Discuss about a Case Study for Overview Of Path-Goal Leadership Expectancy Theory & Global Leadership theory?
Volkswagen is a popular car manufacturing organization established in the year of 1937, just before the start of Second World War. The Government of Germany, under the control of Adolf Hitler and the National Socialist Party, formed this new state-owned automobile company (History.com 2016). Initially, it was known as Gesellschaft Zur Vorbereitung des Deutschen Volkswagens mbH. But it was changed to Volkswagen Werk or The People’s car company later in the same year (Hotten 2016). Because of its historic Nazi connection, Volkswagen’s initial sales were comparatively slower than other car manufacturing companies were. However, slowly they started to gain market share by selling 60 percent of their stock to the public only to denationalizing it. In 1972, Volkswagen’s model Beetle surpassed the worldwide sales record of Ford Motor Company by selling 15 million vehicles.
The popularity and superiority of Volkswagen are critically affected after the Environment Protection Agency accused them of cheating the emission tests. According to EPA, the vehicle company was using a “Defeat Device” in the diesel engines that will change the performance of the engine to improve the results at the time of testing (Goel 2015). The company has also been accused of changing the software on the three-liter diesel engines that were installed on some Porsche, Audi and VW vehicles. These accusations have affected the brand image of the Volkswagen Company as customers are losing their trust on it. Besides, EPA also has the power to fine the company up to $37,000 for each vehicle that is compromised (Hotten 2016). In this way, the total fine amount will rise to $18bn. The organization must take immediate actions to deal with these problems. Otherwise, it will be hard for them to regain their position in the vehicle industry.
The management of the company will have to take a major decision to regain the trust of their stakeholders like consumers, Government of US, employees, media and their shareholders. This assignment will focus on several leadership theories that the leaders of the Volkswagen Company can follow before making any future decision about the company. The management will have to find out the type of crisis they are facing right now and its effects on the organization. From the case study, it can be said that the Volkswagen is facing a crisis related to “Organizational Misdeed Management Misconduct.” Due to the crisis, the chances are high that the company will face severe reputation threat in the market (Harwati 2013). Therefore, they can adopt some leadership theories to make some positive changes in their organization to gain shareholder confidence in the future.
Emotional Intelligence theory, Expectancy Theory and Global Leadership theory are the three theories that can serve the purpose better than any other theories (Hall 2013). Emotional Intelligence theory of leadership will help the leaders of the Volkswagen to monitor and understand the emotions of their shareholders and stakeholders. If they can understand what the shareholders are thinking after the incident, they will be able to implement their plans and decisions according to that. Expectancy theory is another tool that will help the leaders of the company to decide which decision they should make and why that decision is superior to other alternative decisions (Chemers 2014). For example, Volkswagen can offer a huge discount on their vehicles to regain their market position by attracting new customers. They can also ask for an apology from their customers and other stakeholders and then upgrade their vehicles according to the rules and regulations of EPA to re-launch them in the market. Expectancy theory will help the organization to choose the right option between those alternatives. The management of Volkswagen must understand that they should work together disregarding their cultural and personal differences to pull the company out of this crisis. Leaders of the company should lead the way and must follow the global leadership methods to unify all the employees under one goal.
This report will further focus on describing those leadership strategies and linking them with the current problem of the organization (O’Neil and Drillings 2012). Mathias Mueller, the new chief executive of Volkswagen, already announced that right now their priority is to win back the trust of the customers by leaving no stone unturned. Emotional Intelligence theory, Expectancy Theory and Global Leadership theory can help Mathias Muller and his team to obtain that goal in a proper manner.
Leaders of the Volkswagen are expected to make some serious decisions to regain their market position and customer trust which is currently falling at an alarming rate. However, they understand the fact that they cannot make a decision and lead the team unless the team or the employees are also agreed with the decision. Because of the “Cheating Emission” case, the senior management also lost the trust of their employees (Krall and Peng 2015). Therefore, they will have to execute some leadership strategies to evaluate the situation so that they can take proper steps to regain the trust of their employees too.
There is no doubt that the crisis Volkswagen is facing is highly dangerous for their company. Most of the other vehicle companies and customers are assuming that it is the end of the organization as their market share is falling; the brand image has gone down, and even the employees are finding it difficult to keep faith in their senior management. In this condition, the leaders of the organization must come forward and lead the team to help the company. However, this not an easy task to do, therefore, emotional intelligence theory can help those leaders to understand and manage their own emotions and the emotions of the employees around him (Neck and Krishnakumar 2014). According to Daniel Goleman, an American psychologist who is responsible for the popularity of EI theory mentioned five primary elements of emotional intelligence:
Self-awareness
Self-regulation
Motivation
Empathy
Social skills
The more the leaders of Volkswagen will manage these elements, the higher the chances are that they will be able to regain the trust of their employees.
A leader should always control his feelings and emotions in front of the other employees because he knows his feelings can affect the people around him. A self-aware leader understands his strengths and weaknesses and can lead according to that. The leaders of the Volkswagen will have to make them fully aware about the situation by increasing self-awareness and knowledge. They can follow two steps to improve their self-awareness.
First, they can carry a journal with them to write down their thoughts on the current condition of Volkswagen Company. Second, they will have to slow down their feelings like anger and disappointment to find out the roots of these emotions (Barbuto et al. 2014). The leaders of the Volkswagen must act positively before the employees because their negative attitude will destroy whatever motivation and trust is left to the employees.
The situation of the Volkswagen demands that the leaders must not take any rushed decision (Sadri 2012). They will have to critically analyze the condition of the company and take ample time to find out proper solutions to pull the company out of it. By regulating themselves effectively, the leaders of the company can achieve this goal. Self-regulation requires following two steps,
Understanding the value
The leaders will have to understand their value and strengths so that their decisions will not compromise at any stage (McCleskey 2014). The leaders should also examine the organization’s “code of ethics” to figure out what is important to the organization now. If they can understand the “code of ethics” of the company, then they will make right choices.
Take the blame
The leaders must come forward and accept their mistakes in front of their subordinates and employees (McCleskey 2014). It is possible that they will face consequences, but the result will be positive as they will gain the respect of the employees which is the priority right now.
Motivation
Before motivating the employees, the leaders must motivate themselves to provide quality work in the organization. Volkswagen needs the best out of their leaders now than ever. Therefore, the leaders must increase their motivation level to meet the requirement of the company.
Empathy
If the leaders want to win back the respect and trust of the employees, it is important that they exhibit their motto of being empathic with them (Goleman 2013). Having empathy is critical for the leaders of Volkswagen to re-unify the employees and successfully remove the crisis of the organization.
Social skills
The leaders of Volkswagen must have proper social skills to accept both good news and bad news (Humphrey 2013). Due to the emission test cheating of Volkswagen, conflict between the employees, suppliers and shareholders are rising. That is why the leaders of the company must have proper social skills to handle those conflicts by using “conflict resolution” methods.
Expectancy theory is a process that an individual experiences before making a choice. This theory is also called as Motivation theory in organization behavior established by Victor Vroom (Van 2013). This theory also states that increased effort will lead to increased performance. Right now, Volkswagen needs the quality performance of its employees to fight with their current crisis. Therefore, it can be said that expectancy theory will fit their requirement.
According to the expectancy theory, good performance can be achieved by these following elements,
Presence of right resources
Applying appropriate skills and qualified employees for a task
Collecting appropriate support to get the job done
Instrumentality is an important part of expectancy theory that states that if the performance is up to the mark, then valued outcome can be reached (Dansereau 2013). The leaders of Volkswagen must tell their employees that if they work hard to achieve valued outcome, and then they will get some positive results for themselves also. Instrumentality is affected by following factors,
Understanding the relationship between performance and outcomes
Keeping trust for those employees who are assigned to complete the task
Transparency of the process which will decide who gets what outcome
Another important aspect of Expectancy theory is Valence. If the valence is positive, then an employee will decide to attain it rather than not attaining it. For example, if an employee is motivated by money, the management of Volkswagen must announce extra payments for the employees who will work with the leaders to help the company (Alanazi 2013). If the employees are motivated by workplace advantages like additional time offs, then the leaders of the Volkswagen can offer that as a reward for hard work.
Last but not the least, other three elements are important when choosing one element over another. Those elements define effort-performance expectancy (E>P expectancy) and performance-outcome expectancy (P>O expectancy) (Shibl et al. 2013). Effort-performance expectancy will help the leaders to assess whether their efforts will lead to the required performance level or not. On the other hand, performance-outcome expectancy will serve to assess the probability that whether the performance level will help to gain certain outcomes or not. Leaders of Volkswagen must apply these elements in their workforce to find out accurate strategies to focus their effort in the right direction, to execute appropriate performance criteria and to obtain best possible outcomes.
However, expectancy theory of motivation has some disadvantages too. This theory does not consider the emotional state of the individuals. Volkswagen and its employees are experiencing a hard time now as their organization is going through a rough time. Therefore, it is obvious that their mental state is not good at all. But to jump out of this situation, it is important to execute some plans as soon as possible. The mental state of the employees can create obstacles while making a decision. Personality, abilities, skills and knowledge are some factors that affect the outcome of the model (Dansereau 2013). Therefore, the Volkswagen Company must not allow its past leaders to take any decision as they are solely responsible for the current condition of the organization. Besides, it is obvious that employees will never share their personal preferences. For example, no employee will admit that money motivates him, or no employee will ask that he will be happy to receive additional time off in return for his good work. Therefore, the leaders will have to guess the preferences of the employees based on their body languages. This can be considered as another disadvantage.
The primary objective or Global Leadership theories are to change the mind of the employees so that they can work hard and help the organization to move forward (Dinh et al. 2014). The present condition of Volkswagen Company demands the same from their leaders and employees. However, it is true that Volkswagen has lost the trust of most of its employees because of their “Emission Cheat Case”. The leaders will have to generate motivation and trust among the employees as soon as possible because they do not have much time and within the limited amount of time, they will have to work together to help the company. Therefore, it is recommended that the leaders of the company can use these following leadership strategies to communicate with their employees in an effective way,
Great man theory or Trait leadership theory
Behavioral Theory ( The managerial grid)
Participative leadership
Trait leadership theory
This theory states that leaders are different from other people as they carry intelligence, perseverance, and ambition within their personality. According to this theory, it is assumed that leaders are born with inherited traits and some of which are particularly suited for leadership (James 2015). Volkswagen management must find these leaders in their organization and ask them to lead the way. Besides, it is not necessary that only the senior employees can lead Volkswagen out of this trouble. The management must evaluate the work performances of their employees to find out those employees who are already carrying the leadership traits. Those employees can be promoted to a higher rank to support the other leaders of the management. However, the skills of those employees must match the current situation of the company which means those employees must have the skills to deal with the present condition of Volkswagen. A table is shown below to point out the skill a leader or an employee must have to fulfill the tasks related to the Volkswagen’s current condition.
|
Tasks |
Skills |
|
Flexible to the situation |
Intelligent, quick learner |
|
Knowledge of social atmosphere |
Theoretically strong |
|
Ambitious and target oriented |
Innovative |
|
Dependable |
Honesty |
|
Cooperative |
Strong communication skill, good team player, |
(Source: Haslam et al. 2015)
Behavioral theory
The behavioral theory does not support the theory of trait leadership. According to Lehmann et al. (2015), behavioral leadership states that leader can be made, rather than are born. Therefore, behavioral leadership does not seek inborn traits but focuses on what the leaders are doing and how to find out methods to improve their skills. The behavioral theory states that a leader should have two behavioral characteristics among them which are the concern for people and concern for production. Together, those two characteristics are called managerial grid. Due to the present condition of Volkswagen, it highly important that managers show their concern for their people like employees, shareholders and customers. Besides, they must not neglect the production part, as it will be a huge decision whether the company will re-manufacture new vehicles to replace the faulty ones or will simply upgrade the faulty vehicles to meet the rules and regulations of EPA.
Participative leadership
According to the current condition of Volkswagen, it can be said that participative leadership theories will provide best results for the organization. The participative theory states that leaders seek to involve other people of the organization in the decision making process rather than making an autocratic decision (Lam et al. 2015). Volkswagen is facing major issues to regain their market position after the “Emission cheat” incident. Therefore, each employee of the organization must come together to help the company. Leaders alone cannot handle the situation without any help from their employees. Therefore, they must execute participative leadership theories and processes to communicate with the employees and to collect their suggestions (Haslam 2015). They must also invite their stakeholders, peers, shareholders and old customers to participate and share their important recommendations. A figure is shown below to demonstrate how the leaders of Volkswagen must implement this leadership theory in the organization.
(Source: Ferraris 2015)
The vehicle company Volkswagen is facing critical challenges to regain their market position, customer loyalty and shareholder’s trust after they were accused of cheating the emission test of EPA. American boss of Volkswagen, Michael Horn stated that their company is totally ruined which describes how critical the issue is. On the other hand the former chief executive Martin Winterkorn, before resigning, stated that their company has broken the trust of their customers, and they must face the consequences. Therefore, it is clear that senior leaders have already surrendered to the present condition of the company. However, the present chief executive Matthias Muller showed his determination when he said that they will work hard to regain the trust of their consumers. This is easy to say but inside he knows that it will not be an easy task to execute, as they will have to start from scratch. Some recommendations are mentioned below for Volkswagen and its management so that they can systematically execute each step and can win back their lost reputation.
The organization must build a special team to provide immediate response to the situation. If the organization stays silence for long, they will lose the remaining trust and loyalty of its peers, customers, shareholders and employees
Rumors are indicating that Volkswagen will have to pay $18bn to Environmental Protection Agency as compensation. However, the agency has not declared anything else. Therefore, the next job of the team will be to find out the original story. They will have to communicate with EPA to find out what they can do to compensate their actions.
It is always a bold decision to say sorry after committing something wrong. Therefore, Volkswagen must call a press meet as soon as possible and ask for an apology to their customers and other stakeholders with a promise that they will enhance their system so that nothing bad would happen gain in the future.
The remaining leaders of the company must come forward and lead the way to handle the situation. It is recommended that they should use either behavioral leadership theory or participative leadership theory to communicate with their employees which will allow them to collect several alternative solutions to the problem. This will also help them to find out what the employees are thinking right now. If the employees are losing their trust and motivation, then immediate actions must be taken to charge them up because employees are the only powerful resource Volkswagen has at this time.
A major decision must be taken related to the faulty vehicles of the company. Volkswagen is recalling 8.5 million cars from Europe, including 2.4 million from Germany, 1.2 million from UK and 500,000 from the US because of the emission scandal. That is why their shares have fallen by about a third since the scandal broke. Therefore, the company cannot manufacture new cars to replace their faulty cars. It is recommended that they should add external upgrades in those cars so that they can perform according to EPA’s test manual. However, they must note that their newly manufactured cars will be internally upgraded to meet the requirements of EPA.
Upgrading 8.5 million cars in not an easy task as it might take years. However, Volkswagen must perform this task as soon as possible to show their responsibility towards their customers. Therefore, the current workforce is not enough for the company to execute this huge task. The organization must start recruiting new workers on short-term employment notice.
From the assignment the first thing, I learned that Environmental Protection Agency is doing a superb job by tightening their rules to protect the environment. However, I was surprised to know that a company like Volkswagen has committed this type of serious crime only to maintain their profitability. It was unexpected from the company as from 1937; Volkswagen provided several regular vehicles and luxury vehicles and always provided proper safety tools and latest technologies with them. However, from the statements of former chief executive of the company and their American boss, it is clear that the company is now feeling sorry for their wrong doings and is ready to face the consequences. Martin Winterkorn, who was the chief executive of the company at the time of the scandal, took all the responsibilities and resigned from his post. What I understood from some other statements from the leaders of the company is the company management has already accepted their defeat and strongly believing that they are not going to rise from this condition. However, the current Chief Executive has released a strong statement by saying that they are extremely sorry for their wrongdoing, and they are going to do anything and everything to win back the trust of their customers. I knew that this was not an easy job to do so I provided some recommendations related to leadership theories to their leaders so that they can follow the proper way to win back the trust of their employees first and then the trust of their customers.
While doing research on various leadership theories, I gained a vast knowledge on the topic too. I had to go through several leadership theories to choose the best three theories that can fit the present condition of the company. According to the present goal of the company, I have chosen three leadership theories which are expectancy theory, global leadership theory, and participative theory. Those three leadership theories helped me to enrich my knowledge on leadership, decision making and skill of a leader. While the expectancy theory taught me that effort, performance, outcomes are related to each other, global leadership theories like trait leadership, behavioral leadership theories helped me to understand concepts of inherited traits in a leader and self-gained skills of a leader. However, the participative leadership theory fulfilled my goal of choosing a leadership theory that can provide positive results to Volkswagen. Participative leadership theory taught me that the best way a leader can lead his team and earn their respect is to give equal importance to them. A leader must allow all of his team members to participate and share their views on a particular topic before making any decision. This is why I recommended this leadership theory to Volkswagen as the leaders of the company must communicate with their employees one by one to collect as many alternative solutions as they can. This strategy will also help the leaders to regain the trust of the employees because they will think that company values their suggestions. In the end, I can say that I learned how a company selects or should select leadership strategies to empower their decision making abilities in critical conditions.
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