The impact of leadership style on organisational design and performance

grima-tony-41-e1326190243758 Leadership is a key determinate in the success of any enterprise. Leaders make crucial decisions on resource allocation and other important factors such as work design, structure, goals, culture, relationships and people development. It is argued that the design of an organisation provides the context in which managers manage. This may be true for a contingency style of leadership, but is it true for all leadership styles? Business environments rarely remain static and organisations often evolve in ways which create misalignment with the fundamental objective.

 This article considers the impact that leadership style can have on organisational design, and as a consequence, performance. Furthermore, this article will explore the question whether in addition to qualifications and experience, should leadership style form part of the recruitment/promotion process, and if so, how would this intangible be measured. Given that a well qualified and experienced leader can exhibit different leadership styles based on traits, values etc, what should rate as the most important selection factor?  If research indicates that leadership style is an important determinate of success, how important is the fit between leadership style, function and organisational design?  Organisations are facing increasing pressure as they strive to compete at a local or global level and organisational design is important to gain competitive advantage. The decisions leaders make on organisational design have the most potential to impact on operational efficiency and work attitudes such as motivation and job satisfaction. An example from my experience is a manager whose leadership style discouraged employee input. This manager’s ability to make sound decisions was severely constrained by those same employees who ordinarily were well placed to inform and influence him.

This article focuses on medium to large enterprises. In these dynamic environments you are more likely to encounter a large range of competing structures and management styles. It is natural to think that strategy is formulated by the CEO and driven throughout all levels of the organisation. That is, strategy starts at the top and remains consistent, integrated and coordinated across the culture, systems, structure, leadership and employees of the organisation. This may have been the intent but without a clear intellectual framework to guide strategy what tends to occur is that strategies start to diffuse or emerge at various levels of the organisation. Managers with limited perspective and responding to different agendas make decisions shaped by their leadership style and frames of reference. The potential for conflict and misalignment is high, particularly where a leader’s style is, or becomes incompatible with the strategy. The movement of leaders across different business units by promotion or the introduction of new recruits may improve or exacerbate any misalignment.  Consider the example of a high performing
manager leading a team of field technicians. The manager’s style was authoritarian and he relied heavily on expert power. The manager led an all male staff and worked to a centralised and mechanistic structure with strong formalisation and systems of control.

The manager seeking other opportunities with the organisation is promoted to lead a business development business unit consisting of both male and female staff. The manager is now faced with a different environment. The business development unit has an existing clan/market sub-culture and would best suit a leadership style which encourages creativity and innovation. It is not difficult to see where misalignment might occur impacting the business unit performance. From HRs perspective the manager is a good fit. It is a normal progression to move from technical expertise to sales. The manager has demonstrated that he can manage a team and has delivered on expected outcomes. Unless the manager can adapt, the missing ingredient may be the manager’s leadership style.  Throughout the course of my career I have sat through a number of interviews. Rarely have I been asked about my leadership style. On the rare occasion that I have been asked the question it seemed like a throwaway line, and I wondered if it had any relevance at all. When discussing strategy and structure it is often stated that structure follows strategy and systems follow structure. Perhaps it is appropriate that a fourth element of “leadership style” be included in this generic mix? As a suggestion, strategy, leadership style, structure, systems. This approach would clearly put leadership style as a key factor in strategy formulation, design and recruitment practices.

Tony Grima

Broken ladders and middle management

grima-tony-41-e1326190243758 I have always been quite tough on the managers I’ve reported to. My intention was never to be difficult; it was just that my expectations of them were so high. I wanted to be led by people who had vision and ability. I wanted to be led by people who could clearly communicate what they expected from me. When I found such a manager I would literally walk over broken glass to help them achieve their goals. I felt motivated, part of something bigger and my work had purpose. Sadly leaders such as this are rare.

The middle management pool is full of talented people who frustratingly will remain untapped and “business as usual” churn due to the inability of their leaders to truly lead. How many middle managers really understand their organisations strategy, vision and goals beyond what they may have read on the company website? The success or failure of middle managers depends largely on their superiors because it is they who inform, influence and constrain. Without clarity of direction, middle managers can fall out of alignment with the organisations fundamental objectives and find themselves trapped between the frustrations of staff they manage, demands of upper management and personal career goals.

With changing business environments middle managers are under increased pressure and stress, but reasearch indicates they are strongly committed to their work. This committment has little to do with inspiring leadership and more to do with career survival. The middle management pool is frequently regarded as career limbo and this is compounded when senior leadership do not clearly communicate the way forward. In days of old, career pathways were stable and predictable but now companies embrace new organisational structures and are flatter. The traditional career ladders have been broken and it is difficult to know how to succeed and on what basis you be judged. In this situation middle managers can exhibit quite competitive behaviour as they jostle and position themselves to be noticed and progress. This behaviour is driven by the failure of senior leadership to clearly articulate the company’s strategy, goals and expectations of those they lead. In addition it is the failure to reward behaviours which contribute to achieving the organisations objectives while discouraging behaviours which do not.

Mending the broken ladders

There are many reasons why senior managers do not effectively lead. The senior manager may simply lack the ability or experience. This can occur when functional managers over time progress to positions which entail strategic leadership but do not really understand what that means. This type of leader retains the narrow focus and functional manager mindset although the position now requires a broader view. If you are a middle manager it is important to ask your leaders to articulate their goals so you can align your goals with theirs. An effective way to achieve this is by the path-goal theory of leadership (House, 1971). This model of leadership argues that it is through the behaviours of leaders that goals are made clear, that the means of achieving goals are clarified, that obstacles to achieving goals are reduced and that work is made more personally satisfying. When goals are made clear, middle managers expect that their behaviours will result in achieving goals and will be instrumental in achieving performance.

Middle managers should expect their leaders to

  1. Set clear goals or help middle managers to establish clear goals.
  2. Explain how goals can be achieved.
  3. Help middle managers achieve goals.
  4. Clear obstacles to achieving goals.
  5. Provide feedback, recognition and approval for goal consistent behaviour.

Tony Grima

Self -efficacy – An agent for change.

grima-tony-41-e1326190243758I can remember my parents telling me that I could do or be anything I wanted. I am sure many of you have  heard that statement as well, but do we really take it seriously? What is it that even at a young age sows the  seeds of doubt and prevents us from pursuing our dreams? Of course there may be a number of reasons but a key driver is our level of self-efficacy.

What is Self-efficacy?

Self-efficacy is a person’s judgement of their capabilities to perform a task, achieve a goal or reach a certain level of performance. It is your level of self-belief when you ask…..can I do this? Self-efficacy is the measure of one’s own ability to complete tasks and reach goals. It is the crux of the hypothetical question….what would you do if you knew you could not fail?

High self-efficacy equals high performance but an individual can also simultaneously have high self-efficacy for one task (e.g. selling products) and low self-efficacy for another (e.g. public speaking).  Self-efficacy relates generally to specific task and should not be confused with self-esteem (how you feel about yourself). As such, self-efficacy is easier to develop and is a better indicator of expected performance than self-esteem or self-confidence.

By building and developing self-efficacy we can improve our own performance and the performance of others. It allows us to set challenging goals with the realistic expectation of achieving them and to persist when faced with setbacks. Moreover, setbacks and hurdles can often stimulate individuals with high self-efficacy to put in even greater effort compared to individuals with low self-efficacy who tend to be discouraged and give up. Individuals with low self-efficacy and not confident in their ability may respond negatively to evidence that their performance needs to improve. In a way, low self-efficacy can be self perpetuating because negative outcomes are seen as confirming their own perception of incompetence. These individuals may in fact be quite talented but low self-efficacy prevents them from performing as well as they can and they avoid challenging task.

Experiencing and developing self-efficacy

There are four methods in which self-efficacy is experienced and developed.

Enactive self-efficacy – The experience of mastery is the most important factor determining a person’s self-efficacy. Success raises self-efficacy, while failure lowers it.

Social modelling - Modeling is experienced as, “If they can do it, I can do it as well.” When we see someone succeeding, our own self-efficacy increases; where we see people failing, our self-efficacy decreases. This process is most effectual when we see ourselves as similar to the model. Although not as influential as direct experience, modeling is particularly useful for people who are particularly unsure of themselves.

Social persuasion - Social persuasion generally manifests as direct encouragement or discouragement from another person. Discouragement is generally more effective at decreasing a person’s self-efficacy than encouragement is at increasing it.

Physiological/emotional state - In stressful situations, people commonly exhibit signs of distress: shakes, aches and pains, fatigue, fear, nausea, etc. Perceptions of these responses in oneself can markedly alter self-efficacy. Getting ‘butterflies in the stomach’ before public speaking will be interpreted by someone with low self-efficacy as a sign of inability, thus decreasing self-efficacy further, where high self-efficacy would lead to interpreting such physiological signs as normal and unrelated to ability. It is one’s belief in the implications of physiological response that alters self-efficacy, rather than the physiological response itself.

When communicating with individuals such as employees it is important that we don’t signal a lack of confidence in them thereby reinforcing low self-efficacy. We can do this by:

  • Providing lavish praise for performance that the individual knows was poor or mediocre.
  • Assigning the individual with easy or unchallenging task signalling our lack of confidence in them.
  • Micro-managing the individual.
  • Constantly offering the individual help and asking are they ok.
  • Constantly fault-finding and criticising the individual.

We can build and develop self-efficacy in individuals by:

Coaching

  •     Communicate clear objectives
  •     Provide feedback

Participation

  • Allow individuals to participate and decide their goals
  • Take a collaborating approach and seek feedback from individuals before making changes which impact them.

Demonstration

  • Role-modelling and lead by example.
  • Show enthusiasm and persistence.

Mentoring

  •  Provide opportunities to develop expertise and build self-efficacy.
  • Listen and share experiences

Stimulation

  •  Make yourself always available – Open door policy.
  • Communicate clear and exciting vision. Tell your story.

Rewards

  • Rewards can be intrinsic or extrinsic. Find out what the individual values.
  • Support staff when they make mistakes. Praise their genuine efforts and achievements publicly.

Self-efficacy is a crucial factor in change, progress and achievement in our lives and an individual’s degree of self-efficacy is a motivational predictor in how they will perform at any level of endeavour. People with high self-efficacy think and behave different from those with low self efficacy. People, often with talent but who doubt their abilities avoid difficult and challenging task which impacts on their realisation of dreams. Failure, setbacks or negative feedback destroys their motivation leading them to give up which further reinforces their weak self-efficacy.

If you lead or manage people it is important to understand how important the development of self-efficacy is, not just for behavioural and cognitive functioning but also as a driver of high performance, living up to potential and achieving goals in one’s life.

 

Tony Grima

 

Strategic Facilities Management

grima-tony-41-e1326190243758Facilities Management is increasingly becoming of strategic significance to organisations. All businesses can essentially be broken into two larger parts – The core business and non-core business. The non-core business, or support services play an essential role to enable the organisation to operate at its most efficient.This in turn reflects in competitive advantage, profitability, sustainability and value to the customer. The emerging complexity of facility management over recent years has stirred up great debate on what is a Facility Manager and what skills and training should that person have. One half of the debate argues that a FM should as a minimum have a trade or engineering background. Others will argue that managing contractors, business acumen and client relationships are of more importance. What is clear is that the profession is changing and far more skills and attributes are now required to be effective and successful. Training providers and educators are rushing in to fill the void and bridge the perceived capability gaps with a range of courses and programs including post-graduate degrees. Skilled and experienced FMs are now finding themselves in very senior roles within their organisation further highlighting the emerging strategic importance of this function.

FM support

An organisations buildings and infrastructure assets represent a significant investment and it is the job of Facilities Managers to protect the investment and ensure that this expenditure item is viewed as an added value to the business. An ever present challenge for FMs is providing an industry best practice support service on limited maintenance budgets and there is always pressure from finance managers to look for savings in the non-core business. With running cost accounting for a large percentage of company expenditure this shouldn’t be a surprise, but it must be recognised that cost and quality are firmly linked and cannot be contemplated separately. Reducing or limiting maintenance budgets may appear attractive to those looking through a financial frame of reference or bias but is unlikely to produce long term savings and certainly increases risk to an organisations competitiveness, ability to deliver value to customers and reputation.

Formulating a facilities management strategy

A maintenance strategy cannot realistically be formulated without knowledge of the organisations business model and fundamental objective, but this is what often unintentionally occurs. The maintenance department is relegated to a reactive support service rather than an integrated strategic part of the business structure critical in delivering on the customer value proposition.

Key considerations when formulating a facilities management strategy are the organisations objectives, risk mitigation policies, business operational plans and the space/accommodation strategy. Facility management must effectively support and enhance the core business, and certainly should encompass the principles of business administration, engineering, architectural and behavioural sciences. Other important factors of a facilities management plan are.

  1. Budget – What capital is required for short term needs as well as long term savings and value?
  2. What are the direct and indirect cost?
  3. What processes, systems and technology will be required?
  4. What are the appropriate resource levels and capabilities required to provide an effective maintenance service?
  5. What management structure will be required – centralised, decentralised, mechanistic or organic?
  6. Should you outsource services or keep in house? Perhaps a mixture of both.
  7. What are the organisations procurement policies and what impact might they have on facilities management?
  8. What are the implications of outsourcing?
  9. If outsourcing, how will you maintain control?
  10. Are the buildings leased or owned?
  11. What is the life cycle replacement strategy?
  12. What are the service specifications and service level agreement?
  13. What will be your sustainability and environmental strategies?

With the above considerations you can start to apply a strategy development process such as the following.

strategy analysis process

Once a strategy has been selected the next stage is its implementation. Operational frameworks and policies can be developed and implemented via a change management process. With any strategy, poor implementation is an issue and the plan should include a risk analysis and mitigation and performance measures as a means to monitor progress. Facilities management can be a very dynamic and reactive field and  it is best to select a strategy which provides enough flexibility to adapt to changing market forces, technology, and shifts in government and regulatory obligations.

A word on out-sourcing

The positives and negatives of outsourcing have long been a source of debate within the facilities management industry. The positives of course are increased innovation, reduced administration, reduced risk, and cost savings due to economies of scale and scope and also the harsh realities of competition. The advantage is even more relevant when you are referring to multiple sites over large geographical areas. The argument for not out-sourcing may relate to strategic reasons, protecting valuable and sensitive information, losing control on performance, losing core expertise and general principal/agent issues. Quality control issues can be somewhat mitigated by having an effective procurement and contract management process and a partnering arrangement is becoming increasingly common. The decision to out-source in addition to the reasons given above can simply come down to a matter of transactional cost. In other words, if another company can provide a service more efficiently and cost effective than your organisation than it should be considered. The problem is that total cost is often under reported and all direct and indirect cost should be identified if you are to accurately assess the merits of out-sourcing services.

Facilities management and sustainability

A key component of a facilities management strategy these days is sustainability and the environment. Efficient operation of buildings and assets in addition to being beneficial for the environment and reduced impact on resources also helps to reduce lifecycle operating cost and boost occupant productivity. The term “green” building is becoming increasingly common and the challenge for facilities management is to formulate maintenance strategies which integrate “green” principles into their processes and procedures. Some of the sustainability issues faced by facilities managers are

  1. How to reduce building operating expenditure.
  2. How to reduce wastage of limited materials and resources.
  3. How to reduce chemical usage, waste disposal, energy and water usage.
  4. How to improve the carbon footprint.
  5. How to improve building occupant comfort, productivity and job satisfaction.

Choosing the right maintenance strategy provides the opportunity for professional Facilities Managers to have a significant impact on organisational outcomes and performance in tangible but also intangible ways. It is evident that the field of facilities management is becoming increasingly complex and today requires many different skills similar in many ways to a general manager.

Tony Grima

 

The talent bench shortfall

The best business model and strategy in the world is not much use if your business does not have the leadership talent to execute. A lack of individuals with high level business acumen presents a significant risk to company sustainability and is a major concern for recruiters and HR managers. Many managers progress to senior positions over many years by being functionally efficient in their given roles but lack the solutions and strategic capabilities required to make the big plays. This highlights a major weakness of the promote from within concept championed by many firms.

From a selective recruitment point of view, it is not enough to simply say that an employee has done a job for 20 years and therefore “must” be experienced. It is more important to know the range of employee skills and experience and what has been achieved. The 20 years experience example given above may have been gained from a narrow experience base and therefore not adequate to cope with emerging business challenges and opportunities. In Australia in particular, perhaps due to an immature recruitment industry, there is a strange attitude to qualifications such as the MBA. In the US, 52 out of 1000 job opportunities ask specifically for MBA qualifications. In Australia, it is 1 out of 1000 job opportunities. This may relate to a misunderstanding of the range of skills a MBA provides and it appears, at least in the Australian market, that time in the job alone rules.

The Hitachi growth stall in 1994 is a good example of the leadership talent problem. Previously, Hitachi accounted for 2% of Japan’s GNP and 6% of its corporate R&D spending. The downward spiral in the company’s revenue hit hard but further investigation reveals a trend. Hitachi’s executive and leadership team traditionally came up from the industrial side of the company and was driven by an engineering culture and frame of reference. It was clear that Hitachi’s growth opportunities lay elsewhere but none if its senior executives held a MBA or other business degree.

It is argued that 60% of companies are facing leadership talent shortages. Another 31% of companies recognise that a lack of leadership talent will impede their performance over the coming years. The message appears to be slowly getting through with leadership training increasing taking a larger share of the overall training budget. In the US alone during 2009/2010, $ 12 billion was spent of leadership programs.

A sensible strategy to address the executive talent problem is to formally monitor the balance between internal managers and new hires. When considering the management mix a good guide is for the senior executive team to consist of between 10% and 30% of new hires. This ratio will provide a good pipeline of new ideas and a fresh approach to take advantage of market opportunities and facilitate growth.

Tony Grima

The attitude of happiness

True happiness is an intangible notion that can’t be stored, purchased or forced. In other words, it must be regenerated with new thoughts and new objects. There is nothing or nobody that can provide you permanent happiness as a one-off action.

Happiness is a constant re-evaluation of your attitude and thoughts. As an example, when you buy a new car you are filled with joy for a short period of time. The feel of the car, the smell, the sense of achievement is there at the start but slowly starts to wear off. Eventually the joy is gone and you are looking for the next thing to bring happiness into your life. How many of us can remember something we purchased a number of years ago which truly still brings us the same level of joy? Our capitalistic society builds on this sense of emptiness by encouraging us to always want more.

The point to remember is that it is not the object that has necessarily changed; it is our attitude to that object. Friendships, work and even marriages can also be like this. We are responsible for our own happiness. We can choose to acknowledge and be content with what we have or not. When we choose to be content, everything is enough. When we are not content then nothing is ever enough. All main stream religions and philosophies speak of this notion. Christianity warns against being drawn to things that rust and thieves steal in the night. The Kabbalist refer to this constant wanting as the “bread of shame” and Buddhist teach to be in the moment and focus on what is around you now. Abraham Lincoln weighed it up nicely when he said that people are just as happy as they make up their minds to be.

When we delegate the responsibility of our own happiness to objects or people we are sure to be disappointed unless we constantly re-adjust our attitude. Being happy doesn’t mean that everything is perfect. It means that you’ve decided to look beyond the imperfections.

Tony Grima

 

Power and how to get it

As managers and leaders we do not need to be the smartest person within a business and we do not need to be the best at functional business task. What we must have is the ability to take a group of individuals with different levels of emotional intelligence, motivation, skills, values, perceptions and goals and coordinate them to achieve a fundamental objective. Years ago this may have been an easier task due to strong hierarchical structures but now different skills are needed. It is no longer the view that managers have the right to manage.

Today’s workforce has more choice and are less loyal and far more mobile due to being better educated, more informed and changing attitudes. This certainly provides a challenge for today’s managers as we must rely on others to achieve our goals. This last point about relying on others is very relevant. As managers, how do we control and direct a workforce which if fact have a high degree of power. Let’s face it, if your personnel simply refused to follow your directions you may as well pack up and go home. Amongst the myriad of factors which make an effective manager there are in my mind two standouts. They are POWER and INFLUENCE. Just as a lion tamer has power and influence over the lion which could kill him with one swipe, so too must a manager to successfully lead their business. Today I am going to discuss power and how it relates to management.

What is power and how do we get it? It is important to recognise that there are different types of power which go beyond salaries and titles on business cards. Some managers are skilled at using different types of power while others focus on just one type. At times the source of power may not be a conscious choice but rather an extension of the individual’s personality. I am sure we have all known a person in our business who may not be a manager but is clearly the ‘go-to’ person. Any information you need to know or any problem you need fixed, you go to this person. This person is the glue which holds the office together. Everyone relies on this person and feels more comfortable and confident when the person is around. Do you have someone who comes to mind? This person has a source of power which is not reflected in their title or salary but it is real power nonetheless.

The following table (Yukl 1998) describes the different types of power and how to use the power effectively.

Authority power – Derives from the individual’s position within the organisation. This power is legitimate authority which is earned or awarded. Individuals with authority power can ask people to do things simply because of who they are.

Expertise power – Derived from knowledge, training, qualifications or on the job. Individuals with expertise power are considered subject matter experts.

Task allocation power – Derives from the importance strategically or centrally of the task or function the individual carries out. The more important the task the higher the task allocation power.

Information power – Derives from the communications and information known by the individual. This person knows what’s going on. Also relates the strength of an individuals network both inside and outside the organisation.

Coalition power – Derives from working close to individuals who are important to the organisation. This is power by association. It is not what you know but who you know.

Referent power – Derives from the extent which people identify or are attracted to an individual. A person with referent power is well-respected and held in high esteem. Charismatic people are also said to have referent power.

As noted earlier, managers may use some or all of the power types. Some of the power types relate to structural power which ties in with the individuals place in the organisation. Other power types are personal forms of power and may be a factor of an individual’s character or management style. In summary, power derives from having something that someone else wants or needs. This power is used by managers to control resources or results which others in the organisation desire. We really only have power when other individuals value or are influenced by what we have or do. To become powerful, you must have a desire to become powerful and be willing to spend time and effort in building the necessary resources

Tony Grima