Influence of organizational contexts on leadership in Ford in the US and Europe. Introduction Nowadays organizational context is very important, because leaders have to make decisions relying on big amounts of information, which changes every day. Moreover depending on various situations leadership theories work different, it makes hard to predict the consequences of decisions relying only on theory. Depending on organizational context different leadership style can be used.
Throughout the history of Ford, company distinguished itself by iron control of Henry Ford the first and the second. Their “great man” approach brought success to Ford, but eventually this approach became ineffective due to globalization and changing environment. This resulted in the need for followers of Henry Ford the second to introduce the big change for company, change in leadership approach and organizational culture. In addition Ford opened branches almost all over the world, so new approaches, vision and leadership is needed.
This essay will cover questions about different styles of leadership in Ford in the US and Europe, key contextual issues that impact on strategic leadership in Ford and will consider main contextual challenges for Ford leaders. Depending on the context effective leader must be able to adopt his style to the demands and changing environment (Northouse, 2010). Question one The contextual issues significantly impact on strategic leadership. Two main contextual issues that impact on strategic leadership in Ford organizational culture and national culture.
Organisational culture is a set of moral precepts, values, norms of behaviour in particular company accepted by members (Besanko et al, 2010). National culture is a set of values, rules, customs, traditions shared by people speaking the same language and having similar mindsets and moral principles (Northouse, 2010). Globalization has created many challenges for organizations including effective selection of leaders, adaptation to many cultures, creation of different approaches to nationally various employees (Northouse, 2010).
It became necessary for top managers to take into consideration peculiarities, mentality, values and characteristics of different cultures to develop business abroad, because many problems in relationships between people can occur due to variations in norms, habits and values (Needle, 2004). Ford was not an exception and needed to turn the company around. As a company that was operating not only in US, but also in Europe and still doing it, Ford had to create unique strategy and organizational culture for both areas, which differ from each other.
To build a successful strategy it is necessary to know national features of countries where organization is going to operate. According to GLOBE researchers who identified 10 clusters of countries (depending on cultural data), US were set into Anglo cluster and Europe was divided into four clusters: Eastern Europe, Latin Europe, Germanic Europe and Nordic Europe (House, et al, 2004). These clusters have their own characteristics affecting leadership in particular areas, so demands for leaders in these clusters are different. Two describe how different cultures view leadership behaviors in others GLOBE researchers identified six global leadership behaviors”(House & Javidan, 2004 in Northouse, 2010, p. 348). First is charismatic/value-based leadership that includes being decisive, self-denying and performance oriented, being a motivator and inspirer (Northouse, 2010). Second is team-oriented leadership that includes team building, establishing common goals and such characteristics as diplomacy, collaboration (Northhouse, 2010). Third is participative leadership that means degree to which leader involves employees in decision-making ( Northouse, 2010).
Next is “humane-oriented leadership that emphasizes being supportive, considerate, compassionate, and generous (Northouse, 2010, p. 348). Last is self-protective management that puts on top leaders who are face saving, conflict, aware of their status (Northouse, 2010). In that way Anglo countries including US want leaders to be charismatic, humane-oriented, extremely motivating and visionary, democratic, moreover leaders have to focus on team and to be independent (Northouse, 2010). For this reason Don Petersen and Harold `Red’ Poling with their mindsets perfectly corresponded this requirements.
Europe, divided into 4 clusters has its own characteristics, but they are more complex due to peculiarities of clusters. Ideally it is better to have a particular approach for each cluster, nevertheless there are some common requirements for leaders in Europe such as charismatic and value-based person (Norhouse, 2010). As Ford has its offices and plants in Germany, England, Romania, Russia, Belgium, Spain, France and Turkey, it is necessary to consider Latin Europe cluster, Eastern Europe cluster and Germanic Europe cluster. There are three branches in Germanic cluster: two in Germany and one in Belgium.
For this cluster ideal leader is expected to be charismatic, inspirational and autonomous, to have participative style, to focus on team (Northouse, 2010). Two branches are located in Latin Europe Cluster: one in Spain and one in France. In this cluster leader has to be team oriented as well, has to be participative and self-oriented (Northouse, 2010). Two more branches operate in Russia and Romania. For the Eastern European countries it is necessary for leader to have self-protective leadership style, to be team-oriented, to make decisions independently (Nothouse, 2010).
All this factors and characteristics of clusters make it very complex to find perfect leadership style, nevertheless there are some points of contact between these clusters. Moreover GLOBE identified 22 leadership attributes that are universally desirable (House, et al, 2004, p. 39). As a result leader is a person who is honest, charismatic, value-based and team-oriented (Dorfman et al. , 2004, in Northouse, 2010). In addition Hofstede (2010, in Needle, 2004) identified 5 characteristics on which countries differ from each other. Power distance is the extent to which members of society accept that power is distributed unequally” (Needle, 2004, p. 148). It was found that in France for example power distance is large, on the contrary Germany and the USA, where power distance is small. Individualistic societies are the US and the UK, but Germany and France have also high rate of individualism (Needle, 2004). It means that these countries prefer more to look “after yourself or your immediate family group” (Needle, 2004, p. 149). “Uncertainty avoidance is the extent to which members of society feel uncomfortable with uncertainty” (Needle, 2004, p. 49). According to Hofstede (1994, in Needle, 2004) France and Germany tend to be more anxious about the future than UK and US. Masculine societies like USA, UK and Germany used to prefer material success and achievement, while France is more anxious about quality of life and equality between sexes (Needle, 2004). Long-term orientation is not common neither in Germany, or US and UK, so these countries more used to short-term strategies (Needle, 2004). Taking all this facts into consideration becomes clear it is not easy to find appropriate leader for multinational companies like Ford.
Leadership style has to be very adaptable and leader has to be competent and skilful. Organizational cultures in Europe and US were different and impacted leadership style in particular way. In US reorganized organizational culture, which was based on employee involvement and participative management demanded leadership style, based on participation, team-orientation, humane-orientation, such qualities as visionary, motivation and inspiration were necessary for leader. In Europe organizational culture has to be perfectly balanced due to the difference in national cultures.
In that way organizational culture context in Ford in Europe is closely linked with national culture context and it is very complex mission for leaders to create strong organizational culture in Europe. It is not good for company, if its organizational culture is weak, because it “sets the scene for the determination of strategy and hence the operational aspects of organizational life” (Needle, 2004, p. 238). Question two There were different contextual challenges for leaders in Ford in Europe and US as a result they managed with them in a different way.
One of the most important challenges for leaders in Ford in the US and Europe was getting power in company and control over staff. Power in terms of leadership means “capacity or potential to influence” (Northouse, 2010, p. 8). They all had position power and it was necessary for them to strengthen their positions in company by getting more power. Petersen with his leadership style engaged people feelings, introduced participative management and managed to strengthen his position in company by this approach.
This approach perfectly corresponded to main values of Ford, because Petersen obtained ideas and opinions of employees, integrated their suggestions into top decision-making (Northouse, 2010). As a result he got not only position power, but also a personal power. It made possible to influence followers as they saw him as knowledgeable and likable (Northouse, 2010). Moreover it helped him to bring control over employees, who were happy, because they could participate in top-decision making.
From that moment he knew the ideas of his followers, and he was using them in the interests of Ford. While Don Petersen was using participative leadership and reshaping goals of employees through mission of Ford, Harold `Red’ Poling was controlling final goal setting. Petersen and Poling managed to brought to Ford’s top team an intuitive and feeling approach to decision-making, something which is rarely found at that level (Starkey, 1996, p. 379), because participative leadership and management helps employees learn what leads to what (House & Mitchell, 1974, p. 92, in Northouse, 2010).
As Peterson and Poling received more power and control over their followers, there was no need to find new cadres, this resulted in formation of strong team, which was easy to lead. Billy Hayden, Europe’s Vice President of Manufacturing was in other situation. He had to get used to peculiarities of leading in Europe and to adopt his own leadership style. Moreover the situation was more complex than in the US due to high standards of the main rival Toyota. Billy Haeden was going to change behavioural patterns and mindsets in Ford in Europe, but nothing really changed.
It caused many problems afterwards. As a result there was no strong team with an intuitive and feeling approach to decision-making which was needed even more than in the US, his leadership style was backward looking, so the whole organization was not able to compete with Toyota. The only power he had was legitimate power, and without balance like in case with Harold `Red’ Poling and Don Petersen, he was using it in a wrong way. Billy Hayden did not managed to create strong team, because he has given a steady turnover of top cadres and nobody could be a counterbalance for him.
Eventually the change in organization, which brought success to Ford in the US, was introduced in Europe, but it was too late. Moreover values, mindsets, norms, patterns that were introduced in the US should be adapted to Europe and leadership style of Billy Hayden did not match these approach. Conclusion Organizational context became very important to every leader, manager and company on the whole. Without taking into consideration organizational context it is very hard and risky for any leader to make important decisions and lead company to success.
Organizational contexts influence on leadership style, and depending on different peculiarities of context, appropriate leadership style can be chosen. Due to globalization culture context has great impact on leadership style, it became necessary for leader to know main features of mentality of nation in country, where he operates. Ford as a company, which has its branches almost all over the world, faced challenges and it was crucial to find a leader with appropriate leadership style. Don Petersen and Harold `Red’ Poling with their tandem led Ford US to success mostly due to perfect balance of power and participative management.
Their style perfectly matched need of Ford in visionary leadership with necessary control. Petersen and Poling also showed the importance of power context. They managed to use not only position power, but personal power as well. Billy Hayden was in different situation, he did not managed to get personal power, and as a result he did not create a strong team, he did not adopt to the national cultures and his leadership style was not able to bring success. These situation emphases on the importance of cultural context, if company operates worldwide.
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