Introduction
One of the key elements of organisational performance stems from the management’s ability to make correct decisions and lead the company in accordance with the outlined objectives. The case of Mary Teresa Barra, CEO of General Motors, is an interesting and informative example of how transformational leadership can result in improved organisational performance. These achievements were possible due to the transformational leadership of the CEO, who makes her decisions on the basis of financial performance indicators, organisational culture, employee satisfaction, and adherence to organisational goals.
The Role of the Business Leader in Driving Organisational Performance
It should be noted that Mary Teresa Barra has been General Motors’ CEO since 2014. When it comes to the overall organisational performance of General Motors since her appointment as CEO, the financial indicators are the most accurate and reliable determinants of her impact. Since 2014, the company had become twice as profitable with net income values of almost $14B, whereas the previous years before Mary Teresa Barra’s appointment had a net profit of around 7$B as shown in Figure 1 of the Appendix (General Motors net income 2009-2021 | GM, 2022). In other words, General Motors became a significantly more profitable company due to the CEO’s leadership. The same values can be compared to the company’s largest competitor, Ford Motor Company, which reversely has experienced a gradual reduction in net income since 2014 (Ford Motor net income 2006-2021 | F, 2022). Therefore, the growth in profitability of General Motors is not linked to industrywide factors but rather the organisational performance itself. It is evident that the role of the business leader had a positive impact in driving General Motors’ improved profitability in the market.
Exercise of Leadership Power and Influence
When the position of CEO was given to Mary Teresa Barra, the company was experiencing major systematic challenges. It should be noted that one such challenge was the increased dissatisfaction of the factory and plant workers as well as heightened expectations from the shareholders. One of such highlights was the union strike in 2019, which incurred massive losses to both the company and its employees. It is stated that “she came into the job just in time to manage GM through a scandal in which faulty ignition switches had caused a series of fatal accidents” (Boudette, 2019, para. 8). In other words, there was a wide range of issues that were hindering General Motors’ performance.
Since it is critical for a CEO to factor in the interests of all stakeholders, such as shareholders and employees, the decisions need to be made in a correct manner without making a clear choice in favour of one side or another. After the product issues were addressed, the CEO needed to manage the union strike, which resulted in pay raises, factory investments, worker transitions, and healthcare cost retention (Campbell, 2019). However, the CEO also announced that some factories would be relocated to more profitable locations in order to ensure that General Motors would remain profitable. Therefore, both parties received some form of benefit from the deal, where the company’s interests were not dismissed in the face of the union’s demands. Mary Teresa Barra properly utilised her power and influence over the presented problems and made decisions in favour of all parties without abandoning the core objective of the company.
It is important to note that the human resource management policy is implemented through personnel work, which is associated not only with the definition of the main goal but also with the choice of tools, methods and priorities. Personnel policy should be an important element of the personnel management system, integrated with management, investment, financial and production policies. This requires specialists who are able to perform personnel work at a qualitatively new level, who are capable of filling it with productive content. The effectiveness of personnel policy is reflected in the quality of life of employees and the overall economic efficiency of the enterprise.
When implementing and negotiating an effective human resource management policy, the CEO and the company take into account the current stage of development as well as available resources. For example, if the company’s human resources are in a period of active growth and development when selecting employees, more attention should be paid to the initiative and motivated candidates for whom the idea is paramount. It is important to remember that for some of these workers, the content of the job is more important than the size of wages. Thus, the model of the company’s personnel policy is determined by its strategy and the chosen management style. If the company has big goals, it is important to follow the basic rule that the company’s staff is a valuable resource that requires investment to achieve the company’s strategic goals, including maintaining its competitiveness.
Main Features and Requirements of Leadership Development for Competitive Advantage
In the case of competitive advantage, leadership can play a direct role in establishing the given difference or lead. Research suggests that transformation leadership style facilitates the development of proactive employees, and “transformational leaders and proactive employees have been shown to exert a strong influence on excellent service performance, with organisational embeddedness playing a critical role” (Yang et al., 2020, p. 267). In other words, it is mandatory for a leader to positively influence workers in order to make them more proactive. By doing so, a leader can ensure that the product quality and service provision are improved, which has a direct impact on organisational performance.
It should be noted that obtaining a competitive advantage needs to be conducted in a sustainable manner. A study reports that transformational leadership alongside proper executive ability can translate into an increased sustainable competitive advantage (Chen, Lee, and Wang, 2020). The main features and requirements include quality management and competence to lead because not having the authority or power to utilise the benefits of the transformational approach results in zero impact. Mary Teresa Barra is a transformation leader who maximises the use of her previous experience as a communication manager in order to translate her ideas and executive orders. The outcome is manifested in the company’s sustained profitability even during the COVID-19 pandemic, when the competitors, such as Ford Motor Company, were incurred major losses.
The presented trends in the development of management of organisations monolithically reflect the real conditions for the functioning of these entities. Taking into account these criteria helps the CEO to objectively analyse the leadership potential and form management for it in accordance with the proposed classification, designed for a comprehensive assessment of the success of management, the core of which in the current situation is investment and innovation. The practical significance of the above framework lies in the possibility of applying by organisations, regardless of industry affiliation, the regime of general and private methods for evaluating efficiency (Hawkins, 2021). When managing organisational activities, it is important to adapt to the current leadership mechanism and receive complete and accurate information about the state of ongoing management. Based on the criteria, it is possible to make prompt decisions on its qualitative improvement in order to optimise the desired indicators, ensuring a high level of competitiveness. This approach will create a strong leadership position in comparison with other competing entities with identical statuses.
Assessing an Organisations’ Strategic Effectiveness from A Leadership Perspective
The key criteria for measuring and assessing an organisation’s strategic effectiveness from a leadership perspective involve the analysis of financial performance indicators, organisational culture, employee satisfaction, and adherence to organisational goals. These metrics ensure that one is capable of observing and predicting how an organisation is performing at the moment (Hawkins, 2021). For example, General Motors seeks to become the leader of the automotive industry by focusing on technology and customer experience. Since the latter part is directly tied to employee performance as well as the product itself, one cannot dismiss the impact of employee satisfaction. Therefore, the given criteria elements are crucial in order to assess and measure an organisation’s strategic effectiveness.
A leader needs to operate and make decisions on the basis of the resources available and adherence to the outlined goals. Mary Teresa Barra was able to ensure that workers were satisfied after the strike and did not abandon the organisational goals of growth, technological improvement, customer satisfaction. She initiated a gradual transition of factories to locations with cheaper labour costs and focused on utilising more automation in order to improve product quality and manufacturing efficiency (Boudette, 2019). Therefore, transformational leadership contributes to the formation of a positive image of the leader in the eyes of the followers. As a result, trust is established, which increases the psychological potential of the company, the effectiveness of teamwork, and the willingness of staff to learn.
Moreover, transformational leadership has a particular impact on the management system during periods when the company is undergoing dramatic changes in the face of new rules and institutional conditions that need to be accepted. It is stated that “organizations should develop managers’ core leadership competencies such as the communication skill to convey a vision, how to use exemplary behaviours, how and when to empower followers, and the competencies of broad interpersonal skills” (Yang et al., 2020, p. 283). In addition, the practice of transformational leadership in international organisations specialising in innovation is valuable, where the ability of the staff for creative, intellectual work plays a special role.
The degree of competition between organisations forces the management apparatus to diversify its activities since its respectability in the struggle for leading positions in the segments depends on a large number of factors of the internal and external environment. If back in the first half of the last century in the internal environment of the activities of organisations, the predominant role of the resource factor was observed, and in the external environment, the factor of relations between producers and buyers and the factor of economic changes played a more prominent role, then at the beginning of the current century they no longer clearly surpass other endogenous and exogenous factors by specific gravity (Hawkins, 2021). Thus, the internal environment of the activities of organisations in terms of their functional composition is now equally complemented by the technological factor and the factor of the corporate culture.
The external environment of the organisation’s activities is even more differentiated and levelled in terms of specific diverging interests. These circumstances motivate the management of organisations to work in-depth and in a balanced way simultaneously on long-term, medium-term, short-term and operational issues in the field of management and expand its range. It is represented by the transformational management of organisations that management adheres to as it synthesises their relationship with shareholders (Hawkins, 2021). This approach also covers all their processes and all components of their productive forces, such as workers.
Conclusion
In conclusion, Mary Teresa Barra is an example of a transformation leader, who makes her decisions by factoring in financial performance indicators, organisational culture, employee satisfaction, and adherence to organisational goals. She is able to convey her vision by relying on leadership power and competence to improve organisational performance. Despite the challenges, such as union strikes, faulty products, and the COVID-19 crisis, she was able to satisfy the demands of shareholders by increasing the profitability of the company. In addition, she was able to negotiate with the workers by ensuring that they received their demanded pay raises and healthcare coverages. However, considering the importance of organisational growth, she also made bold decisions to relocate some of the factories to different locations. The case illustrates how transformational leadership focuses on not only workers but also on other stakeholders as well, where the key interests of both parties need to be addressed without losing focus on the core strategic goal of the company.
Reference List
Boudette, N. E. (2019) ‘GM chief’s test: satisfy striking workers and sustain bottom line’, Baltimore Business Journal, Web.
Campbell, A. F. (2019) ‘The GM strike has officially ended. Here’s what workers won and lost’, Vox, Web.
Chen, R., Lee, Y. D., and Wang, C. H. (2020) ‘Total quality management and sustainable competitive advantage: serial mediation of transformational leadership and executive ability’, Total Quality Management & Business Excellence, 31(5), pp. 451-468.
Ford Motor net income 2006-2021 | F (2022). Web.
General Motors net income 2009-2021 | GM (2022) Web.
Hawkins, P. (2021) Leadership team coaching: developing collective transformational leadership. London: Kogan Page.
Yang, C. et al. (2020) ‘Transformational leadership, proactive personality and service performance: the mediating role of organizational embeddedness’, International Journal of Contemporary Hospitality Management, 32(1), pp. 267-287.
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