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Part ll – Analytical tools and frameworks;

Part ll – Analytical tools and frameworks;
can be used to audit the sustainable practices that together influence five
perfortnance outcomes: brand and reprutatior-r, custorner satisfactiorr, finarrcial
performance, Iong-term shareholder returns and stakeholder value.
The four leaclership paradigms were used to link manv of the other approaches
including levels of leadership, leader and follower theories and sustainablc
leadcrship.
The purpose of introducing such a u,icle ral’rge of approaches and fi’ameu,orks in
Part II is to provide basic tools for analvsing leadership situations fi’orn clift:err.nt
perspectives. Many other theories and models could have been chosen from the
hundreds of approaches available. However, we believe that the selected
framcn’orks provide a tool kit for dealing r.tith marry practical lcadership issucs.
Sheets containing blank forms for the key framelvorks and tables are provided in
the Appendix for your use.
Applying the tools and frameworks
This section illustrates how some of the framew,orks can be used to unc’lerstand
leadership in the Virgin Group. First, the Virgin Group is described b;rsecl on
publicly available information, then the case is viewed through relevant theories
and tools to highlight Ieadership issues irr this organisation.
Case 2: The Virgin Groupa2
Among the most recognised brands in thc world, the Virgin Groupr consists of
more than 200 branded companies ir-rvolved in planes, trains, finance, soft
drinks, music, mobile phones, holidays, cars, wines, publishir-rg, hot air
ballooning, gaming and formerly bridal lt ear. The group operates worldwicle,
employing about 50,000 people in 30 coulrtries. Reported global revellues
exceeded US$17 billion in 2008.
At the heart of the Virgin brancl are the entreprerreurial instincts and stratergic
vision of the founder, Sir Rrchard Branson, who is non, chairman of the board.
Born in 1950, Branson was educated at Stowe School. His first entrepreneurial
venture was setting up a student magazine when he was 16. In the 1970s hc.
founded Virgin, starting as a mail order record retailer, followed by openirlg a
record store in Oxford Street, London. The rest is historv. Branson is rrerv
accessible througl’r his online blogs, frequently alrpears in the meclia ar-rcl is well
known for his publicity stunts. For example, at the launch of Virgin Bride,
Branson shaved off his beard ancl wore a lvedding dress.
‘l.he group’s mission is to make the inclustries it goes ir-rto better for custonrcrs.
Although the companies in the Virgin Group span rnalry verv different
industries, entering a new business is far from haphazard. All ventures are
carefully analysed beforehand. The group looks for opportunities that offc.r
improvements for, or otherwise add value to, customers, particularly whcrc
the competition is complacent. Talented people from throughout the group are
then often seconded to steer new l,entures, thereby bringing new perspectives
DiagnosinB Leadership in Global Organisations
and sharing knowledge and experience. People at Virgin claim to be passionate
about creativity, taking an innovative approach to business alld not being
dictated to by convention.
According to the group’s r,r’ebsite, once a Virgin conlPanY exists, various
factors contribute to its success, including tl’re power of both the Virgin nante
ancl Richard Branson’s personal reputation. This is supported by the gfoup’s
network of friends, contacts and partners and the way talented people from
within the group are empowered and supported. In adclition, Virgin has its
own management style: minimal layers of management, no bureaucracv, a tiuy
board and no large expensive global headquarters. The group aims to deliver a
quality service bv empowering emplovees and continually improving the
customer’s experience through inuovation ancl feedback.
For over 40 years, Virgin’s values remained constant: value for money, qualitv,
innovation, fun ancl a seltse of competitive challenge. ln recent years/ two ntore
values har.e been added: the wellness and happiness of all stakeholders plus
sustainability of the planet. Employees are expected to share these values ancl
act accordingly. Management believes that this clear set of corporatc- values has
the advantage of needing fewer managemclrt controls. However, employees
are still held accountable for their performance.
The companies regard themselves as part of a family rather than as part of a
hierarchical conglomerate. The companies manage their own affairs,
collaborate with other errtities in the group arrd share ideas, values, interests
and goals. The group headquarters takes a prirnarily advisorY role. For
example, to help manage the growth and det,elopment of tl-re 9rouP, teatns
Iook after different sectors of the business, such as aviation,
telecommunications, financial services and health and wellness. A managing
partner runs each sector team.
Employeg5 are attractecl by Virgin’s strong culture, vision and values. The fun
culture is eviclent in the folksy wording used on the website. Here is the
opening sentence on the 2010 careers portal: ‘Expansive global enterprise, wiclu’
ranging iuterests, ofterr maverick but llever reckless, seeks passionate
professionals, from all walks of life, for challerrging adventures…”
Various kincls of financial reward systems also help keep individuals
committed including stock optiolrs, bonuses and profit sharing.
Entrenreneurial opportunities for advancement and promotion abound within
the group.
It is difficult to find information about the privately held Virgin enterprises as a
whole, especially because Branson reportedly has a love-hate relationsl-rip with
the firrancial markets. After listing on the stock exchange, he then le-privatised
some of his companies. He said this was because the short-termism of the
markets went counter to his philosoph,v of building businesses for the longterm
and bearing losses along the way. Aftel briefly rururing the Virgin Group
as a public companv, Branson took the formcr holding comPany prir,,atc,
Ieaving only otre of the companies, Virgin Exprcss, publicly tradcc-l at the tirnc.
Part ll – Analytical tools and frameworks
He often floats a company and then r,vithdran,s it again, as he did with Virgirt
I{ecords in the late 1980s, or threatens to do so, as he did with Virgin lvlobilc in
2000. Reportedly, manv of the Virgin companies do not make a profit. For
example, Virgin Atlantic, the airline regarclecl as a Virgin cash cow, lost US$90
million in 200L-2, and Virgin Brides had to close in 2007 because it was
unprofitable.
The Virgin Group supports a number of philanthropic activities including
Virgin Earth Challenge, which offers a $25 million prize to encouraE;e a viable
technology to remove atmospheric greenhouse gases. The Carbon War Roon.:
p;ets entrepreneurs together to create market-driven solutions to climate
change. The Elders is a g;roup of prominent leaders, including Branson and
Nelson Mandela, who contribute their wisdotn, independent leaclership and
integrity to tackle some of the world’s toughest problems. A non-profit
foundation, Virgin Unite, focuses on entrepreneurial approaches to social and
environmental issues.
Virgin’s first Corporate Respot’tsibility and Sustainable Development Report
was released in 201 0, although senior executives claim that they harve beet’t
concerned about sustainability for some time. According to the report, the
corporate vision for sustainability is to ‘make a credible contribution towards
sustainable lifestyles while meeting or exceeding the expectations of our staff,
customers and stakeholders’. What this means in practice for the l’atious
corrlrpanies in the group cliffers. For Virgir-r Gaming, social responsibilitv means
helping to prevent gambling addictiorr, for Virgir-r Wirres it means cnsuring a
fair price to producers and pron-roting responsible drinking and for Virgirr
Money, responsibility refers to responsible lending. Finally, the Virgin Group
acknowledges the high environmental impact of its aviation businesses aud
savs that it is working on wavs of makir-rg flving more sustairrable.
Analysing the case usinB the frameworks
In analysing leadership within the Virgin Group, the following framew’orks and
tools are systematically applied to the case:
. leadership paradigms
‘ levels of leadership
. Bergsteiner’s levels and ]eadership paracligms matrix
. selected leadership theories arrd approaches
. follower theories
r power and politics
. substitutes for leadership and management
. sustainableleadershippractices.
Ar-ralvsing the Virgin case yourself bcfore rc’ading on will test your
understanding.
Diagnosing Leadership in Global Organisations
Leadership paradigms
Based on the information provicled ir-r the casc, it appears that the domin.rnt
Ieadership paradigms operating within the Virgin Group are visionar), ancl
organic. Richard Bransorl’s entrepreneurial vision underlies the entire business,
but he can only achieve this vision in such a largc, diverse enterprise by
empowering and inspiring his enrplovees. This hc docs with a clearly statcd
vision and set of values that people are expected to buy into from the time they
join. Teamwork arrd collaboration are highly valued in the group’s culture.
To the extent that employees within the various businesses are able to make
decisions, take on leadersl-rip roles and establisl-r new businesses, olle could sav
that elements of organic leadership exist at Vilgin. However, there is insufficient
evidence for widespread organic leadership in tl-re case study, despite the few
lavers of management, entrepreneurial opportunities and r,r,idelv shared visior-t
and values. The Virgin Group appears to display strong and consistent visior-rary
lea dership characteristics.
Levels of leadership
Looking at the Virgin case by leadership level reveals:
. Societnl-letel lentlersltip. The company operates in about 30 countries,
requiring considerable intercultural management. The corporate culture
appears strong enough to operate irr rnany national contexts. For
example, even ir-r cultures whcre classical leadership is traditional,
Virgin’s entrepreneurial culture attracts self-starters.
. Mocro-Let,el lendersltlp. The Virgin Group has a clear strategy, visiotr and
set of values. The firm is concerned aboui a range of stakeholders, lr’ith a
particular emphasis on customers and staff. Talent is attractecl aucl used
in creative {rays. Teamwork operates throughout the enterprise. Witl’r
few layers of management, bureaucracy is minin-dsecl. Systems and
processes are in place for managing trranv functions. HR plavs ar-r
advisory role. Staff developmerrt is enabled and promotiou fron’r within
encouraged, Sustainability is an increasirrgly stror-rg focus, including
corporate social responsibilitv.
. Meso-lcttal lendership. Like the boarcl, the top team is kept very small and
provides autonorny to the indiviclual businesses. Members of the top
team are expected to support the visionary leadership paladigm
operating throughout the group. Similarly, the CEOs of the subsidiaries
and the relatit,elv few middle managers are expected to operate within
the firm’s vision, values and managemellt philosophy. For its
management philosophy to work, the Virgin Group requires special
kinds of follow,ers – those who are willing to accept responsibilitv and
accountability via empow,errnent, share the values and vision aucl bring
the ability to think outside the box. Followers can expcct opportunitics
for plomotion and eutrepreneurial ‘adventures’. Agreements in place
44
Part !l – Analytical tools and frameworks
across all meso-level groups of employees include financial incentives,
stock, bonuses and profit sharir-rg.
. Micro-leuel lendershlp. Little information is provided about what kirrds of
issues arise at the micro level in this organisation and how they are dealt
with.
Bergsteiner’s leadership levels and paradigms matrix
Bergsteiner’s matrix combines the previously mer-rtioned levels of leadership with
the four leadership paradigms. The analysis of the Virgin Group using these
combined frameworks is summarised in Table 2.8.
Table
Croup
2.8 Bergsteiner’s leadership levels and paradigms matrix applied to the Virgirr
1
itevels of leadership
Leadership paradigms
r* : vi”9iete”Iy”
Societal Ievel Prevailing iTh” cr:mpony is operating in several
culture : different leadership cultures.
lrn’^ a^-dl-ld:tsir;i,<.^ -in t+o/ s!y/.rs/tre11n. ts, ,v,ii,-si,i.o,- n a.^-nl d .v,-a1,l,u^.e s a1rrde Organisational or divisional : , -.-.-:’-:l ^ -r^ l : . responsibility is inrportant, multiple systems, processes, traits, life i I ,.r”ffi,rr.r.rs c<;nsiderec.l and staff cycle’ size, economic i ‘l i”rpo*”rrnunt is widespread. Bureaucracy is models’ strategy 1 t iririirir”.ranclemployees are empowered. i Executive i ln small top team sets the vision but does not iTeam i ‘ ; appear to control operations’ ;* – i I i1 Il KReelalattlivveellyy fleeww rmllliududllee tInIldanlldaEgeErIs) eExAirs)lt,, ubtut Meso’ iother 1 t, i roles exist for sector team managers and orgarisation”! ii”ua”rr I I : CEos of subsidiaries. strong autonomy is Ievels t, ‘, , iaccorded to these mnnugeri. Classe. of o* people . ;The company desires self-managing Forowers 1 ! l::1″ffiiil,:”,’J:::J5::::;:’.varues’ t ; ientrepreneurial and enioy furr and innc.rval itln Micro-organisational level i ‘ This ts unclear from the case. * C=Classical, T=Transformational, O=Organic paradigms. Diagnosing leadership in Global Organisations The matrix shows that the Virgin Group operates under a visionary leaclersl-rip paradigm and is aligned across all levels in the visionary column. Unfortunatelv, insufficient information was available in the case to be able to contment oll solne cells in Table 2.8, particularly at the micro level ancl about other leaders, the board a1ld members of the top team (apart from Richard Branson)’ Selected leadership theories and approaches Which theories and approachcs can be drawn on to understar-rd Ieadership in the Virgin Group as describecl in the case? Table 2.9 summarises the analysis using the leadership theories presented above. Evider-rce for the relevance of only four approaches was missing from the case-LMX theory, Fiedler’s model, leamin15 ancl teaching organisation and the use of situational leadership. Of these missing elements, onlv LMX theory and being a teaching organisatiotr are theorics expectecl to applv specifically to the visionary paradigm. This does trot meatr that the missing theories cannot apPl-Y to tl-ris enterprise, just that thev were not evident in the case. Table 2.9 Linking theories and approaches to the Virgin Croup Theory Does the theory offer insights into the Virgin Group case? Behaviours Yes, many visionary behaviours are eviclent. Great men Yes, Branson is a self-nracle great nran, not born into leaclership or lve’alth. Other leaders clo not appear as indivlduals in the case. Traits Yes, all six of Kirkpatrick and Locke’s traits appear presenI in Branson. Others in the organisatiorr are expected to possess most of these traits as lvell, espccially clrive, inrcgrity, sclf-conficlcrrcc and intclligcnt–e. KnoivlecJge of the business can be acquirecl. Charisma Yes, Bransurr is consiclerecl charisrn.rlic. Other individuals are not specified in the case. Authentic Yes, Branscln seenrs Io’lvalk the talk’arrcl er-]courage people irr a 1’lositivc leadership way. Other leade rs.tre nol knolvn. Level 5 Yes, Branson seeks the limelight .rncl is therefore not a level 5 leader. Not clear whether he attributes t-tristakes to hirlself and success to others’ Other people are not cliscussed in the case. Narcissistic ‘ Yes, Branson appears to be a t:onsfruclivenarcissistic lt”ader r,vho is vl’ell balanced and has a positive sense clf self-esteer.r.t. He radlates a sense of positive vitality and empathy. Other inclividuals are not mentionecl in detail. tMx It is unclear frottt the case, but no eviclence of in-grclups or out-g()ulls is preser.rted. The practice of grttup-widc scctlndtlcnl speaks ag;rinst lht: dominance of in-groups. Socio- lt is unclear honr the staff perceive their leaders. cognitive Part ll – Analytical tools and frameworks Fiedler’s model House’s path-goal theory Top echelon Learning Situational leadership Culture Yes, Bransor-t ancl other leaders exercise moclerate corrtrcil and .rre relationship oriented. Yes, leaders are to enlpower sta{f and help renlove obstacles even thrtugh errploye-es are largely self-tnanaei ng. Yes, the case tells us that the top teanr is snr:rll, unbureaucr;rtic, tale’r.rlecl, flexible, advisory, and’farrily’ancl teatl clriented. There is no itrfornratiotr about the c.lynamics of the top lean’t or personal characterisLics of ntost menrbers. Yes, strategic on-the-job learning is eviclent. It is unclear from thc case. (This transactional leadership tttol ctluld bc I useful for developing staff ir-r any firnr.) Yes, there is a strong, vl,idely shared culture. Follower theories First, it is important to consider the follolt,er requirements in rclatiot-t to the four paradigms. Given the visionary nature of the Virgin Group, the followers seem tt’r fit well in terms of sharing the group vision, initiating ideas, collaborating in teams and being self-managing. In addition, employees are expected to fit into a passionate, challenging and entrepreneurial environment with low bureaucracv and few levels of management. Next, we apply three follower framelt orks, the results of u’hich are sumnrarised in Table 2.11: Kellermalr’s follower typology, persoualised versus socialisetl visionarv followers and followers’ need for supervision. But first, Kellerman’s five levels of follower involvement are summarised in Table 2.10. Normallv, Kellerman’s five follower types based on level of engagement would be applied to individual employees. However, Table 2.10 shows the results of applying it across an organisatior-r. [t is clear that the Virgin Group tries to recruit and retain a rvorkforce that is mainly in the activist category, with at least one positive diehard (its founder). Why do people follow visionary leadership at Virgin? Ilichard Branson cau be described as a visionar), leader and some staff rn’ould admire him and want to be part of his organisation because of him, that is, for personalised n-rotives. Othcrs would be attracted by socialised motives of wanting to be Part of an entrepreneurial enterprise that improves the world for customers. Both personalised and socialised motives could equallir well aPPl.Y to some of Virgirr’s employees. The case suggests that followers r,vith a low neecl for supenrision are preferred .rt Virgir-r, particularlv given thc minimal lavers of managcmcnt in that organisation. Diagnosing Leadership in Clobal Organisations Table 2.10 Kellerman’s (2007) follower typologies applied to the Virgin Croup completely detached from leaders and the j No organisation : barely aware of what is going on around : them care little for their leaders : not particularly responsive to their leaders. Bystanders Isolates r T I I I I Participants Diehards a I ! I a I ! I i disengaged from their leaders, groups and the organisation observe but do not pafticipatc deliberately stand on the sidelines offer little resistance clr active support. engaged in some ways try to make an impact may clearly support or oppose their leaders and organisations will invest some of their own time and energy in what they-belSS:1. work hard either for or against their leaders are eager, energetic and errgaged when supportive feel strongly about their leaders and organisations and act accordingly are heavily invested in people and processes. are rare all-consuming dedication to someone or something they believe in willing to endanger their own health and wellbeing for their cause No I T Yes (those working for their leaders) No (except for Branson himselfl i . can be a strong asset or a dangerous liability : to their leaders because of their extreme . dedication. The results for all follower approaches are summarised in Table 2.11. Table 2.11 Summary of follower theories applied to the Virgin Croup Do Virgin followers fit the theory? 1. Avery-Bergsteiner follower types Yes, followers are expected to initiate ideas, collaborate in teams and self-manage towards a shared vision. Part ll – Analytical tools and frameworks 2. Kellerman types 3. Howell and Shamir’s reasons for visionary followership i 4. Need for ] supervision 1 Yes, activists are preferred, but Richard Branson is likely to be I r”9i:”P19 – I Yes, both personalisecl ancl socialised reasons can be relevant I here. Yes, the need for supervision is expected to be low Substitutes for leaders and managers Substitutes for leaders are widely evident at Virgin because of its characteristic management approach. Rather than relying on managers, the group’s philosophy is to provide a clear vision and set of values to guide en’rployee behaviour, thereby requiring fewer management controls. In addition, people work in teams that can rabte 212 substitutes.’ ,”ro:i:.it Ti_”ig:* ‘” ,h”_]I*I 9::p__ Substitutes I Strongly i Somewhat Not evident evident evident t I I 1. Clear vision 2. Shared values 3. Specified goals 4. Access to information about progress 5. Feedback mechanisms 7. i:rl-TiFi”s wglfrorce Professional codes of conduct 8. Widespread skills training for staff ;” j e. Closely knit work teams t 1″, o, pro.”arr”, 11. Computer or other systems for managing work processes l-”-l’:9:*-:-‘-:-y:tT-:-gYid-erines 13. Peer pressure i I +. Dtront culfural norms i*** . … support the members. Staff members know the company goals and cultural expectations. Employees have many opportunities to share in-formation, irrcluding when seconded to new product and other teams, thereby reducing the need for managers to control. A clear set of guidelines is in place for determining and evaluating future projects. With a lean management sttucture, it is essential that substitutes for leaders and managers are built into the system. Table 2.12 Diagnosing Leadership in Global Organisations summarises the extent to which substitutes for leaders and managers are evident from the Virgin case. Power and politics Power varies between different individuals and groups at Virgin. Founder and chairman Branson is strongly associated with many forms of power, as the left Table 2.13 Sources of power among leaders at the Virgin Croup Sources of Branson’s power Sources of other Ieaders’ power i appears that he does not rely on it. 1 appears that they do not rely on it. ‘l Legitintate or position poner-strong: this ; derives from his role or position, although it t. Coercive power-Strong: this goes with I Branson’s position. ;– – 1. Reward power-strong: Branson has many I opportunities to reward people. l- ——** **** i Ownership power-strong: this is clearly a i strong source of power for Branson. i Referent power-strong: Branson is very I widely aclrnired and this would be a strong , source of power for him. ‘, Legitimate or position power-Strong: i derives from their roles or positions, but it Coercive power-strong: potential with own followers; weak towards upper “I.’,”_19:’:’ Rewa rd p owe r-Stron g: many opportunities to reward people. Own ersh i p power-W eak: privately held firm. Referen t power-Variable : depends on individuals. i Opportunity power-Strong: he values : Opportunity power-strong: the group , values being in the right place at the right j time to find <-rpportunities that others miss. j being in the right place at the right titne t<-r I find opportunities that others miss. i Relationsh ip power-Strong: Branson i associates with powerful others, which i *:.:19″”:vsr :-T “l i : : v:-r-:v: r ” !. Networks and coalitions-strong: Branson I has extensive networks, starting with the ] people involved in the Elders and Carbon ] War Room endeavours. 1 Relationship powet-Yariable: depends orr i whom they associate with in addition to ; Branson. -t 1 Networks and coalitions-strong: part of ; the culture is to use networks and ; partnershiPs. i lnformation power-strong: the threads of I n fonna tion power-Y ariable : i ndivid ual the organisation would converge on the differences. chairman and owner. Expertise power-Weak: Branson relies on ‘, Expertise power-strong: for most people. others with expertise instead. : Part ll – Analytical tools and frameworks : Netnorks anc/ cctaition-e-Strong: Branson ; has extensive networks, starting lvith the I people involvecl in the Elclers ancl Carbor-r ,Var Roorl cn(ledr,,r.rr s. , lnionnation potver-strong: thc threacls ol i, lnfornatictn potver-Variable: inclividual , the organisation r,voulcl converge on the. : clifferences. I chairman arrcl ou,ncr. t–.– ‘i Experti.se pnu,”r-wiJi, B’;,l;;.:i;;; : Expertise pc-tr.er-Strong: for rnost people. i Sustainable leadership practices Using Aver)/ and Bergsteiner’s+l sustainable leadership criteria in Table 2.L4, we see that the Virgin Group rneets the honeybee criteria very well. In the ieft column of Table 2.14, the 23 sustainable criteria are listed. In the centre column, the honel,bsg practice or philosophy is clesclibed and in the right column, practices iu the Virgir-r Croup havc been extractcd frorn the case. lVe have used different fonts to indicate the r-natch with thc honel,bgg philosophy. Norrnal font inclicates a good match basecl on the case information, rvhe,reas bold lnealrs that the infolmation rvas unclear on that clement in the case. i Netn orks ancl coalitictn-s-Strong: part of the i culture is to use netit,orks ancl partnetshiqrs. 2. labour relations Retaining staff Succession .planning-, Valuing staff CEO anrl top teanr Develops e/eryone cr;n tin uously Sccl


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