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Business Leadership
Due to the complexity of the leadership concept, there were many ways to identify it during the last century, but I totally agree that leadership is ‘process whereby an individual influences a group of individuals to achieve a common goal’ (Northouse 15), leadership is a soft skill were linked both leader and followers together to meet the needed goals, therefore the relation between both leaders and followers need to be understood. I consider leadership as a positive terminology, which means that good leaders are those who make positive changes in the organizations in order to achieve the company objectives, also good leaders are those who have the vision, so the changes that they can make will allow the followers to achieve short and long term objectives, led by example concept is the way of effective leaders to influence their teams to make the needed changes instead of enforcing them. In the past I believed on the “Born to be a leader” or “Leader by nature”, but now I believe more on “Process leadership”, however, the trait of some people help them to become leaders faster than others because they show: 1-         Ability to take decisions. 2-         Great communication skills, so they can quickly effect in people through speech. 3-         Ability to deal and influence multinational culture without being partial to one side or other. The above three skills can help people in their leadership role and without it, they will face big challenges to achieve the required objectives. Though some people who assigned to a vacant leader position such as Manager, Director or head of department are not necessarily leaders, therefore they will be assigned, leaders, so if they don’t have all the needed skills to be good leaders they should know how to identify emergent leaders within their team and use them in an efficient way to make the needed changes. As you can see the word leadership itself gives power for the business positions, but only the good leaders can use this power at the right time, and only efficient leaders are able to differentiate between both types of power groups, the one which given by the position such as (Legitimate, reward and Coercive), and the other one which came from the leader skills and knowledge (Referent, Expert), this kind of understanding for each type of power allow the leader to make the right balance in his/her communications and also for the decisions that they make. Also I think that only weak leaders are those who use coercive power to influence others to meet their personal objectives, such as Mussolini, Adolf Hitler, and Stalin, I called those poor leaders because their impacts were limited and negative in all aspects, they damaged the picture of leadership by using suppression against anyone who not agree with them, they used the one-way communication instead of two ways, therefore they should not be considered as good leaders, they are a very bad example of leadership. After all of the above-mentioned topics still there is a confusing in differentiating between management and leadership concepts, but for me it’s about a context of each concept, so the leadership context is already cover the management concept while management context is not necessarily cover the leadership context, in other words, good leaders are good managers as well, but good managers are not necessarily good leaders, however both concepts are needed to be available in the successful organization, but number of managers should be more than leaders because one good leader can act on behalf of more than one manager. Finally, I strongly recommend learning from our leaders the soft skills that we don’t have and save our energy by following the real leaders who proved their ability to make positive changes. What do you think?   References
  • Northouse, Peter G. Leadership: Theory and Practice, 6th Edition. SAGE Publications, Inc, 02/2012.
  Best Regards Baha’a Al Mumalah
The Governance & Strategic Purpose ‘Enron Scandal’
Please allow me to share my thoughts regarding one of the biggest scandals at beginning of 21st century, Which is "Enron Scandal" and how ‘Governance and Strategic Purpose' could impact the large corporate business. As Jeffrey Skilling, "[We are] a company that makes markets. We create the market, and once it's created, we make the market" (quoted in Clup and Hanke, 2003, p.7). Based on the above-mentioned statement and as described by Deacon (2004), I found that management of Enron Company was over self-confidence, because of great success and steady improvement trend on their profit, but unfortunately they couldn't maintain this success because more than one factor, for me first important factor which didn't take into consideration is the PESTLE framework that helps any organization to identify the future changes, in Enron case it was heavily needed to determine the economics and the legal environment, especially in such volatile markets like gas and energy since liberalization was followed in that period of 1980s, so it was clear in mid 80s Enron management should revise their strategy in order to avoid any surprise in the future and to maintain steady improvement in profit side. Another factor caused the failure of Enron was the role of governance in influencing the strategic purpose, the governance model was not executed well by the board and stakeholder, we found in the critical period they even didn't follow the basic principle of accounting especially "late of the 1990s when the company entered into a series of transactions for which no genuine outside investor could be found" (Learn from Enron, P.137), also the lack of governance influence cause the conflict of interest in more than one case, where it's clear that the board members were satisfied with the raise of share price, therefore they didn't make any effort to control and monitor the execution of the governance model, and they even didn't check if the involvement of the CFO and one of senior employee in the finance department in the SPEs like Chewco and LJM is legal or not, and with no correct advice from the external audit regarding such conflict of interest, Enron finance package (balance sheet, cash flow) become misleading for the shareholders, so in autumn  of 2001 the unfortunate result appeared and there was no time to react and avoid the bankruptcy. The involvement of some employees in the bid of the SPEs is the most factor that proved that the management was only looking for gaining more profit without thinking in the way of getting it, therefore they didn't even do any risk assessment during their success period, they could not reach the bankruptcy if they studied the risk that they could face based on their dynamic market and the entrant of new competition. I have many questions in my mind which address the need for stakeholders and board efficient engagement.
  • Why the board approved the SPEs deals without drill down to figure out how such deals happened.
  • Why the board advisor didn't give any advice to get at least an external opinion regarding the SPEs framework.
  • Who the CEO of Enron allow such conflict of interest to happen, (I'm talking about Fastow and Michael Kopper)?
  • Where was the company ethics and values in such a case?
From all the above the conclusion is as follows:
  • There was no efficient involvement of the board members, especially when they gain the expected profit, which means they took care of themselves only instead of looking for organizational objectives.
  • Lack of communication between the different levels of management, in particular between the board, non-executives director and the healthy employees, which caused the board to disclaim that they either misled or not informed about the executions of strategic purpose.
  • As of board members also the top management inside Enron they thought and took care of themselves instead of looking for the value of their outputs.
  • Being the market leader is not mean that you can ignore the governance principles.
  • The relation between the stakeholder and the external consultant should not reach to the point where some of the stakeholders enforce the consultant to manipulate their analysis to convince the shareholders in the company performance that will cause the rise in the share price by fakes.
  • The relation between all levels in the same organization should be based on fair values.
  • An independent entity should monitor the strategic purpose and governance executions.
  • Johnson, G., Whittington, R., Scholes, K., Angwin, D. & Regnér, P. (2014) Exploring strategy text & cases. 10th Ed. Harlow: Pearson.
  • Deakin, S. & Konzelmann, S. (2004) ‘Learning from Enron’, Corporate Governance, 12 (2).
Best Regards Baha’a
Measuring Organizational Performance
‘What gets measured gets attention’ or ‘what you measure is what you get’ (Kaplan and Norton, 1992), measuring the performance of the company is very critical needs for the management to understand the past activities and the current situation, so they can identify the needed actions in order to enhance or improve the performance. To measure the performance there is many ways to do so, some of the companies compare the current performance with the budget or target that recognized early before the beginning of the year, and in this case the financial KPI’s get more attention than any other KPI’s, so if the results better than target the management can claim that the performance is positive, but in case of the result is below target the management will be alerted, in other companies the management try to have mix of KPI’s that cover multi-dimensions, where they identify major KPI’s in each area of business and comparing it with target and with same period of previous year, so even if the current performance is less than target it could be better than previous year, so the trend shows improvement and in this case maybe the target was over expectation. The most used method to measure the performance is tracking the financial KPI’s, this is for my old school where the companies drove by financial, and there was no attention to commercial KPI’s, but since the BSC developed by Kaplan and Norton, the companies start using it, to have a wider view of the performance that covers economic perspectives, customer perspectives, internal business perspective and innovation, and learning perspective. However there is a limitation for BSC which is the complexity of adapting it, need very high level of alignment in order to get positive output, and it's not considered some KPI’s that related to the competitors, but still it’s very powerful tool that covers all needed KPI’s from top-down approach, also the good thing of the BSC is it enforce all business unit to be involved in the company performance, so everyone can feel that he can add value. In my previous company we tried to apply the BSC concept and we managed to identify the needed KPI’s which impact the company mission and vision, so we started the exercise with our CEO to get the vision and mission statements, after that we classify the major KPI’s per CXO, this was the first stage which took more than three months to do, after that we bought the system where we can apply the BSC concept with all company KPI’s up to team member level, but as you can see we end up with more than 200 KPI’s which become very hard to track and also the management lost the interest because they do not want to get more responsibility and to be under microscope, so finally it failed. Beside the tool or methods that we use to measure the performance we need to focus on the very important element which can either support the performance management or make the management lose the interest, which is:
  • The accuracy of information, if the team of company performance keeps sending the right figures for a long time, and they send wrong ones only one time, the credibility will be impacted immediately and it will be very hard to gain the trust as before.
  • Setting the right expectation and definition for all KPI’s is very important for the management to understand the value out of each KPI’s.
  • Control the performance management system is the key to encourage the management to keep the focus on the right track, so I usually recommend to get all data under one umbrella to avoid the discrepancies between different business unit for same KPI’s
  • Converting the raw data to solid information is an art which needs to be used by a well-trained team because by this skill we can reduce the time needed by management to understand the numbers and then take the right decision.
    I still believe in BSC even with all my bad experience, but this bad experience is not because of the concept itself, it’s because the culture, the BSC need culture adaptation in order to make every single employee believe in it, also I would like to add that measuring performance is a really complex job which needs a full understanding of the value out of it, otherwise it will become a nice to have tool.   * BSC: “Balance Score Card” References
  • Johnson, G., Whittington, R., Scholes, K., Angwin, D. & Regnér, P. (2014) Exploring strategy text & cases. 10th Ed. Harlow: Pearson.
  • Key Concept Overview, Measuring Organizational Performance, ©2014 Laureate Education, Inc.
  Best Regards Baha'a Al Mumalah