The Impact of Leadership Strategies on Change Management

Analysis of the Field

The approach to apply an organizational change is predefined by the necessity to achieve and maintain sustainability. In the modern world of “dramatic technological change, ongoing globalization, and the declining predictability of strategic-planning models” only change management may assure “a durable competitive advantage” (“Creating organizational transformations,” n. d., p. 1). In this regard, one should point out that the change impacts businesses in the four main directions. Firstly, while striving to align personal attitudes and needs with the company’s interests to maintain financial sustainability through change management, a worker is at risk of experiencing anxiety that is stipulated by the reluctance to change. It leads to shift resistance, but at the same time, change has a positive impact on employees, evoking their urge for learning and personal growth. Besides, timely and correctly implemented change induces the strengthening of teamwork and increases employees’ loyalty and commitment (Buchanan et al., 2005).

Furthermore, discussing the role of leadership in implementing organizational change, it is necessary to stress that managerial staff are doomed to endure additional mental and emotional burdens. Specifically, it is known that to conduct a change in the first place, leaders should be ready to embrace it by themselves (Buchanan et al., 2005). As a rule, organizational change is more frequently used as a reaction to certain issues that have already emerged. Less often, it is used as a preventing measure. Given this peculiarity, one should understand that change management is typically conducted under stressful conditions, which requires leaders to be ready for adjusting to changes and make employees accept the novelties under the tense and challenging conditions (Buchanan et al., 2005).

What is more, an endeavor to maintain sustainability requires anticipating how the interests of stakeholders may be affected by an organizational change. In other words, leaders should consider the cultural aspect while implementing change. To be more precise, a change may comply with the general external tendencies (popular culture, national awareness, prevailing cultural attitudes), or oppose the mainstream trends. It is natural to suggest that in different cases the impact of a change will vary. Therefore, managers should be able to foresee in advance whether the change is supposed to challenge the environment or occur as a natural continuation of already existing tendencies. Moreover, there is also a processual impact of change, particularly, managerial staff should detect in what ways and to what extent an organizational change will affect the process of the workflow and, respectfully, its productivity (Buchanan et al., 2005).

Scholars emphasize that the success of the change management directly depends on leaders’ ability to acknowledge the quadrilateral effect of a change and be aimed at achieving the harmonious combination of all impacts (Buchanan et al., 2005). To succeed in maintaining the financial sustainability, managers may decide to shift organizational boundaries, change the firm’s structure, and/or revise decision-making processes (Luscher & Lewis, 2008, p. 221). They may apply to “downsizing, delayering, teamworking, process redesign, empowerment and other changes in the HR policy and practice designed to encourage flexibility, speed of response to external events, and customer orientation” (Buchanan, Claydon, & Doyle, 1999, p. 21). The use of these methods is defined by the chaotic political, economic, and social process of the contemporary world. Specifically, surveying the role of leadership in an organizational change, scholars accentuate that “the advanced technologies, global markets, and the mobile capital intensify pressures to constantly cut costs while enhancing flexibility” (Leana & Barry, 2000). In these conditions, a lot has been said about the vital role of creativity, the need to use technological knowhow, and be capable of thinking in a totally new way. Nevertheless, presently this field possesses more issues and challenges than successful approaches. Researchers point out that “organizations do not have innovation DNA” (Barsh, 2008, p. 2). Consider the example, endeavoring to identify the connection between leadership and change researchers conducted a study of the Danish Lego Company. This firm decided to conduct an organizational change by restructuring of its organizational chart. As a result, a lot of negative implications of this misfortune change were identified. Scholars reveal that “the problem is not the problem; the problem is the way you think about the problem”(Luscher & Lewis, 2008, p. 227). Specifically, managerial staff reported to be experiencing “conflicting managerial demands” in the questions of “performing, belonging, and organizing” (Luscher & Lewis, 2008, p. 221). In other words, since the functions of managers were changed (due to the organizational restructuring, which resulted in the downsizing of managerial staff), they struggled to comprehend what actions would be appropriate. As a result, they made mistakes or were inactive in performing and organizing. In addition, the rapid change violated the sense of belonging. It means that the managers of the Lego Company were confused regarding the questions of their place in the new restructured chart.

This example of an organizational change highlights the immense role of leadership for successful change management. As the discussed case study illustrates, the deficient empowerment of the senior managers resulted in a considerable working mess among the middle managers of the Logo Company. Besides, mistakes occur because the chief did not correctly assess the demands of the external and internal environments. Moreover, the plausible impacts of the change from the perspectives of managerial, cultural, and processual aspects were not properly anticipated.

Keeping in mind that the effective leadership and productive organizational changes are positively related and assist in maintaining the company’s financial sustainability, it is appropriate to detect why the quality of management may decrease. Scholars suggest that, to a great extent, it happens because business leaders endure a lot of pressure from investors and other stakeholders (Franken, Edwards, & Lambert, 2009, p. 49). What makes the things even worse is that there is a number of micro- and macro-environmental factors that force managers to resort to radical changes. There is a pressure from rivals, political, environmental, technological, and other forces that demand changes even in cases when a company is not ready.

Research Topic

In a modern world, the pressure is intensified by the economic globalization, which presumes worldwide penetration of corporations. Simultaneously, the challenge to remain sustainable is reinforced by the emergence of numerous small and middle-size enterprises. This tendency stipulates the development of an entrepreneurship leadership style. These business leaders are characterized as “individuals who recognize opportunities where others see chaos” (Kuratko, 2007, p. 1). It is necessary to clarify that the entrepreneurship leadership style is often based on the principles of the transformational leadership (Herold, Fedor, Caldwell, & Liu, 2008). It suggests empowering employees to do their best in the interests of their company. Empowerment differs from supervision because it implies the reduced inspection of workers. In this case, an organizational change is about inspiration. On the one hand, this kind of leadership seems to be effective in implementing change because people need to be inspired, motivated, and prepared to embrace the change. It should help decreasing change resistance.

On the other hand, as was illustrated in case of the Logo Company, employees, including managerial staff, need to be guided. They must have a clear vision of what they are, what they are expected to do, under what circumstances, and in what ways. Linking this important idea to the core principles of the transformational leadership style, it is possible to state that it is not completely in compliance with the change management. Researchers stress that the transformational leadership has ambivalent results; it is impossible to conclude whether it has definitely good implications in terms of assuring the efficient change and sustainability or vice versa (Herold et al., 2008). The case presented below will illustrate a positive example of effectively used transformational leadership style for achieving the beneficial changes.

The observed company, SEMCO, is a Brazilian industrial equipment firm, which was founded by Antonio Semler more than a century ago. Currently, this company releases pumps for oil tankers, air conditioners and various equipment for food industry. The chief of SEMCO acknowledges that “the dynamic and chaotic nature of the 21st century demands adaptive and flexible organization development methods” (Karakas, 2009, p. 14). That is why this business is known for a worker-friendly leadership style. Specifically, acknowledging the demands of a rapidly changing modern world, the founder implemented an organizational change (a restructuring). In fact, the company went further: it applied “a radical experiment in an unsupervised, in-house, company-supported satellite production of goods and services for sale to SEMCO itself and to other manufacturers by employees, part-time employees, ex-employees, and people who have never had any experience in it” (Semler, 1994). Semler reveals that the innovative transformational leadership, which the company utilizes, is quite effective. It results in a high productivity and a great employees’ loyalty.

Scrutinizing the key reasons why in this case transformational leadership is an effective tool of the organizational change while in other cases it is less effective, one should point to the environment in which the discussed firm operates. The fact is that the Brazilian economy is poor, and under such conditions, the above-described loosen working relations help reducing manufacturing costs, because less people are needed for the production of goods. As a result, saved money allows paying decent salaries and maintaining competitive prices, which is advantageous for SEMCO and all of its stakeholders.

The absence of the managerial staff is not the only organizational change; in addition, the company encourages its associates to help selling goods directly in harbors and other places (Semler, 1994). In this way, SEMCO’s workers have a direct financial interest to work effectively and remain loyal to the company. The described peculiarities predefine the success of the transformational leadership style that was applied for the change management. Linking the obtained insights to the above-revealed theoretical information, one can rightfully deduce that SEMCO’s success is a result of correctly anticipated impact of change in individual, cultural, and processual terms. Scholars stress that “with the right blend of internal and external resources, companies gain the ability to use their resource pools in a more flexible and effective manner” (Leach, Wandmacher &Ayres, 2013, p. 2). This idea stresses the importance of studying all variables before implementing a change.

In contrast, the example of a successful organizational change that is not aligned with macro-economic factors is a well-known company VISA. It is “a new kind of organization – decentralized, nonhierarchical, evolving, self-organizing, and self-regulating” (Durrance, n. d. p. 5). This corporation contains “20,000 financial institutions operating in more than 200 countries and territories”(Durrance, n. d. p. 5). Nevertheless, unlike any other multinational corporation, VISA does not have significant political, economic, or cultural barriers. What is more, it does not have an organizational structure at all. It implies linear leadership instead of hierarchical one. Undoubtedly, it is an explicit example of the new approach towards maintaining sustainability. It differs from old methods, but it complies with the environment created by the economic and cultural globalization. Besides, this approach helps reducing unnecessary costs. This case of success illustrates that transformational leadership can be successfully extended further.

Apart from taking into account macro- and microeconomic forces, a manager is supposed to cope with numerous internal challengers. To succeed in the change management, a good leader must ensure that his/her work performance serves to achieve the highest good. This approach requires reconstructing personal philosophical foundations. In addition, it implies that managers should constantly improve their knowledge in biology, anthropology, and political, as well as economic sciences. In a word, it is necessary to do everything possible to learn human behavior as well as possible. The obtained information will be helpful in reducing employees’ fears while enhancing their trust and loyalty. A leader should review his/her methods of control with the purpose to “expand the scope of employee autonomy” and “create internal markets for ideas, talent, and resources” (Hamel, 2009, p. 5).

What is more, one should emphasize the importance of communication because being able to communicate the tasks that are shaped by company’s mission and vision is unquestionably essential to every manager. It is necessary to comprehend that “organizational change is often accompanied by pain and injury” (Driver, n. d., p. 8). That is why, business leaders tend to conceal unpleasant information from employees, which inevitably results in the lack of transparent communication, trust, and understanding causing workers’ confusion (Kotter, 2006, p. 3). It is not surprising that holding back unpleasant facts stipulates leader’s failure to develop and maintain employees’ loyalty. As a result, it cannot be implemented for the benevolence of all involved parties. Moreover, it complicates the acceptance of innovations. Without a doubt, in these conditions, the change management will be less effective or completely unproductive.

In general, the role of communication can hardly be overestimated. Studying the connection between the leadership and an organizational change researchers accentuate that there should be “a clear and regular communications strategy in place, prior to the change process commencing, to create a clear sense of urgency” (Armstrong, 2008, p. 14). In this regard, “lack of effective communication strategy” is identified as the main reason of failure to implement organizational change (Armstrong, 2008, p. 14). It is necessary to clarify that poor communication may stem from the lack of vision. In other words, when the tasks/vision/goals are not well-communicated it does not necessary imply bad communicative skills, pretty often it is a result of the lack of vision. This peculiarity may indicate that a problem occurred at the first (conceptualization) stage of innovative management. Therefore, it is critically important to be capable of vocalizing concerns and issues. For instance, the middle managers should be trained not to be scared to carry their problems to the senior manager(s).

Additionally, communication is a tool for uniting the team under the same denominator. In particular, scholars state that managers should be able to estimate “the existing level of agreement” (Christensen, Marx, & Stevenson, 2006, p. 74). Undoubtedly, having agreement in a team is a significant component of success. There are two dimensions of agreement at the workplace. The first is “the extent to which people agree on what they want: the results they seek from their participation in the enterprise; their values and priorities; and which tradeoffs they are willing to make in order to achieve those results” (Christensen et al., 2006, p. 74). For instance, the associates of Microsoft have always been joined by the same goal of keeping the leading position. Despite the fact that every company contains employees who do not share the set of common goals, as a rule, the purpose that is shared by the majority becomes a firm’s culture (Christensen et al., 2006, p. 75).

Exploring effective leadership strategies in terms of conducting the organizational change, scholars emphasize that creating corporate culture is one of the most important approaches that should be considered by the managerial staff while striving to implement a change (Kleiner, 2002). It is important to understand that when a team is characterized by a high level of agreement that results in the formation of certain corporate views and values, these intangible assets help instilling the change at all levels of the firm’s organizational chart. What is more, given that in this case the impact on every individual is mediated (in contrast to a strong hierarchy), transformational leadership style has good chances to thrive in such a teamworking environment.

The second denominator presumes similar views on causal relations. In particular, if the views towards cause-effect relations coincide, they are more ready to move in the same direction. High level of agreement facilitates the process of leadership. Furthermore, in case of the change management, it considerably increases the chances that innovations will be successfully embraced by the employees. In addition, managerial staff should consider the following driving forces that encourage people to embrace change. Firstly, people are perceptive about rational arguments. Secondly, emotional involvement is a strong force that should be used to eliminate the change resistance. Thirdly, cultural conditions (social and normative laws) play an important role in a person’s life; therefore, a change should comply with one’s external surrounding. Fourthly, formed behavioral patterns can be implemented either for better or worse. In this case, it is necessary to remember that behavioral patterns can strengthen acceptance, maintenance and spread of the change, or become the factors that stipulate the change resistance. Fifthly, to help employees accept innovative approaches, a leader should assure that his/her staff has a decent remedy base (organizational aspect must be well-thought and arranged in a way that facilitates workers’ task to embrace changes. Finally, it is important to remember that leaders’ authority and charisma can be successfully utilized for mobilizing people to accept changes (Bate, Bevan, & Robert, n. d. p. 12). Leaders should take into account the abovementioned driving forces because they are critically important in conducting a change.

It is appropriate to emphasize that the role of innovations in a modern business world is immense because it is a remedy for financial sustainability under the conditions of present uncertainties and chaotic global processes. Researches emphasize that “in most industries — and in almost all companies, from giants on down — heightened global competition has concentrated management’s collective mind on something that, in the past, it happily avoided: change” (Jones, Aguirre, & Calderone, 2004). Therefore, one can rightfully conclude that an organizational change influences all industries, and its impact will remain strong in the future. Consequently, it is necessary to explore further the nature of human’s mentality, political, economic, social, and cultural processes that underlie the processes of an organizational change. The obtained knowledge should be helpful in enhancing the effectiveness of such change. In addition, it will help find the new approaches, such as in the above-revealed examples of VISA and SEMCO. At the same time, further research of the role of leadership strategies in the change management will be useful in anticipating and mitigating the plausible negative outcomes.

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