TASK 1

REVIEW THE IMPACT THAT SELECTED THEORIES OF MANAGEMENT AND

LEADERSHIP HAVE ON ORGANISATIONAL STRATEGY

Leadership is about the performance of teams, groups and organizations. Good

leadership promotes effective team and group performance. This in turn
enhances the well being of the people being led. A simple definition is that
leadership is the art of motivating a group of people to act towards achieving a
common goal. Effective leadership is based upon ideas, but won't happen unless
those ideas can be communicated to others in a way that engages them.
Leadership is the capacity to lead others and command. It is a process of an act or
instance of guiding; direction, guidance, lead, management. Leadership is
appreciated in business culture, especially when it helps to attain goals that are
helpful to the organization. It is elaborated in managerial studies that leadership
is a social influence process. Leadership cannot exist without a leader and one or
more followers. Leadership prompts controlled action on the part of followers.
The voluntary nature of compliance separates leadership from other types of
influence based on formal authority. Ultimately, leadership results in follower’s
behavior that is determined and goal directed in some sort of organized setting.

Characteristics of a good leader:

1. A good leader is strategic with their thinking, they understand what result
business is trying to achieve and how the business to achieve these
results. They will ensure all of their decisions and actions are consistent
with the vision. They don't react to the day-to-day noise in their business,
instead, they seek systematic and strategic solutions that not only resolve
today's problems but also prevent future problems from occurring.
Further, a good leader will continually scan for things that are out of their
control including changes in their operating environments.
2. Leadership at any level in the business will have a vision, this vision is like
a fire that burns inside them, it is the source of their passion. Leaders
discuss their vision at every opportunity, in team meetings one on one
with employees when assigning tasks, and when giving feedback. By
reinforcing the vision they are ensuring it becomes important in the
minds of their people, importance drives passion, the more a leader refers
to their vision the more employee passion will grow for the vision.
3. A good leader surrounds themselves with good people, they do not accept
inferior performance, and while they coach and mentor to improve
performance, they make the required tough decisions to resolve
performance issue.
4. Good leadership provides significantly more communication than is
generally required to complete the employee's job. This additional
communication can include changes that are planned financial
performance, cost and revenue, current productivity or service levels,
expected future levels of performance, changes in other areas of the
business, business plan highlights, new competitors or changes with
competitors.
Contingency and Situational Approaches

Contingency and Situational approaches are the same yet opposite. They are the
same because both of them stress the importance of situations, they are opposite
because they hold different expectations on leaders. Situational approach
believes a leader should adapt to the situation at hand. Contingency Theory
believes the right leader should match the right situation.

Fielder’s Theory seems to lack flexibility, he believed that leaders are naturally
fixed in how they handle situations and that if they want to change how the
situation is handled, the management has to change the leader. For leaders that
fall in the middle of the LPC scale, it could be unclear which style of leader they
are. This is a disadvantage of the Fielder Theory because there is a lack of
flexibility in the leadership style.

Fred Fiedler’s Contingency Theory of Leader Effectiveness

Fred Fiedler began developing his theory of leadership in the 1950s and 60s and
eventually coined it the “Contingency Theory of Leader Effectiveness”. Fiedler
believed that leadership was a reflection of both a leader’s personality and
behavior, which were constant. Fiedler believed that those leaders do not change
their leadership styles, but rather when situations change, leaders must adapt
their leadership strategies. Fiedler’s basic theory started with the notion that
leaders typically were either task-oriented or relationship-oriented. Task-
oriented leaders focused more on the task and accomplishing organizational
goals. Relationship-oriented leaders focused on creating positive interactions
with followers and establishing positive relationships based on mutual trust,
respect, and confidence.

To determine a leader’s preference for tasks or relationships, leaders are asked

to think about all of the followers with whom they’ve worked and select the one
follower with whom they’ve had the most problems. By thinking about the
follower with whom the leader has had the most problems, it’s generally very
easy to determine if the leader is more task or relationship-oriented because that
follower is generally the opposite. Fiedler, termed this follower the leader’s least
preferred coworker (LPC).

Once a leader’s LPC is determined, Fielder’s model asks leaders to examine their
situation favorableness, or the degree to which a leader can influence her or his
followers within a given situation. To determine situational favorableness,
leaders must examine three distinct aspects of their leadership style: leader-
member relations, task structure, and position power.

Leader-Follower Relations

The first factor of situation favorableness leaders must attend to involves the
nature of their relationship with their followers. Leaders who have positive
relationships with their followers will have high levels of mutual trust, respect,
and confidence; whereas leaders with negative relationships with their followers
will have lower degrees of mutual trust, respect, and confidence. The more
positive a leader’s relationships with her or his followers, the more favorable the
situation will be for the leader.

Task Structure

Next, leaders must determine if the task at hand is one that is highly structured
or one that that is unstructured. Highly structured tasks are ones that tend to be
repetitive and unambiguous, so they are more easily understood by followers,
which leads to a more favorable situation for the leader. If tasks are
unstructured, then the leader will have followers who are less likely to
understand the task, which will make for a less favorable leadership situation.

Position Power

Lastly, leaders need to know whether they are in a position of strong or weak
power. Leaders who have the ability to exert power over followers (reward and
punish followers), will have greater ability to exert the leader’s will on followers,
which is more favorable for the leader. Leaders who do not have the ability to
exert power over followers are in a much less favorable leadership situation.

Fiedler’s Contingency Model

In this model, you can see that the combination of the three factors create a
continuum of most favorable to least favorableness for the leader. Notice that
there are eight basic levels ranging from the left side of the model, which is more
favorable, to the right side of the model, which is least favorable. One area of
concern that can impact the usability of this model is ultimately a leader’s LPC. If
the situation matches a leader’s LPC, the leader is lucky and he or she doesn’t
need to alter anything. However, often the situation leads to an imbalance
between the leader’s LPC and the appropriate leader behavior necessitated by a
situation. In this case, the leader can either attempt to alter her or his leadership
style, which is not likely to lead to a positive outcome, or the leader can attempt
to change the situation to match her or his LPC style, which will be more likely to
lead to a positive outcome. This theory has been criticized because it does not
tell us specifically (in behavioral terms) what the leader needs to do to become
more effective. It is therefore not helpful in terms of providing recommendations
and training on how to become a more effective leader. Overall, there is no
longer much interest in this theory. To be fair to Fiedler, and his contingency
theory, however, LPC theory was one of the earliest contingency theories to be
offered, and has served to encourage the development of other contingency
theories of leadership.

Paul Hersey and Kenneth Blanchard’s Situational Leadership Theory

Like Fielder’s Contingency Model, the basic model proposed by Paul Hersey and
Kenneth Blanchard is also divided into task (leader directive behavior) and
relational (leader supportive behavior) dimensions. This is a leadership theory,
which says that, neither a transactional leadership model, nor a transformational
model of leadership in all situations and will work all the time. However, Hersey
and Blanchard’s theory of leadership starts with the basic notion that not all
followers need the same task or relationship-based leadership, so the type of
leadership a leader should utilize with a follower depends on the follower’s
readiness. Situational leadership model and the transformational model good
behavior and so adopts a world better suited to the constantly puts new
leadership challenges. There might be some followers who will work
transactional theory and transformational theory means something that can be
inspired by. A mixture of both techniques will work better. Negativity of this
theory is that it tends to constant over time with varying strategies, it is difficult
to be a leader will find new strategies to implement. A long-term vision can elude
him because of constant change.
In the basic model seen below, you have both dimensions of leadership behavior
(supportive and directive). Based on these two dimensions, Hersey and
Blanchard propose four basic types of leadership leaders can employ with
various followers depending on the situational needs of the followers: directing,
coaching, supporting, and delegating.

Directing

The first type of leader discussed in Hersey and Blanchard’s Situational

Leadership Theory is the directing leader (originally termed telling). Followers
who do lack both the skill and the motivation to perform a task need a directing
leader. Hersey and Blanchard recommend against supportive behavior at this
point because the supporting behavior may be perceived as a reward by the
follower. Instead, these followers need a lot of task-directed communication and
oversight.

Coaching

The second type of leader discussed in Hersey and Blanchard’s Situational

Leadership Theory is the coaching leader. The coaching leader is necessary when
followers have a high need for direction and a high need of support. Followers
who are unable to perform or lack the confidence to perform the task but are
committed to the task or organization need a coaching leader. In this case, the
leader needs to have more direct control over the follower’s attempt to
accomplish the task, but the leader should also provide a lot of encouragement
along the way.
Supporting

Next, you have followers who still require low levels of direction from leaders
but who need more support from their leaders. Hersey and Blanchard see these
followers as individuals who more often than not have requisite skills but still
need their leader for motivation. As such, supporting leaders should set about
creating organizational environments that foster these followers’ motivations.

Delegating

Lastly, when a follower is both motivated and skilled, he or she needs a

delegating leader. In this case, a leader can easily delegate tasks to this individual
with the expectations that the follower will accomplish the tasks. However,
leaders should not completely avoid supportive behavior because if a follower
feels that he or she is being completely ignored, the relationship between the
leader and follower could sour.
TASK 2

CREATE A LEADERSHIP STRATEGY THAT SUPPORTS ORGANISATIONAL

DIRECTION GIVEN IN THE ABOVE SCENARIO

Economic Recession is a financial meltdown, which can last for a period of few
months to couple of years and can affect regional or world economy, leading to
financial crisis, market crash, unemployment and economic depression. A long-
lasting impact of economic recession can lead to economic depression.

The calculation of a country's gross domestic product or GDP is usually for two
or more successive quarters of a year. Many economists judge recessions to
better understand the causes and find effective solutions to them. This period is
emblematic of significant decline in economic activity. The decline could be
observed over a period of a few months. The abstract decline that affects real
people is sensed via a fall in the GDP, actual income on record, employment data,
production and sales, etc.

A recession documents simultaneous decline in employment, profit and

investment, and an upscale inflation. A severe economic recession is a
devastating breakdown of an economy. Those economies that are market-
oriented are usually characterized by economic driving cycles and there it is
debated whether or not, in such economies, government intervention smooths,
exaggerates, or creates it. This period witnesses a stock market drop at the onset.
Sometimes, nearly half of the stock market declines are recorded after the onset
of this period. It can also be sensed through the unemployment rate and
subsequent claims, a housing recession, and the use of the indicator index. There
are a number of strategies that can be implemented to help an economy move
out of recession. The strategy adopted and applied varies and depends on the
type of economic system and the analysis followed by the country's policy
makers. While some may advocate the deficit spending to initiate economic
growth, others may adopt tax cuts and yet some other may recommend non-
intervention by the government. There is no difference between the deficit
spending and tax cut strategies and both increase the money within the
economy. Recessions are believed to be caused by wide based increase in rates of
interest or a loss of consumer confidence. Economists suggest that such periods
are actually caused by specific events that impact certain industries. Periods of
recession have followed dramatic increases in the price of oil. The industries that
depended on energy prices suffered a sharp decrease in business and
subsequently, reduced output and staff. An economy wide decline in demand is
influenced greatly by the higher cost of oil imports and a stringent monetary
policy. The influencing factors slow down overall demand and lead to
subsequent recessions. It is the outcome of the impact on the economy by drop
in demand, role of the aggregate, and the allocation forces. Economic gurus and
analysts believe that by extensive data and researches and paying attention to
the forces that impact reallocation may actually help us to predict future
recessions and upscale the economy. The technology harnessed today has made
it possible for economists to observe and make solutions available if and when
such an unfortunate event affects an economy. It has a disproportionate impact
on firms that trade with the country or zone and this triggers reallocation. The
advent of the Internet connectivity and the use of wireless technology to redefine
communication and information and similar sources of favorable reallocation,
could prevent an economic recession. The relative strength of the determining
forces set the future course of the business cycle and thus, helps to evade the
impending recession.

The great recession refers to the period of economic downturn between 2008
and 2013. The recession began after the 2007/08 global credit crunch and has
led to a prolonged period of low growth and rising unemployment. In particular,
the great recession highlighted problems within the Eurozone and, unlike the US,
Europe has experienced a double dip recession.

The main causes of the great recession involve:

1. Credit crunch and fall in bank lending.

2. Fall in confidence resulting from the financial instability.
3. Fall in exports from global recession
4. Collapse in housing markets leading to negative wealth effects.
5. In Europe, the single currency created additional problems because of
over-valued exchange rates, and high bond yields.

The roots of the financial problems of the last two or three years can probably be
traced back to the deregulation of financial markets in the US, the UK and the
Western European economies that started in the 1970s and gathered pace in the
early 1980s. Deregulation swept away many of the regulatory controls and freed
up organizations to trade across a wider range of activities and territories. Prior
to 1970, banks, investment banks, building societies, stockbrokers and insurance
companies operated very much in their own specialized trading spheres. In some
countries there were also geographical constraints allied to these sector-trading
constraints, in the US, institutions were often restricted to trading in certain
states and in Europe, to trading in their own country. In the case of banks, there
were tight controls on cash and capital ratios and,
specifically, on what percentage of depositors’ funds could be lent out to
customers. As these controls were relaxed and governments allowed these
different financial institutions to raise funds from money markets across the
world and not solely from depositors, financial services businesses were able to
grow much more rapidly than had been previously possible. The effect was to
liberalize credit and effectively to fuel a massive expansion of personal debt,
including mortgage debt.
As a member of the EU, the UK is part of a single market that ensures the free
movement of people, goods, services, and capital within member states.
Nevertheless, the UK still maintains its own economy and has chosen to continue
using the Pound Sterling as its national currency rather than converting to the
Euro. As the British Empire, the UK was the largest and most influential economy
in the world. As the birthplace of the first Industrial Revolution during the 18th
century, the UK ushered in what economic historians agree to be the most
significant event in mankind’s history. The UK was also able to be at the forefront
of technological advances during this time, giving it a strong economic advantage
over any other country in the world.

Today, the UK economy faces another struggle to recover from the 2008 financial
crisis. Prior to the financial crisis, the economy was experiencing GDP growth
rates of around 3 percent; but after the economy contracted by 0.968 percent
and 3.974 percent in 2008 and 2009 respectively, the UK could only post a 1.799
percent GDP growth rate (constant prices, national currency) in 2010 – one of
the slowest recoveries among the OECD nations.

Part of the reason for UK’s slow economic growth has been the austerity plan put
into place by the government in 2010. The UK austerity plan was introduced as a
method to reduce a massive debt that had reached record levels after the 2008
global financial crisis. Besides cutting public spending and services, the UK
government have also implemented a new wave of tax increases as part of its
austerity plan. Although these methods can be effective in reducing the risk of a
future debt crisis, it also has the ability to hamper economic growth. A recent
Financial Times report suggests that the UK’s “era of austerity” may stretch to
2020 – two years later than the government’s pledge to eradicate the budget
deficit by 2018, which had already been revised from 2015.
Referring to the case study, Barclaycard has also been feeling the crunch of the
recession of 2008. It needs a strategy that will cater the larger prospective of the
business and bring out managers who are effective and real leaders. The case
study needs the situational theory of Hersey and Blanchard. The CEO of
Barclaycard also has expressed it.

“I deliberately flex my leadership style according to the situation, so choosing

“I deliberately
three words isflextough!
my leadership
If pushedstyle according
I would say to the situation,
visionary, so choosing
collaborative andthree
words is tough!
challenging.” If pushed I would say visionary, collaborative and challenging.”

Valerie Soranno Keating

Chief Executive Officer, Barclaycard

http://www.barclaycard.com/about-us/our-leadership/Valerie-Soranno-
Keating.html

The case study has expressed problems such as segmented within departments
and thus reflecting confused business strategy of conducting organizational
affairs as the various development programs cant be conducted on a wider and
effective framework of the organizational divisions. Situational theory is very
effective, as it has been used extensively in organizations for training and
development. To assess what type of leadership is needed, a leader must
evaluate the employees and assess how competent and how committed they are
to perform a given task. Because employees skills and motivation vary over time,
the theory suggests that leaders should change the degree to which they are
directive or supportive to meet those needs. A leader must match their style to
the competence and commitment of the subordinates.
The approach is applied on the notion that employees move forward and
backward along a continuous development. For leaders to be effective, they need
to diagnose where subordinates are on the continuum and adapt their style to it.
One of the strengths of the situational leadership model is that it makes the
leader responsible for helping followers move to higher developmental levels.
But leaders must also be aware that their work situation changes as followers
move to higher developmental levels. In order to continue to be effective, leaders
must learn to modify their own behavior as the situation changes

The situational leadership model is widely used in training and development of

leaders, because it is easy to conceptualize and also easy to apply. The
straightforward nature of situational leadership makes it practical for managers
to use. It is applicable in virtually any type of organization, at any level, for
almost all types of tasks, so there are wide ranges of applications for it. From a
practical point of view it is perhaps the best leadership model so far. But it is also
a product of its own time, 1960´and 1970´s, in which leadership is perceived as
being a one-to-one relationship.
RESULTS OF USING SITUATIONAL LEADERSHIP

1. Develop leaders who excel at goal setting, coaching, performance

evaluating, active listening, and proactive problem solving
2. Clarify individual goals and ensure alignment with the organization's
goals
3. Create systems to track performance and partnering
4. Reduce employee turnover and absenteeism
5. Increase "star" employee retention
6. Improve individual and organization development
7. Improve job satisfaction and morale at all levels
8. Create a shared language of leadership within an organization

According to the situational theory, a leader can adopt one of four leadership
styles, based on a combination of relationship (concern for people) and task
(concern for production) behavior. The appropriate style depends on the
readiness level of followers.
The telling style reflects a high concern for tasks and a low concern for people
and relationships. This is a very directive style. The leader gives explicit
directions about how tasks should be accomplished. The selling style is based on
a high concern for both relationships and tasks. With this approach, the leader
explains decisions and gives followers a chance to ask questions and gain clarity
about work tasks. The participating style is characterized by high relationship
and low task behavior. The leader shares ideas with followers, encourages
participation, and facilitates decision making. The fourth style, the delegating
style, reflects a low concern for both tasks and relationships. This leader
provides little direction or support because responsibility for decisions and their
implementation is turned over to followers.
Hersey and Blanchard’s contingency model is easier to understand than Fiedler’s
model because it focuses only on the characteristics of followers, not those of the
larger situation. The leader should evaluate subordinates and adopt whichever
style is needed. The leader’s style can be tailored to individual subordinates
similar to the leader and member exchange theory. If one follower is at a low
level of readiness, the leader must be very specific, telling exactly what to do,
how to do it, and when. For a follower high in readiness, the leader provides a
general goal and sufficient authority to do the task as the follower sees fit.
Leaders can carefully diagnose the readiness level of followers and then tell, sell,
participate, or delegate.

The leadership of Barclaycard should allow the leadership to be more open-

minded and exercise the though that not all are same, which will differentiate
leaders from managers. Situational approach will allow the management to
understand that all people are different, that all situations are different if the
knowledge, skills, and abilities of people are different and that the leadership
style must change to accommodate the needs of the employees. One leadership
style does not work for all circumstances.
To get the most out from the employees, the management must take the time and
make the effort to understand their needs and abilities, and allow them to make
mistakes to learn and mature into value members of the organization. Patience
is a competency that management must gain to allow less skilled employees to
mature into seasoned professionals. Building and maintaining relationships
through the formative time is essential, critical, and vital. It is all about the
leader’s abilities to assess the situation and providing value and reasoning to
determine the best path for the management and the employees.
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