Carlos ghosn leadership style pdf

Who Leaders Are and What Leaders Do Indra Nooyi, PepsiCo’s CEO, talks straight, has a sharp sense of humor, and sings in the hallways wherever she is. Nooyi is an extrovert. By contrast, Douglas Conant, former CEO of Campbell Soup Company, is an introvert who says that he feels exhausted after spending time in large groups of people he doesn’t know.

Which one is likely to be successful as a CEO? According to a survey of 1,542 senior managers, it’s the extrovert. Forty- seven percent of those 1,542 senior managers felt that extroverts make better CEOs, while 65 percent said that being an introvert hurts a CEO’s chances of success. So clearly, senior managers believe that extroverted CEOs are better leaders. But are they? Not necessarily. In fact, a relatively high percentage of CEOs, 40 percent, are introverts. Former Sara Lee CEO Brenda Barnes said, “I’ve always been shy.… People wouldn’t call me that [an introvert], but I am.” Indeed, as CEO, Barnes turned down all speaking requests and rarely gave interviews.

So, what makes a good leader? Does leadership success depend on who leaders are, such as introverts or extroverts, or on what leaders do and how they behave?

Let’s learn more about who leaders are by investigating 14- 2a leadership traits and 14-2b leadership behaviors.

14-2aLeadership Traits

Trait theory is one way to describe who leaders are. Trait theory says that effective leaders possess a similar set of traits or characteristics. Traits are relatively stable characteristics such as abilities, psychological motives, or consistent patterns of behavior. For example, trait theory holds that leaders are taller and more confident and have greater physical stamina (i.e., higher energy levels) than

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nonleaders. In fact, studies show we perceive those in authority as being taller than they actually are, and that taller people see themselves as more qualified to lead.

Indeed, while just 14.5 percent of men are six feet tall, 58 percent of Fortune 500 CEOs are six feet or taller. Author Malcolm Gladwell says, “We have a sense, in our minds, of what a leader is supposed to look like, and that stereotype is so powerful that when someone fits it, we simply become blind to other considerations.” Trait theory is also known as the “great person” theory because early versions of the theory stated that leaders are born, not made. In other words, you either have the right stuff to be a leader, or you don’t. And if you don’t, there is no way to get it.

For some time, it was thought that trait theory was wrong and that there are no consistent trait differences between leaders and nonleaders, or between effective and ineffective leaders. However, more recent evidence shows that “successful leaders are not like other people,” that successful leaders are indeed different from the rest of us. More specifically, leaders are different from nonleaders in the following traits: drive, the desire to lead, honesty/integrity, self-confidence, emotional stability, cognitive ability, and knowledge of the business.

Drive refers to high levels of effort and is characterized by achievement, motivation, initiative, energy, and tenacity. In terms of achievement and ambition, leaders always try to make improvements or achieve success in what they’re doing. Because of their initiative, they have strong desires to promote change or solve problems. Leaders typically have more energy—they have to, given the long hours they put in and followers’ expectations that they be positive and upbeat. Thus, leaders must have physical, mental, and emotional vitality. Leaders are also more tenacious than nonleaders and are better at overcoming obstacles and problems that would deter most of us.

Successful leaders also have a stronger desire to lead. They want to be in charge and think about ways to influence or convince others about what should or shouldn’t be

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done. Honesty/integrity is also important to leaders. Honesty, being truthful with others, is a cornerstone of leadership. Without it, leaders won’t be trusted. When leaders are honest, subordinates are willing to overlook other flaws. For example, one follower said this about the leadership qualities of his manager: “I don’t like a lot of the things he does, but he’s basically honest. He’s a genuine article, and you’ll forgive a lot of things because of that. That goes a long way in how much I trust him.”

Integrity is the extent to which leaders do what they say they will do. Leaders may be honest and have good intentions, but if they don’t consistently deliver on what they promise, they won’t be trusted.

Self-confidence, or believing in one’s abilities, also distinguishes leaders from nonleaders. Self-confident leaders are more decisive and assertive and are more likely to gain others’ confidence. Moreover, self-confident leaders will admit mistakes because they view them as learning opportunities rather than as refutations of their leadership capabilities. LinkedIn CEO Jeff Weiner admits how challenging it can be for managers to recognize their mistakes. One of the most difficult mistakes, he says, can be accepting when new hires don’t work out. “It’s not easy to admit this to yourself. After all, as the CEO or owner, you’re largely responsible for the fact that the employee is now in over his or her head,” Weiner says. “Plus, admitting the mistake means that you’ll have to overcome your internal wiring to ‘finish the job’ and ‘not give up.’ Persistence is often an admirable trait, but not when it prevents you from making a necessary midcourse adjustment.”

Leaders also have emotional stability. Even when things go wrong, they remain even-tempered and consistent in their outlook and in the way they treat others. Leaders who can’t control their emotions, who anger quickly or attack and blame others for mistakes, are unlikely to be trusted.

Long-Term Succession at GE

Some companies seem to cycle through CEOs on a yearly basis. At General Electric, however, employees can safely assume that their CEO will be

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around for a while. Indeed, five of GE’s last eleven chiefs have held the post for more than thirteen years. So when current CEO Jeff Immelt took over for twenty-year veteran Jack Welch, many expected that Immelt would run the company for twenty years as well. Immelt himself has lead several board discussions suggesting a shorter fifteen-year timeframe. According to one GE insider, “To maintain the energy that is required to these jobs that are so broad and deep, twenty years is a really long time.” While GE routinely engages in early-stage succession planning, the board hopes to avoid the last succession situation. Succession planning began seven years before Jack Welch’s retirement, pitting top talent against each other. When Immelt was given the job, several competing candidates immediately left the company for outside positions.

Jeff Immelt, CEO of General Electric

AP Images/Kris Tripplaar

Source: J.S. Lublin, T. Mann, and K. Linebaugh, “GE Rethinks the 20-year CEO,” Wall Street Journal, April 15, 2014, accessed May 19, 2014, http://online.wsj.com/news/articles/SB10001424052702304572204579501640452

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Leaders are also smart—they typically have strong cognitive abilities. This doesn’t mean that leaders are necessarily geniuses—far from it. But it does mean that leaders have the capacity to analyze large amounts of seemingly unrelated, complex information and see patterns, opportunities, or threats where others might not see them. Finally, leaders also know their stuff, which means they have superior technical knowledge about the businesses they run. Leaders who have a good knowledge of the business understand the key technological decisions and concerns facing their companies. More often than not, studies indicate that effective leaders have long, extensive experience in their industries. Kevin Tsujihara, Warner Bros. Entertainment CEO, has been in the moviemaking business twenty years, starting as manager of Ernst & Young’s (an accounting firm) entertainment division. He joined Warner Bros. in Finance, then served as executive vice president, overseeing efforts in streaming and social media, then became executive vice president of Corporate

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Business Development and Strategy. Before his promotion to CEO, Tsujihara served as the president of Warner Bros. Home Entertainment, in charge of home video, distribution, video games, and anti-piracy operations.

14-2bLeadership Behaviors

Thus far, you’ve read about who leaders are. But traits alone are not enough to make a successful leader. They are, however, a precondition for success. After all, it’s hard to imagine a truly successful leader who lacks most of these qualities. Leaders who have these traits (or many of them) must then take actions that encourage people to achieve group or organizational goals. Accordingly, we now examine what leaders do, meaning the behaviors they perform or the actions they take to influence others to achieve group or organizational goals.

Researchers at the University of Michigan, Ohio State University, and the University of Texas examined the specific behaviors that leaders use to improve subordinate satisfaction and performance. Hundreds of studies were conducted and hundreds of leader behaviors were examined. At all three universities, two basic leader behaviors emerged as central to successful leadership: initiating structure (called job-centered leadership at the University of Michigan and concern for production at the University of Texas) and considerate leader behavior (called employee-centered leadership at the University of Michigan and concern for people at the University of Texas).

These two leader behaviors form the basis for many of the leadership theories discussed in this chapter.

Initiating structure is the degree to which a leader structures the roles of followers by setting goals, giving directions, setting deadlines, and assigning tasks. A leader’s ability to initiate structure primarily affects subordinates’ job performance. CEO Carlos Ghosn has decreed that by 2016 Nissan will obtain an 8 percent global market share and an 8 percent profit. This unusually specific strategic plan, called “Nissan Power 88,” has clear deadlines,

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direction, and tasks. It specifies that by 2016 Nissan will deliver an all-new car “every six weeks for six years,” for a total of sixty-six different models worldwide, it will launch ninety new technologies (fifteen per year) for its cars, sell 1.56 million electric cars, and its Infiniti brand will sell 10 percent of all luxury cars worldwide. Said Ghosn, “Nissan Power 88 is a demanding business plan, but our company has a proven track record of achieving challenging objectives.”

Consideration is the extent to which a leader is friendly, approachable, and supportive and shows concern for employees. Consideration primarily affects subordinates’ job satisfaction. Specific leader consideration behaviors include listening to employees’ problems and concerns, consulting with employees before making decisions, and treating employees as equals. Marian Salzman, the CEO of Euro RSCG Worldwide PR, a New York City–based public relations firm with 233 offices worldwide, spends a lot of time listening to her staff, most of whom are millennials (i.e., born after 1980). While she hasn’t provided them free food, a juice bar, or reimbursement for using personal trainers, all of which they’ve asked for, she allows casual dress in the office—even flip-flops!—hosts happy hours on the roof of the building three times a week, and allows employees to take time off to do volunteer work. Why? Because, she says, “They want the workplace to recognize that they’re not 9 to 5 people. They’re not people [who are] ever going to wear gray flannel suits.” It makes sense, she believes, to not play the “boss card” with millennials. Salzman says, “You’re not the smartest person in the room anymore. You may be the most experienced, you may be the wisest. You’re not the smartest.” The payoff? Euro RSCG Worldwide PR attracts and keeps a highly motivated staff that is propelling its work in digital communications and social media.

Although researchers at all three universities generally agreed that initiating structure and consideration were basic leader behaviors, their interpretation differed on how these two behaviors are related to one another and which

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are necessary for effective leadership. The University of Michigan studies indicated that initiating structure and consideration were mutually exclusive behaviors on opposite ends of the same continuum. In other words, leaders who wanted to be more considerate would have to do less initiating of structure (and vice versa). The University of Michigan studies also indicated that only considerate leader behaviors (i.e., employee-centered behaviors) were associated with successful leadership. By contrast, researchers at Ohio State University and the University of Texas found that initiating structure and consideration were independent behaviors, meaning that leaders can be considerate and initiate structure at the same time. Additional evidence confirms this finding. The same researchers also concluded that the most effective leaders were strong on both initiating structure and considerate leader behaviors.

This “high-high” approach can be seen in the upper right corner of the Blake/Mouton leadership grid, shown in Exhibit 14.1. Blake and Mouton used two leadership behaviors, concern for people (i.e., consideration) and concern for production (i.e., initiating structure), to categorize five different leadership styles. Both behaviors are rated on a 9-point scale, with 1 representing “low” and 9 representing “high.” Blake and Mouton suggest that a “high-high,” or 9,9, leadership style is the best. They call this style team management because leaders who use it display a high concern for people (9) and a high concern for production (9).

Exhibit 14.1Blake/Mouton Leadership Grid

Source: R. R. Blake and A. A. McCanse, “The Leadership Grid®,” Leadership Dilemmas—Grid Solutions (Houston: Gulf Publishing Company), 21. Copyright © 1991, by Scientific Methods, Inc. Reproduced by permission of the owners.

By contrast, leaders use a 9,1 authority- compliance leadership style when they have a high concern for production and a low concern for people. A 1,9 country

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club style occurs when leaders care about having a friendly, enjoyable work environment but don’t really pay much attention to production or performance. The worst leadership style, according to the grid, is the 1,1 impoverished leader, who shows little concern for people or production and does the bare minimum needed to keep his or her job. Finally, the 5,5 middle-of-the- road style occurs when leaders show a moderate amount of concern for both people and production.

Is the team management style, with a high concern for production and a high concern for people, the best leadership style? Logically, it would seem so. Why wouldn’t you want to show high concern for both people and production? Nonetheless, nearly fifty years of research indicates that there isn’t one best leadership style. The best leadership style depends on the situation. In other words, no one leadership behavior by itself and no one combination of leadership behaviors works well across all situations and employees.