Since the terrorist attack on the World Trade Center and the Pentagon on September 11, 2011, CEOs (Chief Executive Officers) have had to play important roles in the international commerce, because of the global economy recession, which was caused by the massive political uncertainty (Garten, 2008). Hambrick and Mason (1984) have also stated that because leaders of corporations are empowered to make a decision, they have an important impact on team characters and outcomes. The importance of leadership is definitely obvious. However, different approaches to leadership can lead to totally converse results. Authoritarian and laissez faire are two typical styles. The former means individuals control over all decisions with little input from group members, it is dominant and self-reliant. Conversely, the latter depends on teamwork, and be more democratic. This essay will firstly compare these two approaches to leadership in successful multinational companies in various aspects and then illustrate the benefits and drawbacks of each one respectively. Finally, it will analyse and evaluate the appropriate applications in terms of creating sustainable success, which includes steady period management and crisis management. What should to be emphasized is that it is unfair to define one leader as an exact example of an authoritarian leader or a laissez faire leader, thus, in this essay, I only classify leaders by the some characters they showed.
The differences of these two modes are primarily demonstrated in three aspects. First of all, the personal characters showed during the work are definitely distinct. Authoritarian leaders are always confident and decisive, and they have powerful mentality, which leads to making decisions with less input from other group members, even though they may have different points. Finkelstein and Hambrick (1996) have claimed that the degree of consensus achieved in planning strategy was declined by CEO dominance. Whereas, laissez faire leaders are calm and cautious, they tend to propose a scheme and acquire others’ suggestions to make sure it is valid. According to Bass and Stogdill (1990), laissez faire is egalitarian, this strategy ensures less mistaking. Secondly, the strategic decisions they made show different trends. Authoritarian leaders have a strong preference on creative strategies, which are always risky but profitable. Conversely, laissez faire leaders tend to accept conservative and steady plans. They take the negative factors into consideration before the positives, in other words, only when safety is ensured, will actions be taken. Finally, two approaches show different effects on other staffs. Authoritarian organization demonstrates an input-process-output model (Guzzo and Shea, 1992), which enhances staffs’ ability of executing. “Additionally, team members are unlikely to cohere well under an authoritarian leader” (Patrick, et al., 2000, p.406). In contrast, laissez faire group depends on teamwork, which implies everyone in the system can work well even without the leader. Thus, staffs under these two kinds of leaders show strong ability of executing and independent working respectively. Because of the divers differences discussed above, these two approaches to the leadership, especially in excellent multinational corporations, derive alternative benefits and drawbacks separately.
The benefits and drawbacks of authoritarian are extremely obvious during different periods of a company’s development. Due to the powerful leader, top management group of the company can make decisions rapidly under massive pressure. This character is definitely important when the company face an urgent situation, which may need an authoritarian leader who has a superior ability of crisis management. For example, Steve Jobs of Apple Inc., a typical authoritarian leader, had demonstrated how an excellent leader should be to tackle the crisis successfully. Since he returned to Apple in the late 1996, in which year the company was facing severe problems, he had fired a considerable number of staffs and shifted main aims of some departments immediately, which led to the result that Apple’s stock price rose sharply from $13 a share to $118 a share, and the market valuation increased significantly from less than $2 billion to nearly $20 billion in only three years (Deutschman, 2001). In addition, Young and Simon have also argued that “Lightning never strikes twice, but Steve Jobs has, transforming modern culture first with the Macintosh and more recently with the iPod” (2005, p.3).Besides, these series measures, firing and forcing, also enhanced staffs’ ability of executing, making the whole company be more efficient. However, the downsides of authoritarian leaders are also apparent. One of them is that they are easier to make mistakes, because authoritarian leaders rarely consult with others. The survey of Eisenhardt and Bourgeois (1988) has illustrated that where the leaders were more dominant, there was less sharing of information, which might cause making incorrect decisions. Another disadvantage of this style of leadership is that it is really difficult to find an alternative successor when the former leader leaves. Great though Apple is, its market shows a recession after Steve Jobs retired. Hence, an authoritarian leader can play an important role when the company is in trouble, but how to continue to create sustainable success is still a problem.
Comparing with authoritarian leadership, laissez faire shows compensable benefits and drawbacks. The first benefit of it is that leaders who use laissez faire are much more cautious and glad to take others’ advices into consideration, which ensure the schemes they set up are less inaccurate. As laissez faire leadership actions are associated with the teamwork (French, et.al., 1960), the plan or scheme, which has been considered by every group member, is always less risky. Secondly, laissez faire leadership does help to the whole system. Manz and Sims have stated that laissez faire leaders encourage the initiative of staffs (1991). For instance, the management system of GE(General Electric), which has been learned by many multinational companies, is world famous. This achievement should owing to Jeck Welch, the previous CEO of GE, who having not only taken GE of a market value from $12 billion to more than $500 billion during his twenty years management (Garten, 2008), but also “set the standards for other CEOs on corporate restructuring, quality control, globalization and how to take a traditional industrial and service company into the Internet age” (Garten, 2008, p.2). However, crisis management reflects the weakness of laissez faire leadership. According to Den Hartog (1997), laissez faire leaders avoid to make decisions and bear responsibility. This can be fatal when the top management group needs to make a significant decision, such as shifting the market, merger and so on. Company will miss opportunities or cause perils by any hesitation. For example, Kodak, which has been famous for its film production, was so late to shift its market strategies that it has been nearly bankrupt in 2012. Despite this disadvantage, in the stable period of a developing company, laissez faire leadership may be more appropriate because it is less making mistakes and can strengthen the management system of the company.
As Bass and Stogdill have said, “Leadership makes the difference” (1990, p.3). Leadership is a key element in a successful multinational company. The two approaches to leadership mentioned in this essay, authoritarian and laissez faire, which stand conversely, differ in three main aspects. However, their advantages can compensate each other’s disadvantages in some cases. They are suitable leaderships in crisis management and stable period respectively. Thus, leaders need to shift approaches to leadership in terms to help their companies to achieve a sustainable success.
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