Name : Joy Juby

Student ID Number : 19403460

Assignment Title : Leading an organization in a complex

business environment in the 21st century.

Module Title : Critical Issues in Business.

Module Code : STRM042-AUTAG

Module Tutor : Prof. Gwen Lee

Assignment Submission Date : 10th January ‘19.

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Table of Contents.

Page
Contents
No.

1. Introduction 3

2. Challenges for the 21st century leader – “Globalization” 3

3. The Managerial Grid 4

Past century leadership styles’, their negative impact on the employee and the
organizational performance and why they won’t work in the era of
globalization.
 Managerial Grid (9, 1).
4.  Negative Impact of a leadership style according to Managerial grid (9, 1) 4
on the organizational & employee performance.
 Managerial Grid (1, 1), (1, 9), (5, 5).
 Negative Impact of a leadership style according to Managerial grid (1, 1),
(1, 9), (5, 5) on organizational & employee performance.

Leadership style for a sustainable business in a 21st century complex business

environment
 Transactional and Transformational Leaders - Managerial Grid (9, 9).
 Positive influence of a Transactional and Transformational leaders on the
5. 7
employee motivation and organizational performance.
o Their contribution in the motivating the employees.
o Their contribution in better organizational performance.

6. Conclusion 10

7. References 11

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1. Introduction.

The fast growth of the technological, economic and the social environment in the 21st century
have made it easier to communicate, commute, and conduct businesses all around the globe.
This indeed changed the business environment, leading to much more competition among the
businesses in the 21st century as compared to other past centuries (Friedman, 2007). An
effective and an efficient leader is the need of an hour for any organization in such a
competitive business environment in order to flourish and sustain (Atkinson, 2015).
Competitive business environment not only made it challenging to run and maintain a
business in the target market but also made it essential to maintain a harmonious relationship
between the leader and the employees. Because, any disagreement or lack of trust/bond
between a leader and the employee can affect the employee work performance and in turn the
organizational operational and financial performance. An effective leader in the 21st century
is the one who not only works for a better organizational performance but also works in the
interest of his/her employees (Maxwell, 2009). The following study will try to identify the
traits and the qualities required by a leader in the 21st century business environment. It will
also differentiate between the old and contemporary leadership styles and their inevitable
impact on the organizational and employee work performance. The study will also try to
ascertain the reasons for why the leaders with the old leadership styles won’t succeed in this
21st century complex business environment and the leaders with the contemporary leadership
style will lead the business to success.

2. Challenges for the 21st century leader – “Globalization”.

21st century is witnessing the proliferation of the “International Businesses” and an increase
in the competition for an organization not only from the local businesses but also from the
international businesses (Bartels, Buckley, & Mariano, 2009). The customers are having a
wide range of options from whom and from where to buy their products/services. Thus a
business has no other option other than to excel from its competitors in order to sustain in this
competitive environment. Also, the rapid growth of technology in the 21st century has
facilitated many businesses to provide their products/services to its customers at a faster rate
and at a cheaper price, which is used to entice the customers to buy their products/services
(Hill, 2008). Thus it’s very important for an organization to adapt to the external and internal
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changes otherwise it’s at a risk of losing its market share and eventually perish. As a leader
plays an important role in the success and the failure of an organization, it’s very important
for him/her to adapt to these changes and built his/her strategies accordingly (Hill, 2008).

The author will try to find out the qualities required by a leader in the 21 st century complex
business environment in order to lead his/her business into excellence via “the managerial
grid”.

3. The Managerial Grid.

Blake and Moulton proposed a managerial grid in 1964 which depicted various leadership
styles’ concerning employees and production. According to them, leadership styles’ can be
plotted in 9 x 9 grid with a concern for production on horizontal axis and a concern for the
employees on vertical axis (Mosley, Megginson & Pietri, 1989). Blake and Moulton (1964),
identified five primary leadership styles’ via this proposed managerial grid. They concluded
that these five primary leadership styles’ have an inevitable impact on the employee and
organizational performance (Levine, 2000).

Keeping the above mentioned managerial grid as a foundation of this paper, the author will
try to differentiate between the old and the contemporary leadership styles’ and their impact
on the employee and organizational performance.

4. Past century leadership styles’, their negative impact on the employee and the
organizational performance and why they won’t work in the era of globalization.

4.1. Managerial Grid (9, 1) – “High concern for the production & Low concern for the
employees”

First of these five primary leadership styles as proposed by Blake and Moulton (1964), which
can be categorised into old leadership style is “Task Management style” or “Authority-
Obedience style” (Levine, 2000). This leadership style has an at-most concern for the
production with little to no concern/interest in the employees. “Authoritarian leaders” also
known as “Autocratic leaders” can be categorised in this group (Khan, Qureshi, Ismail, Rauf,
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Latif, and Tahir, 2015). An autocratic leader neither entertains nor consult with anyone of
his/her colleagues or subordinates in the decision making process. All the powers are
centralized and remains with the leader, just like with a dictator (Heneman, & Gresham,
1999).

4.2. Negative impact of an “Authoritarian leadership” on the employee and

organizational performance in the 21st century business environment.

An autocratic leader encourages only the one sided conversation, because of which the
creative and innovative skills of his fellow employees are supressed and they are forced to
perform the same repetitive work every day, thus leading to job dissatisfaction (Heneman, &
Gresham, 1999). As an autocratic leader has all the powers by himself/herself, there is a high
possibility of him/her exploiting the power/authority, which can lead to an unfriendly working
environment (Heneman, & Gresham, 1999). Various studies have even concluded that under
a leadership of an autocratic leader there is a greater probability of disagreements and conflicts
within an organization (Khan, Qureshi, Ismail, Rauf, Latif, and Tahir, 2015). Such a hostile
working environment can result into demotivated employees, which can affect their work
performance and further can affect the organizational performance. Some studies even
concluded that an organization with many autocratic leaders have more employee
absenteeism and turnover rate in comparison with other organizations (Khan, Qureshi, Ismail,
Rauf, Latif, and Tahir, 2015). With a high employee turnover rate, the organization is at a
disadvantage of attracting new potential talents, which can be very crucial in the 21st century
competitive business environment where everyone wants to win the race. Dawson (2002),
stated that an autocratic leadership can definitely fetch some good organizational
performance, but only for a short period of time. Excessive use of authority over a period of
time will certainly derail the organizations’ progress in a long term, which is very critical in
the 21st century business environment i.e. the era of globalization.

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4.3. Managerial Grid (1, 1), (1, 9), & (5, 5) – “Low to Medium concern for production &
Medium to High concern for the employees”

The above mentioned old leadership styles’ that has low to medium interest in production and
medium to high concern for the employee needs are “Impoverished”, “Country club”, and
“middle-of–the-road” leadership styles’ respectively (Levine, 2000). A laissez faire leader
can be categorized into an “Impoverished leadership style” (Levine, 2000). A laissez faire
leader provides a little to no inputs, vision, & direction to his/her team and is least concerned
about the production and the needs of the employees. He/she takes no initiative to improve
the organizational and employee performance. All the authority, power, and freedom is given
to the employees and they themselves must determine the goal, pass on the decisions and
resolve the problem. This type of leadership is considered the worst for a business in 21st
century (Khan, Qureshi, Ismail, Rauf, Latif, and Tahir, 2015). Similarly, a democratic leader
can be categorised into “middle-of-the-road leadership style”. Unlike an autocratic leader, a
democratic leader entertains and consults with his fellow employees for their opinions on
trivial and important matters (Ittner, 2002). A democratic leader provides direction, guidance,
participates with the group in completing the project and also allows the employees to give
their feedback. However, there is a downside to this type of leadership. In circumstances
where roles are unclear or time is of great priority, democratic leadership can lead to
miscommunication and uncompleted project. In certain cases, where the group members are
incompetent and has no knowledge or skills to contribute to the completion of the project, can
lead to an extended project time. In short, in democratic leadership the decision making
process can be time consuming thus hampering the production/productivity or the efficiency,
which can be lethal in the 21st century complex environment (Kirega, 2006).

4.4. Negative impact of a leadership style in 21st century, which neglects

production/productivity, on organizations operational and financial performance.

There is no second thought about the importance of the productivity in this 21st century
complex business environment, where the competition has increased tremendously and the
customers have many option from where to buy his/her product or services. However, a leader
which ignores the same can lead an organization to an abyss. In a manufacturing sector,
ignoring the productivity can lead to a slower production rate, resulting into a large W.I.P
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material (Work In Progress material), thus increasing the inventory carrying cost of the
organization exponentially (Patil, & Hukari, 2007). Moreover, with no proper control on the
productivity, the manufacturing cost per unit of the product also increases. Thus with the
increased manufacturing cost and inventory carrying cost, the overhead cost of the product
also increases. As a result of which the organization has to sell the product with a higher
selling price in comparison with its competitors or has to compromise with its profit margin
by selling the product at the same price as that of its competitors, just for having a competitive
advantage in the market (Patil, & Hukari, 2007). Thus from the above discussion it is evident
that a leader that ignores productivity has to pay a high price of either losing its customers
because of increased product price or compromise with his profit margins because of
increased overhead cost of the product.

Thus from the discussion above it is evident that a leader that neglects the employees and/or
the production in 21st century complex business environment has to pay a heavy price of
employee demotivation and poor work performance that inevitably affects the organizations
performance, losing a loyal customer or selling the products with a lower profit margin. Thus
making the business unsustainable in the 21st century environment.

5. Leadership style for a sustainable business in the 21st century complex business
environment.

A successful leader in a 21st century business environment should have the traits of a leader
who follows “Team Leadership style” – i.e. High concern for both the production and the
employees - Managerial Grid (9, 9). A 21st century leader should have the following traits
in order to excel his/her business in this competitive business environment.

5.1. Transactional and Transformational Leaders’

A transactional leader pivots on the leader-employee relationship. The employees perform

according to the vison and the lead given by the leader and the leader in return emphatically
remunerates them for their efforts. The main point of attraction is the reward, which can be

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positive like an incentive, promotion, appreciation, and/or recognition if an employee
performs well and meet the expectations of the leader or it can be negative reward like a strict
action if the employee fails to meet the set goal (Riaz, & Haider, 2010). There are four main
dimensions of a transactional leader – Laissez faire, Active management by exception,
Passive management by exception, and Contingent reward (Riaz, & Haider, 2010). Thus a
transactional leader not only leads the team but also gives his team an opportunity to actively
participates, rewards them, and constantly monitors and gives his feedback whenever
necessary.

A transformational leader on the other hand reshapes the belief and the attitude of the fellow
employees and inspire and motivates them by recognising their needs and aligning them with
the vision and mission of the organization for the betterment of the business (Riaz, & Haider,
2010). There are four facets of a transformational leader too – Charisma, Communication,
Individual consideration, and Intellectual stimulation. A transformational leaders normally
has an exceptional communication skills, because of which they tend to have a higher
agreement on strategic plans and goals of the organization (Berson and Avolio, 2004). They
are highly supportive, participative and involved with the fellow employees in their assigned
tasks, which results into high job satisfaction among the employees, and friendly working
environment (Scandura and Williams 2004; Nemanich and Keller, 2007). And thus a lower
employee turnover rate (Scandura and Williams, 2004; Rafferty and Mark, 2004).

Unlike the old traditional leadership styles’ mentioned earlier, the transactional and
transformational leaders lead the organization from the front, goal oriented, highly
participative, gives his/her employees the freedom to come up with an opinion or
suggestions, and work for the betterment of the employees and the organization. Both
transactional and transformational leaders have a strategic thinking capability and a clear
vision for the business (Abbas, & Asghar, 2010). 21st century leadership is all about leading
a team to a certain goal in a most effective and efficient way. A transactional or
transformational leader can foresee the opportunities, obstacles and hindrances to the business
and promote changes to the business or business model via strategic planning and execution
so as to seize those opportunities or dodge the obstacle which can hamper the business growth
(Senior & Fleming, 2006). 21st century complex business environment has been the witness
of constantly changing business trends, increasing business competition, and ever growing

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customer needs and demands, role of a visionary and a strategic leader (i.e. a transactional or
transformational leader) is very important (Abbas, & Asghar, 2010).

5.2. Positive influence of a Transactional and Transformational leaders on the employee

motivation and organizational performance.

Their contribution in the motivating the employees.

A transactional leader uses a reward as a motivational factor for his/her employees. According
to Vrooms Expectancy theory (1964), the expectation of receiving a reward, which can be of
a great value to the employee, acts as a motivational factor to the employee resulting into a
change in his/her work attitude and putting in an extra effort to complete his/her work more
effectively and efficiently (Lazaroiu, 2015). Thus a transactional leader believes in providing
a reward to the employees for triggering a particular behaviour for a superior performance.
With remuneration driven inspiration, the things that get compensated are the things that get
done (Carter, 2013). Whereas, the transformational leader uses his charisma to inspire and
motivate the fellow employees and work for their and organizations’ interests.

Thus both transactional and transformational leaders believe in motivating their employees,
thus leading to a highly satisfied employees. A high job satisfaction among the employees
results into an increase in the sense of responsibility, ownership, engagement, involvement,
and organizational commitment (Batthi & Qureshi, 2007; Harmon et al, 2003; Zainnudin &
Isa, 2011). Which further leads an employee to follow “Organizational Citizenship
Behaviour” (OCB) which improves the overall employee work performance and thus the
organizational performance as well (Ibrahim & Aslinda, 2014). Thus, a transactional and
transformational leader uses motivation as a tool to get an excellent employee and
organizational performance which is very decisive in the 21st century complex environment.

Their contribution in better organizational performance.

Both transactional and transformational leaders are the pioneers in adapting “Change
Management” (Abbas, & Asghar, 2010). An organization which doesn’t cope up with the

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change, has no chance of surviving in the 21st century. Change management not only yield
better financial performance, improves competitiveness in the 21st century market, and boost
employee and customer satisfaction but also steer the organization to a path of continuous
improvement and sustainability (Boston, 2000). One such change management program is
“TQM” (Total Quality Management). The main work buckets of TQM is Productivity,
Quality, Cost, timely Delivery of the product/services, Safety of the employees, & Morale of
the employees (Acronym PQCDSM) (Pool, 2000). Thus by initiating TQM in his/her
organization, a leader triggers the movement of continuous improvement in his/her
organization, which is very important in the present scenario where the needs and the demands
of the customers are constantly changing and so does the competitors and their strategies.
Thus giving the business lead by a transactional or transformational leader a competitive
advantage over their competitors in the market (Pool, 2000).

6. Conclusion

21st century is considered as the dawn for globalization. Globalization has transformed the
whole world into one small global village where the exchange of communication, technology,
and logistics has increased tremendously, due to which the competition among the
organizations has increased exponentially and the customers have various options from where
to buy their products/services. This is where the role of a leader becomes crucial in an
organization.

This study has successfully differentiated between the old and contemporary leadership
styles’ and their effect on the employee and the organizational performance. The study
showcased that how old leadership style leaders who have a too much concern for either the
production or the employees and completely neglect the other in the 21st century complex
environment, will end up either in a poor organizational financial performance/losing a loyal
customer thus losing the valuable market share or in a demotivated employees with poor work
performance. Which is very critical for an organization in the 21st century environment and
that’s the reason why the old leadership style leaders won’t be the ideal choice of selection
for any top management in this era. The study then also reviewed the contemporary leadership
styles and their impeccable impact on both the organizational operational and financial
performance and their effect on employee motivation and productivity. A leader with the
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contemporary leadership style was found to be more interactive, and engaged with the
employees, goal oriented with a better task structure and worked for the betterment of both
the organization and the employees. So, in order to grow and sustain a business in the 21st
century complex business environment, it’s very important that the leaders adopt to the
contemporary leadership style i.e. the transactional or the transformational leadership style.

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