Main Body/Literature Review
The notion of leadership and its significance has its roots at the time of Plato and other scholars. Plato attached social meaning to the term leader, stating the position of leader is created based on their class position. However, the meaning has changed significantly in the contemporary. The type of relationship a person has with other individuals defines a Leader. Leadership is the potential of an individual to motivate, influence, and enable other people to effectively contribute to the success of their organizations (Brian, 2017). The various determinants of the leadership style of a person, includes personal beliefs, Life Experiences, Upbringing, and daily interactions. A good leader is someone more resilient and foresighted. But a great leader is someone who introduces and adjusts according to the need. There are several theories on leadership. Organizations are currently concerned with a lack of leadership talent (Els, 2022). The paper provides an overview of the styles and theories of leadership in contemporary times. It also provides a discussion on the real-life case studies and their prevalent leadership theory and style. An analysis of self and interpersonal leadership skills. Also, a real-life case study of SandRidge Energy Inc. is included to provide a practical analysis of the leadership styles and theories. It discusses the issues that the organization has been facing, particularly the crisis led by the pandemic and its after-effects in the organization.
Earlier theories of leadership focused on distinguishing the qualities between followers and leaders, Subsequent theories emphasize more on skills and situational factors of an individual. Due to innovation and technological advancements, the need for good leadership is required then it ever was in the past.
The theories of contemporary leadership have their roots in the post-industrial paradigm. The notion of leadership has been considerably changed due to these contemporary theories following the reciprocal and dynamic approach based on situations and contingencies.
The literature review of Leadership theories shows that they have been altered and refined from time to time to fit the need of the organization. Thus, each theory holds some relevance. However, their relevancy and significance depend on the situation it is applied. Simply put, some factors substantially impact the leadership theories, such as circumstance, culture, organizational complexities, new laws and regulations, work environment, other business developments, and the like. Thus, leadership theories for dynamic and contemporary organizations are distinct.
Business dynamics have created complexities requiring good leadership than ever. The literature provides for five theories explaining the leaderships perspective: Contingency, behavioral, competency, implicit and transformational. Further, the leadership styles, such as charismatic, transformational, and contingent were enumerated by the author McShane and Glinow in the book Organizational behavior. The author emphasized the contingency model of leadership by Fiedler (Mc Shane, 2021).
Contingency Theory of Leadership
Nelson and Quick (2005) defined leadership as a process of managing and guiding the people at the workplace. Meanwhile, Lepine, Wesson, and Colquitt (2014) focused on an individual’s ability to exert influence and power on the followers to achieve the desired goals (Colquitt, 2014).
The dynamics of the organizations have made the great men theory of less relevance, since, in contemporary times a leader is not someone who merely possesses some qualities or traits. Now the leadership is determined by various other factors (Samad, 2012).
Author Edgar Schein (2016) distinguished leadership into two theories i.e., transformational and transactional leadership. In the latter theory, the relationship between followers and leaders is contractual in nature. Whereas, a transformative leader molds the followers by bringing changes in values, beliefs, goals, needs, and aspirations. Transactional leadership is leadership that has a contractual nature between leaders and followers. The author also explained the behavior a transformational leader possesses i.e., influence, motivation, intellect, and consideration (Cotter, 2016).
The book ‘organizations’ defined transformational leadership as the capacity of an individual to motivate and inspire the followers to achieve desired objectives for the internal reward (Gibson, et al., 2012). Further, the transformation leadership model is a multilevel approach of leadership, based on values and beliefs that are fundamental for working in a socially responsible manner.
Contingent leadership states that the efficacy or success of a leader is conditional. A leader can effectively manage a certain situation and fail to manage another. Thus, this theory believes a good leader is someone resilient in different situations. Fiedler’s contingency model defines a good leader as some who fits diverse situations and supervises closely rather than team-based (Swanwick, 2019).
The Contingency Model by Fiedler on Leadership states that the success of an organization relies on the effective leaders’ style and decision according to the situation. Simply put, effective leadership is contingent i.e., depends upon the requirement of the situation. The match between the leadership approach and the situation needs to fit right to benefit the organization.
Additionally, there are leader-member relations present in the contingency model. Under this model, a leader dictates task structure and his employees to have situational control. The leader-member relation represents dependability, support, loyalty, and trust in each other. Thus, the leader focuses on maintaining cordial relations with the employees. The leader is able to use reward and penalty programs to boost employees’ morale and performance. However, there are limitations of the contingent model (Heller, 2019).
Transformational Leadership Theory
Transformational leadership theory is the latest addition to the literature. Transformational leaders align leaders’ and employee goals, thus, benefitting the company by focusing on individualized considerations. Examples of transformative leaders include Jack Welch, ex- CEO of General Electric, Sundar Pichai and Larry Page of Google, and the like. Transformational leaders lead to turnaround the company for optimal benefits. Research suggests that transformational leaders are influential for their employees by increasing the level of enthusiasm and motivation to achieve the desired goal. The leader works in building more effective relationships with their employees which in turn improves productivity and performance benefitting the organization. Additionally, it results in higher levels of integrity, team performance, and commitment to the organization. The founder of Starbucks Co. is a good example of a transformational leader since he passionately takes care of his employees’ needs. However, the theory lacks in situations where employees dislike their leader, or they don’t share the same values and beliefs as the leader. Also, not all leaders can be influential to their employees (Han, 2020).
Transactional leadership increases the efficiency of the organization, meanwhile, transformational leadership works towards an improved course of action (Jangsiriwattana, 2019). A transactional leader values structure and order. It relies on people who are self-motivated and work well in a directed, structured work environment. The leader reviews individual and group performances in a routine manner. They work best with employees who are self-motivated and well-versed with their duties since the leader relies on the already existing organizational structure. The relationship is based on the system of reward and penalty between the leader and the employees. However, transactional leaders are not considered a good fit for organizations with innovative and creative needs (STU , 2018). Transactional leader prefers the status quo of the organization through their leadership, unlike transformational leaders.
The theory of charismatic leadership states that extraordinary traits and personalities build devotion and enthusiasm in followers to believe in their leaders. Research shows leaders with charisma are those who hold strong values and are strongly influential (Seidel, 2019). For example, charismatic leaders like Steve Jobs, Sir Richard Branson, Bill Gates, Elon mask, Jeff Beroz. The theory is charm centric i.e., believe in the ability of the leader to inspire and persuade by their personality and charm.
According to the contingency theory by Fiedler, there is no one best style of leadership suitable for every organization. Sometimes situational changes require a change in the managerial and leadership approach. In contemporary times, Contingency and environmental variables are considered significant factors in determining leadership style (Dhamija, 2021). For instance, a participative style would be well suited for a flexible and dynamic organization. Whereas, a directive style of leadership is preferred in a mechanistic or static business. Following are some of the leadership styles significant in contemporary times:
Transactional Leadership Theory
Transactional leadership style- A leader focuses on interactions with the employees to ensure the attainment of the organization’s objectives and goals. It follows the satisfaction theory of Maslow. The relationship between the leader and employees is driven by rewards and incentives aimed to motivate employees to augment their productivity standards. Evidence shows little improvement in employees’ job satisfaction by incorporating transactional leadership. A transactional leader is more focused on managing things rather than leading. He is more indulged in laying out short-term plans and goals. This type of leadership style is not recommended for organizations requiring creativity and flexibility. Nevertheless, it is common in most organizations (Vasilescu, 2019).
Transformational leadership- A leader with a transformational style of leadership possesses valuable traits to lead as a visionary, inspiring, enthusiastic, optimistic leader. A transformational leader focuses on both short-run and long-run goals. He works in transforming the organization from within by promoting ethics, value, and transparency. Transformational leaders work towards transforming and helping each other in the organization to boost productivity and build a harmonious work culture. A transformational leader is considered a true leader owing to his inspiration and visionary skills.
Charismatic leadership- charismatic leadership is defined by a leader who uses his or her communication skills, persuasiveness, and charm to influence others. Charismatic leaders, given their ability to connect with people on a deep level, are especially valuable within organizations that are facing a crisis or are struggling to move forward. However, under charismatic leadership, an organization relies completely on the leader for effective functioning (Novitasari, 2021).
Servant leadership- The leader works to develop, support, and mentor team members to enhance their skills to deliver their best. The leader acts as a mentor for the employees. Servant leadership is similar to democratic leadership, since, the leader involves the team members in the decision-making process. The servant-leader shares his management powers and lays emphasis on aiding and supporting employees to organizational goals. The leader is equally concerned about the well-being of employees.
Authentic leadership- Authentic leaders are self-aware and genuine. They believe in transparency and accountability. They believe in inspiring employees to gain each other’s trust and loyalty. Thus, seeks employee retention with increments and raise. This leadership style includes communication and appreciation between the leader and the employees. Authentic leaders are mission-focused and driven by positive outcomes. They focus on long-run objectives. Further, they show immense patience and trust while nurturing employees along with the organization. An example of an authentic leader is the CEO of Medtronic, George, who believes the authentic leadership approach is beneficial for organizations’ future prospects (Alzghoul, 2018).
Charismatic Leadership Theory
The 2021 global leadership forecast report shows the prevalence of leadership crises that Companies around the globe are facing. Since 2011, there is a decline in the rating of the average global bench. In the 2021 report, only 11% of the organizations had a ‘good’ or ‘great’ leadership. It is the lowest reported percentage in a decade. The probable reason is the failure of development and transition in leadership skills (Sehgal, 2021).
The real-life case analysis of an organization and leadership theories of management will further help in understanding the practical significance of leadership. The chosen organization is Sand Ridge Energy, Inc., which deals in the production and exploration of oil and natural resources. It was founded in 2006 in Oklahoma in the U.S. The company faces serious management and leadership issues in terms of corporate governance, investment portfolio, employee retention, and compensations. Also, SandRidge Energy received poor ratings by the global leadership forecast for 2021 (Sehgal, 2021). The organization falls under the category of ‘high concern level’ for the short-run along with the long-run viewpoint. Thus, indicating high management risk issues, including low independence of board to high executive compensation. Further, increased issues of payment and transactions within the organization have raised stern concerns among shareholders about its pay practices. Furthermore, there are other major issues affecting the functioning of the organization, such as internal equity pay, orientation policy, and vague structure of compensation on performance (Armental, 2018).
At the macro level, SandRidge faces social and environmental concerns by hiding most of its data about the risks and opportunities involved. This has made its investment portfolio under critical scrutiny by investors. Thus, indicating the bureaucratic style of leadership which focuses on control management and non-transparency. This type of leadership has become obsolete and not considered useful in the dynamic business environment.
The company requires strong leadership to resolve the above-stated issues. In 2013, CEO Ward was dismissed by the board of directors stating the need for better leadership for the benefit of the company. A new leader James Bennett was appointed as the CEO and President of the company. He aimed at strengthening the organization from within by emphasizing the significance of ethics, values, and transparency. He visioned to build a corporate culture that would respect its employees’ dignity and hard work. He dedicated his work to building a long-lasting business. Thus, following the transformative leadership style. However, under the leadership of Mr. Bennett, the organization filed for bankruptcy in the year 2016. In the same year, SandRidge also got delisted by New York Stock Exchange (NYSE). But Bennet’s leadership saved the organization and it got re-listed on the NYSE and managed bankruptcy within a few months (U.S. Securities and Exchange Commision, 2019). Thus, indicating transformative theory of leadership. He used persuasive techniques for the leadership and not manipulation or punishment techniques of transactional leadership style. Conversely, he laid off around 75% of the workforce and sold the organization’s assets to reduce its debt. Henceforth, he adopted a transactional leadership style.
Real-Life Case Study: SandRidge Energy Inc.
He was fired without cause and an interim CEO John Suter was appointed acting as ad hoc leader. Under his leadership, the organization laid-offs more than 80 employees. This created job security and employee royalty issues within the organization creating more complexities.
Soon, McKinney became the new President and CEO of the company. He followed ex interim CEO Suter’s leadership style and laid off employees amounting to more than 50% of the total workforce in the year 2021. Thus, indicating grave concerns about the organization’s future prospects and survival. Also, the Pandemic has a negative impact on the organization due to the worldwide shutdown the prices of oil and resources were severely affected. Thus, the survival and functioning of SandRidge depends upon the decisions of the management and most importantly the leader to overcome the current crisis (Wulandari, 2021). To reduce the negative impacts of Covid-19, CEO Suter took several initiatives to optimize the organization’s stability and resilience. The sudden blow of Pandemic made things complicated for the already troubled SandRidge Company. The organization became standstill with all-time low oil and mineral prices. CEO Suter was replaced with the new CEO and leader Carl F. Giesler. He took swift measures to minimize oil price and Covid-19 impact. He adopted asset restructuring to overcome the crisis. Furthermore, he downsized the company to balance the debt, to maximize liquidity and the cash flow. He initiated work from home with proper compliance with the government guidelines. Also, he led a cost-savings initiative to combat the pandemic effect. His leadership style benefitted the organization. The data shows, the organization has a better turnover in the year 2021 as compared to 2020. Thus, SandRidge requires a good leader with exceptional qualities like Carl Giesler, because the organization has been facing management and leadership issues. He is a transformational leader. However, other management issues also need to be addressed. Also, the organization has listed under ‘high level concerns’ by forecast reports (Sehgal, 2021).
Thus, SandRidge organization needs a transformative leader with a vision who also enhances the employees’ morale, motivation, and performance leading to profiting the organization. Under transformational leadership, effective communication and positive transition are followed. This would resolve the issues of the organization concerning shareholders, investors, and employees. Furthermore, an approach stated in the charismatic theory can also benefit the organization. A charismatic leader becomes a driving force in inspiring the employees and increasing their productivity and faith in the organization. Furthermore, Fidler’s model of contingent theory fits SandRidge’s needs, since it needs a resilient leader to manage the issues depending upon the situation’s need. Thus, the organization can resolve its issues through effective leadership. The application of transformational and charismatic theories seems apt in addressing organizations’ issues. After the analysis of the company, it is evident that it lacks effective leadership. The frequent change of leaders results in instability in the organization and decreases trust and loyalty among shareholders, investors, and employees. Furthermore, an authentic leader can also fill the shoes in the SandRidge Company to resolve the issues of sudden lay-offs by nurturing employees for long-term benefits.
Self and Interpersonal Leadership Skills Analysis
Conclusion
Leadership is significant for the smooth functioning of any organization. Without good leadership, organizations can face difficulties even in resolving daily challenges along with critical situations. A leader needs the run an organization in the contemporary era. The traditional beliefs described a leader as someone who is born with leadership traits necessary to assume the position to lead his followers. Conversely, the change in leadership beliefs is evident by its transitioned theories. There is a sharp shift in the leadership styles depending upon the situation. A leader needs to be smart and resilient to be capable of running an organization successfully (Cobo, 2017). In 2006, the organization SandRidge Energy Inc. was founded and in 2021 it got categorized under companies of ‘serious concerns’ by the GMI. The management issues have been prevalent in the organization since the leadership of its first CEO Ward. Within a short span of time, the organization changed several leaders. Each leader with their distinct leadership qualities and style to resolve the issues of management. However, the company’s current position indicates a need for a transformational leadership style. To overcome the crisis situation, a resilient leader with a transformational approach and style is required. Also, a leader is responsible for the daily functioning of the organization, determining short-term and long-term goals, action plans to handle and recover from future crises. A leader needs to be visionary and resilient to be distinguished as a great leader. Furthermore, the qualities of an authentic leader can also prove to be an effective and good leader for the SandRidge Company, under the leadership of the CEO Carl overcame the pandemic crisis by the sudden lay-offs which have resulted in lowered employees’ morale and loyalty. Under authentic leadership, SandRidge Inc. can overcome its current crisis by investing time in employees for achieving goals of longer terms.
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Conclusion
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