There have been numerous arguments as to whether business leadership should be promoted from within or outside the organization. This project was aimed to ascertain whether leadership promotion within organisation may benefit the overall performance of the organisation or if leadership promotion or recruitment from outside will help an organisation to do better, the case of Nestle Ghana Ltd.
table of contents
1 INTRODUCTION 4
1.1 BACKGROUND 4
1.2 RESEARCH MOTIVATION 4
1.3 Aims and Objectives of the Study 5
1.4 The research question 5
1.5 significance of the study 5
2 LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK 6
2.1 INTRODUCTION 6
2.2 UNDERSTAND THE CONCEPT OF LEADERSHIP 6
2.3 THEORIES OF LEADERSHIP 7
2.3.1 PSYCHODYNAMIC THEORY OR LEADER-MEMBER EXCHANGE (LMX) THEORY 7
2.3.2 CONTINGENCY AND SITUATIONAL LEADERSHIP THEORY 7
2.3.3 NEW LEADERSHIP THEORY 8
2.4 ORGANISATIONAL CULTURE AND LEADERSHIP PROMOTION 9
2.5 LEADERSHIP PROMOTION IN ORGANISATION 10
2.5.1 LEADERSHIP PROMOTION WITHIN ORGANISATION 11
2.5.2 LEADERSHIP PROMOTION OUTSIDE ORGANISATION 11
2.6 LEADERSHIP PROMOTION IN SUPERMARKETS 12
2.7 SUMMARY 12
3 METHODOLOGY 13
3.1 METHODOLOGY OF THE RESEARCH 13
3.2 RESEARCH STRATEGY AND DESIGN 13
3.2.1 RESEARCH STRATEGY 15
3.2.2 RESEARCH DESIGN 15
3.3 SOURCE OF DATA 16
3.4 DATA ANALYSIS 16
3.5 ETHICAL CONSIDERATION 17
4 DATA ANALYSIS AND DISCUSSION OF RESULTS 18
4.1 INTRODUCTION 18
4.2 BACKGROUND OF RESPONDENTS 18
4.3 RELEVANCE OF LEADERSHP IN ORGANISATION 19
4.4 LEADERSHIP AND ORGANISATIONAL BEHAVIOUR 20
4.5 LEADERSHIP PROMOTION IN ORGANISATIONAL 21
4.6 SUMMARY 22
5 CONCLUSION AND RECOMMENDATIONS 23
5.1 CONCLUSION 23
5.2 RECOMMENDATIONS 23
5.3 LIMITATIONS 24
5.4 REFERENCES 25
Appendix A – Questionnaire for Staff 28
appendix B: semi structured interview questions for staff 30
Leadership can be described as a dynamic process in a group, whereby one individual influences others to contribute voluntarily to the achievement of group tasks in a given situation (Gill, 2009). It has been observed that, in many organizations, leadership promotion is done outside the organizations. Some critics like Goldsmith et al (2003) have observed that lack of confidence on the part of some leaders; make some companies promote potential leaders from outside their organizations.
However some critics have argued that leadership is the lifting of people’s vision to a higher sight, the raising of their performance to a higher standard, the building of their personality beyond its normal limitations (Goldsmith et al, 2003). By this, it could be vital for organisations to promote leadership from within. Leadership involves diagnosing situations, determining what needs to be done and marshalling collective efforts sufficient to achieve a desired future or avert significant problems. Therefore if individuals are promoted within an organisation, since they understand the organizational culture and know its structures, they can promote whatever vision or mission the organisation have to a certain height. Effective leadership entails the use of power and persuasion to define and determine the changing and ongoing problems within an organisation and, any other opportunities, while working to address solutions and actions needed to cope with the situation (Goldsmith et al, 2003).
1.2 Research Motivation
The motivation behind this investigation came up as a result of my observation in leadership promotions in many organizations that I have worked as a factory operative or part-time staff member. What was observed over the period is that, instead of organizations promoting their leadership from within the organisation, the promotion was made externally. In other words, each time there is leadership vacancy, the position is advertised and potential job seekers, who have leadership qualities being sort, apply and the recruitment is made from the applicants. Some critics have argued that, some of the leadership priorities are concerned with ensuring – continuity, development, improvement, monitoring, and evaluation both for the work being done and for those involved in helping those objectives to be achieved. Therefore if leadership is promoted within an organisation, such continuity is not curtailed.
If leadership is promoted from outside an organisation, it has a lot of serious consequences as pointed out by Mendenhall et al (2008). For instance, if staff members notice that there are potential members who possess the same qualification and employment experience as those recruited from outside, the recruited leader’s work or efforts may be sabotaged, therefore opening the door of failure ajar. In some cases they may decide not to corporate or intentionally put up lackadaisical attitude to weaken his/her leadership. It is against this background that this investigation becomes very important for organisations such as Nestle Ghana Ltd, to understand the benefits that could derive from leadership promotion within it rather than getting potential leaders from outside the organisation.
1.3 Aims and Objectives of the Study
Aims: The aim of the study is to ascertain some of the benefits that will be derived from leadership promotion within organisation rather than recruiting people from outside the organisation to lead the teams within the organisation.
Objectives: To achieve the above aim, the study will be achieving the following objectives;
To investigate the reasons behind why organisations need leadership instead of managers
To assess why leadership promotion within organisation may benefit the overall performance of the organisation
To analyse some of the difficulties involved in promoting leaders within an organisation rather than from outside the organisation
Understand how organisations could enhance its performance through internal promotion of its leadership.
1.4 The research question
The research is aimed at answering this research question;
What are the benefits involved in promoting leadership from within an organisation, and what are some of the challenges associated with this approach?
Answering the above questions will help in the achievement of the objectives; and through that, some recommendations will be suggested for the formulation of policies to address some of the leadership promotional challenges.
1.5 significance of the study
This study will benefit all stakeholders in both large and small scale businesses as a result of effective recruitment decision making by organisations.
Literature Review and Conceptual Framework
Chapter one talked about the introduction which gave a clear background of the study and how it has become very important for such an investigation to be carried out. In this chapter, the various themes that underpin the study will be reviewed in more detail. The concept of leadership and leadership theories will be made very explicit. Organisational culture and leadership promotion will also be examined in more detail. The chapter will end by looking at the relevance of leadership promotion from within or outside organisations.
2.2 Understanding the concept of leadership
Leadership can be described as dynamic processes in a group whereby one individual will influence the others to enable them make voluntary contribution to the achievement of a group or organizational tasks in a given situation (Mendenhall, et al, 2008). Leadership involves diagnosing situations, determining what needs to be done and marshalling collective efforts sufficient to achieve a desired future or avert significant problems. It entails the use of power and persuasion to define and determine the changing nature of an organization and solving its problems, as well as making use of all opportunities, finding solutions to its problems and taking actions where necessary and helping it to cope with any given situation (Goldsmith, et al (2003). Leaders are supposed to set their organizational vision – knowing where the organization is and where it is suppose to go. They also set the longer term vision for the organization.
A leader in an organization is also a member of that organization, company, institution, etc whose purpose, vision, and values are for the benefit of the entire organization and its stakeholders, and those values and vision are shared by the entire organization. He or she is supposed to see his/her members as not just followers, but also as stakeholders striving to achieve that same purpose, vision, and values. The leader mobilises, motivates, inspires or encourages others. He/she must be exemplary in his or her dealings. Leaders must be able to motivate, inspire and energize their members (Gill, 2009; Fulop et al, 2004). To ensure that teams voluntarily follow and resources are attracted to the cause, ideas must be translated into simple, direct and positive statement of what the leader is going to do, how and why this is to be achieved and the benefits that it will bring to others (Mendenhall, et al, 2008). Leadership therefore become the most influential aspect of an organization; so a good leader is suppose to ensure that success of his or her organization is paramount and achievable, even within turbulent times.
2.3 Theories of leadership
Theories of leadership have been used to explain the characteristics of those whom we expect them to be leading or are seen leading their organizations. There are many leadership theories, but most leadership theories explain how the style of leadership help shapes organizational culture. According to Gill (2009), there are so many types of theories of leadership. He stated psychodynamic theory or leader-member exchange theory, contingency and situational leadership theory and the new leadership approach which comprises of visionary theory as some of the theories that this study will be looking at.
2.3.1 Psychodynamic theory or leader-member exchange (LMX) theory
Psychodynamic theory, or leader-member exchange theory as some writers explained, looks at the effectiveness of leaders as a function of the psychodynamic exchange that occurs between the leadership and the group members following the leader (Gill, 2009). Leaders are supposed to provide direction and guidance for the organization or the members through their influence given to them by members or management or the organisation. In some cases it is the board members who give the powers to those who are supposed to lead the organization, but the leaders will be influencing certain decisions depending on their power of influence. The LMX approach defines the effectiveness of the leaders and as a function of the psychodynamic exchange that is occurring between the leaders and group members – that is, the followers or sub-ordinates. The leaders provide direction and guidance for the organization through influence permitted to them by members.
Exchange theories focus on the characteristics of the leader, their individual followers and how they relate with their followers. In contrast to leadership-style theories, LMX theorists argue that leaders-member relations are sufficiently variable and it is suppose to warrant on each pair of leaders and their members in a separate dimensions; and that the members may differ markedly based on their descriptions and how they perceive the leader (Dansereau et al., 1975; Graen, 1976; Graen et al., 1977). The essence of psychodynamic theory is the understanding of oneself and others and in terms of results and performance of the organization; and the transactional nature of the style of the leader and the leader-follower relationship (Stech, 2004).
2.3.2 Contingency and situational leadership theory
Contingency and situational leadership theories suggest that there is no one best style of leadership (Graen, 1976; Graen et al., 1977). They explained that successful and enduring leaders use different styles according to the nature of the organization they lead, the situation at stake and the followers. A condition or situation may compel a leader to change his/her behavior, while some of the situations – political, social or economic may compel some leaders to their style, sometimes making them become authoritarian leaders, due to certain circumstance. Graen et al. (1977) noted that contingency theories suggest that there is no one best style of leadership. Nevertheless, successful and enduring leaders use different styles according to the nature of the organizational culture, the situation they may be handling and the followers. Such leaders know how to adopt a different style for a new situation, regardless of how effective any one particular style has been in the past.
The effectiveness of a particular style of leadership depends on the relationship between the characteristics of the leader, the followers and the situation as suggested by Graen (1976) and Graen et al (1977). Bass et al, (1975) found that specific leadership styles are associated with different ways in which organization operates, the task at stake, personal and interpersonal characteristics or relationship. Hodgson and White (2001) argued that effective leadership is by finding the best fit between good behaviour, context and need. Contingent and situational theorists therefore argue that, there is not acceptable form of leadership, rather, the situation will justify what type of leadership is appropriate and must be applied. This means those in leadership position must be able to change their leadership style based on the situation.
2.3.3 New leadership Theory
The new leadership theory comprises of visionary, charismatic and transformational leadership theories. Transformational leadership occurs when leaders raise people’s motivation to act and create a sense of higher purpose as explained by Graen (1976). He further noted that it is distinguished from transactional leadership, because it involves an exchange between the leader and the followers with an emphasis on correction mistakes from requirements and providing a material or extrinsic reward systems in return for compliance with the leader’s orders or wishes. The new theories also place emphasis on strategic leadership and pragmatic leadership styles. Burns (1978) explained that vision, charisma and transformation are some of the keywords for the New Leadership theory.
The concept of transformational leadership arose from a study undertaken to understand rebel leadership and revolution form of leadership that occurred in the early 1970s (Downton, 1973). However, others also argued that it was James MacGregor Burns who was seen as a political, historian and biographer, who in a seminal book published in 1978 first described transformational leadership and blended it with transactional leadership style (Burns, 1978). Transforming or transformational leadership as he explained them occur when both the leader and followers raise each other’s motivations to a sense of higher purpose. Transactional leadership on the other hand is a form of transaction or exchanges that occur between a leader and followers, such that it provides material or psychological reward systems in return for follower’s compliance with the hope of accomplishing their wishes.
According to Sashkin visionary leadership, concerns itself with transforming an organizational culture such that it falls in line with the leader’s vision it has for the organization’s future (Sashkin,1988). Sashkin and Rosenbach have also suggested that there are three personal attributes that guide the leader’s behavioral approaches. They include self-efficacy, power orientation and cognitive capability (Sashkin and Rosenbach, 1998). Cognitive capability therefore concerns itself with understanding complex that is cause-and-effective chains to be able to take action at the right time to achieve organizational desired outcomes (Streufert and Swezey, 1986).
Very good leaders are often perceived as charismatic or born leaders, because of how they are connected with their followers. They inspire them and encourage them to follow their cause. Charismatic leadership may be found at most levels within the organization, though they are frequently found at top most part of the organization (Bass, 1992; Sashkin, 1992). They further noted that it is associated with greater trust that members or the followers will have in the leaders and achievement that have been noticed among followers. The charismatic leader weaves a spell outside that of the organization; and may attract shareholders, customers and investment in troubled times, as argued by Flynn and Staw (2004) the French researcher. Waldman et al. (2001), however, in a study of senior managers in Fortune 500 companies in the United States, also noted that charismatic leadership is associated with net profit margin registered with some organisations, but only under conditions of environmental uncertainty. Charismatic leadership appears to be dysfunctional in predictable conditions, perhaps because it may generate unnecessary change.
2.4 Organizational culture and leadership promotion
Culture has been described in many ways, and it has become very difficult to find a consensus or a common and clear definition. Some critics have argued that culture describes what an organization is about or how organization conducts itself (Smircich and Cala, 1987). Leigh and Maynard (2000) see culture as a heady combination of organisation’s vision, its values, tradition, ethos and its self-image. While the Work Systems Associates (1996) also describe culture as the lifestyle of the organization; its main core values, its hidden assumptions or beliefs, systems, policies, programmes and procedures, and the way it conduct its business everyday and its relations with stakeholders. Linstead (2004:107) has argued that, ‘leaders can exert a powerful influence on the culture of their organization, especially if they are the founder’, for that matter can play a very significant role in promoting those expected to be leaders or to lead it.
Understanding the organization culture and how leaders influence promotion of leaders within it become very significant for the organization. While some of the organizations have a culture of promoting leaders from within it, others prefer getting leaders from outside. The later is preferred because some schools of thought argue that, if leaders are promoted within an organization there is little respect for those who will be promoted, while exercising their authority also become difficult because of familiarity with members. The ability to perceive the limitations of one’s own culture and to develop the culture adaptively is the essence and ultimate challenge of leadership. The most important message for leaders at this point is how they have to understand the organizational culture, give what is due, and ask how well the culture could be understood which the leadership is embedded (Schein, 1992).
The need for leaders to create and manage organizational culture is consistent with the increasingly becoming accepted part of organizational-wide leadership concept or become an expert of distributed leadership style (Ashkanasy et al., 2000). With regards to leadership style, and how culture may influence its promotion, significant, indirect pervasive effects on organizational performance could also be very significant (Gill, 2009. Linstead (2004) has explained that, since leaders can shape the culture of their organization – more especially if they are the founder, promoting leaders could be very easy, because they have direct influence on the culture of the organization. The culture of an organization and how leaders are promoted therefore could be very significant because every organization has a way of conducting itself and how it may decide to promote its leaders. Ogbonna and Harris’s overall conclusion was that organizational culture mediates the relationship between leadership style and organizational performance and in effect has a positive role to play in promoting leaders (Gill, 2009).
2.5 Leadership promotion in organization
Leadership promotion takes place, of course, mostly on the job and in many organisations. In fact most of what we know about leadership and leadership promotion and how it can be done is learned through experience in real life rather than in the classroom. Formal training in general, and leadership development programmes in particular, aim to enhance organizational development and performance through a well managed organization. Leadership promotion could serve as a learning process for those who may have the potential and skills to become future leaders. Examples of leadership promotion in an organization could be to rotate job responsibilities, taking on the leadership of special projects or assignments, deputizing others of for the bosses and leading in a cross-functional team (Economist, 2001d).
The value of real experience is well demonstrated by the way in which some of the top consulting firms have become a rich source of CEOs, through leadership promotion. It is almost as if the experience and ideal leadership program exist within such organizations, because of how the leadership promotion is well nurtured to develop future leaders (Linstead, 2004). Leadership promotion becomes very important for organization to effectively manage its affairs. Most organizations prefer to promote staff onto higher position within their organizations, while others promote from outside the organization. However, even though some organizations may prefer promoting from within others also prefer to do their promotion from outside the organization even if there are skillful individuals to serve as leaders within it.
2.5.1 Leadership promoting within organization
Leadership promotion within organization means instead of getting people from outside an organization to occupy leadership positions, organization promote its own staff that it considers to be very effective or have the leadership potential or skills that are needed and get promoted. One may argue that such a move is very good and that, since members in a company are used to the way things operate and understand the system very well, promoting such individuals is a form of continuous process. That is since employees know the system already, if they are promoted internally, they are familiar with the situation so they will know what to do from day one. It might be a change of position, but continue doing what they already have an idea of how it is done.
Linstead (2004) has argued that, when a company is small, and the leaders are easily seen, the influence they can have in the development of the company can easily be seen, than if it were to be a multinational company. Promoting leaders from within a small company although could be bringing some benefits as explained by Linstead; familiarity which will bring contempt could also affect the leader’s performance and his or her ability to exercise his or her full authority and powers as a leader. While some critics also argue that, promoting from within is the best way because most members that are promoted from within an organization are familiar with the job, the culture and structure of the organization. This will serve as a good foundation for those promoted to be leaders from within to have a basis to begin their leadership assignment.
2.5.2 Leadership promotion outside organization
Promoting leaders to higher positions is another way that many organizations or institutions have to adopt as a means of motivating their employees. It is not just to promote them because they have to be motivated in one form or the other, but when staff gets promoted within their organization, they feel motivated to work very hard. Like promotion within an organization, other critiques also argue that, promoting within an organization is very bad and support promotion from outside an organization. They are that, since individuals become stagnant and too familiar with colleague when they have worked in the same place for long, making become seniors in the same workplace may not enhance respect being given to them by other members.
2.6 Leadership promotion in supermarkets
Leadership promotion is very crucial in every organisation. It is not only supermarkets that need to promote leaders in their organisation, although leadership promotion is very vital for organisations to remain competitive and improve. Supermarket like any other organisation also must improve or develop its leaders so as to make the organisation move forward. Every organisation should have those who can set its vision and communicate the vision to the members to enable them support it.
It can be said that effective leadership place a central role in the success of every organisation, regardless of the size, form or structure. Leadership therefore needs to be effectively promoted such that all stakeholders will feel part of the organization and therefore promotes its standings within today’s market.
3.1 Methodology of the Research
There are three main methodologies, which can be used to undertake research in the real world; they are quantitative, qualitative and mixed methodologies (Kumar, 1996; Robson, 2003). The study will adopt both qualitative and quantitative methodologies to ascertain the relevance of managing across cultures and the techniques managers need do so effectively, which according to critics like Flick (2002) and Kent (1999) will give the researcher to gather good data. To do so successfully, employees from selected organisations will be interviewed alongside managers and chief executive officers to seek their views about the topic under investigation. The interviews will be conducted on a one-on-one basis for both ordinary workers and some individuals in management positions. Some employees will also be made to answer questionnaires to triangulate the interview data
Forms methods such as observation – participants or non-participants will not be suitable for the data gathering. According to Kent (1999) looking at non-participant observation method for instance, although it may be suitable for the research, position of the researcher and his/her inability to probe whatever may transpire makes it difficult for adequate information to be obtained from the respondents. Besides, clarification cannot be done during data collection. Respondents may also exaggerate their activities if it becomes obvious that the researcher is amongst them gathering data. While others may also decide to withhold information, that will enhance the degree of biases that may affect validity of the data. These reasons have made it very important to adopt both questionnaire and interview and will neglect the other methods.
3.2 Research Strategy and Design
Nestle Ghana Ltd
Nestle started in the 1860’s by Henri Nestle, a pharmacist, whose initial aim was to develop food for babies who were unable to breast feed.
A study by the Institute of IDE-JETRO (Institute of Developing Economies, Japan External Trade Organisation), Nestle is not only one of Switzerland’s largest industrial company, but also, currently, one of the world’s largest food companies. They products include Perrier, Nescafe, mineral water, pet food. It is also fast increasing its share of the ice cream market.
The study continued that Nestle Ghana Limited is one of the divested businesses by Nestle whose origination dated back in 1957 under the trading name of Nestle Products (Gh) Limited with the importation of Nestle products such as milk and chocolates. It was incorporated as Food Specialties (GH) Limited to manufacture and market locally well known Nestle brands in 1968, however, in 1987, it became Nestle Ghana Limited.
Services and Products
Nestle Ghana Limited has numerous well-known brands including; IDEAL Full Cream Evaporated Milk, CARNATION Filled Milk, Carnation Tea Creamer, MILO, CEREVITA Porridges, CERELAC Maize/Milk and CERELAC Wheat/Milk. Nestle Ghana also imports and distributes brands such as: NIDO Milk Powder, LACTOGEN Infant Formula, NAN Infant Formula and NESCAFE Soluble Coffee among others.
Number of Employees
Nestle Ghana Limited employs 1,000 people.
Nestle Ghana Limited’s turnover in 2008 was US$173,491 and net profits US$18,499.
Nestle Ghana limited is ranked 437 in the “Top 500 Companies in Africa 2009” and as one of the top ten companies in Ghana for 2009 (6th position overall and it is the only company in the food industry category on the list of top 10).
Though Nestle’s business objective is to manufacture and market the Company’s products in such a way as to create value that can be sustained over the long term for stakeholders, however, Nestle Ghana Limited’s aim to be “the number one company not only in business terms and the highest profit making business but also the best employer, the most socially responsible citizen and ethically sound company.”
Ownership of Business
Nestle Ghana Ltd owns 76% of the business with 24% belonging to the Ghana Government.
Benefits Offered and Relations with Government
The numerous business and social activities undertaken by Nestle Ghana Ltd is hailed as a direct contribution to the Ghanaian economy. Aside aiming at maximising profit, they also undertake series is of activities which promote the growth of Ghana’s workforce. For example, Nestle Ghana Ltd promotes medical students in health sciences, supports child education and social events as well as sports. These achievements have earned them a place by the Ghana Government who qualifies the company as a “responsible citizen”.
Source: Jetro, I. (). AGE (African Growing Enterprises) File. Available: http://www.ide.go.jp/English/Data/Africa_file/Company/ghana04.html#anchor1. Last accessed 11th Oct 2012.
3.2.1 Research Strategy
The use of Nestle Ghana as the only company being used for the study justifies the case study approach being adopted. As it has been argued by May (2001), the exploratory study helped to develop understanding and analysis of the issue under investigation. However, according to Gray (2004) research in real world could be carried following the qualitative, quantitative or a combination of two research methodologies. Robson (2003) and May (2001) explained that, the choice of methodology depended on the research question that were answered, the nature of organisation and also the respondents who were involved in the study. The study utilized the survey questionnaires to generate data from employees of Nestle Company and their understanding of how BSC could be applied in the organisation to enable it measure its performance. In the process of finalizing the questionnaire survey, informal discussions with those knowledgeable about BSC or measurement of organisational performance was carried out. The survey instrument used for this research was a carefully designed.
3.2.2 Research Design
The data collection tools were designed in a way that could make it possible for the research objectives to be achieved. One of the ma