Introduction
Organizational growth is one of the key indicators of good leadership. Leadership refers to a process of social influence by an individual who aids others to achieve a collective goal. Organizational leadership entails a process of organizing a social unit that consolidates its efforts to accomplish a universal objective (Baack, 2011).
Good organizational leadership entails application of effective operational strategies, organizational structure, and promotion of an organization’s corporate culture. Organizational leaders also have an ethical obligation to ensure that employees are provided with the best working conditions, which allow them to give their best output towards achieving organizational goals.
Ethical leadership is the driving force of businesses. It plays a crucial role of ensuring that an organization remains highly competitive. Leaders should promote ethical values in their organizations through an inclusive decision-making process, strategic human resource management, and strict adherence to organizational culture (Baack, 2011).
Organizational leaders endure a lot of criticism for their styles and methods of leadership. It is very important for organizational leaders to know the source of their power and influence when leading an organization. This helps them to avoid negative criticism and failure.
Leaders can source for power and influence from their reputation, title, job position, verbal persuasion, or through the powers vested in their offices. One organizational leader who has been heavily criticized for his leadership style is Robert Nardelli. Robert Nardelli was the Chief Executive Officer (CEO) of Home Depot for seven years (Brenner, 2007). This essay will analyze the concept of organizational leadership in business ethics by analyzing the leadership style of Robert Nardelli.
Discussion
Robert Nardelli became the Chairman and CEO of Home Depot in 2000, after working at GE for almost three decades. However, he resigned from his position at Home Depot in 2007 due to mounting pressure for him to change his leadership style. Robert succeeded Bernie Marcus as the chairperson and CEO of Home Depot.
Bernie Marcus was using a laid-back style of leadership compared to what Robert introduced at the largest retail store for home improvement products in the United States (Brenner, 2007). Robert focused on instilling discipline in the workforce by introducing new operational strategies. He managed to improve sales and profit margins for the business within the first year of his tenure as the CEO.
Despite all the major improvements that Robert was making at Home Depot, his style of leadership came under serious scrutiny and criticism. The main reason for the criticism was his big compensation package that never matched the financial ability of the business (Brenner, 2007). According to economic experts, Robert’s compensation package did not make any economic sense because the stocks were performing poorly, yet he could afford to reward himself with a huge salary.
This was also happening at a time when Home Depot was fighting off stiff competition from Lowe’s hardware. Lowe’s was a fast rising retail shop selling similar products as Home Depot. This meant that the business had to fast track its expansion plans in order to tighten their grip on the American market and eventually move to foreign ones.
However, lack of a quick response from the CEO to implement the business strategy clearly demonstrated his poor leadership style that eventually led to the business losing a sizeable share of the local market. Robert’s leadership style at Home Depot showed a lot of inflexibility and hard headedness. In addition, it showed a few traits of directness, autonomy, autocracy, and a weak desire to fulfill various managerial tasks (Brenner, 2007).
According to leadership theories, an individual’s ability to offer good and ethical leadership depends on factors such as their work environment, the situations at hand, individual abilities, and acquired skills.
According to the trait theory of leadership, good leaders should be able to motivate, guide, as well as listen to and understand the people they lead (Baack, 2011). Situational theory of leadership explains that an individual’s ability to offer good leadership and make ethical decisions depends on the nature of the situation being resolved.
According to the multiple intelligence theory of leadership, seven types of human competencies help leaders to do their work. These intellectual abilities are musical, logical, visual, interpersonal, verbal, bodily, and naturalistic (Gerald, 2006). All human beings have these abilities, albeit in different degrees.
A good leader should be able to apply these competencies to gain the support of those they lead. Robert was a controlling leader who used his power of command for his selfish gains at the expense of Home Depot shareholders. His leadership style was incompatible with the organizational culture of the business, which tagged along a desire to offer quality customer service.
The business focused on offering high quality products to their customers at competitive prices. When Robert took over leadership at Home Depot, he failed to improve the decision-making process that excluded employees and other stakeholders (Baack, 2011). Robert emphasized on applying a top to bottom approach of decision-making instead of a bottom to top approach. His approach was not helping the business to attract new customers and retain their existing ones because of reduced quality of products.
For example, a few months into his tenure, Robert crippled the retail structure at home depot when he eliminated salespeople from the workforce. A series of poor managerial decisions led to detachment between Home Depot and its employees, customers, and shareholders (Brenner, 2007).
According to stakeholders at Home Depot, Richard was arrogant and inconsiderate of their needs. Most stakeholders had lost their attachment to the business because nothing seemed to work right, yet the board could have changed the situation. According to the behavioral theory of leadership, good leaders are born and not made. It is evident that Richard was not a natural leader for the position he held at Home Depot (Brenner, 2007).
Contingency theory of leadership explains the success of a good leader as a function of numerous contingencies that shape along variables such as groups, tasks, and subsidiaries. In addition, the theory explains that leadership styles apply differently depending on the situation being resolved in an organization (Gerald, 2006). Organizational leaders should apply their competences to develop a consistent pattern in their decision-making, because it has a huge impact on organizational success.
Conclusion
Robert Nardelli applied an imperialist style of leadership during his tenure as the CEO of Home Depot. Robert deserved all the criticism he got for this style of leadership because it detached the stakeholders from the business. His actions as a leader were very unethical, considering the fact that he was supposed to provide leadership to implement the organization’s business strategy.
Instead, Robert focused on improving his compensation package at a time when the economic situation could not allow. Communication is very important in every organization. Therefore, Robert was unethical in his decision to alter communication structures at Home Depot. An ethical leader should promote an inclusive style of management that allows all stakeholders to take part in decision-making.
References
Baack, D. (2011). Organizational Behavior. New Jersey: Cambridge University Press.
Brenner, D. (2007). The Imperial Management Style of Home Depot’s Bob Nardelli. Web.
Gerald, P. (2006). Leadership: Theory and Practice. London: Oxford University Press.