Leadership Challenges and Strategies in a Post-GFC World
There is a growing public over the performance of business in the global market after the global financial crisis (GFC) of 2008. Voegtlin and Partzer (2011: 1) state that in the post GFC world, it has become impossible to separate the outcomes of corporations from the responsibilities, ethics and morality of leaders in the corporations. It means, therefore, that as the global market in the post-GFC world presents myriad challenges, leadership remains at the center of solving the problems which businesses face. The term globalization refers to the continuously increasing connection between different countries in the world. Globalization has the effect of opening up countries for greater participation in world affairs, especially in economic activities. However, globalization comes with its challenges, and the global financial crisis is one of them.
GFC is an economic problem of 2008, which affected most economies that participate in the global business. GFC presented long-lasting economic effects on global businesses, which require appropriate leadership strategies for global businesses to achieve growth. The post-GFC global market requires leaders to practice responsible leadership (Voegtlin and Partzer, 2011:2). They must take the central position for understanding the effect of GFC and develop the right strategies for getting their companies back on track. Leadership is becoming a challenge because the staffs of most companies are over-anxious about the future (Dilger, 2013:1). Employees’ detachment from their workplaces is also increasing. The biggest challenge for leaders is to unite their corporations using ethical means. Demonstrating ethical leadership, especially on matters of business growth, remains an invaluable strategy. The approach to leadership must be innovative. The aim of this discussion is to identify and explain the leadership challenges for businesses in the post-GFC market. The discussion also analyzes two strategies that leaders can use to respond to the challenges, and how companies have used innovative leadership to respond to the post-GFC challenges.
Organizations need responsible leadership for their businesses to grow in the current murky post GFC world. Leadership remains a big challenge in most global organizations. Without the proper understanding of responsible leadership, it is becoming nearly impossible for leaders to relate well, not just with their employees, but also with their stakeholders. One of the effects of the GFC is the increasing uncertainty (panic) of employees, as well as investors. They need information, for instance, about the performance of their businesses, security of their investments, the future of the businesses, etc. Without responsible leadership, panic is the obvious result as stakeholders and employees become over-anxious about the future of their investments and employment opportunities. Today, leaders face the challenge of being at the center of good performance. In the post-GFC world, leaders must understand that any failure of their businesses means their own failure. They must, therefore, create a good relationship between all parties in their systems. There is need for harmonious working relationships, which must be inclusive.
Secondly, leaders face the challenge of low employee engagement. Employees’ engagement with a business depends largely on the extent to which the business (or its leaders) meets their needs. Robison explains that some of the needs of employees include “feeling cared for, having the necessary equipment, and knowing what to expect” (1). However, the financial crisis presented various challenges to businesses, such that meeting all the needs of employees has become a serious challenge. The danger of not meeting the needs is that it lowers the level of an employee’s attachment to the business. If an employee lacks the right equipment for performing his tasks, for example, he feels that his job predisposes him to health risks.
Solving the above challenges requires leaders to become more responsible than they were prior to the GFC. Responsible leadership enhances the influence between a leader and employees (Voegtlin and Partzer, 2011: 4). Responsible leadership, as a strategy for solving the challenges that businesses are facing in the current global market, applies at three levels. At the micro-level, the leadership aims at influencing followers (e.g. employees and stakeholders). Leaders must motivate their employees and ensure that their job satisfaction remains high. At the meso-level, leaders must align their cultures to the requirements of the current global markets. Some of the things that leaders must ensure their organizational cultures meet include ethical culture, showing corporate social responsibility, investing in social entrepreneurship, and enhancing performance. At the macro-level, the business relates with its stakeholders appropriately. Leaders must maintain legitimacy and openness to their stakeholders.
Innovation is another strategy that organizations must embrace to respond to the challenges of the GFC. Since the crisis has made capital expensive, organizations must change their ways of production for sustainable growth. Identifying cheap sources of raw materials, low cost technologies, and low cost energy sources are ways of ensuring that business still remain profitable after the global financial crisis. Companies also need to change to low cost sources of capital (Dilger, 2013:1). Over-relying on loans, which have become expensive after the GFC, makes the cost of production high. Turning to green energy is an effective way of reducing the cost of energy. Electricity has become expensive, making production costs after the GFC high (Robison, 2009:1).
Apple, the world’s leading tech organization, has used innovation to respond to the challenges of the GFC. Gustin (2012:1), explains that Apple has a history of continuous innovation, which its response strategy to the changes in the global market. After the GFC, Apple turned to cheaper and sustainable sources of raw materials for producing its tech products. Dilger (2013: 1) explains that Apple makes a lot of investments in innovation. The company, in 2013, invested $10 billion in its innovation. During the GFC, Apple almost collapsed because it had not changed its ways of doing business, yet the global market had become so hostile. Price became a major factor for consumer choice. Apple has also changed its focus to tech products alone, investing in other markets, as part of its innovation strategy. For example, the $10 billion that Apple planned for 2013’s innovation went into Capital investments (Dilger 1).
Samsung has also used innovation to respond to challenges of the GFC. However, unlike Apple, Samsung receives the criticism of buying technology instead of producing it (Cain, 2013:1). Samsung, therefore, bears greater execution risks than innovation risks (The Economist, 2011: 1). Samsung has responded to the financial crisis by shifting to energy markets where it has never invested previously. The Economist states that the company invested $20 billion in green energy source like solar panels (1). Other areas where it invested it $20 billion were the production of “car batteries, light emitting diodes (LEDs), and biotech drugs” (The Economist, 2011:1). The reasons behind Samsung’s divestment are the challenges in the electronics markets after the GFC (Cain, 2013:1).
References
Cain, G. July 27, 2013. “Samsung: Fomenting crisis at the world’s largest electronics
company”. Global Post. Retrieved on April 28, 2014 from http://www.globalpost.com/dispatch/news/business/technology/130726/Samsung-innovation-TV-smartphone-crisis
Dilger, D.E. January 24, 2013. “Apple to spend $10 billion on Innovation, Expansion, in
2013”. Apple Insider. Retrieved on April 28, 2014 from http://appleinsider.com/articles/13/01/24/apple-to-spend-10-billion-on-innovation-expansion-in-2013
Gustin, S. April 25, 2012. “Why Apple is Winning: Innovation, Opportunity, and
Execution”. Business Time. Retrieved on April 28, 2014 from http://business.time.com/2012/04/25/why-apple-wins-innovation-opportunity-and-execution/
Robison, J. May 12, 2009. “The Economic Crisis: A Leadership Challenge”. The Gallup
Business Journal. Retrieved on April 28, 2014 from http://businessjournal.gallup.com/content/118315/economic-crisis-leadership-challenge.aspx
The Economist. October 1, 2011. “Samsung: The Next Big Bet”. The Economist.
Retrieved on April 28, 2014 from http://www.economist.com/node/21530976
Voegtlin, C., & Partzer, M. 2012. “Responsible Leadership in Global Business: A New
Approach to Leadership and its Multi-Level Outcomes”. Journal of Business Ethics, Vol.105, pp.1-16.
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