Research Paper - Effects of Strategic Leadership
EFFECTS OF STRATEGIC LEADERSHP ON ORGANIZATIONAL GROWTH IN A TURBULENT ECONOMY: ANALYSIS OF MINORTITY-OWNED ORGANIZATIONS IN THE UNITED STATES
Organizational growth depends on both macro and micro economic situations to thrive but the type of leadership the organization could also hamper its growth. This study examined leadership skills needed to excel in minority-owned organizations, most especially those of Nigerian-American organizations and also reviewed qualities brought into these organizations by transcultural practices. The researcher reviewed theories that support inspirational and motivational leadership, and examined importance of leadership training, efficacy levels among leaders, and inclusion strategies of Nigerian-American organizations. Strategic leaders must have technical skills to perform specialized tasks in their business areas; possess upscale abilities to work well with other people, and retain conceptual skills to analyze and solve complex problems. For organizations to flourish, leaders must have in-depth knowledge of their individual personality dimensions and a good understanding of others. In a turbulent economy, it is important for Nigerian-American business leaders to focus on organization as an open system and what the system requires to sustain its competition. The researcher concluded that leaders must emphasize training and development of strategic master plans to expedite organizational growth. In addition, this author recommended that leaders must be change agents and have extraordinary internal self-forces capable of driving their determination to succeed.
KEYWORDS: Leadership, Diversity. Collaboration, Strategic Leadership
Organizational growth is dependent on both macro and micro economy to propagate. However, the type, size, and products an organization offers will dictate how they fair in turbulent, saturated, rapidly growing, or downward economy. In addition, regardless of the aforementioned, the type of leadership in organization could severely hamper the growth of the organization. This study will examine various organizational behaviors (Schermerhorn, Osborn, Uhl-Bien, & Hunt, 2012; Thompson, Strickland, & Gamble, 2010) during the economic downturn in the United States. Of particular consideration will be businesses owned or managed by minorities, most especially of Nigerian descents. The study will also scrutinize leadership skills needed to excel and review the qualities brought into these organizations through transcultural applications. In addition, it will analyze shortfalls in organizational growth due to lack of expertise, inadequate trainings, cultural differences, and poor leadership skills.
2. BACKGROUND OF THE STUDY
This study was necessitated by the needs to improve success rates of businesses owned by African-Americans of Nigerian descent. This group will be broadly categorized as Nigerian-Americans. They are particularly well educated both in Nigeria and in the United States. Nigerians are noted to dominate other Africans in higher education careers such as, engineering, accounting, nursing, physical and biological sciences, and other top level careers in the United States. This value is evident in the attention paid to education by Nigerians. Generally, over 95 percent of Nigerians living in the US under the age of 25 years have at least high school diplomas, 34.5 percent of which hold bachelor’s degrees in various programs (Ameredian, 2012). Ameredian further contributed that 52 percent of the Nigerian population in the US is in business, science, arts, and management occupations, while median household income of the group is $59,551 (which is significantly higher than the national average of $51,369). Records indicate that Nigerians are about 260,000 in the country and they live mostly in Maryland, New York, Virginia, Georgia, Texas, and California (Ameredian, 2012). Data from Nigerian National University Commission (2014) further contributed to the understanding of why Nigerians pursue higher education in the United States. There are currently 129 universities in the Nigeria with several polytechnics, colleges of technology, and colleges of education. This number has more than doubled in the last decade but the institutions are inadequate in capacity, for the population seeking higher education. The Nigerian population continues to grow rapidly and the Nation derives sizable income from crude oil. Nigeria is currently in the 6th position in crude oil production in the world (US Department of Energy, 2014). According to the Department of Energy, the US imported 9% of its crude oil energy from Nigeria (one million barrel per day) in 2010, representing over 40% of total Nigerian exports that year. Below is a summary of important data on Nigeria and Nigerians in the United States. Country population 140million World oil production level 6th largest Number of Universities 129 African population in the US 1.8 million Nigerians immigrants in the US 260,000 US residents of Nigerian descents 1 million According to the US Population Census (2010) as indicated in table 1 below, United States comprises of 224 million (72.3%) Caucasians, 39 million (12.9%) African-Americans, 2.9 million (0.9%) American Indians, 1.8 million Africans, and other races. Of the1.8 million Africans, 260,000 are Nigerians. However, critics argue that Africans and most especially Nigerians are simply counted as African-Americans since only those who immigrated through lottery, family ties, or other immigration procedures would check-mark Africa categorization in a census. Several children of Nigerians who are born in the United States are usually counted as African-Americans, while illegal immigrants are most unlikely to submit to counting altogether. Hence, unofficial figure for Nigerians is put at about one million.
3. THEORETICAL PERSPECTIVE
This study analyzed several leadership characteristics that could lead to sustainable competitive advantage (Thompson, et al., 2010) and reviewed personality traits that support progressive leadership strategies (Schermerhorn, et al., 2012). The researcher further reviewed theories that backed inspirational and motivational leadership. Schermerhorn, et al. (2012) and Thompson, et al. (2010) argued that organization’s internal and external resources must be used to promote strategic goals. These authors added that an organization’s value chains ensure sustainable competitive advantage when aligned strategically to transform core competencies of the organization. The world is rapidly changing and consequently, industries, businesses, and organizations, are changing rapidly too. These and other studies (Jones & George, 2009; Hisrich, Peters, & Shepherd, 2010; David, 2009) confirmed that changes have been brought by high velocity of technological transformation, internet, and globalization. Peoples’ thinking and consumption behaviors have been affected by these turbulent changes. Organizational leaders must therefore understand their new world and their emerging clients’ needs. Hard copy books, physical store purchases, and heavy reliant on newspaper distributions are rapidly becoming things of the past. Hence they must not only anticipate changes, they must be change agents. Thompson, et al.(2010) noted that “to primarily react to changes in [any] industry would be defensive strategy used to counter, for example, unexpected shits in buyer tastes and technological breakthroughs. The react-to-change strategy would not be as effective as the anticipate-change strategies” (p.164). Schermerhorn, et al. (2012) also added that selecting leaders with high efficacy and high yielding factors can lead to higher productivity because of their abilities to reduce stress in functional supervision of their subordinates. Since it is the role leaders to champion crafting and executing strategies, high efficacy becomes a requirement rather than exception. Developing strategic objectives that promote growth, including ensuring hiring of senior personnel who imbibe the strategic objectives of the organization is a practice that must be taken seriously according to Thompson, et al. In order to meet the challenges, every organization must develop a “lead change” strategy (Beitler, 2003). Leaders in organizations must pioneer new initiatives, be visinary in providing products that could lead market of the future, and provide clients with cutting edge products. If these leaders are in not-for-profit or faith-based institutions, they must constantly innovate items, approaches, and products that appeal to both physiological and psychological needs of their clients or followers. Leaders’ strategy in this situation must be to seize the offensive, become agent of change, and influence rules of operations. They must always be one step ahead of their competitors. In such turbulent economy, Thompson, et al. (2010) added that leaders must analyze possible procedures for change, plan ahead, adapt resource ahead of time, and constantly improve on technological delivery system. The diagram below illustrates this approach. However, when leader react only to changes, they are defensive. They would give up their leadership in their respective industries. Strategic leaders must possess abilities to respond fast to unexpected changes and defend market positions in order to remain competitive. Diagram 1. Proactive leadership approach in for-profit and not-for-profit Despite that many Nigerian organizations have been successful in their business operations, the situations above have hindered their expansions. There are needs to develop strategy of inclusion that will embrace diversity in totality. Diversity must be looked at from multiple directions such as age, gender, sexual orientation, disability, religion, and multiculturalism. Schermerhorn, et al. (2012) added that social identity theory might have contributed to general tendencies of people to discriminate. According to the authors and in reference to this theory, “individuals have not one, but multiple personal selves. Which self is activated depends on the group with which the person identifies” (p.47). Whereas, the act of categorizing oneself as a member of a group makes the identity salient in the group’s minds. Hence, there is in-group and out-group categorization that might further complicate management of a diverse organization. A more diverse workplace is a more productive workplace, Schermerhorn, et al. added. If organizational leadership has an in depth understanding of managing a diverse group through development of policies and procedures, including workforce trainings, the organization will retain talents of multiple origins and nationalities up to top management levels. Nigerians in the United States have benefited from improved understanding of diversity, which has been emancipating in the US in the last decade (US State Department, 2014). The advent of diversity lottery program has given credence to this phenomenon. The visa lottery program is conducted once a year and 50,000 randomly selected applicants are given opportunities to apply for permanent residency in the United States. Entry into the program are invited from pre-selected nations. Nigeria was removed from participating in the program in 2014 because it has gone beyond the threshold established by for eligibility. Workplace discriminations still exist but there are more immigrants now than ever because of this program and this has helped American people to better understand characteristics of multicultural society.
4. COLLABORATION AND DIVERSITY AS VALUE CHAINS
Collaborative leadership and wide range inclusion are strategic approaches that when combined, could lead to organizational growth, most especially in not-for-profit institutions. Many Nigerian-American organizations are faith-based institutions and Nigerians by nature are very generous. The growing popularity of faith-based institutions of Nigerian origin could be accelerated through strategic planning that improves collaboration and inclusion. This researcher closely studied several Nigerian-American businesses and organizations. A particular case study was a rapidly expanding Mountain of Fire and Miracle Ministries (MFM), a faith-based institution. A branch of the organization, located in Baltimore was studied. MFM has an enormous appeal among Nigerians at home and abroad. The brand in the United States has a substantial reference to situations many Nigerians would identify with and this has increased the popularity of the church. Thompson, et al. (2010) argued that when a resource strength is high, it propels an organization to achieve competitive advantage. Organizations with rare resource strengths, hard to copy resources, resources that cannot be truncated by substitutes, and resources that are high in competitive values, are in virtuous position to develop sustainable competitive advantage over rivals. This analysis is accurate in its application to MFM. It is also true in cases of many other Nigerian-American organizations in healthcare, housing services, and retail businesses. However, expansion beyond predominantly Nigerian groups must be addressed. Also evaluated was the inclusion strategy of the above institution. Schermerhorn, et al. (2012) noted that when an organization has a strong in-group and out-group categorizations, the organization may create a passive environment of exclusion. Lip service that an organization embraces diversity is not a strategy. Hence, there must be strategic initiatives that take proactive actions at embracing all races, nationalities, and cultures. When an organization has several members from the same social cultural and ethnic backgrounds, a strong in-group categorization is precipitated and this may cause alienation of other minority groups. In order to increase organizational growth and sustain the competition, leaders must develop visions that give priorities to strategic training, collaboration, and most especially, development of pathways which value diversity. It is important that a 21st century organization understands factors that support inclusion and embrace diversity. When an organization has a good understanding of, and a high value for diversity, it will grow in multiple directions and also sustain its competition. The faith-based institution under study has demonstrated sustained growth through horizontal expansion strategy, which has significant inclusion appeals. But additional actions are required. Diversity strategies must be specifically developed with the help of industry experts while cultural sensitivity and decent knowledge of host country’s culture should be given adequate priorities. Nigerian-American organizations, both for-profit and not-for-profit, need to consider development of strategic approaches to managing diversity. As illustrated in diagram 2, once there is a leadership commitment to this strategy, policy and procedures should be crafted to support the commitment. Subsequently, hiring practices and mentoring programs should be geared towards promoting inclusion. If valuable approaches are benchmarked, the culture of inclusion will be established, and benefits derived from this will be immeasurable. Below are the steps needed to improve diversity: • Strong commitment from the Board of Trustees, religious leaders, and corporate headquarters. • Establishment of influential mentorship and sponsorship programs. • Creating opportunities for networking between the experienced and seasoned members and the new/minority members. • Increasing sense of responsibility by apportioning assignment with high visibilities to the out-grouped members. • Benchmark organizational culture of inclusion, respect, and one that values diversity. • Reduce to minimum possible, any actions of subconscious discrimination and marginalization.
5. NEED FOR STRATEGIC LEADERSHIP
Most dynamic organizations develop strategic plans in their respective businesses. Thompson, et al. (2010) and Beitler (2003), defined strategy as management’s action plan to attract and please customers, conduct operations, achieve targeted levels of organizational performance, and compete successfully. Strategic plans are measures designed by organizations to achieve above average returns. However, many small businesses do not have strategic plans and are therefore, affected by stagnation in the face of opportunities. Small Business Administration (SBA) contends that several small businesses in the US share similar faith and this accounts for one of the reasons why 80% of them fail on the long run (Boone & Kurtz, 2012). While small businesses generate enormous amount of incomes, many of them have less than 100 employees. Boone and Kurtz added that these businesses generated between 60 and 80% of new jobs in the US during the last decade. In addition, they produced almost 50% of the US total sales. It is no surprise then, that US economy is substantially driven by small businesses, including those of the Nigerian-Americans. As a result of this vital contribution to the US economy and presumably that of Nigeria, Nigerian-American organizations need to engage more strategic initiatives to succeed. It is important that key leaders and managers have technical skills, which are abilities to perform specialized tasks in their business areas. These leaders must have upscale abilities to work well with other people and possess conceptual skills, to analyze complex problems (Schermerhorn, et al., 2012). Beyond these abilities, organizational leaders must possess intricate qualities to resolve additional organizational problems relating to both internal and external environments. To be able to do this with precision, leaders must have in depth knowledge of themselves and others. As a result, they must be aware of the personality dimensions that affect leadership according to Schermerhorn, et al. (2012). These dimensions are extraversion, agreeableness, conscientiousness, emotional stability, and openness to new experiences (Schermerhorn, et al., 2012). The later in particular, is a characteristic of being imaginative, curious, and broad-minded. These distinctions, when embellished by Maglino’s categories of workplace values such as achievement, honesty, and fairness, can improve leadership outcomes. Strategic planning involves analysis of organization’s competition and desired outcomes. As detailed earlier in diagram 1, leaders must be change-agents and proactive in decision-making rather than reactive. In a rapidly changing global competition, organizational leaders must nurture culture of strategy-formulation and advance distinctive quantitative or qualitative strategic planning matrix to guide decision-making processes. Thompson, et al. (2010) argue that organizational leaders must design matrix for analyzing organizations’ external opportunities and threats, assign weight to each key factor, identify alternative actions, and determine attractiveness of the actions by allocating scores to each option. The attractiveness scores should then be computed and used in decision-making process. To achieve better results, leaders must perform analysis of their strengths, weaknesses, opportunities, and threats (SWOT) at predetermined intervals of time. Cross-functional and cross-cultural reach-outs are required for an organization to accurately formulate strategic decisions. A successful decision making process starts with top management personnel while implementation must include every division of an organization. As a result, awareness, broad inclusion, and impartiality are required to construct a winning strategic plan.
6. CONCLUSION AND RECOMMENDATIONS
In conclusion, the research recommends that Nigerian-American organizations should focus on leadership training and development of strategic master plans to sustain their competition both in for-profit and not-for-profit organizations. It takes ingenuity and innovation to grow any business. Strategic leaders must take actions that have strategic objectives and goals. Hence, to be strategically minded, leaders must have high self-efficacy. They must also have high internal locus of control and never cease to innovate. These leaders must develop personal approaches to implementing classical conditioning for behavior modification of employees. This practice will then influence workers’ behaviors through association that could involve manipulation of stimuli (Schermerhorn, et al., 2012). In addition, organizational leaders should develop strategy for implementing operant conditioning, considered as an approach to inducing employees’ exemplary performances by reinforcement techniques. Upon implementation of the above recommendations, many of the organizations controlled by Nigerian-Americans will gradually develop heterogeneous characteristics and possess high inclusion properties. In addition, these organizations should invest strategically on technology and training, capable of turning core competencies to distinctive competencies, thereby inducing sustainable competitive advantage in each of the industry where the group is involved.
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Professor Solomon Fakinlede is the Executive Director of GoldenCRI. He earned his Ph.D. in Decision Sciences from Walden University in Minnesota, USA, and he is a Professor of Management.