NN12 Business Management : Transactional and Democratic

Discuss about the Business Management. These types of leaders are strict leaders who try to maintain law and order in the organization and Jeff Bezos is one of the best examples of successful transactional type of leadership. 

This essay will highlight the leadership styles of great leaders who are successful in their respective genres.  The three leadership styles that have been chosen are transformational, transactional and democratic style and the great business that are chosen for critical analysis are Warren Buffet, Jeff Bezos and Larry Page.  Leadership is the ability of the person to influence the employees in the organization so that they can achieve the goals of the organization. Leaders have the capability of leading the organization towards the required goal and objective. There is no correct leadership style as mentioned in the contingency theory of leadership. This means that the decision making of the leaders are dependent on the external and the internal situations in the organization (Avolio and Yammarino 2013). Thus, adaptability is a major factor where the leaders use various leadership styles in order to mitigate the issues and manage their respective organizations in a better way. Motivation is important for improving the performance of the workforce and effective leadership can improve the motivation level of the employees. Thus, the increase in the motivation level of the workforce will improve the overall performance of the organization.

As stated by Northouse (2015), transaction leaders believe in maintaining structure and order in the organization. These types of leaders are strict leaders who try to maintain law and order in the organization and Jeff Bezos is one of the best examples of successful transactional type of leadership. Amazon has become one of the global leaders in the market and has been able to gain competitive advantage due to the use of innovation in their business model. This has been possible due to task oriented leadership style of Jeff Bezos who has aimed at maintaining high standards among the workforce. Moreover, he dictates the plans and actions of the organization and the subordinates are expected to follow the instructions given by him. Moreover, it is tough to sustain in Amazon, as employee appraisal management is continuously used to analyze the performance of the workforce. Moreover, the employees that are under performers are sacked which shows that employees keep on performing at optimal level in order to maintain their sustainability. Thus, Jeff Bezos has been able to achieve the operational goals and objectives by deploying this kind of leadership. The growth of Amazon has exponentially increased and is much better than what they have been able to achieve in the past two decades. On the contrary, according to Carter et al. (2013), Jeff Besoz have used transformational type of leadership to gain competitive advantage in the market.  He has been visionary in implementing new ideas in to the business model of the organization such as AWS cloud based system which is now providing service to other companies. He has been able to develop a supply chain management, which is better than any other organization in the industry. As stated by Zhang et al. (2014), that Jeff Bezos has implemented effective leadership into the organization and maintain the balance between the transformational and transactional style of leadership. He has been successful in amalgamating innovation with stressful and rigid working environment, which is the main reason for their competitive advantage in the industry.

Warren Buffet is one of the most successful pioneers of business and has been one of the most successful leaders due to his adaptability to the changing environment in the global working environment. As stated Wong and Laschinger (2013), Buffet has used democratic style of leadership where he has provided encouragement to the employees in the organization. He believes in proving freedom to the employees in the organization and does not interfere within their roles. This shows that Buffet is using a combination of Laissez Faire and democratic style of leadership where he knows where to interfere and where to not. Moreover, he has provided the employees with encouragement to use their own innovative ideas to solve the problems. Thus, he believes in learning from past mistakes and use team bonding to improve the organizational procedures. According to McCleskey (2014), the unique leadership style used by Buffet has been fruitful and it can be seen from the performance of Berkshire Hathaway in the past decade. Even though he gives full freedom to the employees in the organization, he interacts with them and ask them relevant questions to make them grow at an organizational level. He has focused on employee engagement, communicates with the employees on a regular basis to identify the thought processes of the workforce. This shows that employee engagement is one of the essential factors for the success of the organization as Buffet has been instrumental in improving the growth level of the workforce. Buffet does not provide insights to the employees though out the year and after the end of each of the fiscal he sends tips to each of the employees in the organization (Antonakis and House 2013).

Moreover, he has been successful in creating a sense of belonging among the employees in the organization so that they can keep their personal goals in alignment with the goals of the organization. Moreover, he has made emphasis on keeping trust among each other and trust is essential for improving the quality of the workforce and improving the motivational level of the employees (Antonakis and Day 2017). Humility, acceptance and team working are important for the growth of the organization, which facilitates in the improvement of employee engagement. Moreover, Buffet focuses on expectation rather than focusing on the structure of the organization. This means that Buffet is clear about his expectations and has been successful in conveying it. Thus, he is asking his subordinates to achieve the goals and objectives without providing them with the path of action and they are able to choose whatever they feel is effective convenient (Birasnav 2014). Thus, it can be seen that Buffet has been using a different style of leadership when compared to Jeff Bezos, then it can be said even though their methods are different they are effective in their respective style of leadership.

Larry Page, the founder and CEO of Google is one of the best examples of transformational leadership style. A transformational leader provides motivation to his employees to fulfil unachievable goals in the organization. Moreover, these types of leaders are the ones who are able to accommodate successfully innovation in to the business model of the organization. Therefore, Larry Page has been instrumental in providing inspiration to the subordinates and develop a collective identify for the organization
(Tian, Risku and Collin 2016). Creativity and collaboration is the main motto of Larry Page who is currently the CEO of alphabet Inc. that is the parent organization of Google. The four main stages of transformation leadership style adopted by Larry Page are inspiration, motivation, brain stimulation, personalized consideration and idealized influence. The various policies started by Larry Page include the mailing system for the manager where he is able to get updates about the projects they are working on (Van Wart 2013). Moreover, 70-20-10 policy stared by him allowed the employees to spent 10% of their time in personal activities. Moreover, he encouraged managers to work on papers to create more innovative ideas and improve their level of interaction with the employees so that there is two-way communication channel in the organization. On the contrary, as stated by Chemers (2014), Larry Page has also used transactional leadership style to maintain right kind of behaviour within the organization so that he can ensure that none of the employees are misusing the facilities provided by the organization.  According to Dugan (2017), the three major factors adopted by transactional leaders are active management, passive management and contingent rewards.  Thus, Larry Page provided the employees with rewards and facilities to improve further their motivation level. Moreover, he has been successful in using passive and active management to provide the employees with freedom in the work they do. Moreover, the intervention happens when he feels that the decision taken by the subordinates may give rise to threatening and future conflicts.

Thus, from the critical analysis of the leadership style of various leaders it can be seen that most of the leaders are using different forms of leadership styles for efficient operations of their business. Moreover, there are lot of aspects in the organization, which has to be dealt in a different way. A single style of leadership is not effective enough to tackle all the situations so adaptability is the key to success in this changing global working environment. However, the traits of a particular leadership style will more in all these leaders because of their individual personality. However, it has been seen from various instances that leadership styles are important in improving the performance of the employee and culture within the organization. The three organizations Amazon, Berkshire Hathaway and Alphabet Inc are known for their efficient work force and unique work culture, which validates the importance of leadership in the organization. Thus, it can be deduced that different styles of leadership are effective in providing the organization with competitive advantage but it totally depends on the individual needs of the respective organization.

References

Antonakis, J. and Day, D.V. eds., 2017. The nature of leadership. Sage publications.

Antonakis, J. and House, R.J., 2013. The full-range leadership theory: The way forward. In Transformational and Charismatic Leadership: The Road Ahead 10th Anniversary Edition (pp. 3-33). Emerald Group Publishing Limited.

Avolio, B.J. and Yammarino, F.J. eds., 2013. Introduction to, and overview of, transformational and charismatic leadership. In Transformational and Charismatic Leadership: The Road Ahead 10th Anniversary Edition (pp. xxvii-xxxiii). Emerald Group Publishing Limited.

Birasnav, M., 2014. Knowledge management and organizational performance in the service industry: The role of transformational leadership beyond the effects of transactional leadership. Journal of Business Research, 67(8), pp.1622-1629.

Carter, M.Z., Armenakis, A.A., Feild, H.S. and Mossholder, K.W., 2013. Transformational leadership, relationship quality, and employee performance during continuous incremental organizational change. Journal of Organizational Behavior, 34(7), pp.942-958.

Chemers, M., 2014. An integrative theory of leadership. Psychology Press.

Dugan, J.P., 2017. Leadership theory: Cultivating critical perspectives. John Wiley & Sons.

McCleskey, J.A., 2014. Situational, transformational, and transactional leadership and leadership development. Journal of Business Studies Quarterly, 5(4), p.117.

Northouse, P.G., 2015. Leadership: Theory and practice. Sage publications.

Tian, M., Risku, M. and Collin, K., 2016. A meta-analysis of distributed leadership from 2002 to 2013: Theory development, empirical evidence and future research focus. Educational Management Administration & Leadership, 44(1), pp.146-164.

Van Wart, M., 2013. Lessons from leadership theory and the contemporary challenges of leaders. Public Administration Review, 73(4), pp.553-565.

Wong, C.A. and Laschinger, H.K., 2013. Authentic leadership, performance, and job satisfaction: the mediating role of empowerment. Journal of advanced nursing, 69(4), pp.947-959.

Zhang, Y., LePine, J.A., Buckman, B.R. and Wei, F., 2014. It's not fair… or is it? The role of justice and leadership in explaining work stressor–job performance relationships. Academy of Management Journal, 57(3), pp.675-697.