Introduction
Leadership is crucial for the success of any organisation (Atchison, 2003). Leadership functions to inspire followers to work collectively in a bid to achieve specific goals within an organisation. Leadership is an organisational practice that not only influences the followers (employees), but also the leaders in a manner that ensures that organisational objectives are achieved through change.
It integrates and intertwines followers and leaders coupled with influencing organisational objectives and missions and other organisational stakeholders (Lussier & Achua, 2004). While leading, followers should be involved, which perhaps explains why there has been an immense scholarly interest in how leaders should relate with followers to ensure organisational success.
Carlos Ghosn, the leader of the Nissan Company, exemplifies how leadership can help to yield success for manufacturing companies across the globe. In search of an effective leadership theory to increase productivity levels of manufacturing organisations, leadership has undergone magnificent changes from bureaucratic leadership, transformational, and participatory leadership to leadership through followership.
These changes have also occurred in the quest to address emerging problems in the field of leadership. The purpose of this paper is to present a discussion of theories and concepts of leadership in current multinational businesses using the leadership style of Carlos Ghosn (CEO for the Nissan Company) as a benchmark for effective leadership in the modern dynamic business environment.
External Environment and Strategic challenge
Leadership comprises key aspects for enhancing performance of an organisation. In the 1990s, the Nissan Company experienced various challenges, which pushed the company to the brink of bankruptcy. Faced with this challenge, Carlos Ghosn encountered a major challenge of ensuring that he turned around the fortunes of the company.
He joined the Nissan Company in 1999 in the capacity of Chief Operating Officer (COO) and later he was confirmed as the company’s CEO in 2000. According to the Global CEO (2005), Ghosn joined the company at a time it has accrued a debt of 20 billion US dollars. At this time, out of the 48 models of vehicles made by Nissan, only three models returned profits.
On joining the company, Ghosn promised to consider resignation if he failed to ensure that the organisation made profits. He set his mission as ensuring that the Nissan Company did not have any debt by the year 2005. To this extent, arguably, Carlos Ghosn attempted to restore the glory of the Nissan Company by ensuring that the organisation managed to cover all its debts. To resolve this leadership challenge, he needed to reduce the costs of running the company.
Turning around an organisation from loss making to profit making requires leaders to alter certain cultures and approaches of executing the organisational business. For organisations seeking to gain a competitive advantage in the future, they need to focus on mechanisms of changing the manner that they conduct their business.
The most desired change is the one that enables an organisation to become more profitable. Carlos Ghosn was well acquainted with this concern in his efforts to ensure that the Nissan Company became a profitable organisation again. However, he was aware of the eminent external challenges and pressures waiting his pursuits. One of such pressures was the need to comply with business etiquette standards in Japan.
Although he was aware of these challenges, he chose to defy them. He auctioned some of the Nissan’s enormously prised assets among them the aerospace unit, cut off the workforce of the company by 14 percent, and closed 5 domestic manufacturing plants of the company. Although this decision was the most appropriate for the future success of the company, he was open and ready to welcome criticism and pressures from the public by becoming the public’s outcry target.
Strategic Vision
Carlos Ghosn visualised the situation at the Nissan Company as having the capability of being turned around through the adoption of appropriate leadership styles. In a bid to implement necessary changes to drive the success of the company, Ghosn cognised that success in driving the success of a company did not involve altering its culture in the quest to reduce resistance to change.
Consequently, he permitted himself to be influenced by the Japanese culture while ignoring the need to incorporate the European culture in the Nissan’s production approaches. Although he thought that expatriates from Renault were resourceful in attainment of his mission of changing Nissan to become a profitable organisation, he utilised this workforce in a manner to ensure that he respected the Nissan Company and the Japanese’s culture at large.
Ghosn had the vision of rejuvenating the operation of the Nissan Company. His commitment to this vision was exemplified by his announcement of the need to resign from his position as the CEO of the company if he failed to restore the profit-making status of the organisation. Making the Nissan Company profitable was the main desired outcome.
Ghosn’s efforts to attain his visions and desired outcomes were not in vain. He altered the manner in which things were done in accordance to the Japanese business culture. These changes included the mechanisms of making organisational decisions based on a system of consensus to systems in which people developed awareness of issues necessary for making decisions based on their merits and demerits.
He then progressed to eliminate Nennkou-Jyretu in an effort to ensure that people assumed individual responsibility or accountability of their actions. In this effort, he ensured that promotions were principally based on individual performance in delegated duties. Failure to attain specific performance level amounted to demotion.
Leader
A leader programs, checks, and guides other people towards the attainment of a common mutual objectives and goals. Leadership has two main components, viz. organisational and personal elements. Lussier and Achua (2004) note that success “over time demands knowledge of and commitment to both” (p.31).
Leadership influences the relationship between leaders and employees who act as tools for change within an organisation, which should reflect shared purpose for interaction of both employees and leaders. The qualities that describe effective followership are similar to those that describe effective followers (Atchison, 2003). The importance of followership theories and leadership theories to organisational leaders hinges on the assertion that leadership is linked to followership.
Through the understanding of this link, it becomes possible to adopt appropriate leadership style that leads to the achievement of organisational objectives, goals, and missions. Such a relationship is implied by understanding the actual works of a leader within an organisation. Many leadership theories such as participatory and transformational leadership theories contend that leaders serve the principal functions of directing and guiding the behaviours of various people who have to work together in as a team.
From the context of leadership style adopted by Ghosn, the focus was to enhance employees’ motivation as the main tool for enhancing the achievement of his strategic visions and missions. Before they could be utilised for this purposes, the employees needed to be transformed to align with his principles of success. This argument implies that Ghosn was essentially a transformational leader.
Ghosn remained focused on his strategic visions and missions of changing fortunes of the Nissan Company from 1999 to 2005. In a bid to transform the financial status of the company, he knew well that it was impossible without the creation of talented employees’ work teams. In this effort, he transformed the culture of promoting employees based on the age-experience to use of expertise coupled with talent potentials.
He also transformed the company to ensure that it became more diverse in an effort to tap more talent potential. By the time he joined the organisation, the Nissan Company had only 1 % of women taking managerial roles, even though this number was twice that of the competing companies. Through his leadership, in an effort to create a more diverse managerial team, currently the top management team for the Nissan Company comprises 5% women and his goal entails increasing this number to10 percent.
Transformational leaders are deployed in organisations requiring sudden turnaround, transition, or even a spark to rejuvenate them. Transformational leadership style has the merit of setting visions coupled with inspirations necessary for the followers to follow in an effort to drive organisational success (Polychroniou, 2009).
The style also finds applicability within organisations characterised by reduced morale of workers. The operating conditions at the Nissan Company in 1990s created the need for a transformational leader such as Carlos Ghosn. Transformational leaders “stand out from other leadership styles in their ability to quickly assess a company’s current situation and formulate a vision for growth or improvement” (Sakiru et al., 2013, p.36).
Such leaders also possess the ability to ensure adequate and effective communication of success strategies and visions to all organisational stakeholders. This advantage aids leaders to handle challenging external and internal situations within an organisation since they have the ability to see bigger pictures on the future position of the company in the context of adoption of certain success strategies.
Moreover, inspiration comprises an additional advantage of transformational leadership style for an organisation operating under hard financial, environmental, and even political conditions. From the paradigms of inspiration, the advantage of transformational leadership is that such leaders depend on “their passion to help sell their vision and to get employees headed in the same direction” (Prati et al., 2003, p.24).
While inspiration and vision underscore the major advantages of transformational leadership style, struggling in detailing challenges and overreliance on passions coupled with emotions pose major disadvantages.
Achieving the success enumerated in the missions and visions developed by transformational leaders require help from detail-oriented organisational leadership team. This assertion implies that the incorporation of transactional aspects of leadership is critical for ensuring that visions developed by transactional leaders move in an appropriate direction. Small oversights have the capability of derailing visions to take a long time to develop and implement (Hautala, 2006).
Overreliance of passions and emotions introduce the demerit of transformational leadership since they overlook reality coupled with truthfulness of a given situation. However, amid these disadvantages, the transformational leadership style of Carlos Ghosn has not experienced these challenges. People at the Nissan Company believe that Ghosn has managed to restore the company to the success track, hence saving and providing security to thousands of jobs at the company.
Leading others
Transformational leaders are influential to their followers and thus they consistently seek for new ways of ensuring their ability to achieve more things of benefit to their followers and themselves (Bass & Steidlmeier, 2002). Ghosn appreciated success of the Nissan Company in changing from a non-profitable organisation to profitable organisation would only occur in the presence of an agreement and coherence in the things leaders say, advocate for, and think with employees’ cognition of the same.
After transforming employees at the company to behave and think in his preferred ways of enhancing the success of the company, Ghosn turned to looking for mechanisms of enhancing transparency coupled with the management decision consensus to mitigate the risks of resistance to change.
Leading effectively comprised one of the essential influences and authorities deployed by Carlos Ghosn. For this aspect to occur, Lussier and Achua (2004) insist that leaders cannot “accomplish goals without the assistance of followers” (p.65).
Therefore, followers should embrace and welcome the process of being directed by persons whom they believe are supposed to lead them. This assertion means that the existence of a good relationship between leaders and followers within an organisation is initiated by the creation of good understanding of the functions and purposes of the leadership among those that one leads.
Leaders should understand the mechanisms used by followers to accept persons as leaders. This knowledge is important as it helps leaders to know what to do in a bid to ensure that followers obey and respect the directions given (Lussier & Achua, 2004). This kind of influence was useful and effective for Ghosn since the Nissan Company needed a person to set a new direction towards its success.
Strategy accounts for 5% of the required success in falling organisations, and 95 % mainly entail the execution of the strategies, which require people (Polychroniou, 2009). Therefore, leading effectively through paying attention to followers’ perceptions, motivations, and reactions to change was appropriate since although Ghosn developed the plan for success, its execution required people to implement it.
Organisation
Ghosn focused on attaining his missions and strategic visions by engaging in decisions unacceptable within the context of the Japanese’s culture. Such actions included sacking of 21,000 employees from the Nissan Company. This move created immense criticisms from the media, which held the culture of people remaining employed until retirement. From the paradigms of the perception of employees on the leadership of Ghosn, this sacking presented a major challenge in attaining his visions and missions.
He wanted to utilise the remaining workforce to drive the success of the Nissan Company. Luckily, the Prime Minister provided jobs for all people who were sacked from the Nissan Company. Ghosn also approached the challenge of leadership at the company from an open-minded dimension by making employees participate in the implementation of his ideas.
This aspect left him with the only challenge of addressing media concerns, which was not problematic since the success in attainment of his vision and mission depended on the manner in which the employees at the company embraced his leadership roles and ideas. The culture of the Nissan Company was also based on promoting workers based on age and experience. Ghosn altered this culture and based it on talent coupled with expertise in areas of employees’ specialisation.
Before Ghosn took over the leadership of the Nissan Company, its culture also encouraged collective workforce accountability to mistakes done within the work environment.
While this culture may have provided the advantage of people working to execute tasks as a team, it presented the disadvantage of people within teams failing to engage in innovative and creative tasks since individual accountability was not recognised. This culture was problematic in deploying transformational leadership to enhance achievement of Ghosn’s visions and missions at the Nissan Company.
Evaluation of the leader
Organisational leaders act under constant pressure to comply with various demands by various organisational stakeholders while still ensuring that an organisation remains competitive in both short and long term. Since Ghosn took over the leadership of the Nissan Company in the capacity of the CEO, he has met the purpose for which he was appointed. Based on this score, I would rate him as a level 1 leader. His overall performance is tremendous.
He posted a profit of 2.7billion U.S. dollars in 2000, one year after his appointment as the COO, right from an organisation having made a loss of 6.1 billion US dollars the previous year. The trend of profitability has since been maintained and by 2005, he achieved his visions of ensuring that the Nissan Company was debt free. Therefore, he is a great performer who is committed to his vision and mission within an organisation.
Insights
Through this research, I have gained resourceful insights about leading in an organisation requiring drastic changes to turn around its performance. Through effective leadership, it is possible to change an organisation experiencing losses to experience profits.
Although effective leadership is crucial for the success of an organisation, significant success is attained when all workers have awareness in all hierarchical structures of an organisation on the direction taken. This aspect helps the employees to support the leaders and do what is within their capacity to ensure that the organisation succeeds in the direction set by their leaders.
In this sense, transformational leadership within an organisation fosters change of the employees’ behaviours. I have also developed the insight that desired change in an organisation takes different forms. It may involve a change of attitude or alteration of work processes in an effort to support organisation’s desired outcomes as in the case of the Nissan Company under the leadership of Carlos Ghosn.
I have also learnt that effective leadership entails the communication of strategies of success through translation of the essential business objectives and goals into terms that employees can understand easily. In response to such communication, employees work collectively towards driving organisational success in terms of profitability as evidenced by the case of the Nissan Company.
References
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Bass, B., & Steidlmeier, P. (2002). Ethics, character, and authentic transformational leadership behaviour. The Leadership Quarterly, 10 (2), 181- 237.
Global CEO. (2005). Carlos Ghosn’s Leadership Style. Punjagutta, India: ICFAI University Press.
Hautala, T. (2006). The Relationship between Personality and Transformational Leadership. The Journal of Management Development, 25(8), 777-794.
Lussier, R., & Achua, C. (2004). Leadership Theory, Application, Skill Development.
Minnesota, MN: Southwestern Cengage.
Polychroniou, P. (2009). Relationship between emotional intelligence and transformational leadership of supervisors: the impact on team effectiveness. Team Performance Management, 15(8), 343-356.
Prati, M., Ceasar, D., Ferris, G., Ammeter, A., & Buckley, R. (2003). Emotional Intelligence, Leadership Effectiveness, and Team outcomes. International Journal of Organisational Analysis, 11(1), 21-40.
Sakiru, K., Lawrence, J., Othman, J., Silong, A., & Busayo, T. (2013). Leadership Styles and Job Satisfaction among Employees in Small and Medium Enterprises. International Journal of Business and Management, 8(13), 34-41.