BUS 500 Leadership Qualities of Chief Executive Officer Assessment 3 Answer
Leadership can be defined as the management function that helps in directing efforts of Human Resource capital towards achievement of goals and objectives. Leadership has become one of the most important functions of business management as a majority of business operations are undertaken with the help of human resources. In addition to that other resources such as financial resources as well as technological resources are operated by human resources. It means that the efficiency of other resources is also dependent on the efficiency of human resources. Therefore it can be said leadership is very important for a business organization and it will help business organizations to achieve their full potential of the operation. The main focus of this report will be on analysing leadership qualities in one of the most popular and biggest organizations in the world i.e. Microsoft. Microsoft is one of the most successful business organization operating in the information technology industry (Burns and Dewhurst, 2016). The focus of this report will be on identifying the relationship between the profitability of the company and leadership. Currently, the CEO of the organization is Satya Nadella and this report will evaluate the leadership qualities of the chief executive officer and its impact on the overall organization. In addition to Microsoft, this report will also focus and evolution of the concept of leadership and difference between leadership and management.
The historical trend in the concept of leadership
Leadership has been part of business management for a long period of time in one or another way. Leadership qualities have been presented by the different business organization across the histories that resulted in the evolution of this concept. In the current business, scenario leadership is very important for directing the efforts of employees so that the objectives of business operations can be achieved. Different theories have been explained in this part of the report with the timeline in which they were used by business organizations.
Behavioural theory (1950 to 1970)
This theory was used by Business organizations during the period of 1950 to 1970. This story was focused on the behaviour of leaders that you were leading a particular business organization. According to this theory, a leader will be considered as effective only if he/she is able to understand its personal behaviour and change it in accordance with the change in a business environment (McCleskey, 2014). Therefore it can be said that the main focus of this theory is to adapt the behaviour of the leadership in accordance with the needs and requirements of the business organization.
Contingency theory (1970-1990)
According to this theory business organizations are required to analyse the leadership qualities of a particular leader and whether such letter will be effective in a particular business situation. For this purpose, it is very important that leaders are able to identify the business situations in which they can thrive. The main focus of this theory was on two factors i.e. personal style of leaders and the situation in that is controlling the leader.
Over the evaluation of time, there have been various leadership theories that are adopted by the business organization in 2000. It becomes very common for a business organization to analyse its business situation as well as the industry situation in order to adapt to a different kind of leadership. Transformational leadership has become one of the most significant leadership theories over a period of time. According to this theory business organizations are required to change their leadership qualities in accordance with the change in a business environment (Gunter, 2016). For example, if a particular order is required to be completed within a limited the amount of time and then autocratic leadership will be required as strict instructions will be required to complete the work in time.
On the basis of this analysis, it can be said that the concept of leadership has evolved over the period of time and currently business organizations are focusing on changing the leadership style in accordance with external factors affecting business operations.
Difference between management and leadership
Basic overview it can be said that management and leadership are similar to each other under the business management process. Both of these concepts helps the business organization to achieve the full potential of employees. In addition to that, these concepts also help in the achievement of goals and objectives with the help management of employees. It can we said that both of these concepts are focused on directing employees in accordance with their roles and responsibilities in the organization (Antonakis and Day, 2017). Apart from the similarities, there are some differences between these two concepts and some of these differences are as follows-
Basic overview- On one hand where leadership is only concerned with the human resource capital management is concerned with all the other resources employed by the organization. For example managers into organizations are responsible for achieving the full potential of each and every resource rather than focusing only on directing employees.
Emphasis- the primary emphasis of leadership is on motivating and influencing people in order to achieve overall goals and objectives. On the other hand emphasis in case of management is on controlling the business activity is so that business operations can be conducted in accordance with a structured plan.
Guidelines- There are no fixed guidelines provided to leaders in the organization for leading a team. Leaders are required to analyse the characteristics of their employees and their expectation from the business organization. Leaders are required to analyse these requirements and prepare leadership strategies accordingly (Northouse, 2018). On the other hand, management is based on fixed policies and procedures developed by the top management of the organization. For example, the management of operational department will be based upon the policies and procedures developed for the production process.
Creativity- it can be said that the level of creativity in case of leadership is much higher as compared to management. This is due to the fact that leaders are not required to follow a fixed format of policies and procedures for leading employees. On the other hand, it is important to follow rules and regulations in case of management with a limited scope of creativity (Van Wart, 2014).
On the basis of this analysis, it can be said that these two concepts are very different from each other net is important for business organizations it makes sure that both of these concepts are adopted in business management.
Overview of the business
Business organization under consideration in this report is Microsoft Corporation. This is an American multinational technology company that is providing IT services in different countries all across the globe. It is one of the largest multinational organizations are currently in the world in terms of revenue and market capital. Profitability generated by this organization is also increasing constantly over the period of time. In the year ending March 2019 overall profit generated by the organization has increased by 21.51%. Net income generated by the organization in this organization in 2019 is 34.92 billion as compared to net income of $16.57 billion in 2012. It can be said that this organization is one of the most profitable organizations in the world (Burke, 2017).
One of the primary factors behind the success of this organization is its leadership. Bill Gates i.e. the founder of Microsoft is considered as one of the most influential leaders in the history of information technology. Innovation has always been a key path of leadership in Microsoft and this is continued by a current chief executive officer of the company i.e. Satya Nadella. Satya Nadella has contributed significantly towards the achievement of various milestones in the last 5 years (Ferreira, 2016). It can be said that leadership qualities of Satya Nadella are working in the best interest of the business organization and he is able to continue the leadership of Bill Gates.
A general overview of leadership practices in Microsoft
The main focus of the section of the report would be on identifying the leadership practices in Microsoft. For effective and efficient evaluation of leadership practices, the main focus of this section will be on a leadership style leadership challenges and leadership development activities. This section of the report will help in understanding the basic overview of the leadership structure in the organization.
Leadership style- Leadership style followed by the organization is transformational leadership. According to this concept of leadership management of the organization is required to alter its management practices in accordance with the change in the environment. Therefore it can be said that there is no fixed leadership style that is followed by the organization. Management of the organization changes its leadership style and practices in accordance with the business environment (Rowley, 2016). For example level management of the organization requires innovative input to from their employees then autocratic leadership will be used by the organization in order to take feedbacks and suggestions from each and every member of the company. on the other hand, if management is required to follow a particular set of procedures for the production of a product and services then autocratic leadership will be followed as it is a more effective strategy in case of the strict business environment.
Leadership challenges- One of the biggest challenges was faced by the organization during the year 2014 when one of the most anticipated product launched by the company i.e. Windows 8 was not preferred by the customers. In addition to that other organization like iPhone and Android by beating the windows in the mobile industry. At this time management of the organization appointed Satya Nadella as chief executive officer of the organization and leadership qualities of Satya Nadella has been positively working in the best interest of the company (Gupta and Van Wart, 2015). After the appointment of chief executive officer, management of the organization has been focused on launching innovative product and services in the mobile industry. In addition to that, they are also focusing on cloud-based services which have been profitable for Microsoft word is a period of time. Profit generated by the organization has improved significantly as compared to 2014 and the appointment of Satya Nadella as the chief executive officer has provided leadership direction to the company.
Leadership development activities- Any activity that helps the business organization to establish rules and regulations in relation to leadership in a business organization can be defined as leadership activities. Following are some of the leadership development activities-
Customer- Primary focus of management is to ensure that the business activities are in accordance with the needs and requirements of the customer. Leadership activities are undertaken by considering the expectation of the customer.
Industry analysis- As it is already provided that transformational leadership is followed in the organization which is focused on changing the leadership activities in accordance with the change in the environment (McCall Jr. and McCauley, 2014).
Strength and weaknesses of leadership practices in Microsoft
Appropriate for changing the environment- One of the strengths of current leadership practices of Microsoft is that leadership in the organization can be altered in accordance with the changes in the environment. In which Microsoft is operating is the very fluctuating as needs and requirements of the customer in information technology market changes in accordance with the change in technology. Transformational leadership will definitely help the business organization to regularly update their business processes.
Competitive advantage- Overall profitability of the organization increases with the help of transformational leadership due to changes in business processes in accordance with the business environment. It can be said that the overall profitability of the organization has improved significantly over the period of time. This is evident from the fact that net income generated in the year 2019 has increased by 21% as compared to 2018 (Eragula, 2015). Therefore it can be said that current leadership practices have been very positive for profitability and productivity of business operations.
The full potential of employees- It can also be said that management of the organization has been able to achieve the full potential of human resources working in the organization. Microsoft has become one of the most preferable business organization to work for by skilled employees whether such employees are from management or IT background. In addition to that leadership practices of Microsoft promotes innovation in product and services which is always preferable by employees as it provides internal satisfaction from the job.
Support from staff- one of the primary challenge in this type of leadership is that support from staff and peers might be limited. This is due to the fact that business organizations are required to change business processes on a constant basis in accordance with the change in the environment (Govindarajan, 2016). This type of business practice might be registered by employees as it will create additional work due to changes in roles and responsibilities on a regular basis. This type of business practice might discourage employees.
On an overall evaluation, it can be said that transformational leadership style and other leadership practices of the organization has been very beneficial. This leadership style has enabled the business organization to turnaround financial performance. Over the period of time net income and revenue generated by the organization has improved significantly and it is expected to continue in the future. Microsoft is also one of the five largest organizations in terms of market capitalization listed on NASDAQ in the past 5 years. As of 31st March 2019, it has surpassed Apple Amazon and Facebook to become the largest business organization in terms of market capitalization (Easter and Brooks, 2017). All these indicators suggest that the leadership practices of the organization are working in the interest of the company.
Following are some of the recommendations that will help in improving the financial position of Microsoft-
- First of all leaders of the organization should focus on needs and requirements of the customer to alter their management practices.
- Leaders of the organization should also focus on the mobile market as currently it is one of the most profitable markets and Microsoft is way behind Android and Apple in the mobile market. Collaboration with mobile phone manufacturers such as Samsung and Sony can be very profitable for the organization.
- Transformational leadership should be continued to be followed in future and employees apart from employees at leadership position should be encouraged to participate in leadership and management of the company (Roueche, Baker III and Rose, 2014).
- Management and leaders are also recommended to constantly analyse the external and internal environment in which business organization is operating in order to make changes in leadership style and practices.
It can be said that leadership in organization please very important role in improving productivity and profitability. After analysing different aspects of Microsoft it can be concluded that the financial performance and style of leadership are dependent on each other. Effective and efficient leadership and management in Microsoft have been contributed significantly towards the financial success of the organization. Management of the organization has been able to face different business challenges effectively with the help of effective and efficient leadership qualities presented by key people and leaders in Microsoft such as Satya Nadella and Bill Gates.