Essay Assignment on Leadership and Management PDF

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Application of Leadership and Management Theories in Contemporary Organizations: A case study of an Exchange in Nigeria...

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Application of Leadership and Management Theories in Contemporary Organizations: (A case of FMDQ Securities Exchange)

Student Name:

Clement Changwak Dakat

Student Registration Number: 74108478 Course Name and Code:

BS4S16-V1: Leadership and Management Theories

Tutor’s name:

Dr. Leonidas Efthymiou

Date:

July 7, 2019

Abstract The purpose of this paper was to examine the application of leadership and management theories and its effect on work performance and employee engagement in a contemporary organization with FMDQ Securities Exchange (“the Exchange”) as an area of study. The paper reviews related literature on leadership and critically applies this to the leader, who is generally accepted to be the current managing director of the Exchange as well as literature on management theories and its application to the management cadre of the Exchange. It uses a qualitative research approach based on the perceptions of the researcher, who is a staff of the Exchange as well as his interaction with staff at different management levels, as the basis of the study. The conclusion of this study showed that the use of democratic leadership and transformational leadership was not fully embraced within the organization, transactional leadership was clearly practiced in the organization and the high staff turnover may be attributable to the autocratic or micromanaging leadership style which affects efficiency and effective performance negatively. Management was also seen to be bureaucratic with its insistence on rigidly conforming to standard procedures of operations, blunting individual initiatives. From the conclusions of the study, it is recommended that the organization embrace democratic leadership with more emphasis on transformation leadership. Care should be taken in the practice of transactional leadership since it has its shortcomings and the autocratic style should be used as the last resort and generally discouraged if efficiency and effective performance is to be achieved in the organization. Management also needs to move away from the bureaucratic management style to a situational or contingency based approach which is more dynamic. Background Over the last century, much research and postulations have been done in relation to leadership and management. These efforts have led to widespread theories; some adopted in whole and others with some finer refinements by organisations big and small around the worl d.

This paper will critically evaluate leadership and management theories over the past 100 years; ranging from the “great man” notion of heroic leaders, through the behaviorist, traits, situational, contingency, transformational and transactional theories of leadership as well as the classical, behavioral, quantitative, human relations and contemporary approaches to management with particular emphasis on the transactional leadership and bureaucratic management style found in Nigeria’s foremost Debt Capital Market securities exchange, FMDQ Securities Exchange. Methodology The methodology adopted is the qualitative approach which includes analyzing the traits and behavioral patterns of the leader, observed first hand as an employee, as well as the culture enshrined in the organizational structure, control systems using policies, procedures, standards and guidelines and power structure; and identifying the particular leadership and management style applicable in the organization under review. 3. Conceptual Framework Democratic Leadership Teamwork, Delegation of duties, Group-Dicision Making Transformational Leadership Working Conditions, Motivation Job Satisfaction

Application and Effect on Performance of FMDQ Securities Exchange

Transactional Leadership Rewards, Punishment Accountability Autocratic Leadership Staff Control, Self-Decision Making Bureaucratic Management Style Organisational Structures, Hierarchy of authority, Rules and Regulations

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Efficiency

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Effectiveness

Contingency Management Style Adaptability, situational, not one size fits all Independent Variables

Dependent Variables

Figure 1: Conceptual Framework Camp (2001) stated that “a conceptual framework is a structure which the researcher believes can best explain the natural progression of the phenomenon to be studied”. (Camp, 2001 cited in Dickson et al. 2018). The form and manner is best summed up by Miles and Huberman who opine that

conceptual frameworks can be ‘graphical or in a narrative form showing the key variables or constructs to be studied and the presumed relationships between them.’ (Miles and Huberman, 1994, p.18 cited in Dickson et al. 2018). Here, I have elected to present it in a graphical format. Introduction The last century has seen rapid changes in the organizational workplace. The effect of technology, globalization, regulation, diversity in the workplace has impacted not only the organisations themselves but leadership and management roles (Ronan et al. 2012). From ancient times, men have learn to organize resources in order to achieve common objectives. Robbins et al. (2013) argued that management must have existed for the Egyptians to organized and direct over a 100,000 people to build one pyramid over a span of 20 years, for the Chinese to build the Great Wall of China and for the Venetians to build their warships using a primitive assembly line system of floating the warship along the canal where different parts were then added to the ship. It wasn’t until the late 16th century however that a more scholarly approach to the study of management started with the work of Adam Smith who published his Wealth of the Nations in 1776. Other contributors to the study of management include Frederick W. Taylor, Frank and Lilian Gilbreth, Henry Fayol, Max Weber, Robert Owen, Hugo Munsterberg, Mary P. Follett, Chester Bernard, Elton Mayo, Edwards W. Deming, Joseph M. Duran and a host of others. It is noteworthy that with so much literature on management and leadership, confusion still exists as to the meaning of management (Cole and Kelly (2005 p.1), Griffin (2013 p.4)), as well as the difference between leadership and management (Schedlitzki and Edwards p.1). Notable definitions include “Management is an authority relationship between at least one manager and one subordinate who coordinate their activities to produce and sell particular goods and/or services." (Rost, 1991, p. 145), “The set of activities (including planning and decision making, organizing, leading, and controlling) directed at an organization’s resources (human, financial, physical, and information), with the aim of achieving organizational goals in an efficient and effective manner” and a manager as one

“responsible for combining and coordinating these various resources to achieve the organization’s goals” (Griffin 2013). Since coordinating the activities of other people is largely the most important work of a manager, Robbins (2018) defines a manager a s “someone who coordinates and oversees the work of other people so organizational goals can be accomplished” Leadership on the other hand is more about aspiring people to take certain actions despite obstacles in order to achieve a goal (Kotter 2004). It thus becomes evident that while management is related to activities or processes carried out by persons referred to as managers, leadership is more about the intrinsic quality, skills, behavioral pattern, traits and personality of managers or those in position of authority that allow them to influence the action of others. A number of approaches have been adopted by scholars in classifying management and leadership theories. Today, management theories are grouped into the Classical approaches, Quantitative approach, Behavioral approach which includes the Human Relations movement and Contemporary approaches (Robbins 2013) while leadership theories are grouped into the Great Man, Trait, Behaviorist, Situational or Contingency, Transactional and Transformational theories. In whole or mixed, these management and leadership theories are seen in the way many organizations are structured and directed. Analysis of Management Theories Many agree that formal study of management began in the early twentieth century with the work of Frederick W. Taylor (1856 –1917), Henri Fayol (1841–1925) and Max Weber (1864-1920 ). These are known as the classical approach to management and are further subdivided into the scientific approach, administrative approach and bureaucratic approach. Frederick Taylor championed the scientific approach with much emphasis on rationality and worker efficiency. He was joined in this by the husband-wife team of Frank and Lilian Gilbreth who

worked on a devise for analyzing hand-and-body movement and the amount of time spent in carrying out each motion. This enabled the identification of wasted motions that can then be eliminated. It is a testament to the endeavors of these pioneers that even today, many organisations strive for employee efficiency through job descriptions, hiring of the best qualified and designing of incentive programs based on output. In the Exchange, each employee goes through a rigorous hiring process, is given a detailed job description, has a list of tasks and deliverables on a daily basis and enjoys a bonus incentive. It is noteworthy that emphasis is placed on worker efficiency, quality of output and rigor than on human relations, employees work long hours and rarely form social interactions beyond the office setting. Henri Fayol focused his attention on what managers do or should be doing. He identified five (5) key managerial functions, planning, organizing, commanding, coordinating and controlling. He also developed 14 principles of management that is today taught in many business schools. Fayol’s clear delineation of the role and responsibility of managers or management serves as a critical bedrock for defining management and differentiating it from leadership because it clearly focuses on the activities management performs rather than on the quality and personality of the manager. We surmise that anyone can be a manager since it is task-oriented but not everyone can be a leader due to differences in personality, traits and behavioral norms needed to influence others. In the Exchange, there are two categories of managers, general managers and functional managers. The general managers coordinate the activities of several functional managers while the functional managers are responsible for specific business units such as accounting, internal audit and human resource. However certain aspects of the 14 principles of management espoused by Fayol are lacking in the Exchange. Many employee feel the remuneration can be fairer, equity is lacking in terms of managers being kind and fair to their subordinates and too much emphasis on respect for authority. A third member of the classical approach was Max Weber, a German sociologist who studied organizations. He was not concerned with workers efficiency nor managers’ effectiveness but rather

the impersonal authority structures and formal relationships in an ideal organization termed a bureaucracy. Here, there was little place for human emotions or personal differences. Work was govern by strict division of labor, clearly defined hierarchy of authority, documented policies and procedures and impersonal relationships. What this provides to an organization is predictability, stability, rationality, technical competence and authoritarianism. Alternatively, it also takes away workers’ motivation, team spirit, innovation, contrary opinion and sense of identity. Surprisingly, Max Weber’s concept of an ideal organization has been adopted by many contemporary organizations and this bureaucratic style is the most aligned to the structure of Exchange. It can be argued that this is needed if the newly established organization is to rapidly grow and challenge already established players like the Nigeria Stock Exchange. It is hope that having taken on the competition and prevailed, more attention will be given to the employees by adopting a human relations approach in the future. Many scholars were quick to see the limitations of the classical approach in terms of its limited consideration for the worker himself and impact of the internal and external environment on performance. One of the approaches to counteract this imbalance is the behavioral approach. Some of its early advocates include Robert Owen (late 1700s), Hugo Muntersberg (early 1900s), Mary Parker Follett (early 1900s) and Chester Bernard (1930s), Abraham Maslow and Douglas McGregor. Hugo for instance pioneered the field of industrial psychology which is the scientific study of people at work; he suggested using psychological testing for employee selection, a practice seen today in hiring through the use of psychometric test to determine suitability of candidates. Chester was the first to argue that organisations were open systems having interactions with its internal and external environment (Robbins and Coulter, 2012). He held on to the view that a managers’ role was to encourage communication and stimulate his subordinates to higher levels of efforts. This approach clearly requires greater involvement by the manager in the life of his employees than the classical approach, something not many managers will be willing to do in this fast paced, technologically oriented and dynamic business environment. It is noteworthy however that Robert considered money spent

improving labor as smart investment. Abraham Maslow, a proponent of the human relations movement under the behavioral theory, was someone who believed in the importance of employee satisfaction. His hierarchy of five needs is now a well-known theory of employee motivation, though one in which management must realize that once a need is substantially satisfied, it no longer served to motivate behavior. Still under the human relations movement, Douglas McGregor developed Theory X and Theory Y assumptions, which are related to a manager’s beliefs about an employee’s motivation to work. A theory X manager will always have a pessimistic or negative view of subordinates and this will affect workers efficiency and effectiveness negatively while a theory Y manager will always have an optimistic and positive view of workers. It is generally agreed that this will motivate workers to higher efficiency and effectiveness in performance. In the Exchange, there seems to be a mix of theory X and theory Y managers. We observed that there is greater staff turnover or attrition rates for workers under managers that adopt the theory Y approach in the Exchange. It is important that more managers adopt the theory Y approach. The quantitative approach to management, sometimes referred to as management science, grew out of the statistical and mathematical research carried out in World War II (WWII). The end of the war led a number of military people to join different organizations, bringing with them military techniques such as linear programming for resource allocation, optimization models, computer simulations and other quantitative techniques to management activities. Critical path analysis was used for more efficient work scheduling, economic order quantity help managers determined optimum inventory levels and so on. It can well be argued that this is simply a refinement of scientific management espoused by Taylor in the classical approach since its objective is to achieve worker efficiency and managers’ effectiveness in terms of decision making. Quantitative techniques are more apparent in manufacturing organisations than service organisations and today, they are taught in schools as operations research. The Exchange does not implement this approach.

The approaches considered earlier were more focused on the internal environment of the organization, however, beginning from the 1960s, scholars began to look at the external environment and its impact on organizational performance. They adopted the system theory initially developed by Ludwig von Bertanlanffy (1956), a biologist, and applied it to organisations using the terms open system and closed system. Organisations were seen as open systems since they accept input in the form of resources from the external environment, process or transform these resources into output that are distributed to the external environment. The implication of this is that a manager sees the organization as composed of various parts that must harmoniously work together to achieve a common goal and thus must do his best to meet the needs of these disparate parts. This will include motivating the people carrying out the work, meeting shareholders’ needs, conforming to regulatory requirements, and operating to the benefit of the community and environment. This realization is seen in the way many organisations structure there annual reports, producing an integrated report that covers their sustainability activities, corporate social responsibilities, employee value add, level of regulatory compliance as well as financial performance. The Exchange is gradually adopting this view. In the last couple of years, it has increased its budget for corporate social responsibility, and offered capital markets training to students in secondary and post-secondary education on a pro bono basis. It must be noted that exponents of the management theories considered so far held the view that their principles had universal applicability. In the decades since the publication of these theories however, it has become evident that there are exceptions to the universality of each theory. A good example will be to consider the principle of division of labor; whilst it has been adopted by many organisations, it is also true that it can make jobs to become too specialized. Another example will be to consider bureaucracy which is quite good in formalizing structures and enabling the organization to exist as a legal entity. However, certain situations may arise that the formal structures of bureaucracy will hinder the manager from being effective; For example, in the Exchange, the negative bureaucratic red tape of approvals a manager will have to go through even in an emergency situation has frustrated

many a manager. At the annual strategy session, this was one of the complaints levied against management; requiring a business process re -engineering to be initiated. In light of the above, a newer approach was suggested and named the situational or contingency approach. Its premise is that no two organizations are exactly alike. They face different situations (contingencies) and thus require different ways of managing. Interestingly, proponents of this approach have worked hard to identify contingency variables that managers will factor into their managing style, something like the conditional “if-then” statements found in many advance programming languages. In other words, if a contingency variable exists, then this should be the way a manager should act. Robbins (2018) identified four common contingency variables as organizational size, routineness of task technology, environmental uncertainty and individual differences. This is an area for consideration by the Exchange as many managers follow a rigid approach, afraid to take decisions independent of their reporting structure. In more modern times, globalization has increased the operational sphere of management. Many organisations now have subsidiary companies and joint ventures in foreign countries where the culture, economic landscape, political system and working conditions are asymmetrical to their home countries. To succeed, managers are turning to useful management tools such as PESTLE Analysis to consider the political, economic, social, technological, legal and environmental characteristics of whatever country they are expanding into. To achieve cultural intelligence, Geert Hofstede (cited in..) developed one of the most widely referenced approaches to helping managers better understand differences between national cultures. He identified five different dimensions of national cu...