BY KELVIN SOVI
On November 6, 1986, Sir Alex Ferguson took up as the manager of Manchester United. After a few initial disappointments from players, he came back with a bang when his team won the League Cup during 1991-92 and the Premier League in 1992-93. His team-building tactics, by bringing-in talent from other teams to the Red Devils’ squad showed remarkable results. Sir Alex Ferguson worked with talented players like Dwight Yorke, Ryan Giggs, Teddy Sheringham, Paul Scholes and Ole Gunnar Solskjær and won the memorable FA Cup Final against Newcastle United (2-0) in 1998-99. In that season, the Red Devils’ squad also bagged the UEFA Champions League and the Intercontinental Cup. Under the efficient coaching of Sir Alex Ferguson, Manchester United won the Premier League (10 times), the FA Cup (5 times), the League Cup twice, the FA Charity/Community Shield (8 times), the UEFA Champions League twice, UEFA Cup Winners' Cup and UEFA Super Cup once each. Despite some valleys in Man United’s performance along the way, Sir Alex Ferguson has not received the sack! Similarly, Arsenal’s coach, Arsène Wenger has been with them since 30 September 1996. On the other hand, the Zambia National team has had many coaches in same period and the effect has been disastrous.
But for Colonel Muammar Gaddafi, his long stay in power that saw self deification has resulted in a very sad ending. Libya’s economic progress under his leadership, which should have been the antivirus to the revolution, failed to provide an anchor against the movement. There are still some other countries in the Arab world in whose direction the wind of change is blowing. Leadership is fluid because you never get to know what will knock on your door the next morning. In the political world, the people must have the freedom to change leadership through the ballot box or else they will seek other means.
In this paper, I seek to examine changing leadership in a corporation and its impact on the organization as whole and on the employees. Changing leaders is an important organizational decision which is likely to affect the strategic direction of the organization. In a corporation, leadership changes occur due to:
(a) Increased pressure for reform
(b) Decrease in performance
(c) Changes in share holding
(d) Significant differences of opinion among leaders within the corporation
(e) Voluntary separation
(f) Disciplinary severance
(g) Political environment
It is also true that in corporations managers lose their jobs over very flimsy grounds. If we were to conduct a survey among former CEOs under the title ‘Why I got fired’, we shall discover some very petty reasons.
Changing leadership becomes inevitable sometimes because a leader that has been in office for several years can often become increasingly narrow minded and inflexible about considering other alternatives. The longer a leader is in office, the more time there is to institutionalize power relations. Moreover, leaders who have been in office for a long time may rest on previous accomplishments or become complacent. Organizational reality becomes taken for granted, and it is difficult for organizational members to question the strategic direction.
Rick Wagoner was CEO for 8 years and at GM [General Motors Co] for more than 30. Wagoner joined GM in 1977, has had a senior role in GM management since 1992, and became CEO of the company in 2000. He is considered responsible for increasing GM's focus on trucks and SUVs—at the expense of the hybrids and fuel efficient cars that have become more popular in the last couple of years. But 29 March 2009, the Obama administration ousted Wagoner from GM. According to www.wired.com ,in his address President Obama said Wagoner’s ouster was not a reflection on his stewardship of the beleaguered automaker but "rather a recognition that it will take a new vision and new direction to create the GM of the future." But Considering GM’s stock plunged from around $90 a share to less than $3 a share since Wagoner moved into the corner office eight years ago, maybe the ouster was a reflection of his leadership! Rick Wagoner was replaced with Frederick "Fritz" Henderson as CEO. But just after eight months of Henderson’s leadership, the board determined that the company wasn't changing quickly enough. Hence they opened the exit door for him and he left! Wagoner is fired because a new vision at GM is needed but Henderson was ousted because he was not changing the company quick enough [in eight months?] to get the new vision envisaged by President Obama.
While leadership changes are inevitable, high leadership turnover [where leaders have a very short office tenure] has a negative impact.
Impact on the employees
Usually, when decision makers make changes to leadership in a corporation they do not take into consideration the impact of the change on the employees. They are pre-occupied with making the changes in leadership in order improve performance. They consider less how many times they have changed managers/CEOs. The general workforce remains essentially the same amid changing leadership. In his book on management, Kreitner defines management as process of working with and through others to achieve organizational objectives in a changing environment. This means that leaders do not work in a vacuum. It is for this reason therefore that the impact of leadership change on employees must be considered.
Some of the impacts of high leadership turnover on employees include:
(i) Reduced loyalty. When employees realize that the management team changes abruptly and frequently, their loyalty to the leadership is reduced. Each time there is a change in management team, employees are subjected to change management. They have to understand the new leader(s). But in a corporation where leadership change is abrupt and frequent, employees find themselves with new management before they settle down with the previous change. Inevitably, change saturation occurs leading to frustration, apathy and skepticism on the part of employees. For every new leader, employees begin to tick the calendar to mark predicted exit!
(ii) Disengagement. The elements that define engagement include emotional aspects, like taking pride in working for a company, and rational aspects, like understanding how your job fits into 'the bigger picture'. These elements wear out when employees become disengaged. They become indifferent and begin to put in less. Employees begin to question the seriousness of their corporation and this creates a serious risk for the organization.
(iii) Emotional. Employees can become stressed. Imagine walking to your manager’s office to present a report only to find another new face after one year! Employees can become stressed because of being frequently subjected to different leadership.
Impact on the organization
In an article that examined leadership succession among university presidents, the authors state that ‘’ Strategy researchers have emphasized that the characteristics of the CEO as well as his time in office can affect the strategic direction of an organization (e.g. Hambrick/Fukutomi 1991).’’ When a manager or CEO is replaced, it is theoretically anticipated that the new person will make things better. But no one can effect a new strategy immediately without synchronizing it with existing budget and agreements. A new leader has to understand the problems that the organization is facing, the people with whom he has to work and the legislation governing the business environment. If the new leader has come from outside the organization, he will lack the historic perspective of the organization and will require more time to settle down before he can form his own vision. One thing we must realize is that there is always a dead time when leadership changes occur. Organizational myopia is responsible for frequent change in leadership. Changes are made based on current happenings while ignoring the future prospects. With frequent leadership change come frequent shift in strategy. The end result is that the performance of the organization that is supposed to benefit from change goes down. The corporate world must realize that there is no angel CEOs but fallen human beings!
Image building is important in attracting good workers. However, if people know that an organization has a tendency of frequently replacing its leadership, they will grow cold feet. Most likely, such an organization will always hire leaders that have had the shortest term wherever they have been! Such leaders have one aim- make your money, no matter how short the stay! They are like boxers who chose to fight in a heavy weight championship bout when they fully know that they will not succeed. The only driving factor is that they will have some coins in their pockets. If at all good leaders are attracted, they will voluntarily leave out of frustration. Certainly, this is a bad image for any corporation. One little illustration will drive the nail through:
Chitengi: What are you currently occupied with, Kahuma?
Kahuma: I got myself a new job as Manager- Finance and Planning with Twikatishe Corporation
Chitengi : You would be luck to stay!
Kahuma: Why?
Chitengi: Have you asked anyone about how many folks have been in that job for the last 10 years?
Kahuma: No
Chitengi: To the best of my knowledge, they have had eleven folks in that job for the last ten years!
Kahuma: Goodness me, I wish I had met you earlier.
The final impact really is on the general performance of the organization. The corporate world must realize that there are no angel CEOs or Managers but fallen human beings! Without giving a leader sufficient time to execute his strategy, organizational success cannot be attained. Employee disengagement mentioned earlier, as a result of frequent leadership change, cripples the operations of an organization in a very subtle way. The minimum sufficient tenure of office for a leader should be four years.
Leadership is not like clothes that must be constantly changed, although even clothes are not thrown when dirty but are just washed! So those with the power of the pen must look back and see how many times leadership changes have taken place in their corporation. Leaders who have had the opportunity to finish their tenure of office would attest to the fact that they managed to roll down their vision to the benefit of the corporation.
References
- R Kreitner Management
- http://www.allbusiness.com/management/change-management/8900448-1.html
- http://www.siralexferguson.net/
- http://www.management-issues.com/2006/8/24/research/employee-disengagement-a-global-epidemic.asp
- http://www.msnbc.msn.com/id/34227871/ns/business-autos/t/general-motors-ceo-henderson-out/
- http://www.wired.com/autopia/2009/03/obama-to-wagone/
- http://www.politico.com/news/stories/0309/20625.html
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