How efficiency, adaptation, and human relations improved?
In a bid to improve efficiency, adaptation, and human relations in a company that was in a state of decline, Ghosn had to initiate a set of changes. In improving the company’s efficiency, the CEO had to reduce the costs especially costs associated with making purchases. He improved the company’s efficiency by closing five factories. This resulted in the elimination of 21,000 jobs. In addition, he reduced the cost of purchases by 10% and eliminated any dealings that were not profitable to the business. This move by the CEO led to the elimination of many suppliers’ services despite the untouchable relationship the suppliers had with the manufacturers at the time.
In terms of adaptation, the CEO employed an innovative designer known as Shiro Nakamura who made sure that the designers ranked higher in terms of authority than the engineers. However, the leaders did not dictate the changes upon the employees. The management gave the reasons and explanations following the moves. The purpose of this move was to ensure that the cars produced by Nissan would appease the customers bringing about a sense of excitement that would increase their sales. In this way, the achievement of adaptation through corrective ways resulted in major changes taking place. This bore fruit as the company sales went up the roof by the year 2001.
In terms of human relations, Ghosn had to make major changes in the company’s human resource department. Such changes included scrapping off the plan that guaranteed lifelong employment to the employees of the company and the consideration that seniority was the basis of promotions and salary raises. The CEO introduced a plan based on merit whereby one’s performance determined his promotion and salary increment. Awarding the employees bonuses in cases of effective performance also improved human relations.
Resolving the potential trade-offs
The trade-offs came about because of the counteraction that existed between striving to improve efficiency, adaptation, and human relations. However, Ghosn resolved the tradeoffs by improving human relations through the utilization of cross-functional teams. The cross-functional teams’ purpose was to facilitate association and interaction between different departments. Ghosn used the cross-functional teams to resolve the trade-offs, as the employees would feel no form of a dictatorship arising from their superiors. He also used techniques that involved the introduction of merit-based plans, increasing innovative measures as well as better management skills.
Traits and skills that explain Ghosn’s effective leadership
Individual attributes (traits) that explain Ghosn’s effective leadership, include his charisma and self-confidence. He portrayed this trait when he upset the status quo by eliminating the purchase costs, and scrapping off the dealerships that were not profitable to the business. He portrayed self-confidence when he was willing to step down if he did not succeed in turning around the company in a span of one year. On the other hand, he portrayed interpersonal skills as well as conceptual skills. In terms of interpersonal skills, the CEO portrayed such skills when he introduced the cross-functional teams for purposes of problem identification and problem-solving.
He had good interpersonal skills as he replaced the seniority plan with the merit-based plan that was more productive for the business and a better alternative to the employees. The CEO’s capability to cut down the costs portrayed good conceptual skills. In eliminating five companies, and reducing the employees as well as the suppliers, Ghosn portrayed a superior decision-making ability.