Leaders to Leader

Lessons from the Great American Leaders & How They Apply Now

A Leader’s Management Style Sets the Organizational Tone

with 6 comments

Jack Welch – Former CEO – General Electric

The leader’s management style sets the organizational tone. When Jack Welch took control of General Electric, he “wiped out whole layers of management, jettisoned underperforming units, introduced tough performance measures for employees, and junked the venerable “blue books” that for years had told GE managers what to do and how.

Most significant, he redefined the CEO’s central purpose in life. Before, GE had focused on growing revenues, even though a bigger company didn’t necessarily mean a more valuable one, while its CEOs talked about balancing the interests of employees, shareholders, and society as a whole.”[1]

If Welch’s actions didn’t set the tone, no one was paying attention, but indeed they were and his management style affected American businesses for decades.

Like Welch, leaders imprint their companies with their unique management style. While they collectively can be categorized using labels such as autocratic, paternalistic, collaborative as well as other commonly used descriptions, individual leaders craft a style that is a reflection of who they are and how they prefer to manage.

The two most influential leaders who are responsible for shaping modern management styles were Alfred Sloan (General Motors) and Jack Welch (General Electric). Peter Drucker said of Sloan that he was “the designer and architect of management… a foundation for America’s economic leadership in the 40 years following World War II.” Both Sloan and Welch had a significant influence upon the management styles of their contemporaries.

As was cited previously, Welch’s influence began the emphasis on shareholder values that resulted in many leaders focusing on short-term profitability, which has underscored a host of problems with its application over the past two decades. Ken Lay (Enron), Bernie Ebbers (Worldcom), Al Dunlap (Sunbeam) and a host of other leaders have relied on this emphasis for their personal gain, at the cost of long-term corporate financial viability. While they maintained a focus on increasing shareholder value to the cheers of Wall Street, they collectively destroyed their companies.

Therefore a leader’s management style is an important factor in determining his or her professional competence. This is due to its overall impact on all key constituencies and the organization’s financial health and sustainability.

Prior to the introduction of Sloan’s management principles, many of the great leaders tended to be paternalistic, as exemplified by John Heinz (J.J. Heinz), Milton Hershey (Hershey Chocolate) and George Westinghouse (Westinghouse Electric).

These leaders provided fair wages, good working conditions and were socially responsible. They provided a variety of employee benefits, built housing communities and a clean and healthy home and working environment.

Others were autocratic such as J.P Morgan (J.P Morgan), Andrew Carnegie (Carnegie Steel) and Cornelius Vanderbilt (New York Central Railroad). They focused on improving efficiencies, quality and the customer experience, while simultaneously driving down costs and prices.

Many contemporary leaders such as John Chambers (Cisco), Andrew Grove (Intel) and Thomas Engibous (Texas Instrument) have developed more collaborative management styles to harness their organization’s collective power to achieve their goals and objectives.

One facet that differentiated the great leaders was their ability to create and sustain the emotional balance incorporated within the Legitimacy Principles. They established and maintained strong emotional connections with all of their key constituencies. This was true despite the utilization of a variety of unique management styles that they incorporated.

Reference:

  1. Useem, Jerry, Tyrants, Statesmen, and Destroyers (A Brief History of the CEO) (Fortune Magazine) November 18, 2002

For more information on this topic and to read a free chapter, refer to Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It by Timothy F. Bednarz (Majorium Business Press, Stevens Point, WI 2011).

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreword Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2012 Timothy F. Bednarz, All Rights Reserved

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6 Responses

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  1. Would you be interested in an interview with a Japanese CEO, a woman who has always had to buck the glass ceiling, but who became one of the first senior technical women at Kodak and the only married woman to be a working engineer at Sony Japan? She has now started her own company, producing a music site for indie musicians and their fans. It is the top site of its time in Japan, and in beta in the U.S. — to be launched next month. Perhaps a Q and A about managing to succeed in a tough world?

    Sue Bohle

    November 22, 2012 at 5:05 am

  2. Timothy, it’s true that a leader’s management style absolutely sets the tone for its organization but it’s also true that if the leader is not open to alternative points of view and ways of behaving then that management style can be dangerous in the long-run. Every organization needs to adapt into today’s fast changing world. If we tackle all problems with just one approach we run the risk of missing opportunities. True success rests on a plurality of management styles.

    Ara Ohanian

    November 26, 2012 at 5:55 am

    • You are are absolutely correct in your assessment and there are numerous examples of high profile failures that underscore your point. For instance, Al Dunlop at Sunbeam destroyed the company with his management style. Unfortunately a leader’s management style does set the tone for either the good or the bad and its up to the Board of Directors to control the leader if the tone creates a path to ruin.

      Timothy F. Bednarz, Ph.D.

      November 26, 2012 at 9:33 am

  3. […] A Leader’s Management Style Sets the Organizational Tone […]

  4. […] A Leader’s Management Style Sets the Organizational Tone […]


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