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Is there a leadership crisis? This seemingly simple question has been made complicated and difficult to be answer as Ange (2008), an entrepreneur and professor from the Binghamton University was criticized for making the comment that “leadership crisis is alive and thriving” which he considered as one of the major reasons that resulted in the unoptimistic economic and social status we have in the present in a worldwide scale especially in the United States (Leadershipmodel.net 2010). To begin with the topic whether the current economic and social problems could be attributed the ineffectiveness of the leaders that we have in various fields, let’s focus on the definition of the leadership to understand the fundamental requirement of a leader.
Leadership could be defined in many ways and actually the various definitions of leadership (more than 860 according to Warren Bennis) also becomes a proof for Ange to come to the conclusion that there is a ongoing leadership crisis as people simply could not easily understand the fundamental of leadership because the different definitions of leadership. Below let’s exanimate some of the well known definitions of leadership. Leadership involves the process of influence between a leader and followers to attain group, organizational or societal goals (Hollander 1985, p486). Jago (1982, p315) concluded that the leadership is a process and a property. The process side of leadership is the use of non-coercive influence to direct and coordinate the activities of the members of an organized group toward the accomplishment of group objectives. And leadership in a property perspective is a set of qualities attributed to those who are perceived to successfully employ such influence. Similar definition could also be found in R. Glenn Ray (1999)’s study suggesting that leadership is a series of behaviors that enable a group or organization to accomplish commonly desired goals. From the three definitions we have above about leadership, though the expression of the concept have not been identical but two major keys word that could be commonly identified among these definitions are: influence and common goal. So a shared definition of leadership refers the process in which leaders exert their influence to motivate their subordinates to achieve the goal of the group in large. So in this point the definition seems not to be supportive to the Ange (2008)’s point that the leadership definition become an obstacle for people to learn leadership. Below this study will be focused on a more deepened analysis of the leadership crisis topic in term of literature review and an interview with a CEO followed by some recommendations to improve the leadership effectiveness to help avoid leadership crisis (Brecher 1967).
2. Literature review of leadership crisis
2.1 What is leadership crisis?
Crisis happens when an organization, a community or a nation perceives an urgent threat to core values or life-sustaining functions which must be dealt with under conditions of uncertainty (Ronsenthal, Boin & Comfort 2001). Vanette (2003) claimed that crisis happens with transformation in which old system could not be remained. Researchers in the International Crisis Behavior (ICB) Project in a military perspective define crisis as a situation in which the following three critical conditions, deriving from an internal or external change that is: a) threat to the fundamental values; and results in b) high probability of military hostilities incurred; and with c) limited time for reaction to the threat (Wilkenfeld, 2005). This definition though does not developed in the business perspective, but it does provide the three critical factors in determining a crisis situation. Firstly, a crisis of any unit, organizations or country start from an internal or external change which will threaten the fundamental values in the specific unit, organizations or country. Secondly, if the crisis is not dealt with in an appropriate manner then it will lead to very bad results which is not desired by the unit. The third factor involved in the crisis is the time limitation which means that there is limited time for the relative parties to find a solution to the crisis or else the very worst result mentioned in the second factor will become real. In term of leadership crisis, as there is little literature regarding the leadership crisis but instead there are abundant researches and studies about the crisis leadership or crisis management and given the fact that the concern of leadership crisis actually happen when leaders could not manage and control the crisis well as people hope, so it may be useful to draw the definition of leadership crisis by referring to the definition of crisis management or crisis leadership. Crisis management refers to the management of a company in a crisis event (Rowitz 2006, p24). Klann (2003) differentiates crisis leadership and crisis management as that crisis management majorly involves operational problems when crisis leadership dealt with practices relating more to human response. With the various definition regarding crisis and crisis leadership, here a definition of leadership crisis could be developed: maybe triggered by an internal or external transformations, leadership crisis refers to the sudden breakdown of value in term of trust toward leaders who are not able to prevent and control the crisis from happening, resulting in leadership ineffectiveness and failure. Below this definition would be used to indentify whether there is an ongoing leadership crisis in the business world.
2.2 Causes of leadership failure
According to a survey done by Cutter senor consultants David Caruso and Kerry Gentry (2005) on 250 senior IT staff by asking them to describe the worst IT manager that they had worked for. Through the interviews, David Caruso and Kerry Gentry managed to conclude 29 causes of leadership failure ranging from personalities to the lack the necessary management skills. And the top five causes of these causes are listed below:
Chart 1.0 Leadership failure causes ranking
Source: Caruso & Gentry 2005
By ranking the top leadership failure causes, one major conclusion made from the survey is that the main reason of leadership failure is because there is a lack of emotional intelligence in term of the lack of relative soft skills such as interpersonal skills and untrust- worthiness. After summarizing the conclusion, David Caruso and Kerry Gentry claimed that because it is very difficult for those failed leadership to change learn emotional abilities such as the communicating skills, they would recommended the companies to redeploy these failed managers to other positions and employ those qualified leaders with such skills. Sydney Finkelstein (2004) in his famous book “Why smart executives fail” also came to similar conclusions by listing out seven shared habits among the failed executives:
|1||Feeling themselves as dominating and controlling their environments.|
|2||Assume that they all the solutions needed|
|3||Make no differences between personal interests and group interests|
|4||Get rid of those who are not fully supporting them|
|5||Being consummate spokespersons, obsessed with the company’s image|
|6||Underestimating difficulties and challenges|
|7||Stubbornly relying on what worked for them in the past|
Table 1.0 Seven bad habits of successful executives
Source: Finkelstein 2004
By analyzing the executives’ behaviors in employees’ perspective, among the seven concluded habits shared by failed executives irrespective of in what situations the executives failed, we can see that there are five out seven habits that are relative to the personalities of the leaders. This finding also corresponded with findings in another book call: Why CEOs Fail, in which its author David Landreth Dotlich and Peter C. Cairo (2003) similarly indentified 11 personalities traits that transform a successful leader into the position of leadership failure with the help of a psychometric exam called Hogan Challenge Report. These personality traits include arrogance, melodrama and so on as shown in the figure below.
Figure 1.0 The 11 personality derailers of leadership (Source: Stoddard & Wyckoff 2009)
Both these two books share the same view of point that in most cases, leaders fail do not because the lack of professional skills, experiences, or any vision and goals and relative strategies in the corporate level, the major reason could be attributed to the bad personality traits and the bad habits that probably form with the successful leaderships without significant threats to their leadership practice. So in a word personality issues have critical influences in determining the success of leadership because personality is the outward expression of how they deal with needs they had been employed to address.
2.3 Task for leaders in crisis
Boin (2005) indentified five critical tasks for leaders in case of crisis based on his phase model of crisis management: sense making, decision making, meaning making, terminating and learning. The explanations of the five tasks are stated in the table below:
|Sense making||Crises are hard to be perceived, when they become manifest, leaders should make timely and reliable representations of the crises and let the followers know what is going on and what the crises might be about.|
|Decision making||Involves the decision making process based on the judgments of the situation which will have severe influence over the development of the crisis.|
|Meaning making||Meaning making refers to the communicating process of what the crisis is about and how the leader will cope with the crisis.|
|Terminating crisis||Shifting from mode of exceptional handling in crisis back to normal mode of routine leadership and management work|
|Learning||About lessens that could be summarized and learned from the crisis management which will be of significant importance for future training and similar crisis avoidance.|
Table 2.0 Boin (2005)’s five tasks for crisis leadership
These five tasks provide a good understanding of the work content of a leader in the time of crisis. Similarly Klann (2003) also classified three kind of activities that a crisis leadership should focus. The first activity is communication which is similar to the Boin (2005)’s task of “Meaning making” for crisis leadership. The second kind of activity is clarifying of vision and values which provide strength for employees to go through the difficult times and it is often forgotten by followers in time of crisis as they may focus on the negative side of the crisis. And the third kind of activity is caring for followers. As mentioned above, one of the signal that mark the leadership crisis is the breakdown of the value such as trust toward the leaders that has been built up for long time. As caring for followers would be necessary while followers become to distrust leaders.
2.4 Literature supporting leadership crisis
Ph.D Mike Horne (2002), in his web publicized article Are You Prepared for the Coming Leadership Crisis? claimed that with the anticipated 15 percent decline of the population ranging 35 to 44 years will happen within 15 years from 2002. And because of people at this age are very suitable to be leaders by making the balance of both energetic and enough of exposure to the relative work experiences. He also listed out the statistics that about a quarter of the Fortune 500 companies did not rank management succession as a top priority while 40 percent of them rank it as in very low priority. And because of an expected of decreases in the talents as candidates for leaders, Mike Horne (2002) anticipated there will be an insufficient quality leaders in the near future which he concluded as one of the basic conditions leading to a leadership crisis. Another factor that drives for leadership crisis is coming along with the trend of globalization. Rob Silzer,Prof Susan E Israel,Ben E. Dowell (2009, p400) pointed out that with the contradiction of the increasing trend of cultural mismatch due to the current fact of focusing on adding particular capabilities in the process of talent identification, the cultural mismatch will increase the chance of leadership crisis which is not desired by the companies but companies have to take the risks of leadership crisis because of the need for leadership transformations with the trend international business in term of various cultures integration. One more driving force that could result in leadership crisis is the lack of integrity as John MacArthur (2004, p3) wrote: A crisis of leadership faces both the world and the church. He listed out some typical examples that described the leadership crisis in the business world and the political area of the United States. In term of political life, the sexual scandal of the US president Clinton still reminds the world that sexual life is a necessity in the White House in which the US president works. And it enhance the citizens’ suspicion whether the US president is focusing in work or personal life and this is absolutely a case of leadership crisis. Another typical case relates to the government’s military action as the Bush government decided to invade Iraq with excuse of eliminating the WMD (Weapon of Mass Destruction) which the later proved not existing inevitably smash the trust between the US people and the leadership of government which will consider its interest (oil control in Iraq) as the first priority. When even the government treat the integrity as nothing, it is understandable to see so many business scandal that happened to the large corporations in US. And it stroke the business world when in 2001 the Enron scandal was revealed, staffs, stock holders and the relative stake holders were all astonished of how Kenneth Lay colluded with the various parties especially the accounting firm to hide the billions of debt and create a seemingly most profitable and one of the best performing listed companies. The fundamental reason behind these scandals is the lack of integrity of the leaders and in term of putting their interests in a more important position than the corporate interest which lead to too many typical leadership crisis cases.
With the help of the definition of leadership crisis and the various literature evidences that we have above, it is safe to draw an conclusion that there is an ongoing leadership crisis, which need to be addressed in a limited time according to the definition of crisis and below study will be focused on a medium China outsourcing company by interviewing their CEO and founder of the company Mr Zhang and this interview statement will be followed by providing some recommendations to help solve the leadership crisis.
3. Case analysis- Interview with Mr. Zhang, CEO of China XXX Outsourcing
Me: Good afternoon, Mr. Zhang, It’s my honor to make this call to you to discuss the problem regarding the leadership crisis. Have your lunch eaten? Mr Zhang
Mr. Zhang: Yes, thank you. Glad to meet you also.
Me: As the CEO of one of the fastest growing companies in the new industry, outsourcing industry, which is under the government’s encouragement to develop, how do you define the term leadership?
Mr. Zhang: I do like the term leadership which I understand as the persons promoting the changes that are needed for the company and under this leading effect, the followers fulfilled the leaders’ vision by careful hard work, but I do not like the term of followers because I believe human being are creative and should have their own ideas though it is true that the employees should to some extent sacrifice their influence by following the leaders’ guidance ensure that efforts have been spent in the right direction which creates the synergy effect for the sake of the company’s overall interests. And I still remember when my company was still in a small scale with only dozens of staff, I always encouraged them to take the lead if they felt that they got the idea which will help our business develop. This strategy played an important role in my company’s growth in such a new industry when all of us are searching for a better way to do the business. And actually I found some talents who had the potential to lead and I promoted them as the managers or executives.
Me: As we are talking about leaders, how many leaders would you say your
Mr. Zhang: I would rather say about 7 of them, 2 executive and the 4 are
senior managers in charge of the departments and the other one is me if I may
Me: Absolutely. So are there any changes to the configuration of the
Mr. Zhang: Yes, the leadership team had been expanded, and what’s more two of them were replaced, one manager left was due to retirement and the other senior executive, a very smart guy, jumped to the another competitor carrying at that time the confidential data that regarded to our business strategy and it was a sad story that brought substantial harm to the management employee relationship in company at that time.
Me: I am sorry to hear that. But did you ever think about the reasons why this executive would betray your company? Do you think it is a betrayal by the way?
Mr. Zhang: Yes, it is a betrayal. If he is just like other ordinary employees and he did this like a business spy, I can’t say anything because it is business. The problem is that we started the business together from nothing since the graduation, I did put my trust and my caring on him seeing his growth and his progress. I don’t think it is too much to say that this is a betrayal and I guess even himself would admit this if you can talk to him. This is why after that he never dare to show up in front of me again. And regarding to the reasons why he left, actually after he left the company I had been asking myself this question for the whole month. First of all, I did bear some responsibility for his betrayal as I recalled that for the several months before he left, he had told me his strong oppose against the company’s strategy setting and the expansion of the management team, but I had been too busy with the operational issues and never got a change to have a long talk with him. Secondly, I guess we did choose the wrong leader even though he was once my brother, that’s how we described our relations, he did bear the major responsibility as it was his decision to leave the company in this way. Actually before I selected him as a executive one of his friend did remind me that this person is not very trustworthy, and warned me that he might did something unexpected. I should have take this warning. And later I came to a conclusion that it was one’s personality that matters despite other capabilities, in order to select a qualified leader, first you have to indentify some candidates with good leadership traits such as honesty, ambition but not arrogance, charismatic but still pragmatic. Thirdly, I found out that team building is very important. A good team is not only making home to employees in the team but it is making the same feeling to the leaders. Even a leader need to be cared like any other else. The executive who left did come to me saying that he didn’t get along with some of the employees and he felt sad about the team built up there. He thought he was excluded and separated.
Me: How do you define a leadership crisis? And after the executive left the company, did you think there was a leadership crisis in your company?
Mr. Zhang: I understand leadership crisis in a very simple way, if the employees in a period could not trust most of their leaders, then there is a leadership crisis. When the executive left, it did hurt a lot of our feeling, I guess it was the same for any of us at that time, but I didn’t observe there was a leadership crisis going there, trust had been built up through very long time and we did earn trust from employees by heart and a guess just one betrayal could not cause a crisis which if happen would be unfair to the rest of the leaders because we were still doing our best for the company. If such betrayals happen frequently then there should be a leadership crisis.
Me: Recently, there has been debates over whether there is a leadership crisis worldwide, for example in the US many people are now holding such a viewpoint that there is an ongoing leadership crisis with so many scandals happened in the government and large MNCs such as Bush’s decision to invade Iraq. Such debates in the past two years become popular again as the economy crisis happen and influence has been felt by every ordinary people. It seems to be reasonable for people to doubt the capability of their brilliant leaders when most of the leaders knew nothing before the crisis happen. In China, do you think there is ongoing leadership crisis in the business and political sectors as now there are also a lot of economical and social problems such as the high real estate price in the property market?
Mr. Zhang: For the US case, I would rather trust that there is an ongoing leadership crisis especially after the 9.11 terrorist attack though I do understand the leaders difficulties. Take the economy crisis as an example, it is an economy phenomena that is following the rule and I think it is inevitable which has been approved by both various researches and past experiences. The government could warn the market against the possible economy overheat and help recover the economy by making relative policies but so far economy crisis still happens now and then. But people did lose confident with their leaders, so crisis did happen in a real manner. According to the definition that I have just told you, in order to have a leadership crisis one precondition is that you need to trust and have faith with your leaders, but in China, I think the trust is still being as Chinese people have witnessed too many business scandals and some of them are really ridiculous. So my point is that when leadership has not been build not, how can it collapse? And in many large companies, information are not open to outsiders, so in many case employees do not even know what happen and the Chinese government also usually cover up the bad news. For these reasons, I don’t think there is a leadership crisis happening in China because we do not expect too much from our leaders or you can say that there has long been a leadership crisis especially under the current economy imbalance under which people are living a difficult life.
Me: Would you like to use one sentence as a conclusion?
Mr. Zhang: Leadership crisis saying seems to be popular, but when so many cases happen, it may be only the problem with the leaders themselves, the system of choosing leaders could also got a problem. What’s more leadership crisis is also a development issue, when the environment is changing fast you can’t blame them for making some big mistake when rules, values, norms are changing and reforming.
Me: Thank you for sparing some of your precious time, wish you and your company a wonderful success.
Mr. Zhang: Thank you.
With the literature and interview record we have above, it is evident enough to come to the conclusion that there is an ongoing leadership crisis though it may be not in a world wide scale. Three major driving factors to the leadership crisis has been identified through the analysis above are as following: firstly, there is an expected declined in the near future due to a demographic trend; secondly, the current leadership identification system widely used has been focusing too much on the professional skills rather than emotional skills and integrity which has become the most frequently appeared filed in which leaders in political and business failed because they do not have strong believes on some necessary values; thirdly, with the current fast changing external and internal environments in the globalization trend, there is increasing chance of cultural mismatch leading to failure of leadership.
5.1 Leader identification process
When selecting the most appropriate leader among the number of candidates, in term of the selecting criteria, the companies needs to carefully examine personality of the candidates to see whether he or she is an ethical leader in the future with strong believes and would not easily get derailed by some attempts. Ethical leaders are those who lead with integrity, inspiration, energy and will also offer caring and support to their knowledge workers (Hester 2003). As Mendonça and Kanungo (2006) commented when leaders form an idealized vision representing a state of profound consciousness, the leaders then could achieve the vision by identified themselves with commitment to this vision.
5.2 Management succession
With the anticipated decreasing trend of talent pool in the near future, when there are more competition for external quality leaders, one solution for the companies would be to cultivate their own potential leadership candidate from internally by providing leadership courses and chance to lead in the actual business practices for example. Another area that need to be noticed is how to retain the cultivated qualified leaders from the competition from other companies. One idea that we could get from the content of the interview with Mr. Zhang, the CEO, is to build up a good them according to the specific leader provided that this leader is capable and trust worthy. This special team building effort should be able to help increase the gravity of the leader towards the company because it is easy for a leader to get higher paid from the competitors but it is not easy for them to find a team that could make him or her feeling home.
5.3 Rebuilding trust in organizations
Rebuilding trust after the leadership crisis in any organizations or countries could be a tough and long term task. The suggestion given to the rebuilding effort could be referred back to the five tasks in the crisis for leaders: sense making, decision making, meaning making, terminating and learning. Any crisis will be gone though, the more important mission is the avoid the recurrence of the same kind of crisis which really hurt and demolish the remained trust between the leaders and the followers. So in these five tasks, the most important and meaningful task would be to summarize the lessons that could be learnt from the leadership crisis that the company has gone thought and avoid similar leadership crisis from happening again.
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