Case study - Case leaders and their leadership style PDF

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Case leaders and their leadership style ...

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Introduction: The following case comprises of comprehensive comparison between Virgin and Foxconn, where the leadership style and behaviors of the CEO’s of both the companies, Terry Gou and Richard Branson, differ. Firstly, the case discusses the characteristics of the leadership style that is exhibited by both the CEOs. Following this, a brief description of path-goal leadership theory is discussed and also examined the type of leadership behavior is demonstrated by Branson and Gou. A brief argument is further presented showing how Branson's and Gou's leadership style can impact the workers' motivation, from either a positive or negative perspective. Also some recommendations are made for Terry Gou for the creation of a more harmonious workplace, which is less stressful and less toxic for employees at Foxconn.

Question 1 (A)

Richard Branson is one of the most admired business men due to his democratic leadership style. This style led him towards great success. According to Nagendra & Farooqui (2016, pg. 1), a democratic leadership is where decision-making is decentralized and shared by subordinates. Similarly, Branson actively involves his employees in all the company decisions and allows them to be a part of the decision-making process. At Virgin, employees are provided freedom to come up with their own ideas and applying it in their area of expertise. He believes that every single employee at Virgin is an entrepreneur himself/herself. He encourages his employees to imply their knowledge and idea rather than just following superior employees' orders. This style of leadership is known as Laissez-Faire leadership, where leaders provide little or no direction and employees work and resolve problems independently, make employees more confident and more motivated towards their work (SHARMA & SINGH 2013, pg. 1). Additionally, the company has not framed any kind of particular process for certain tasks because Branson believes that efficiency of a person cannot be judged while they are working accordingly to a particular method. Hofstede study shows that the culture with low power distance allows the employees to imply their knowledge on how they want to complete the task (Al-Sarayrah et al 2016, pg. 5). Therefore Branson provides his employees to implement their creativity in accomplishing the tasks in the best possible manner.

Question 1 (B) Terry Gou is the owner of the worlds largest as well as the best electronic manufacturing company known as Foxconn. His autocratic leadership style contributes in continuous error-free production and managing to complete the targets on time. Leaders with this style involves the application of punishment and task oriented approach. This suggests that autocratic leaders focus on managing tasks and completing them (Chege, Wachira & Mwenda 2015, pg. 596). Leaders with this type of approach does not allow their employees to work independently. The path-goal leadership theory also defines this type of leaders as directive leaders. They direct their subordinates by clearly pointing the requirements and the expectation of the task as well as maintaining definite standards of performance (Schermerhorn et al 2014, pg. 351). With this leadership style, the workers are constantly in pressure to work harder for ever-increasing efficiency and productivity. He doesn’t want to compromise on quality, thus he can go to a greater extent to achieve it. In this type of leadership approach, decisions are taken by leader himself without the consultation of employee. At Foxconn, there is a very big power distance. According to Yin (2013, pg. 47) “Integration and Moral Discipline each correlated with Hofstede’s Power Distance and Individualism negatively”. Only the leaders have the authority to make any decision and employees must obey the order and do what is asked to do. This is very similar to dictatorship where the order of the leader must be followed in any conditions.

Question 2 The Path-goal leadership theory suggests that an effective leader is one who clarifies path through which followers can achieve both task-related and personal goals. It also represents how leader’s motivation, performance and satisfaction affects the organization (Schermerhorn et al 2014). According the theory, there are four different types of leadership styles, each depending upon the case. These leadership approaches are: -

Directive Leadership – where leaders direct their followers by letting them know what needs to be done and how it needs to be performed. In this type of approach, leader is like a guide who tells people what direction to go towards without support.

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Supportive Leadership – in this case, the leader tries to make work more pleasant by treating everyone equally and making the work environment friendlier.

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Participative Leadership – where leaders involves their subordinates in decision-making process and also encourages them to be more interactive. The leader values all the ideas from their employees and support them in implying those ideas.

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Achievement-oriented Leadership – where leader sets challenging goals for their employees and expects them to perform best. This style is helpful when employees are not motivated.

According to Path-Goal theory, Richard Branson shows more than one leadership behavior. Firstly, he demonstrates a participative leadership approach. By investigating the relationship between participative leadership and job performance, it was found that there is a positive relationship with job performance (Newman & Teo 2016, pg. 1). It was clear from the case that at Virgin, there are no set protocols, every employee is given freedom to participate in company’s decision making process. Branson is often involved personally in supporting his employees to pursue their ideas and innovations. Furthermore, he also demonstrates supportive leadership style. He supports and trusts his employee in performing a difficult challenge by themselves without any support from leaders. He also believes in rewarding his employees for their great achievement, which also shows his transactional leader traits. Leaders with this type of approach make their organization grow really high. On the other hand, Terry Gou’s leadership style is vastly contradictory to Richard Branson. His style of leadership is best known as directive leadership, where leader takes full control of all the decisions and

employee advice is not heard (Martins, Liao & Campbell (2013). As identified in the case, the employees at Foxconn work in a military style environment, which is kept very strict. Any imprecision is not tolerated. Terry has even made policies including a letter claiming that his company is not responsible for any suicide attempts by his employees, which are unethical for the employees. However his style of leadership make those a requisite for the employee. Even after such conditions he is able to get his work done precisely and on time. Yet, there is lack of deeper understanding of human interaction within workplace.

Question 3 Leader’s style of motivation has a great impact on worker’s performance. Karu (2013, p1061) defines motivation as a critical aspect that improves worker’s job satisfaction and their performance. The leadership styles exhibited by Branson and Gou differs which has a distinct effect towards subordinate’s job satisfaction. Thus, Alderfer's ERG theory of motivation can be applied. Alderfer’s theory condenses Maslow's five needs into three categories: existence, relatedness and growth. Existence needs includes Maslow’s first two level of needs, psychological and safety requirements, which are defined as basic human needs similar to food, water, oxygen, etc. Relatedness needs are composed by Maslow’s social and external esteem needs. These are the needs for relationships with family, friends and co-workers. This also includes need of recognition and feeling secure as part of a group. Growth needs are essential for internal esteem and self-actualization; this drives a person to be more creative and productive on himself and the environment. (Dinibutun 2012) The style of motivation exhibited by Branson does have a significantly positive effect on the subordinate’s performance. Branson offers his employees with challenging tasks, enables them to cooperate hierarchy in decision-making process and provides them job flexibility. Thus, Job satisfaction amongst employees is positively influenced by Virgin’s culture and this fulfils the employee’s Growth needs. For instance, a responsibility towards task is accomplished when considering a decision may improve employee self-esteem. In terms of Relatedness needs, Branson encourages his employees to participate in decision making process. Removal of barriers between employees and executives creates more interactive workplace where idea is shared with subordinates. These can be identified as social and external esteem needs. He has also implemented "Non-policy", which allows employees to take a short or long-term holiday if required, which fulfils employees psychological needs. Apart from this,

Branson also considers designation of certain rules. When employees experience dissatisfaction from their work or they consider their wages to be insufficient, he supports them. Thus, the environment at Virgin is non-stressful and enjoyable. On the other hand, the leadership style exhibited by Terry Gou affects the employee in negative manner. Due to forced labour at Foxconn, the employees are exhausted physically and mentally affecting their Growth needs. Workers are required to work overtime and perform repeated tasks. This can be identified as job inflexibility and uncreative work. As a result, the employees are not provided the opportunity to participate in the decision making process. Hence, Growth needs are inadequate to satisfy workers. Additionally, with regards to Existence needs, Gou’s leadership style shows secretiveness and military behaviour. This has a negative impact on employees existence needs particularly social needs. In addition, due to stressful work conditions, employees commit suicide, resulting in Existence needs of safety adversely. Gou’s response towards suicide occurrence was making employee sign a contract where they sign that employees are not Foxconn's responsibility. Thus, job security is inadequate and work conditions are psychologically unsafe. Although, Gou’s positive approach was towards physiological needs by introducing cafeterias, medical facilities or fitness facilities. However, the workload was highly demanding and stressful, worker’s condition were physically and mentally exhausting.

Question 4. As we know from the case, Foxconn is world’s top company as per their customers. However due to a non-harmonious and highly stressful workplace, the employees are not able to work happily. After all, customers do not come first. Employees come first. If a leader takes care of his employees, they will provide best service to the customers. Therefore as a consultant, I would first of all improve the leadership approach, and working conditions at Foxconn. Currently, workers are set to do their routine job every day and the supervisors do not interact with them. Hawthorne studies suggest that if there is higher interaction in the workplace it will increase the productivity (Schermerhorn et al 2014). So rather than not providing attention to employees, supervisor should constantly interact with them in order to increase productivity. Environmental changes can also make the tasks more efficient (Schermerhorn et al 2014). Rather than displaying target banners around workplace and demotivating the workers, they should place some energetic

quotes or thoughts which motivates the employee to work harder. After all motivation is all about making workers feel positive towards their job. Also, there are several reports of suicide cases due to long working hours and harsh working conditions. To avoid this, Gou introduced erecting suicide nets to avoid fatality. However it is essential to consider what influences employees to committing suicides. In this case, work overload, insufficient amount of salary and non-challenging tasks are identified as the causation of suicides occurrence. Therefore, it is recommended that minimizing workload is essential. According to Lee, McCann & Messenger (2007, p.22) the average working time is 8 hours per day and a total of 40 hours per week. This can lead to less stress on workers physical and mental condition. Additionally, because of Chinese culture, Terry Gou's leadership style has high power distance with his employee. There are limitations on communications between executives and employees. Thus, job satisfaction is not met. However if the power distance is reduced, allowing some space to let employee decide what they want to do, the productivity will increase as well as the work satisfaction. In addition, China is more male dominated (Pruett, Shinnar, Toney, Llopis & Fox 2009). In higher levels of organisational positions, such as executives, Gou’s leadership may therefore be influenced, as the authority in male is more powerful compared to females in Chinese society. Therefore, I would recommend Gou to be lenient with his approach to staff.

Conclusion: It can be clearly seen that the characteristics of leadership style exhibited by Richard Branson and Terry Gou were vastly contradictory. Leaders like Richard Branson exhibited democratic and laissez-Faire leadership style, and through his leadership he was able to make great success in his business. However on the other hand leaders like Terry Gou exhibits autocratic and directive leadership style, he believes that by keeping workforce strict the productivity will increase and employee will pay more attention towards work. Regard less of poor working conditions he is able to maintain a large workforce. Thus, it’s totally dependent upon the leader how they want to be recalled.

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