Leadership Theories and Organisational Performance

Introduction

This assessment gives a demonstration on the deep understanding of how the leadership theories and organisational performance influences the impactful effectiveness of the international business operations in an organisation. The organisation chosen is H&M which is one of the top leading fashion and clothing brand situated in UK. H&M abbreviated form the full name of Hennes & Mauritz whose main motto is "Fashion and quality at the best price" (H&M Group, 2019). H&M daily operates for over 5000 stores in 74 different countries with affordable prices. As of 2020, H&M achieved net sales of approximately 11.5 billion in UK with an average of around 110,325 employees worldwide. Further explanation of the leadership power sources and its contributions in creating and sustaining leadership in an organisational environment on a global context is present. It will also evaluate distinct aspects of leadership that influences its effectiveness within the selected company like gender, culture and the environment of H&M.

Analysing the key leadership theories with a critical evaluation of the theories adopted by leaders in the chosen organisation including relevant examples of organisational situations involving the chosen company that would call for different leadership styles/approaches such as transformational, transactional, or charismatic

Leadership is that basic pillar depending upon which all the organisations whether profitable or non-profitable runs and without leadership no organisation can perform their activities and functions in an organised manner for achieving the targeted goals. There is a long list of leadership theories from which each organisation adopts a different one in their organisational functioning. The theories of leadership are just normal explanations presenting that why and how certain people become leaders leading a whole team (Chow et al. 2017). Leadership theories mainly focus on the behaviours and traits which people who are leading can adopt in them to increase their leadership influences & capabilities. One of the top behavioural traits according to the leaders is vital for a good leadership process which includes - high moral standards & strong ethics along with the other traits of leadership.

In H&M, their leadership style or theory is also one of those which are always driven by their core values and they also lead by being examples. Ciuk and Schedlitzki (2021) stated that the leaders of H&M always try to be role models for others and set good examples in everything about what they do regarding their business. At H&M, their leadership method is all about delegation, inspiration, motivation and feedback (H&M Group, 2019). Their motto says “YOU GROW, WE GROW” and this is given by them by providing a creative, fun-embedded and dynamic workplace where they all grow together combining both the employees and the management also (H&M Group, 2020). There are total six main leadership theories - the great man theory, the behavioural theory, the transformational theory or relationship theory, the trait theory, the situational theory, the charismatic theory & lastly the transactional theory or management theory. Out of these leadership theories, H&M leaders have chosen the situational theory and the transformational theory or relationship theory (Chow et al. 2017). These two theories are specifically adopted by H&M leaders because in the situational leadership theory there is no fixed type of leadership style which is applied. Instead of that, the situational theory argues that the best leader is the one who can be able to adapt his/her leadership style according to the requirements of the current situation. This theory says that situational leaders are generally known for their flexibility where they respond to any situation by thinking what will be necessary from being persuading, commanding, participating, coaching or delegating (H&M Group, 2019).

The second theory applied by H&M leaders is the transformational or in other words relational theory which became possible only due to the result of having a positive relationship with their team members and other leaders (Business Essay, 2020). One of the examples of the usage of these leadership theories in H&M is mainly known and popular for its fashion clothes of best quality at best prices so whenever the market trends and fashion styles change, they have to re-straegise their products and items according to customer expectations & satisfaction and for that each time they have to combine and unite with their teams for improving and offering new and innovative products to the market. And Su and Baird (2017) opined that in this process they uses their both the leadership theories to transforms & channelise their workforce according to the situational changes reminding their simplicity with uniqueness, commercial mind set, cost consciousness, constant improvement and entrepreneurship. They revealed that these theories helped them in increasing the sales in their existing stores with focusing on the quality also and taking care of the continued profitability.

Although, Ciuk and Schedlitzki (2021) discussed that H&M can have adapted other leadership styles/approaches in them also which could have impacted in their leading patterns and strategising their policies and principles influencing the workforce and management too. In this regard, the corporate strategy of H&M is to give expansion to the business on a continual basis in a consequential manner, improving the employee strength also which gives increase to continuously expand and rise in market (Shah et al. 2017). For making this goal possible effortlessly and efficiently, the trait theory of leadership can be adapted too which simply explains that there are certain natural qualities which are present in a person and that naturally tends to create good leaders on their own. As per Salihu (2019) there is no need to train or make them learn the traits of being a good and influential leader; they have their own quality to lead people systematically in a synchronised way.

Providing a brief overview of how the function of leadership can further enhance the global organisational performance of the chosen company include examples to support the analysis

The success of an organisation along with its sustainable development and lifting up the people at that organisation is directly attributed by their leadership form of that organisation. In this regard, many experts have pointed out that the leadership can be marked by either the success or the failure of H&M which is significantly influenced by that specific leadership which they applied for running the functionalities & activities in their organisation. The leadership qualities and skills of an individual is such an intangible requirement which directs and leads the workforce for the success of that organisation (Buil et al. 2019). The effect of leadership functions on H&M’s overall performance accomplishing the extremely sustainable competitive advantages of H&M in the global fashion industry market is one amongst the numerous corporate objectives &M have pursued for a long time to become efficiently correct along with encompassing a mixture of human and non-human aspects which are necessary and required to employ the employees or the further leaders of the organisation (H&M Group, 2019). H&M have observed in their business operations that from leadership that it has a vital role within the growth of organisational performance. So, their leaders are the most essential producer of conclusion of the transformation of their capitals which has been turned into the prised merchandise of products and services provided to its audience by H&M. Budur (2020) declared that this effect of leadership on the organisational behaviour will bring out all the considerable organisational growth points.

The leadership behaviour and leadership style are those two elements which shows that how the leadership functions can be performed by affecting the manager’s attitudes towards that group members. As per the report presented relevant with this context, leadership is that management element which deals with the continuous exploring for most of the effective thanks to influence the staff members in attaining organisational goals and objectives within the on-going method of H&M’s human & other valuable resources and the data that is coordinated with the associated H&M’s activities. If the proper management of human resources has to be controlled, then the relationship between organisational leadership and efficiency must be increased with involvement & engagement of the employees, enhanced inspiration for the workforce to follow and the critical analytical determination within H&M (Leithwood et al. 2020). A vital responsibility of the administrative leaders in H&M is to make that specific strategies and techniques which will give continuous improvement to the employee performances so that the on-going activities must progress (Mendenhall et al. 2017). Researches revealed that the crucial relationship between an organisation’s leadership form and its operational performances results in an ultimate considerable organisational growth which can be found evident in the cases such as of H&M and other brands too who is competing in the fashion industry market.

H&M (Hennes & Mauritz) is basically a Swedish origin multinational retail company that offers to its customers their own-branded cosmetics, accessories, clothes and footwear targeting all the age group and including the kids, teenage adults, women and men along with providing the latest fashion and quality products & items at an affordable price to attract more and more audience towards them. H&M is consisted of around total number of 16 production centres round the globe, specifically in Asia and Europe countries (Roscoe et al. 2019). H&M mainly & principally runs in the countries of Europe, Asia and North America with having approximately around 2,000 retail outlets of their brand in 37 other nations (H&M Group, 2019). The head office of H&M is in Stockholm, Sweden which has nearly around 68,000 permanent employees who are working there with their full efficiency and dedication. H&M, the fashion retail company primarily deploys the transformational leadership style and the theories related to the same (H&M Group, 2020). The transformational leadership practically reflects on the overall performances complying with the H&M organisation’s current structural form and adding to this it also evaluates the progression depending up on the scheme of incentives allowed and punishments of the internal organisation of H&M. It has also been identified from the relevant studies that the transformational leaders have their clear responsibilities and duties towards an organisation which has been played by the transformational leadership type of H&M by functioning further enhancements at the global level organisational performance in H&M (Leithwood et al. 2020).

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Explaining the sources of leadership power and how employees of a company can contribute to leadership sustainability at a global level

Leadership style and theories in organisational environment always needs some influential powers from various sources which are listed in the number of six total sources namely, Reward, Legitimate, Coercive, Informational, Referent & Expert powers. A powerful leader always has their great & powerful potential but this influence might be for a limited amount due to the poor skills in using the social sources of power (Schönborn et al. 2019).

Reward power – The reward power comes from the leader’s individual ability to compensate people for their compliances. These compensations might include elements like raises, promotions, money, training opportunities, compliments or just a simple smile (Kim et al. 2018). H&M have applied many incentive programs in their organisation which covers all the employees of H&M worldwide regardless of their position or salary.

Legitimate power – This power is where the leaders are hired, appointed or elected to such a position which comes with the legitimate responsibilities of being a leader. So, the role of a leader, being a frontline supervisor is to probably go to some point of the process to make the employees’ schedules & this is where the legitimate power responsibilities come (Morrison et al. 2017).

Coercive power – The opposite side of the reward power is the coercive power where the leaders can punish others also for being non-compliance. In this power, threats and punishments are the most common coercive tools which the wise leaders use as this coercive power has the last resort because it creates distrust and conflict among the leadership process.

Informational power – In this power the leader can utilise all the information to empower the followers or withholds that information for creating distrust among the employees (Kim et al. 2018). H&M analyses their yearly sustainability report and utilises that information for further strategizing their policies and practices.

Referent power –The referent power is based on the resource of respect and love in between the leaders and their team members where the leaders have great referent power like values, integrity and honesty which raise respect. As suggested by Coccia (2019) great leaders always prefer to adapt this referent power because this makes each and every employee feel good by improving the relationships and the social climate.

Expert power – The power of the expert power is very much limited up to the domain of the leaders’ expertise for example – it can’t be expected from a doctor to give any kind of fashion advice so in in expert power, the leaders are enabled to generally out-perform to their followers which raises trust and respect but only in one area (Morrison et al. 2017).

In this regard, the key for creating the vibrant and sustainable company on a global level to find various ways to get all the employees starting from the top executives to the assembly line workers all of whom are personally engaged in the day-to-day corporate sustainability efforts for an organisation on global level (Morrison et al. 2017). Some of the contributions are:

Aligning Personal and Corporate Values

In the business world, the dominating is done by maximising the profits where the calculation often leads towards the employees to behave in such ways that their organisations can support but that will only run on the counter-wise to the values where the employees will conduct their personal lives also (Schönborn et al. 2019). H&M management authorities put corporate challenges to their employees so that they can implement what they learnt building trust, respect, inclusiveness and integrity in workplace.

Define the Company’s Long-term Purpose

The first technique to erase all the conflicts which people feels in between their work duties and their personal values is to remove the stress from the long-term interests of the company where undoubtedly more aligned well of society with the planet. According to Tuan (2020) all the companies must try to strive having a clear long-term purpose which is built in the business strategies along with bringing it to life through the brands and their products.

Create Sustainability Knowledge and Competence

Sustainability cuts all aspects of a business starting from energy consumption to the procurement process. Many sustainability initiatives are required for specialised knowledge and expertise like talking to the suppliers related to sustainable sourcing or using any eco-efficiency & friendly tool to evaluate all the new products (Stahl et al. 2020).

Evaluating different aspects that may influence leadership effectiveness within the company – culture, gender, and the environment

Everything starting from the industry market to the employee performances, all these gets affected due to certain aspects or factors related to the leadership form or pattern and this shows that how well the business organisational leaders can perform in the business environments and how well the leaders can be able to reflect the organisations for which they work. There are some of the factors or aspects which are responsible for majorly influencing the effectiveness’s of the leadership for in every company which includes:

Society – Leaders are always known as a product of the society and a much prime example of a reciprocal relation between people of different backgrounds and societies. Leaders of H&M have always influenced their group members through perceived conformity, persuasion & charisma but the group members influence the leaders by either increasing or decreasing their support towards the leader (Kark et al. 2018).

Culture

In regards to the leadership forms, of an organisation, the importance of cultures impacts the leaders to take more dominant role and clearly-defined role. The subordinates always address them in a very specific way which doesn’t typically challenge what the leaders say (Lim et al. 2017). This dynamic aspect greatly impacts that how the leaders and the higher authorities interact with their respective teams to ultimately influence all the other aspects of the management. In H&M, they mainly focus on “working in teams” and “leading by examples” encouraging positive organisational culture. At H&M, their leadership is all about delegation, inspiration, feedback and motivation (Lin et al. 2018).

Environment

Different styles of leadership forms are directly affected by factors like demographics, organisational environment, resources, staff characteristics, technology, economic and political factors and the culture of that specific organisation (Xiao et al. 2017). H&M always promoted toxic-free products and items through their brand by avoiding fossil-based energy sources, harmful chemicals and single-use packaging helping to protect nature. They set their ambitious goal to be climate positive by the year 2040.

Gender

In this regards, both the men and women puts their focus on building all the relevant traits to become considered for the promotion to top leadership positions (Kark et al. 2018). H&M gives respect to human rights equally, promoting champion diversity and inclusion through their supply chain motivating others. According to Budur (2020) reports says that men are slightly more likely in the leadership ground than the amount of women are included which says that men are to make better political leaders as estimates around 17% to 12% whereas women are more likely to be better leaders which is approximately around 11% to 7%.

Conclusion

The concluded summary in the form of a conclusion says that Leadership theories mainly focus on the behaviours and traits which people who are leading can adopt in them to increase their leadership influences & capabilities. At H&M, their leadership method is all about delegation, inspiration, motivation and feedback. Lastly, it can be concluded that a powerful leader always has their great & powerful potential but this influence might be for a limited amount due to the poor skills in using the social sources of power.

Recommendations

One most significant recommendation for H&M is to focus more on their leadership techniques since same old leadership pattern might not work every time with the passing years.

Adding to this one more recommendation for H&M is that they must implement more prominently of their coercive and informational powers in a better and more efficient way.

References

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