Leadership, Organizational Performance, and Effects of Employee Turnover - Case Study Example

Organization Leadership and Performance Name Course Instructor Date Organization Leadership and Performance Leadership is one of the extensively discussed aspects in business, but the definition in modern day differs from one person to the other. This is because the term leadership has been used in various aspects like politics, academics, and social work places. Herord (2008) asserts that the degree to which individual exhibits leadership depends not only on their personal characteristics and abilities, but also on the environmental characteristics in which they exist. Positions of leadership are established in the work place for the sole purpose to help the organization to achieve the objectives within the larger system. One of the factors that play a crucial role is leadership style. It is one of the essential factors in enhancing or retarding the interest and commitment of the individuals in an organization (Valenti, 2008). The major objective of any organization is profit making and the attainment of maturity status. In the pursuit of these objectives, organizations allocate recourse to competing ends. In this whole process, the organization provides employment, goods, and services, and in the end contributes to societal growth (Herold, et al 2008). It is fundamental that members of an organization contribute to organizational development. This equally depends on the how the leader of an organization understands and adapts appropriate leadership style in performing the role of the manager. Effective leadership behavior can aid in the performance of the organizations when faced with challenges. Organizational performance indicates the ability of an organization to achieve the set objectives outlined by the shareholders. The objective includes good financial results, high profit, and large market share achievable through relevant strategy and leadership. Organizational performance measures the strength and weakness of an organization in terms of profit margin and quality of product in relation to the same industry. Understanding the merits of leadership on performance is essential because leadership is renowned to be one of the driving factors for improving a firm’s performance (Leadership and Organizational Performance, 2013). Effective leadership is viewed as the potent source of management development and sustained competitive advantage for organizational performance. Senior organizational leaders enhance performance entrenched by visionary thinking. Organization performance is entwined to leadership bestowing an obligation as well as the content of the organizational direction. Organizational leadership involves process development and formulation of proximal outcomes. These tasks such as commitment contribute to the development and achievement of an organizations goal (Angelis, 2007). Organization leadership is identified by the submission of the non-routine influence on organizational life. This implies that organizational leadership is inherently bounded by system characteristics and dynamics; hence, leadership is defined and caused. A common loom to leadership assumes that organizations perform best when their leaders take those vital measures to influence people to work harder or more proficiently. A key challenge for leaders is the obstacle that exists between the workforce and the organizational structure, physical separation and cultural differences. Angelis (2007) affirms that organizations perform best when leaders simultaneously manage multiple flows among them. This is an essential feature since it transforms leadership ensuring that stipulated objectives are achievable. In essence, leadership and performance share a thin line and positively influence an organizations performance. Woolworths Limited is an established and expansive corporation commanding an endearing market share in Australia and New Zealand. The corporation majors in the retail industry dealing in food, liquor, hotel, and poker gaming operations. According to world rankings, Woolworths limited is the 19th largest and most expansive retailer while topping the list in both Australia and New Zealand. Woolworth’s inception dates back to 1924 as a single basement. The multinational corporation has since grown its market capitalization in terms of sales and capital outlay. Woolworth’s supermarket has a staggering market share of more than 30% resonating to a turnover of AUD 14 Billion. Woolworths boosts of over 500 supermarkets and food stores in Australia. The company has employed close to 190,000 people in 3,000 locations across Australia and New Zealand. Currently, Woolworths limited has several different subsidiaries under its control including 75% of Australian leisure and hospitality group, which has over 280 licensed venues and gaming operations across Australia. Woolworths Limited operates over 160 big W discount department stores in Australia which retail in hardware, books, software pet food, and automotive goods. Woolworths is in the Australian securities exchange coded as WOW. According to the Deloitte 2008 Global powers retailing report, Woolworths ranks third in the Asia pacific region. Given the prevalent technological advancements that have taken the world in shock, the company operates an online grocery store. This seeks to ensure that the Woolworths retain a competitive edge in the ever-competitive market. Additionally, Woolworths operates a statewide independent wholesale based in Tasmania. In the recent past, Woolworths has failed to attain stipulated accomplishments. For instance, Woolworth’s has not performed according to the public expectations. This has been discernible by the fast slide of its share price demonstrating decreased investor confidence. The current global economic situation has further weighed down on Woolworth’s ability to provide shareholder value. Woolworth’s symphonic problem has been its inability to provide shareholders with a satisfactory return (Buytendijk, 2009). Competition in the retail industry has enormously increased. As the law of equilibrium delineates, any industry that obtains abnormal returns attracts competition. The main challenge underpinning Woolworth’s undesired performance in the recent past emanates from high employee turnover. This has been a major setback to the company. Woolworths has lost its most competent employees, this has resulted to drain profits on the organization. For instance, in the accounts department the organization lost its senior accountants. This dealt a big blow as Woolworths had invested heavily in training and recruiting the accountants. Apart from this, the cost of losing an outstanding accountant extends to losing the value of their superior performance. The problem has costs Woolworths an immense fortune, in terms of replacing the employees. According to reliable statistics, Woolworths incurred $600 to replace a sale people and about $2,700 to replace a manager. While estimates to replace every driver ranges between $2,000 to 6,000, Grill (2005) asserts that hiring and training an hourly worker costs 400 to 800 times the hourly wage. According to Grill (2005), replacing a worker costs 2 to 4 times as much as keeping an existing employee. While the exact figures of the cost of employee turnover fluctuate broadly, all cases suggest that the cost of employee turnover is too expensive to ignore. Woolworths has had to compact with tangible cost, which include the amount of time involved for the selection, recruitment and training the new personnel. The organization has also had to part with elusive costs reflected, in the increased workloads for co-workers before recruiting new employees. This problem also culminated to other hidden costs, which result to disruption of workflow, vacancy cost, morale erosion, and instability among the remaining employees. Effects of Employee Turn Over Employee turnover has had numerous effects on the organization. For instance, Woolworths is losing of intellectual capital, comprising well-trained and competent staff that may not be easily to replaceable. This reduces morale, while mounting stress on the remaining workforce. This is because the remaining workers must fill the slot left open while a replacement is being recruited. This might include working longer shifts and more days. Overworking the remaining workers may create stressful situation and in turn interfering with profitability. The organization has been left with huge looses in terms of the knowledge the person leaving is taking, the greater the intellect of the person, the larger the loss. Woolworths must create a succession plan unless it is already in place due to the high employee turnover. One of the effects of heavy turnover is that employees begin to compare their current situation with that of former colleagues and start to develop conclusions about the situation (Grill, 2005). Employees also try to explain the reasons as to why the person may have left and try to justify them. Woolworths has had to deal with negative publicity because of high level of turnover. This is a significant challenge necessitating urgent redress. In the prevalent circumstances, change is inevitable to alleviate Woolworth’s performance and enhance its productivity. Change is an imperative element in the modern organizational setting. With modernization taking centre stage, organizations seek to change and adapt to new dynamics (Angelis, 2007). The dynamics of change is a very decisive process in any organization .Angelis (2007) affirms that any system or execution plan especially changes in the business environment have numerous dynamics. For instance, the factors whose performance affects the overall performance causes changes, inefficient management credentials leading to poor stewardship. Grill (2005) affirms that, in a change environment the prevalent intricacies not only attribute to the change but also to the general business process anticipated. Each change endeavor has a clear and concise objective to be accomplished during implementing. Hence, a dynamic based approach to the management of the change system is essential for its success. Various factors contribute to the process of change include evolution, structural implications, and integration (Grill, 2005). Evolution Under this change, the change seeks to restructure the top-level management and overall reorganization of the company is emphasized. The fact that the existing management team is disorganized and de-motivated to meet the set targets of the organization, quality of service and higher revenue attainment create the desire for change (Marlin, 2000). This makes it apparent that the management structure is actually evolving from the existing structure rather than an innovative approach where the whole system is created from scratch. Structural Implications At this stage, the restructure of the senior management is analyzed. During this process of implementing changes through evolution, the role of the personnel is not immediately uprooted but transcends to another role. It is essential for every member of the staff to have a clear role, especially once the change process is implemented (Higgs & Rowland, 2005). This is because of the fact that job role description will not only increase the management’ team precision but also increase the exceptional capabilities among the managerial staff. Structural implications are a focal point in the entire change process. Integration This is the progression of change involving senior management and operational staff to execute the proposed changes in an organization (Valenti, 2008). The assimilation dynamics contributes to the maneuver of the staff to concentrate on efficient development and management along with streamlining the process to identify the new market as well as increase the existing market. Human recourse performance Human recourse is described as the backbone of an organization. Human recourse is measured as a dynamic factor whilst implementing change. In any organization, the human resource team bears the mandate to execute managerial directions promptly and effectively. More and more organizations are relying on human recourse programs intended to reduce turnover, which in turn results to positive change (Guy, Beaman & Weinstein, 2005). For Woolworths to solve the inalienable challenge, the four critical elements have to merge. There are various theories used to infiltrate change in organizations. The kotter’s eight-step change process suits Woolworth’s organizational structure. Implementing Change through Kotter’s eight-Step Change Model The first step in change model is that in order for change to take place, and help the whole organization. Woolworths must develop a sense of urgency around the need for change. This is done by identifying potential threats and to develop scenarios showing what could happen in future. Woolworth’s management must realize in order to solve the issue of turnover first; the management must convey to the table why it occurs and need for address. The management must realize that turnover is an employee behavior. A sole or a series of incidences that result in the employee leaving the company by choice and what causes it (Libertella, Sora & Natale, 2007). The purpose of this question is to investigate why employees are leaving Woolworths. Then have serious discussions and give dynamic and convincing reasons to get people thinking and discussing. After this, it is important to request support from all stakeholders concern with the change process. Form a powerful coalition The second step is to convince the people involved that change is necessary. This usually takes visible support from key people and strong leadership in an organization. It is essential to note, that managing change is not enough, as leaders must lead by example (Burke, & Cooper, 2007). To lead change, a leader needs to formulate a coalition of influential people bearing notable status, proficient, and of political importance. Woolworth’s management team has a responsibility to manage change by selecting influential and collaborative personnel in the workplace. The next step involves seeking for emotional concern and commitment from key individuals. Create a Vision of Change The third step is to create a vision. As stakeholders continually, float ideas and solutions the suggestions might be defining and overwhelming. It is essential to link these concepts to an overall vision that people can grasp and remember easily. This is where a leader, determines the values that are central to change. Woolworth’s vision is to create a conducive environment that will foster the development of a robust workforce. Communicate the Vision Communication is a vital element in modern organizational settings. The leader of the organization needs to communicate the vision frequently and powerfully. It is also essential to walk the talk implying that what a leader does is important than word (Kernighan & Pike, 2009). Demonstrate the kind of behavior expected from employees. Woolworth’s managerial team has the mandate to communicate the vision and listen to the current workforce grievances. Finally, a leader should apply the vision to rectify all aspects of the operation. Woolworth should learn to address employees concerns and issues before they resign. Woolworths leadership should also be involved in good personnel management techniques which will assist in the reduction of job satisfaction and thus turnover. Remove Obstacles By the fifth stage, the staff should be busy benefiting from what leaders have been promoting. At this point identify and hire leaders whose main roles is to deliver change. To accomplish this adequate evaluation of the organizational structure, job descriptions, and performance is beneficial. Recognize and reward people for making change happen. Low compensation and other salary issues are also reasons for turnover, employees unsatisfied with their present pay will duly undertake their stipulated roles efficiently. It is important to identify the people resisting change and help them change perspectives (Kotter International, 2013). Create Short-Term Wins Nothing motivates employees or the entire humanity more than success. It is important to avail a taste of victory during the early stages of the change process. At this stage, it is important to create short-term targets. The team might find it hard to up with these changes, but each win will further motivate the staff (Stanley, Meyer & Topolnytsky, 2005). Thoroughly analyze potential advantages and drawbacks emanating from the set targets. It is good to reward people who meet the targets. Build on the Change Kotter asserts that numerable change projects fail due to early declaration of victory. Each success provides an opportunity to build on what went right and identify what can be improved. After every win, it is important to analyze what went wrong and what needs improvement. At this stage, it is also imperative to maintain ideas fresh by bringing in new change agents and leaders for the change coalition. Anchor the Changes in Corporate Culture Finally, make the change last by merging it with the core objectives of the organization. At the final stage a leader should make continues effort to ensure that change is evident in every aspect of the organization. Woolworths management has the responsibility of merging the change objectives to the organizational goals. The company leaders should continually support the change process. Organizational leadership and performance share a tight relationship. An organization seeking to thrive in this competitive market has to merge the two elements. Woolworths is an established conglomerate in the Asian pacific region. High employee turnover seem to threaten its sheer existence. It is imperative for the organization to unearth the cause of the challenge and resolve it before detrimental consequences are inevitable. The Kotter eight-step change model avails a feasible change process that would deliver desired results. Woolworth’s performance would significantly improve for the better in the instance the management unites to resolve the undying problem. References Kotter International - The 8-Step Process for Leading Change . (n.d.). Kotter International - Innovative Strategy Implementation Professionals. Retrieved October 2, 2013, from http://www.kotterinternational.com/our-principles/changesteps Angelis, M. R. (2007). Michael Fullan, Turnaround Leadership. Journal of Educational Change, 8(3), 287-289. Blanchard, K. H. (2010). Leading at a higher level: Blanchard on leadership and creating high performing organizations (Rev. and expanded ed.). Upper Saddle River, N.J.: FT Press. Burke, R. J., & Cooper, C. L. (2007). Building More Effective Organizations HR Management and Performance in Practice.. Leiden: Cambridge University Press. Buytendijk, F. (2009). Performance leadership: the next practices to motivate your people, align stakeholders, and lead your industry. New York: McGraw-Hill. Grill, R. (2005). Change Management--or Change Leadership?. Journal of Change Management, 3(4), 307-318. Guy, G. R., Beaman, K. V., & Weinstein, C. (2005). Effecting change in business enterprises: current trends in change management. New York, NY: Conference Board. Herold, D. M., Fedor, D. B., Caldwell, S., & Liu, Y. (2008). The Effects Of Transformational And Change Leadership On Employees' Commitment To A Change: A Multilevel Study.. Journal of Applied Psychology, 93(2), 346-357. Higgs, M., & Rowland, D. (2005). All Changes Great And Small: Exploring Approaches To Change And Its Leadership. Journal of Change Management, 5(2), 121-151. Kernighan, B., & Pike. (2009). Finding Performance Improvements. IEEE Software, 16(2), 61-65. Kotter's 8-Step Change Model - Change Management Training from MindTools.com. (n.d.). Mind Tools - Management Training, Leadership Training and Career Training. Retrieved October 2, 2013, from http://www.mindtools.com/pages/article/newPPM_82.htm Leadership and Organizational Performance (M.Ed.) | Graduate and Professional Programs A | Leadership, Policy, and Organizations A | Departments A | Peabody College of Education and Human Development A | Vanderbilt University. (n.d.). Peabody College of Education and Human Development A | Vanderbilt University. Retrieved October 3, 2013, from http://peabody.vanderbilt.edu/departments/lpo/graduate_and_professional_programs/leadership_and_organizational_performance.php Libertella, A. F., Sora, S. A., & Natale, S. M. (2007). Affirmative Action Policy and Changing Views. Journal of Business Ethics, 74(1), 65-71. Marlin, T. E. (2000). Process control: designing processes and control systems for dynamic perfomance (2nd ed.). Boston: McGraw-Hill. Stanley, D. J., Meyer, J. P., & Topolnytsky, L. (2005). Employee Cynicism and Resistance To Organizational Change. Journal of Business and Psychology, 19(4), 429-459. Valenti, A. (2008). The Sarbanes-Oxley Act Of 2002: Has It Brought About Changes In The Boards Of Large U. S. Corporations?. Journal of Business Ethics, 81(2), 401-412. Read More