recognition of the cultural boundaries, sets of cultural demands arise, making it necessary for the management of multinational companies to identify the novel situations and opportunities alike, and take effective leadership steps to respond effectively to these aspects. It therefore follows that there must be universal forms of leadership which must be applicable as effective strategies of ensuring effective leadership of organisations that operate on a multinational scale. The underlying understanding of these leadership styles thus calls for three actions within the management; the ability to mobilize employees towards the desired goal, nurturing meaningful bonds with other stakeholders in the multinational organisation and providing adequate direction for others to follow. These are the basic leadership skills that are applicable in the process of providing direction for the organisations, the management’s role. It means that the leaders must be sensitive so as to recognize the cultural barriers by identifying their own practices so as to differentiate them from those of the host nation. This essay is an examination of the three most popular styles of leadership that have been adopted for effective running and success of multinational companies upon which the management relies, with an analysis of the differences between the styles. Leadership styles Autocratic Leadership This form of leadership calls for total control and authority over the process of making vital decisions that affect the organisation. Cooper (2002) argues that the leaders who adopt the autocratic form of leadership practice complete and close supervision on the workers while controlling their actions as a result of the powers and responsibilities given to them. Autocratic leaders draw their skills from the ancient rulers of empires and kingdoms. The shift to practicing democracy means autocracy grows unpopular, and people tend not to associate themselves with this style of leadership (Silverthorne, 2005). However, autocratic leaders are in given situations the most effective in solving emerging issues within the multinational organisations. This assumption does not, however, imply that the leaders must develop insensitivity to the needs of their subordinates. Applicability of Autocracy Autocracy is a style that is most effective for situations that call for necessary control. In most cases, margin error is characteristic of these arising situations. If destructive conditions arise within the multinational company, it means that urgent action needs to be taken, and the most obvious strategy applied often implies autocratic leadership (Silverthorne, 2005). The management is forces to design very rigid rules so as to eliminate the dangerous factor from the organisation, although such a move means that the employees are presented with responsibilities that they are unfamiliar with. Autocracy is style of leadership that defines rigid and conservative corporations, which are paternal in nature, and the managerial team has independent minds which have negative motivation on the employees. Although it a strategy still applicable in such departments as military, it has effectively been taken up by international companies. Such companies that deal in construction works and manufacturing of Goods on international scale find it the most appropriate form of leadership for adoption. Effective traits of Autocratic Leaders Cooper (2002) views that the basic requirement of successful application of autocracy calls for unrestrained recognition of the roles that need to be accomplished using one’s skill. It calls for the leader to ensure that all the employees effectively respond to their responsibilities and precision and time consciousness must be achieved. Through intuitive reminders, workers are always reminded of their expectations. Autocratic leaders realize of a major difficulty in applying this mode of leadership. According to Silverthorne (2005), autocracy lacks a balance between motivation of the subordinates and authority. Misery of employees develops when they are overly scrutinized directly, while having too much command on the workers translates to diminishing employee effort altogether. Effective autocratic leadership calls for scrutiny of how and when to intentionally make demands over the workforce. Silverthorne (2005) identifies that effective and successful multinational company management that had adopted autocracy has the following defining characteristics; Provision of an explanation for the new demands and rules on worker expectations. It is obvious that employees have internalized the procedure necessary to their service provision, but it enhances on the quality of their services when they are informed why they have to follow the demands made. Respect should be accorded to the subordinates. A common practice is leaders growing rigid as the rules formulated to ensure effectiveness in the company. However, recognizing that every stakeholder in the organisation has a part to play towards achieving the general objectives of the company. Recognizing such employees brings contentment to them and they get motivated to work better. Successful autocratic leaders need to be consistent in enforcing the policies of the company. Fairness must be exhibited, but the leader must also ensure that his manner of policy implementation is consistent so that they earn the trust of subordinates. Education of subordinates with regard to the novel course of action before enforcing the demands as expected reduces unnecessary surprises in the event of adopting the demands into the organisational system. This is possible through reducing misunderstandings. Lastly, a successful leader practicing autocracy needs to be a good listener. This doesn't imply that they have to change as per the opinions of the subordinates, but workers need assurance that they are appreciated by heir seniors. Employees need to feel contentment resulting from the knowledge that their ideas have been considered, as much as these ideas might not translate to direct changes in the company. Workers will therefore have the confidence of sharing their opinions with the managers, and gives them the assurance that they can be listened to irrespective of the outcome. Democratic Leadership Democratic leadership can be referred to as participative leadership as well. According to Spitzeck (2009), this form of leadership entails all the stakeholders in an organisation taking part in the process of making decisions that affect the operation of the organisation. In multinational companies, it therefore means that workers are involved in decision making. Such action entails the subordinate involvement, but in most cases to areas of their concern. Research has shown that multinational organisations that are interested in performance and excellence have adopted this form of leadership. Effective democratic leadership is characteristic of increased productivity due to higher motivation among workers and significant contribution by the subordinates to the production process (Spitzeck, 2009). Features restricted to Democratic Leadership There is increased employee participation in the decision making. The form of participation here indicated that the opinions of the workers are adequately paid attention to. However, the managerial team is responsible for the selection of course of action with regard to selection of the final decision to be made. A feeling of involvement by the stakeholders. It is common knowledge that the employees will have a feeling of satisfaction when they are assured that they are valuable in the organisation. This means that they are encouraged to share their opinions and they therefore develop confidence in their leaders. Reward and encouragement is extended to subordinate creativity. If the workers are involved in the process of decision making, they are encouraged to seek more effective solutions to problems at hand. Further, those whose opinion has been considered for adoption creates is a form of satisfaction in the worker. This is a reward, although the worker could also receive material reward or promotion. Merits of Participative Leadership Creativity and innovation is enhanced within multinational is enhanced through participative leadership. Sharing of information, ideas and opinions results in more alternatives to organisational problems and more efficient solutions can be formulated (Cooper, 2002). The workers further become committed and involved in their projects with intent to reach problem solutions. All these are geared towards attainment of success in the multinational companies. Demerits of Participative Leadership In view of Spitzeck (2009), the main downside of democratic leadership is failure in effective communication and incomplete projects. Although this leadership style encourages members to take active participation in sharing of ideas, other employees might lack the relevant expertise and technical know-how to provide viable opinions. Democratic leadership is most effective under such conditions as adequate worker expertise and willingness to share their ideas. For better results, the workers need plenty of time to formulate their opinions. However, this puts pressure on the organisation to provide adequate time for every employee to give their idea, thus time consuming to listen to every employee. Laissez-faire This form of leadership has been identified as lying the extreme ends of organizational achievement. Hoffman, Casnocha & Yeh (2014) suggest that laissez-faire is the most effective and efficient leadership form if it is properly practiced with regard to the recent guidelines, and it becomes the least effective mode of leadership that managers could ever use if they stick to the customized guidelines that demand hands-off and lack of intervention in employee activities in the organisation. Critical analysis of the terminology laissez-faire reveals a direct contrast of ideology. Laissez-faire in essence referred to an economic system in which the government didn't interfere in operation of the economic system, while leadership in itself requires that individuals are given direction and guidance through the process of interaction. Prominent leaders as Martin Luther did use laissez-faire to lead people to achieve the objective of freedom. The 21st century leaders therefore must be guided by the desire to motivate, inspire and empower their subordinates to achieve organisational objectives. In this essence, the laissez-faire leader has strong belief in the ability and freedom of the subordinates. This drives the leader to let the workers to have the ability of choosing what to do and not to do. The understanding of laissez-faire leadership derives from two major arguments; either the leader is so convinced that the workers have the relevant skills to perform the responsibilities as required and do not need close monitoring and directions, or the leader was assigned the leadership role on an election or political basis and thus cannot practice control and power over his subjects out fear that he might be perceived as autocratic which might lead him not to be re-elected (Hoffman, Casnocha & Yeh, 2014). Such leaders if bestowed the power to run multinational companies then decide to avail limited though vital resources and information. This leads to insignificant subordinate involvement, participation nor communication. A number of operational activities of these companies then are ineffective since the procedures of production, job requirements and organisational policies are shared only among the employees. The input of such a leader is felt in case the company is in a serious crisis which needs urgent intervention. The laissez-faire counts on the effectiveness of the employees as long as there are set objectives that the company wants to achieve and the leader tends to ignore the commitment needed for success of the organization. Although the employees are capable of working effectively, withdrawal of necessary action by the leader leads to inefficiency due to lack of proper planning on the strategy to be employed to accomplish these objectives. Therefore, in most cases, laissez-faire leadership is prone to inefficiency and underperformance. Differences between Autocratic, Democratic and Laissez-faire Leaders It is apparent that these three major forms of leadership have a number of variations in terms of provision of guidance to the workforce to trigger effective response to situations that arise within multinational organisations. These leadership styles further have consequences on motivation of employees and effectiveness of their services. Sadler (2003) argues that the autocratic leadership, as opposed to the other leadership form, is the sole decision maker in the company. Such a leader would not consider any form of input from the subordinate as much as their opinion could be of great help. It is a form of leadership that is best applicable in situations of urgency in which the response to a problem ought to be immediate, where getting ideas from a group of individuals is not vital and a situation in which a common alternative for a solution does not determine the ultimate outcome. Unlike other forms of leadership, autocracy is dangerous to worker morale, and it is a major cause of worker absenteeism. Democratic leadership entails a leader making a final decision although the subordinates are allowed to contribute to the decision making by sharing their opinions with the management (Spitzeck, 2009). This process is identified as a major source of employee motivation as workers’ innovation and creativity as seen in their involvement in project work. Employees working under the supervision of a democratic leader have high levels of job satisfaction which directly enhances productivity. As opposed to autocratic leadership, democratic leadership is not fit for situations requiring fast action in decision making. Multinational organisations that use democratic leadership are known to excel. Hoffman, Casnocha & Yeh (2014) propose that laissez-faire is a form of leadership in which workers have extra freedom as opposed to those under autocratic and democratic leaders. Here, the employees decide on the best course to take in service delivery. Meeting job requirements and setting of deadlines is at the employees’ discretion. Such leaders do not take their responsibility as required, but only provide information and material support to the employees when dire need arises. The main advantage of laissez-faire is the fact that employees have a sense of job satisfaction. However, such freedom to workers might mean employees who do not manage the available resources efficiently, or they may not possess the relevant skills needed to perform their responsibilities. Employee motivation is as well limited. Therefore, an organisation that practices laissez-faire is that which its leaders are elected on a political basis or the leaders lack the ability to practice control over the subordinates. Conclusion The most successful international companies however do not use one form of leadership. The management in these institutions is a perfect blend of autocracy, laissez-faire and democracy. It is for this reason that the leaders of these organisations are able to make the right decisions when faced with different situations. The workers in these companies are highly motivated and they have an inner drive to deliver quality services to the best of their ability. The leaders in turn have the responsibility of encouraging the workers. The leaders do not completely adopt laissez-faire. Rather, they delegate duties to other employees and only make up regular assessment on the progress of the areas delegated. Leaders have adopted consistency and mutual respect for their employees so as to keep high levels of employee motivation. The leaders also lead by example, and acting in such a way desirable of employees. This creates a good impression on the workers about the leaders. The leaders in multinational organisations which enjoy success are those who have the best communication practices. In is easier to send emails to subordinates, for example, but it is most effective when the leaders choose to meet and talk to employees on a face to face communication. Therefore, adoption of the three forms of leadership yields the best results for multinational companies. Bibliography Cooper, A. A. (2002). Leadership in organizations. Cincinnati, OH, South-Western. Hoffman, R., Casnocha, B., & Yeh, C. (2014). The alliance: managing talent in the networked age. Sadler, P. (2003). Leadership. London, Kogan Page Ltd Silverthorne, C. P. (2005). Organizational psychology in cross-cultural perspective. New York, N.Y., New York University Press. Spitzeck, H. (2009). Humanism in business. Cambridge, Cambridge University Press. Read More