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Leadership Unit 18
Thinking bigger
The media often suggests that ‘heroic’ leaders are vital to making a
successful business. Such leaders make things happen. They are heroes
because they alone have the vision, personality and capability to bring
things about in the business, either by themselves or through others.
Although not denying that leaders have special qualities, it could be
argued that focusing too much on leadership can create problems. For
example, this approach may lead to the conclusion that a business
without a heroic leader may not be able to function properly. Or it
might suggest that the heroic leader is the most important thing to
organisational effectiveness. It also perhaps devalues the role and
importance of other employees.
Mainstream approaches to leadership also take consensus in organisations
for granted, i.e. that employees are generally happy to be at work and
that leadership is about providing them with the direction to get the
most out of them. Where there is conflict, this is often seen as being
related to problems with an individual or about resistance to change.
The possibility that there might be underlying conflicts associated with
inequalities of wealth, status or power between leaders and subordinates
is not considered. Critics argue that although businesses may appear to
be consensual, this is because leaders occupy positions in the hierarchy
that enable them to suppress conflict or because subordinates have an
understanding that compliance or consent is in their own ‘best’ interests.
In other words, the absence of conflict is a consequence of dependence
- subordinates depend on managers for terms and conditions, including
retaining their jobs, promotion, future employment and references.
FT
There is evidence to suggest that effective businesses are those which are
more concerned with the creativity of their products and organisational
structures that enable those products to be produced and sold than those
that rely heavily on leadership. It could be argued that the ability to
teamwork, delegate and manage others effectively is more important in
the daily workings of creative organisations than the attributes of heroic
leadership, such as vision, command and personality.
Knowledge check
Key terms
1. What are the main differences between a leader and
a manager?
2. State three different leadership traits.
3. Under what circumstances might an autocratic leadership
style be particularly appropriate?
4. Some people argue that Sir Alex Ferguson (ex-manager of
Manchester United) had an autocratic leadership style. To
what extent do you agree with this?
5. State two disadvantages for a business of an autocratic
leadership style.
6. What is the difference between an autocratic leader and a
paternalistic leader?
7. What is the difference between persuasive and consultative
democratic leadership?
8. State two disadvantages of democratic leadership.
9. State the main advantage of laissez-faire leadership.
D
R
A
Autocratic leadership – a leadership style where a manager
makes all the decisions without consultation.
Democratic leadership – a leadership style where managers
allow others to participate in decision making.
Laissez-faire leadership – a leadership style where
employees are encouraged to make their own decisions,
within certain limits.
Paternalistic leadership – a leadership style where the
leader makes decisions but takes into account the welfare
of employees.
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Marketing and people
Case study
Islip Travel
amounted to £3,300 each for the 50 staff employed by
the company.
FT
Islip Travel organises specialist holidays for the 55+ age
group. The company was the subject of a management
buy-out in 2009 after the previous owners decided to
‘ditch’ the business because of poor financial performance.
The management team, led by Ellen Bridges, bought the
indebted company for £1. It had debts of £1.2 million and
was struggling due to the economic recession. The previous
owners had run the business very badly. However, the new
management team believed that they could manage the
company much better. They aimed to counter earlier poor
marketing decisions, weak leadership and to raise workforce
motivation levels.
After a slow start the fortunes of the company started to
change. Figure 3 shows the profit made from 2007 to 2014.
Ellen led the company with confidence and verve. She had
charm, was well liked by staff and led by example. All key
decisions made by the business were ‘thrashed out’ at
management meetings. In the early days of the ‘buy-out’
some of these meetings were hard work and lasted for
several hours – sometimes a whole day. At the end of the
meetings the four senior managers and Ellen would vote
on new company policies. Most of the votes were carried
unanimously. Ellen also consulted staff and held voluntary
meetings in work time to get their views and ideas. The
new pay system introduced for sales staff was the idea of a
sales assistant.
R
A
In 2014 the company made a record profit. The new
website was starting to attract an increasing amount of
traffic and bookings made via the website doubled in two
years. The marketing agency was also producing good
results – it was expert at placing ads that the target market
would see. Finally, as the economy started to grow in 2014,
consumer confidence improved and the holiday industry in
general picked up. Demographics were also working in the
company’s favour. The proportion of people aged over 55 in
the UK is a fast-growing sector.
The management team raised £500,000 privately and
persuaded a venture capitalist to invest a further £1.5
million for 49 per cent of the company. Ellen Bridges
was appointed CEO and some key changes were made.
The company:
D
• redesigned its website. It was made more attractive and
easier to navigate. The site also introduced a review
system so that clients could describe their experiences and
rate the company’s performance
• carried out some market research to find out which types
of holiday were most popular with the 55+ age group
and which particular features were most important
to them
Figure 3
Islip Travel profit after tax 2007 to 2014
£ million
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
-0.2
-0.4
2007
2008
2009
2010
2011
2012
2013
• outsourced marketing to an agency with particular
experience in the holiday industry
•
introduced a new pay system to help motivate sales
staff. The system organised sales people into three teams
of eight and awarded a monthly team bonus linked
to monthly sales. If teams performed well, each team
member could earn up to an extra £1,000 per month on
top of their basic pay of £15,000 per annum.
• introduced an annual profit-related bonus for all staff,
which was paid just before Christmas. In 2014 this
2014
Year
(a) Explain the style of leadership used by Ellen Bridges.
(4 marks)
(b) Explain one benefit to Islip Travel of this style of
leadership. (4 marks)
(c) Evaluate the extent to which Ellen’s leadership style
contributed to the recovery of Islip Travel. (12 marks)
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