Effects of organizational structure, culture and power on leadership process

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Using appropriate examples and research theories, provide an analysis on how organizational structure, culture and power has often affected leadership process and particularly how you can use these principles to help Norton to become a more successful leader in the case of creative Airline.


1.1    Organizational structure and the influences on leadership process

According to George R. Goethals and Georgia J. Sorenson (2004, p. 126), leadership takes place within a social context and part of the social context is the organizational structure. And organizational structure will certainly influence individual behavior but individual behavior also influences organizational structure. Organizational structure is itself the result of what people have been doing. Accordingly, just as leader effectiveness depends on organizational structure, organizational structure depends on leadership as well. Three major types of organizational structures are used to implement the company’s strategies: simple structure, functional structure, and multi divisional structure. The simple structure is a structure in which the owner-manager makes all the major decisions and monitors all activities while the staff services as an extension of the manager’s supervisory authority. Informal relationships, few rules, limited task specialization and unsophisticated information systems describe the simple structure (Hoskisson, Hitt & Ireland 2008). And the functional structure is a form of bureaucratic structure adopted by organization that are usually larger than 50 or so members whose activities can be coordinated via a simple differentiated structure, yet no so large that they do business in several different locations or serve widely differing groups of clientele (Wagner & Hollenbeck 2010, p. 249). In the case of Creative Airline, the company was using a functional structure but some feature of the structure were actually more closed to a simple structure in term of informal relationships, few rules, limited task specialization and unsophisticated information systems, hence I will conclude that the structure of the company was a structure in between these two structures which had significant influence of the leadership practices and effectiveness. Below we will check some features of this organizational structure.

1.1.1            Functional specialization and span of control

The functional specialization is generally known as the dividing of the groups of individuals into special functions based on expertise or purpose. The high degree of functional specialization is necessary in the large scale companies to assist the employees especially those with professional skills to focus on a particular area to increase their performance and productivity. With a lack of functional specialization as Andy Norton preferred to keep a structure that was more closed to a simple organizational structure, leaders will be required to manage people in different positions which disable the leaders to best utilize their expert power. And also because of the company’s intention to keep a flatter and simple hierarchy, three management layers, it will mean to the leaders that they will a broad span of control which refers to the number of subordinates a supervisor has. And leadership effectiveness would be lower if there are too many subordinates to manage for a leader. Hence, with the fast expansion of the business in Creative Airline, Andy Norton should accordingly increase the complexity and functional specialization of the corporate structure to better utilize the expert power of the leaders and increase the leadership effectiveness by maintaining an appropriate span of control.

1.1.2            Promotion Systems

Promotion is the vertical movement upward in the organizational hierarchy and usually is associated with an increase in pay and increased responsibilities (Narang 1999, p. 658). There were two major problems with the promotion system in Creative Airline: on one hand because of the flat corporate structure which was closed to a simple structure, the leaders would not have a hierarchy that was big enough for them to climb up which resulted in low motivation among the leaders; on the other hand, there was also problem in the source of the promotion. The company had been focusing on sourcing the talents internally which resulted in a lot of managers and supervisors who were lack of management experiences or professional skills because the company all promote internally and kept away the best experienced talents in the industry. The advice to Norton is that he should balance the use the external and internal promotion to embrace a larger pool of candidates while also encouraging internal competition for higher positions.


1.2    Corporate culture and the influences on leadership process

The corporate culture embodies the organizational values that implicitly and explicitly specify norms, shape attitudes, and guide the behaviors of the members of the organization (Finkelman & Kenner 2010, p. 219). In this perspective, because both the leaders and followers are subject to the influence of the corporate culture, the leadership practices which happen between the leaders and followers will certainly be impacted by the corporate culture. And also leader behaviors and leadership styles will also have positive or negative impacts and influence over the forming and development of the corporate culture systems. For example, Steve Jobs, the CEO of Apple Inc, was considered as a task-oriented person who tends to focus more on the jobs and key tasks which he believed will result in the achievement of the business goals according to his entrepreneur efficacy. By focusing on his vision and belief in the specific new technological trends, he even left the company because of the different opinion with the board; hence we can see that Apple has a strong task orientation which is a key part of its corporate culture. And actually we can see that Steve Jobs and Andy Norton share some similarities, they tend to have over confidence on their decision making and vision about the future of the company and also they tend to direct the employees according such vision. In this way, both two companies would tend to adopt a task oriented corporate culture and directing leadership. But the difference is that Andy Norton did not make a right decision while Steve Jobs made more correct decisions than the wrong ones. In case of Creative Airline, it is recommended that Andy Norton should turn to a less directive leadership and care more the employees when his directive leadership seemed to be ineffective.




1.3    Power and the influences on leadership process


It has been established that leadership is a process of influence between the leaders and the followers, and influence is a key concept in the definition of power (Wilson 2002). Power has been defined as the ability to influence others. And in term of the source of leadership, according to French and Raven (1968) the source of leadership power could be reward, coercive, legitimate, referent or expert. And it is believed that leaders need to utilize different types of power to influence the followers in different scenarios. Here we will discuss some types of leadership power sources with the reference to the case of Creative Airline and provide suggestions to Andy Norton to be a better leader.

1.3.1            Reward Power and coercive power

Reward power refers to the level of opportunity costs that an actor can impose on another while coercive power or punishment power refers to the level of actual losses that an actor can impose on another (Molm 1997, p. 282). Unlike the legitimate power which is perceived immediately by both the leader and the subordinates, the strength of reward power lies in the subordinates’ perceptions of the reward’s value which means that the subordinates’ desire to earn the reward is very important (Fiore 2004, p. 11). In the case of Creative Airline, Andy Norton could have been more use this power to settle some issues rather than using a coercive power. For example, in 1985 when there had been an attempt to unionize the pilots, as there are many pilots complaining that they had been exploited and mistreated from which we can see that these pilots considered the salary as very important to reflect their value, Andy Norton could have used the reward power to show the company’s care and concern about the pilots which could possibly stop the quitting of the pilots. Here using of the coercive power could be inappropriate because the pilots had already been upset with the company.


1.3.2            Legitimate power

Legitimate power (“position power”) refers to the power people receive as a result of their position within the organization. Legitimate power is vested with one’s authority. Legitimate power is not unrestricted, it is restricted to those matters that pertain to the position within the organization (people holding rank are given specific responsibilities (Gaines & Worrall 2010, p. 154). Too much legitimate power could be detrimental to one’s leadership which could be seen from the case of Andy Norton in Creative Airline. Andy Norton had done two things wrongly: first of all, he took over the president’s role when the last president left the company and he kept the position empty for a long time; secondly he did not hire an independent outsiders on the board of the directors and suggested that he was the biggest shareholder and could decide how the board was operating. From these facts we can see that Andy Norton had abused the legitimate power given to him because as a CEO, Andy Norton could not control the formation of the board because it will cause conflict of interests. The recommendation given to Andy Norton is to advise him to perform his job only rather than abusing his legitimate power which had proved to be ineffective and contributing to the failure of the business.

1.3.3            Referent power

Referent power means that power or ability of individuals to attract others and build loyalty. It is based on the charisma and interpersonal skills of the power holder. Many leaders under power would desire to identify these personal qualities and gain satisfaction from being an accepted leader (Arora 2010, p.8). In general understanding, in order for a leader to enjoy strong referent power, he or she has at first to be a kind person that can make friends with the employees because if the subordinates feel that the leader is not nice enough to talk to, there is no reason for the subordinates to feel the leader’s charisma and be proactive to seek help from the leader. This was exactly the case that Andy Norton was in when internal problems worsened in 1985 and he was considered as like a dictator and no on dare to cross him, under such circumstances the referent power owned by him was minimal. To change such situation and possess more referent power, it is advisable that Andy Norton controls his emotion and temper and be nice to the employees and other management.






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