Leading Organizations to Achieve Success: Strategies for High Performance - Essay Sample

Introduction

The leaders of many organisations use different methods to guide their institutions to achieve success in their operations. Just like most companies, their most valuable assets that help them make profits is their staffs. Therefore, these leaders usually try using the best methods to lead and guide their employees to attain the goals and objectives of their organisations. They follow different leadership styles to influence their members of staff to have high performance levels. For instance, the leaders of some institutions use democratic style of leadership, whereby they allow their workers to contribute on how the institutions should operate.

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Others use the autocratic style and dictate the method that the staffers are supposed to use at work. These leaders use the said styles because they have seen the advantage of each and they consider them to have the ability to make them successful in their activities. This paper assesses an episode in the leadership of a leader called Warren Buffett. It analyses the activities of a senior member of staff and the subsequent actions of the chief executive officer after this episode.

The issue that this paper assesses placed this organisation under strict scrutiny from other people. The leader of the company used his mode of leadership to handle this issue appropriately and protect the institution, its trust, and employees. When faced with this critical situation, the leader knew that whichever decision he made would have had serious consequences on his institution. Specifically, the issue would have caused other people to lose trust in Berkshire Hathaway. Alternatively, it could have made the employees of the institution to lack trust in their leader, and this factor would have affected their working and productivity. Therefore, the leader had to think critically and decide on the action to take and protect his organisation and staffers while handling the issue.

This paper considers the controversial case that engulfed the organisation in the year 2011. A key executive in the organisation, named David Sokol spearheaded the acquisition of a business named, The Lubrizol Corporation. While spearheading this acquisition, the executive engaged himself in activities that other people considered to be insider trading (Heineman, 2011). Specifically, a few weeks before heading the acquisition Sokol had bought shares in the Lubrizol Corporation worth ten million dollars. This acquisition caused the value of his shares to rise by about three million dollars (Heineman, 2011). This instance shows a case of insider trading whereby a person purchases the shares of an organisation while possessing information that is not in the public domain. Specifically, Sokol knew that he intended to spearhead the acquisition of The Lubrizol Corporation by Berkshire Hathaway.

Moreover, he knew that such an acquisition would cause the value of shares of the organisation to rise. Specifically, being under the ownership of Berkshire Hathaway normally causes the value of many organisations to rise (Larcker & Tayan, 2016). Critics say that his purchase of the shares of the Lubrizol Corporation was illegal, and therefore, he should have isolated himself from the negotiation process involving Berkshire's acquisition.

During the acquisition process, Warren Buffett did not know that Sokol had purchased shares of the Lubrizol Corporation worth ten million. He only came to know about it after criticism rose against Sokol. Many critics stated that after knowing about this case, Warren Buffet should have referred Sokol to the compliance department of his organisation (Heineman, 2011). They expected Warren to initiate an investigation into the conduct of his executive. However, Buffet defended Sokol and said that the latter did not commit any illegality. Specifically, he only recommended the acquisition of The Lubrizol Corporation without participating heavily in the acquisition.

Moreover, he had already concluded the purchase of his shares of the Lubrizol before the recommendation and he did not have any guarantee that Buffett would have agreed to acquire the Lubrizol. Therefore, there is no way that he would have known that Berkshire Hathaway would have bought the Lubrizol. These factors made Warren Buffett to defend his executive. In fact, he defended him even after Sokol resigned (Heineman, 2011). This defence shows that Buffett trusted his employees and he did not think that Sokol would have committed an illegality intentionally.

Explanation for Considering the Episode as Leadership

Leaders use different approaches to guide their employees and achieve success in the operations of their organisations. A style that a leader chooses to use depends on several traits, behaviours, and characteristics of a person when interacting with subordinates (Al-Khajeh, 2018). For instance, some of the traits that make a good leader are integrity, determination, intelligence, sociability, and self-confidence (Northouse, 2016). An individual with a specific combination of these factors produces an effective leader. Furthermore, some researchers state that the different combinations produce five distinct types of leaders. Specifically, they state that it produces transactional leaders, transformational, culture-based, leaders, visionary, and charismatic leaders (Al-Khajeh, 2018). These styles have their specific advantages that make them preferable to some individuals as compared to others.

Additionally, each of these styles has its distinct results on the performance of an organisation (Al-Khajeh, 2018). Specifically, in his analysis, Al-Khajeh (2018) stated that transformational leadership focuses on developing followers while considering their needs. Such a leader prioritises on improving the performance of each person, which then increases that of the organisation. Transformational leaders also use methods, such as creating a value system, developing moralities, motivating followers, and creating interest in them for their work. These factors make workers to have perform highly.

Another leadership style that researchers have focused on is charismatic leadership. This uses a leader that develops the vision for an organisation, which followers are then required to follow. Such a leader encourages the followers to be innovative and creative uses motivation to influence them to have high performance (Al-Khajeh, 2018). Another style is democratic leadership, which allows followers to participate in decision-making of an organisation. This style influences followers to perform highly since they know that their institution values their opinion. This knowledge motivates the workers and it can make them to perform highly in their activities. Al-Khajeh (2018) also considered the transactional leadership style. Such a leader is normally willing to give followers things like promotions, pay rises, and other tokens for performing highly. This mode of leadership is appropriate in some cases since it causes a person to perform highly in the hope of receiving a token in return. The discussed leadership styles form the basis of the styles that many leaders use.

Now, considering this case under investigation here, the chief executive officer for Berkshire Hathaway developed his specific mode of leadership. Firstly, before considering his leadership, it is crucial to understand the organisation that he leads. Warren Buffett is the leader of Berkshire Hathaway, which owns many other businesses. While this person only controls one organisation, he is the leader to thousands of other employees that his company owns (Larcker & Tayan, 2016). Therefore, Warren Buffett has had to find and use style that will allow him to lead all these people appropriately. Therefore, he developed a different mode of leadership that is based on trust (Staley, 2017). This model shows followers that the leader trusts them to do the right thing (Gumus, et al., 2016). Applying this style makes followers to perform highly since they know that they have the trust of the leader. In fact, in some cases, this knowledge makes the workers to perform better than they would in different cases.

Warren Buffett used this trust-based to let his employees to choose their actions appropriately. It makes them to always as themselves whether they are doing what they need to do or not. Considering the case under investigation here, many scholars have faulted the conduct of Sokol. These critics say that Sokol knew that acquisition by Berkshire Hathaway could cause the value of his shares to rise. This case gave Sokol information that was not in the public, and therefore, he should not have been part of the negotiation that lead to the acquisition. These critics use this information to criticise the decision of Warren Buffett to defend his executive. Now, in this case, Buffett could have decided to act against Sokol. However, this action would have contradicted with his leadership style. Specifically, it would have implied that he does not trust his executive. Therefore, he stood by his leadership model and defended Sokol. This case shows the leadership skills of Warren Buffett.

This case also shows that Warren Buffett empowers his staff and then watches them work at his organisation. He knows that they cannot work best when under strict watch, thus, he allows them to work in a way that will be profitable to the organisation. For instance, in the post in the Harvard Business Review, Larcker and Tayan (2016) stated that Buffett allows his executives the freedom to control his businesses. Moreover, he often tells them that he values their trust more than profits and the reputation of his organisations. These factors are crucial for his leadership style. Furthermore, his style of leadership includes transformational model. He knows that if the workers in his organisation have many skills that will be of high benefit to him. Therefore, he encourages them to learn and find innovative ways of solving problems that they face in their work. These factors show that this case was an appropriate episode for him to display his leadership.

The final factor that proves that this episode showed the leadership of Buffett is the fact that after the case his organisation continued with its operations normally. Had he handled this case differently, he would have lost control of his business and the trust of his stakeholders. However, defending his executive shows that he always trusts them to do the right thing. Employees usually have different talents that their leaders can turn into strengths after learning and practice (Daft, 2015). Trusting his employees causes them to develop and enhance their skills and talents, making them strengths. These strengths are usually beneficial to an organisation. Since Warren Buffett knew the advantages of empowering the strengths of his workers, and therefore, he decided to defend his executive.

Critical Assessment of the Behaviours of the People Involved in the Incident

This incident involved several people and each of them could have affected the outcome. The case had main actors and those that were in the background. This assessment will firstly consider the main actors before analysing the subordinate ones. The first individual of interest in this situation is Sokol. He was a key executive at the organisation, which means that he knew all the rules of operation of the business. For instance, he knew that the chief executive officer trusted him. He also knew that he was supposed to follow ethical guidance in all his dealings in the organisation.

Now, despite this knowledge, Sokol decided to practice the controversial activity of influencing the acquisition of L...