In the current business scenario, one of the major factors that determine the organizational effectiveness is the leadership approach. This is due to the reason that leadership approach of an organization determines the efficiency and productivity of the employees and to what extent the organization is dealing with the business challenges effectively. Thus, leadership plays an important role for the business organizations in gaining competitive advantages in the market (Zhu, Sung and Leung 2014). In addition, it also determines the culture and values to be followed in the internal management. There are number of instances where it is seen that effectiveness of the leadership helped the organizations in driving towards success and vice versa. One such prime example is of Goldman Sachs. This is due to the fact that they are awarded for being the best employer in their United Kingdom operation and criticized for their unfavorable working environment in their United States operation (Filatotchev and Nakajima 2014).
Goldman Sachs is one of the top financial institutions in the world with having their operations in different countries around the world. However, it is quite uncommon that a same company is awarded as well as criticized for their employee management approach in two different countries. Thus, it is the effectiveness of their internal management that is making the differences. This report will discuss about the sources of these differences from the perspective of leadership, organizational values and culture. In addition, this report will also discuss about the right type of leader that is need for Goldman Sachs in their business operation. The pros and cons of high level of employee engagement will be identified and critically analyzed. Lastly, the limitations of the leaders in shaping up the organizational culture will be discussed in this report.
One of the major styles of leaderships being stated in the corporate strategy is the output oriented leadership. This refers to the process of focusing mainly on achieving the organizational objectives without having much concentration on the employee welfare. In addition, this style of leadership also does not have the provision for determining the value of the external stakeholders including the customers. According to Day and Dragoni (2015), initiation of the output oriented leadership style may have both positive and negative impacts. This is due to the reason that output oriented leadership will help the managers in maximizing the output and performance of the employees and contributes in the organizational success.
Transformational leadership is one of most common and desired styles of leadership being stated in the corporate strategy. This refers to the process of providing an healthy and communicative working environment in the workplace and having the highest valuation for the ethical principles and stakeholders. According to Wu et al., (2015), initiation of the transformational leadership helps the business organizations in having highly satisfied and engaged employees in place.
One of the major types of core values for the organization as per the corporate strategy is loyalty. This refers to the extent to which the stakeholders are loyal in their workplace and the extent to which they are maintaining their loyalty in providing the service to the customers. It helps in enhancing the organizational citizenship among the internal stakeholders. On the other hand, another major value is efficiency (Bourne and Jenkins 2013). This refers to the approach of enhancing the effectiveness of the stakeholders and the extent to which they are working better than their competitors. Differences in implementing these values have caused in different consequences in the UK and US operations.
In terms of organizational culture, one of the major cultures being followed in the current businesses is clan culture. This refers to the approach of having collaborative environment in the workplace with having focus on teamwork and effective communication process (Schmiedel, Vom Brocke and Recker 2014). Another major type of culture is hierarchy structure that refers to the presence of the strict and ladder based structure in the organization. This culture is based on organized procedures and all the stakeholders are bound to it.
According to Klettner, Clarke and Boersma (2014), this style of leadership is being followed in the both country operations of Goldman Sachs. This is due to the reason that it is identified in the United Kingdom operations of them that employees are working beyond their working hours to ensure the output of the organization and on the other hand, it is also reported that Goldman Sachs gained a fortune in terms of their business. It is also identified that both the operations are following efficiency value (Jourdain and Chenevert 2015). This is due to the reason that in the UK operations of Goldman Sachs, employees are positively motivated to be efficient in their workplace. This causing positive branding in the market and in the US operation, employees are negatively motivated in being efficient and thus even though they are having issues but the company is earning fortune. In addition, hierarchy organization structure is being maintained in both the operation due to the fact that both the operations are having higher degree of managerial roles and employees are being leaded from the front (Laschinger et al. 2014). However, in the UK operation, effective communication process is being maintained across the hierarchy but in the case of the US operation, this effectiveness in less.
In terms of this perspective, it is identified that United Kingdom operations of Goldman Sachs is having this leadership style but in their United States operation. This is due to the reason that in the case study it is stated that employees and customers are highly satisfied with the business approach of Goldman Sachs in the United Kingdom and vice versa in the United States. This is one of the major differences being identified between the operations of Goldman Sachs in these two countries. In addition, according to Strand (2014), following transformational leadership in the United Kingdom operations of Goldman Sachs is complementing the effectiveness of their output oriented leadership approach, which is not applicable in the case of their United States operation. This is due to the reason that with the help of the transformational leadership, employees in the United Kingdom are more motivated in their workplace and thus output oriented approach is positively impacting on them to enhance their performance.
It is identified that, UK operations of Goldman Sachs are having majorly clan culture with the having equal representation of all the internal stakeholders in the workplace. This is further enhancing the level of coordination among them and increasing the effectiveness of the hierarchy structure (Wei, Samiee and Lee 2014). On the other hand, it is also being identified that loyalty is not being considered as a core value in their US operations. This is major reason behind the loyal productivity and organizational citizenship of the employees in the US. On the other hand, considerations of the loyalty as the core value are helping Goldman Sachs in enhancing the employer branding.
As per the information stated in the given case study, it is identified that Blankfein is not a right leader for a company such as Goldman Sachs. This is due to the reason that one of the major competing factors of Goldman Sachs from their initial stage is caring for the customers and other stakeholders (Pierro et al. 2013). However, under the leadership of Blankfein, the major focus is being given only on profit maximization over the welfare of the stakeholders and maintaining their traditional cultures. In addition, the leadership style of him is not sustainable in nature due to the reason that profit maximization will be short term if the stakeholders are not being considered in the organizational affairs. This is also evident in the given case study where it is reported that Goldman Sachs faced reduction in their earnings by about 82 percent. Thus, it can be concluded that Blankfein is an ideal leader for Goldman Sachs in their business operation.
In the case of the Goldman Sachs, the ideal leader should have situational qualities and flexibilities in changing the approach according to the business situations. In addition, the right leader also should have the capability of determining the differences in cultures in different countries (McCleskey 2014). In this case, situational leadership theory will be the most effective and ideal for Goldman Sachs. This is due to the reason that according to the situational leadership theory, leaders should have both the qualities of autocratic and democratic approach in order to lead the organization through different business situations. In addition, it should be noted that cultures in the United Kingdom and United States are different in nature and effective considerations of these differences are important. In the case of situational leadership, these differences can be effectively managed without having the requirement for changing them (Thompson and Glaso 2015).
Situational leadership also refers to the fact that effectiveness of the leaders is not depended only on a particular style or approach but on different external situations. If the democratic leadership is being followed at the time of challenging business situation, then it will not be an effective option due to the fact it will slow down the decision making process (Bedford and Gehlert 2013). On the other hand, continuous process of following autocratic leadership will cause dissatisfaction among the stakeholders as relevant in the United States operation of Goldman Sachs. Thus, in the case of the situational leadership, leadership styles can be changed based on the external factors. This will enable Goldman Sachs in having right style of leadership according to situation in the United States business and United Kingdom business.
It is evident that leadership is one of the prime factors gaining competitive advantages for the organizations and in shaping their culture. However, there are number of limitations being identified for the leadership in shaping up the internal culture of the organization. One of the major limitations of the leaders is enhancing the individual skills of the employees. This is due to the reason that leaders can help in enhancing the skill sets of the employees being required in the workplace but they will not be able to enhance their skills based on their education and social backgrounds (Roos 2013). Thus, if the few employees are not the perfect choice for the particular job role, then it will be difficult for the leaders in enhancing their basic skills and expertise. The effectiveness of the leaders in enhancing the skills of the employees will be limited to the organizational requirement.
Another limitation of the leaders in shaping up the organizational culture is lack of ability to change the different social culture of the diversified employees. In the case of diversified workforce, employees will be from different social backgrounds and it will be the responsibility of the leaders to align the different social cultures of the employees with that of the organizational approach. However, they will not be able to change the individual cultural difference of the employees (Tyssen, Wald and Spieth 2014). Thus, if the cultural differences between the employees are contradicting with one another, then also the leaders will not be able to resolve it and it can identified as one of their major limitations. It should be noted that leaders are also humans and they can also be influenced by the different external factors. Hence, there may be situations where the decision making process of the leaders are getting influenced and deviated due to the presence of the external factors. This will cause hindrances in having an ideal organizational culture in place.
Leaders are also having limited provision in enhancing the productivity of the employees. This is due to the reason that it is the responsibility of the leaders to initiate different training and development programs for the employees in order to enhance their productivity and effectiveness. However, on the other hand, if the productivity and performance of the employees still cannot be increased with the help of training and development, then leaders will not have any other options left (Tyssen, Wald and Spieth 2014). In addition, it should also be noted that if the performance of the employees is being affected due to their personal matters, then also the leaders are having very less to do in resolving the issues. This is due to the reason that leaders can be effective in resolving the organization related issues of the employees but not their personal issues. Thus, it can also be considered as another major limitation of the leaders. From the above discussion, it is identified that effectiveness of the leaders is limited to the organizational boundaries and beyond that they are nothing to do (Saks and Gruman 2014). Even, there are number of factors inside the boundaries of the organization, which cannot be resolved by the leaders such as increasing the productivity of the employees after a certain extent.
Conclusion
This report concludes that Goldman Sachs is having different level of internal management in their United Kingdom and United States operations. This is causing different outcome from these two operations. The positive sides of their United Kingdom operations are being identified in this report. In addition, this report also discussed about the characteristics of the right leader required in Goldman Sachs and concluded that Blankfein is not a perfect choice for them. The major pros and cons of high level of employee engagement are being identified. Lastly, this report also discussed about the limitations of the leaders in shaping up the culture of an organization.
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