Introduction
Skrill is an e-commerce business that allows its customers to make payments through the internet. This financial firm was founded on July 27, 2001, under the name Moneybookers. It targeted customers in the European Union during the early days. The firm offered its clients a unique payment method that enabled them to make payments online at a time when online technology was gaining massive relevance in the global market.
Merchants found this company’s products very appropriate because it reduced the need to visit the banks frequently to make payments. This firm struggled to attract the local market in its early days under the leadership of its founders, Mr. Daniel Klein and Benjamin Kullmann. Although it received a positive welcome in a market that had little competition, it did not manage to achieve global market operations. There was a problem of trust that the leadership of this firm had to find a way of addressing. The company had been incorporated in the United Kingdom, but its main concept failed to convince many of the merchants who operated globally. These were the main target customers of this firm.
The local traders and individuals who rarely travelled abroad found it more convenient to use their credit and debit cards for most of their financial transactions. However, the firm was determined to attract global merchants because of their constant need to make payments to people in various parts of the world. In 2007, the two founders of this firm sold it to Investcorp Technology Partners at £ 105 million (Ferch & Spears 2011). In 2008, the firm finally announced that it had achieved global operations. It rebranded its name from Moneybookers to Skrill in 2011.
Leadership Approaches at Skrill Limited
According to Flint (2012, p. 48), the success of an organisation largely depends on the leadership style that is used by its management. Leadership defines how employees will behave within the firm and how various tasks will be approached (Matha & Boehm 2008, p. 83). Skrill had a promising future because it came up with a unique product that was able to meet the needs of its users appropriately. However, its earlier days were characterised by many challenges.
The original owners tried to penetrate the global market but with minimal success. This forced them to sell the firm to Investcorp Technology Partners. Investcorp was able to give it a global image but failed to propel it to the next level, and they too sold it to CVC Capital Partners in 2013. This was when the firm started experiencing massive success in this industry that the previous management units failed to realise.
According to Adetule (2011, p. 67), it is important for a leader to understand the nature of business and various dynamics that may affect the operations of a firm. This is one of the areas that the previous leadership of this firm failed to understand. The leaderships maintained aristocracy in running this firm, a trait that could not address environmental changes that were taking place. The changes associated with the emerging technologies needed transformational leadership traits in order to enhance close interaction between the leaders and junior employees.
They were managing this firm in the same manner as other non-online money transfer firms like Western Union. What the management failed to realise was that these non-online money transfer firms had a close relationship with established financial institutions, and customers were assured that their money would be secure. However, this firm was operating in an independent manner, and the customers were reluctant to use its services for fear of fraudulent transactions. This is one of the main areas that the new management has worked upon to ensure that it attracts more clients (Dwivedi 2002, p. 260).
When this firm was acquired by CVC Capital Partners, the management realised that it needed customer management strategies that would win the trust of its target market. It had to develop a strategy specifically meant to address the issues that customers had raised about the usage of the products of this firm. The management created a massive awareness campaign that was meant to educate its users about the improved services and all the charges per transaction. It also explained its privacy policy and insurance on the funds that customers upload into its system. This move saw many users get more attracted to its services, especially when they were assured that their funds could not be swindled by cybercriminals.
According to Miller (2012, p.78), one of the most important areas where leadership plays a crucial role is on how to manage employees. Watson (2006, p. 450) says that employees form a very important part of an organisation, and failure to manage them with care can lead to serious consequences within a firm. The leadership should be ready to learn new principles that can make them address some of the emerging problems. As Heifetz and Laurie () say “We should be calling for leadership that summons us to face the problems for which there are no simple, painless solutions-the challenges that require us to learn in new ways.” When the top management formulates strategies that are meant to propel a firm to a greater height, it is the employees who are expected to implement these strategies to achieve the desired success.
Under the leadership of Siegfried Heimgaertner as the chief executive officer, this firm has developed revolutionary employee management strategies that were never witnessed at this firm before. One of the main areas of change that has been seen in employee management is in communication policies. The new management has abolished its bureaucratic approach to communication where a message was passed through a chain of command, to a more open communication system.
As Sadler (2003, p. 84) says, the approach taken by the management in its communication strategies will define its ability to understand the problems that junior employees face when handling various tasks. This is what the new management has embraced. It has created an avenue through which junior employees can interact freely with top management and share issues that affect them in their normal operations. Under the leadership of Siegfried Heimgaertner, this firm has seen the level of satisfaction of its workers rise consistently, as per the recent survey conducted by various bodies in the United Kingdom.
The management of this firm has created a forum where employees can share their innovative views on new products that this firm can offer or new marketing strategies that can be used to popularise the existing products. This has helped it expand its market share in the global financial industry. For instance, the firm recently came up with a new approach to attracting global clients. It has partnered with many online-based companies such as Amason.com and e-bay to process payments of the clients who are reluctant to use their credit cards online (Dwivedi 2006, p. 538).
Given that its clients do not necessarily need to use their credit cards online when making payments for the purchases of these online companies, the partnership has received massive success. The companies partnering with Skrill have benefited from this move because they no longer have to worry about the security of their customers’ credit cards when they make purchases. They only need to wait for the payment from Skrill through wire transfer.
Online companies with employees spread across the globe have also partnered with this company in the same manner in order to ease the process of paying the employees. These companies have transferred the burden of paying their employees to Skrill. This has boosted their operations because they can now focus on operational activities other than the issue of ensuring that the payments are safely made to their employees (Schuttler & Burdick 2010, p. 56). At this stage, it is important to review some of the challenges faced by this firm when introducing major changes in its management system.
Important Challenges Faced by the Leadership in the Change Process
According to the research by Sipe and Frick (2009, p. 56), change comes at a great cost. Although people are always aware that change is something that cannot be avoided, they always make efforts to oppose it at any slightest opportunity (Dayal & Adhikari 1970, p. 478). According to Dwivedi (2001, p. 420), many people view change as a threat to some of their established norms or practices within a particular setting. For this reason, it is always very challenging to introduce change in an organisation.
One of the main challenges that Siegfried Heimgaertner and his new team of managers faced was the resistance from a section of the employees in this firm. When CVC Capital Partners took over this firm, it retained most of the employees, especially at the mid and junior management levels. However, it did not retain the management practices that were used in the firm. The new management came up with new management principles that some of the employees found strange. This led to a form of resistance from the employees.
One of the areas that the mid-managers found strange was the issue of direct communication between the top management and junior employees. In the past, they were the link between the top management and the junior employees. However, this changed under the new system, and they considered it a deliberate attempt to demean their position as senior employees of the firm. According to Chaitanya and Tripathi (2001, p. 230), this is a very common problem when a firm is changing from an autocratic system to a more democratic system. It took time for the top management to assure the mid-managers that their position in the firm was not in any way belittled by this move.
The pace of adapting to the changes introduced by the top management was another problem that Siegfried Heimgaertner and his team faced when they took over the management of this firm. According to Chis, Kemp and Legge (2007, p. 92), it is always difficult to introduce new approaches to employees who were used to a given approach for a very long time. They will take some time to learn how to apply the new strategies. McManus (2006, 89) notes that when a given change is accompanied by the use of new technological approaches, the problem may become even more complex.
This is partly the problem that the management of this firm faced. The employees were slow to understanding new technological inventions that were relevant in their normal duties. It was a costly process to educate the employees on how to use new technological systems that were introduced during the transformational period. Some of the employees were slow to learn, while others were not interested in the new strategies that this firm was using in the market. In fact, this firm lost some of its employees during this period because they could not withstand the changes that were taking place within the firm.
Change comes at a great cost, and as DuBrin (2011, p. 80) observes, a firm must be ready to spend in order to achieve success when introducing new strategies. According to Brough and Kalliath (2009, p. 583), in most cases, change involves overhauling the existing system and replacing it with a new one that may require structural readjustment. At Skrill, the management had to invest in technologies very heavily in order to ensure that customers’ money remained safe.
It had to use technologies that would ensure that its system if free from attacks by cybercriminals who take advantage of individuals who use online financial transactions to steal. Other than the expenses in buying and maintaining this software, the firm had to purchase hardware to support the operations of the heavy software, especially following the increase in the number of the clients in its server. The firm also had to spend in outsourcing the services of technocrats, especially in the installation of the software and hardware, and their regular maintenance.
According to Bowles and Dong (1999, p. 18), although outsourcing is always considered a cheap way of accessing specialised labour when dealing with tasks done periodically such as installations and maintenance, the cost can soar in cases where the services are needed regularly. In the case of Skrill, it was necessary to have the technical team responsible for the maintenance doing regular check-ups to ensure that the system does not fall when it is needed by the customers. This meant that it had to be ready to meet the extra costs that come with such services.
The outcome of the Leadership Style and Approach in the Organisation
The journey of introducing new changes at this firm came at a great cost, but the outcome of the leadership style embraced by Siegfried Heimgaertner and his team bore positive fruits. According to Biswas (1998, p. 71), sometimes it takes much effort to achieve a positive outcome out of a leadership approach that has been newly introduced. It is important to maintain consistency in a new leadership style in order to create a consistent organisational behaviour in a given firm (Biswas, Srivastava & Giri 2007, p. 35).
One of the key outcomes from the new leadership style that was introduced by Siegfried Heimgaertner was the culture of communication. A new culture was introduced in the firm where employees maintained a positive environment for sharing information whenever this was necessary. It took some time for the mid-managers to accept this open communication system, but they finally came to appreciate its importance within the firm.
They came to realise that the organisation needed to make free communication one of the primary factors in order to achieve the desired success. All the employees realised that it was their duties to collect relevant information from their places of work, and make such information available to avoid cases of repeated mistakes when dealing with customers. This is one of the main reasons why this firm has become very successful over the last two years (Falah 2005, p. 58).
Another important outcome is the increase in the number of clients over the last two years. According to Blunt (1995, p. 112), customers are always attracted to quality and reliable products offered at reasonable costs. The new management unit of Skrill improved its services in order to make them more reliable to the customers. It also eliminated hidden charges that may lead to complaints from the customers.
This way, it has successfully assured its clients that its services are superior to those of its competitors. This explains why it has received massive acceptance over the past few years. Harris (2009, p. 116) says that convincing customers that products’ quality has been improved may not be easy in the current competitive market. This is specifically so in cases where the product offered is a service (Abinash & Gupta 2005, p. 27).
Unlike goods that a customer may analyse and see the changes that have been introduced, services cannot be viewed in that manner, and it depends on the clear communication from the firm in order to convince customers that some changes have been introduced (Bissell & Dolan 2011, p. 84). The marketing unit of this firm had to run promotional campaigns on both the social and mass media in order to inform the global customers that its products had been redesigned to offer superior value.
The new management unit of this firm successfully introduced a new leadership style that can be defined using the Theory of Transformational Leadership. When Siegfried Heimgaertner took over the leadership of this organisation, he clearly communicated the vision of this firm to all the employees as a guiding principle to their behaviour within the firm.
Kolenda (2001, p. 75) says, “Transformational leaders inspire their team members because they expect the best from everyone, and they hold themselves accountable for their actions.” Mr. Heimgaertner had very high regard for all the employees, and he would always insist that every employee has his or her own unique worth in an organisation. Gallos (2008, p. 45) says that a transformational leader has a unique capacity to inspire employees to achieve success beyond what many would expected. This is what the new chief executive officer did when he took over the leadership of this firm. He made the employees of this firm realise that they had unique potential that they could use to improve the performance of the firm (Kotter 1989, p. 38).
As Maxwell (2007, p. 93) says, “Transformational leaders set clear goals, and they have good conflict-resolution skills that leads to high productivity and engagement.” Mr. Heimgaertner would set specific goals for each department within a given duration. He encouraged all his employees to set their own personal goals in line with the overall objectives of the firm. He also set a clear conflict resolution policy within the firm, something that did not exist before.
According to Bhatnagar (2006, p. 54), sometimes minor conflicts within an organisation may affect the ability of a firm to be successful. For this reason, it is very important to address such conflicts as soon as they arise in order to ensure that they do not affect the desired positive relationship between employees (Bhal 2005, p. 360). This has created an environment where most of the conflicts are addressed easily among the employees, sometimes without the intervention of an arbitrator. This way, the level of employee integration has massively increased, and this has brought massive success to this firm.
McGregor’s Theory Y is one of the most popular theories that have been used by many leaders to manage their employees. According to Bhal and Gulati (2004, p. 16), this theory holds that people always have the tendency to work positively without any supervision when offered an environment to do so. Mr. Heimgaertner has proven to be one of the believers of McGregor’s Theory Y when it comes to dealing with employees.
He has created an environment where employees are expected to supervise their own work in various departments. He has introduced this culture through his own management approach towards the middle managers. Once he has assigned his junior officers specific tasks, he would not follow them to ensure that they accomplish the tasks assigned to them (Kang & Singh 2006, p. 202). He would always assure them of his trust, and the need to work without feeling unduly pressured to achieve specific goals. This culture has been accepted by the employees of this firm.
They have developed a culture where they supervise their own works because they have come to appreciate the need to work without supervision. They feel more responsible for their actions because the top management has clearly indicated that it trusts them. Cases of procrastination or absconding duties have significantly reduced as every employee struggle to achieve specific goals and to maintain trust that has been created by the top management (Finlayson 1975, p. 34).
The Blake-Mouton Managerial Grid is one of the management theories that have been used by this firm to achieve some of its current outcomes. According to Bell (2005, p. 57), this theory tries to balance between concern for people and concern for productivity. A good management approach should find a way of balancing between the productivity and the need to care for its people (Awasthy & Gupta 2004, p. 288). While trying to boost productivity within a firm, the management should avoid any temptation to ignore the well-being of its people.
This has been clearly witnessed at this firm in its new management approach. The management has introduced new policies that are meant to improve the welfare of its employees. The remunerations of the employees have improved, following the improvement of the profits of this firm over the years (Kline 2010, p. 60). Insurance policies for all the employees have also changed positively. The management has not ignored its customers. Reduced cost and duration of transaction has ensured that employees get superior value from the products of this firm. As Annabelle (2006, p. 855) says, when employees realise that the management cares for their interest, they will always make an effort to ensure that they deliver positive results. This is what has been happening at this firm.
Conclusions and Recommendations
Skrill is currently one of the most successful organisations in the United Kingdom. Aquinas (2006, p. 59) says, “In February 2010, The Sunday Times ranked Moneybookers as the fastest growing private equity backed firm in the United Kingdom based on profits.” This is specifically so because of the leadership approach that has been used by the management unit in the recent past. The firm experienced massive success when Mr. Siegfried Heimgaertner became the chief executive. He introduced policies that were meant to improve the working environment within the firm.
He ensured that positive communication was maintained within the firm in order to encourage information sharing among the employees. He also introduced new polices that were meant to address issues about conflict resolution within the firm. As Bakacsi (2008, p. 190) says, conflicts can affect productivity of an organisation if it is not managed within the right time. The new chief executive manager has embraced transformational leadership approach when dealing with his employees. This has enabled him to delegate responsibilities to individual employees because he has successfully created trust with them.
All employees have come to realise that it is their responsibility to deliver success in various assignments delegated to them. Customers have not been ignored in this positive management change in this firm. The products offered by Skrill have become more reliable and less expensive. Their customers can now make online payments without using their credit or debit cards. This has improved security of online financial transactions. The prices of these products have also fallen as the firm now benefits from the economies of scale following an increase in the number of its clients. The leadership should consider the following recommendations as the market competition in this field becomes even more complicated.
- The leadership of this firm should eliminate bureaucracy in the communication system. As Bass (2005, p. 56) notes, free flow of information within a firm is important in nurturing innovations.
- The leadership should promote close interaction between various stakeholders within this firm to enhance sharing of ideas.
- The leadership should use various motivational measures to ensure that junior employee remain motivated in their work.
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