Leadership Styles Impact on Organizational Culture
Effects of the Different Leadership Styles on the Organizations’ Culture
Leadership styles affect small companies as well as large corporations; particularly they build the corporate culture that has impact on the organization and its performance. It can be explained by staff’s desire to work in the ways that reflect their leaders. Employees also subconsciously wish to cater their managers, so gradually they become as a whole. Therefore, when new leader comes to the company, certain “culture friction” usually appears (Pirraglia, n.d.).
Corporate culture of IKEA and Ethan Allen Furniture is also influenced by their leadership styles. First, IKEA uses autocratic management style, which means that senior managers determine objectives and give tasks to the rest of the staff. Employees are encouraged to be obedient, so it reduces their initiative and motivation. As a result, turnover among the most qualified workers is higher. Second, the influence of democratic style is becoming stronger. Managers start motivating people to participate in making business decisions. Besides, IKEA’ corporate culture is greatly influenced by its charismatic leader. In addition, it is a perfect example of family business, so its major values are formed on the basis of the family business concept. For example, the company is ruled by the family member with the strongest entrepreneurial character, who is able to set the organization’s goals and operational strategies and desires to control almost all the business area. Such concept was a reason why the company tends to use autocratic leading style. The owner of IKEA defined his style as leading “by good example”. He states that in order to reach high productivity, it is necessary to encourage hard work and strict business ethics. His leadership features include humility, readiness to confess own mistakes, caring about employees, simplicity, thriftiness and continuous development, thus IKEA’ owner can be defined as a transformational leader. Apart from already discussed characteristic, transformational leadership also presupposes idealized impact, intellectual encouragement, inspirational motivation and individualized consideration. These properties are found in IKEA. Summarizing, the company has some features of a paternalistic and democratic management styles because it values staff’s input not only to receive their feedback but also demonstrate they the firm needs them. This is effective for the organization’s productivity. On the other hand, the company has many features of autocratic leadership styles because final decisions are made by the director and are based on his vision. It is explained by the fact that it is a family business with a powerful entrepreneurial character (IKEA, n.d.).
As for Ethan Allen Furniture, they stress that good leadership is beneficial for profitability as well as for forming talented and loyal team. The group determined ten major leadership principles that demonstrate their commitment to excellence. First, they defined that leadership is provided by example. Second, change is considered as opportunity. Third, Ethan Allen Furniture stands for accessibility, which means that they are supportive and accessible, as well as admit contributions of others. The fourth principle is keeping a competitive advantage by responding fast to new possibilities. The fifth one is client focus, which means recognizing customer service as a top priority. The sixth principle is continuous hard work. The seventh one is focus on excellence and innovation. The eighth principle is making priorities by determining significant issues and small ones. The ninth one is confidence that is used as a way to encourage others to make as many efforts as possible. Finally, the tenth principle is providing justice. The company’s managers believe that it is important to make decisions fairly because this creates trust, and the latter motivates people to work harder (Ethan Allen, n.d).
In general, the leadership style of Ethan Allen Furniture looks more democratic that the one used in IKEA because chiefs of the first company make more accent on needs of customers and employees, providing them opportunities for development, justice and confidence. There is no focus on the company’s leaders. On the other hand, both firms state that leadership should be made by giving example.
Management Procedures at IKEA & Ethan Allen
IKEA success on the market demonstrates that the company has efficient and well-developed management procedures. It has 285 stores in 36 countries, which says that organization possesses the expanded distribution system. Such manufacture allows IKEA to get higher production rate, lower costs for one unit and higher capacity utilization. The firm can also set the tag price first and only after start designing goods within the following range. These aspects are particularly important for IKEA because they have brand image of the company that provides qualitative furniture for affordable prices. To avoid returning products, IKEA opened own laboratory to test goods before selling them. In addition, the company tends to have long-lasting relations with suppliers in exchange of following IKEA’s codes and policies. Its production is outsourced but distribution is considered as major competency. Apart from thousands of producers and approximately 1,400 suppliers in fifty-four countries, the company has twenty-seven distribution centers that ship furniture to stores. Another 11 were opened to deliver products directly to customers (Griffin, 2008).
One more important part of management procedures is selling of products. IKEA made this process very innovative, particularly they designed attractive stores. Usually, they are 300,000 square feet and unite show rooms that form “a natural path” and self-service warehouse. After taking good from show rooms, customers move to Market Hall where they choose small items such lighting, bed clothing, rugs etc. Then clients can go to Self-Serve Warehouse to pack everything and only after that they precede to cashiers’ stations to pay for everything and order delivery if necessary. The procedures that customers perform in IKEA’s stores are usually made by employees in shops of their competitors. Such innovation allowed the company to optimize processes in retail, and make cost and price reductions effective. The company also pays attention to procedures of searching new products. Employees from all the departments are encouraged to design or just offer new ideas (Griffin, 2008). Therefore, management procedures within IKEA are highly efficient and innovative. The company’s tries to respond quickly to all new customers’ needs in order to be ahead of its competitors. The particular attention is put to procedures that deal with distribution and retail.
Unlike IKEA, Ethan Allen Furniture has nine manufacturing centers in the United States. It also focuses on variety of product range. For example, the firm has three hundred of designing centers in America as well as in foreign countries. To inform customers about offerings, the manufacturer developed a wide network of design advisers that not only advertise the company’s goods but also give advice concerning repair. However, the biggest attention is put not on procedures that deal with manufacturing, design and distribution but on personal service. Every its operation was renewed and improved. Procedures that refer to introducing innovations are not as developed as in IKEA. Apart from that, Ethan Allen has less procedures and operations aimed to reduce prices and costs (Ethan Allen, n.d.).
Change in Leadership Philosophies
Nowadays the company focuses on searching the ways of empowering women in the their leadership positions. IKEA tries to achieve this objective by promoting females to senior management even in case they are pregnant and providing 6-month’s salary to the accompanying partner of an employee, who was asked to move to a new position. All IKEA’s leaders believe that gender equity is one of the aspects of effective business. According to Peter Agnefjall, the company’s CEO, this helps to build an inclusive and humane culture with such values as simplicity, togetherness, humility and eagerness. This philosophy is called “value-based leadership”. It is believed to be the basis for creating an innovative business in the future. IKEA managed to achieve high results in promoting its values. In particular, nowadays 47% of all company’s managers are females and about 40% are senior managers. The highest percentage of women is in American and Sweden offices. IKEA’s short-term global objective is 50%. Such diversity gives new opportunities and increases creativity and innovation. Besides, it helps to reflect society, which is important for understanding and satisfying customers’ needs (Brzezinski, 2013).
In addition, the leadership philosophy of IKEA is becoming less autocratic and focused on the personality of the director. According the company’s CEO, IKEA is now team-oriented organization. Its top managers value the ability to work together with defined framework and aims, but they also give space for freedom. The CEO tries not to interfere in other employees’ spheres of responsibility. Peter Agnefjall claims that delegating and trusting others by providing them with responsibilities is now part of IKEA’s corporate culture. One of the advantages of such policy is wide opportunities for personal and professional growth, which is also positive for the whole company. IKEA’s growth is based on evolving the business through its staff (Brzezinski, 2013).
Like IKEA, Ethan Allen Furniture has changed its leadership philosophy making it more people-oriented. It involves a support of its employees, customers and even communities where the company’s offices are situated. Moreover, group involvement of one of Ethan Allen Furniture’s top priorities. They possess outstanding credibility in their communities and with their customers, which is believed to be a direct consequence of trust and commitment that exist between managers and employees inside the organization. The company’s CEO tries to give an example with his community leadership actions, and that motivates the senior managers of local producing, logistics, and design departments to give an example as leaders in places where they live and work. For instance, they try to support their communities, and corporate headquarters assist them in this. It is particular important for remote groups (e.g. in Vermont and Maine) where Ethen Allen is the largest employee. Customer service has also evolved over the years and has become highly important for the organization. It can be explained by the processes of commoditization and globalization that have led to significant changes in the whole industry. In particular, mass marketing appeared, so a significant amount of furniture goods is commoditized now. Besides, most of production was moved out of the USA. Therefore, the company’s managers decided to create competitive advantage by improving their customer’s service. They renewed every aspect of personal service in order to provide the pleasant buying experience to their clients (Ethen Allen, n.d.).
In general, changes of leadership philosophy in both companies are very similar. As it was mentioned before, they have become more human. Leaders of IKEA as well as Ethen Allen Furniture realized their business cannot develop without support of their employees, customers and communities. It is probably as result of globalization as well as the increasing of competition. Many companies produce home furniture. Most of them then have modern equipment, good suppliers and well-developed distribution system. However, in order to attract customers and to save employees, they need to provide something more than lower prices and average salaries. IKEA and Ethan Allen should gain competitive advantage and commitment of their staff by offering support, freedom, justice and simplicity. IKEA called this “value-based leadership.