It is clear from the case in question that an array of serious issues underly the daily running of Aussieco. These issues impact not only on the operations of Aussieco, but have a much wider effect on its overall efficiency and potential for profitability. Hodgins and Manning (2005, p. 45) claim that an organization's outputs are entirely dependent on the resources that are input and the way that they are processed and subsequently delivered.
As such, it stands to reason that for an organization to operate and produce effectively, it must be managed properly to ensure group cohesion and thus enhanced group performance between which Montes et al (2004) identified the relationship. Aussieco in the 1990s failed on several accounts to identify its own organizational problems, which can largely be divided into three categories: Leadership, Work Motivation and Individual Differences.
Leadership To begin with the very top of the organization, it is made clear in the case that the company's owner (who established the company himself), makes most of the decisions without ever being involved in the daily running of the company (p. 79). Stodgill (1950, p. 3) described Leadership as 'the process of influencing the activities of an organized group in its efforts toward goal-setting and goal achievement'.
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In the case of Aussieco, what is clearly missing in terms of the above definition is the concept of 'influence', in other words, a form of implied personal contact in which the company leader interacts with other members of their organization to clarify and help achieve goals. The detachedness of Aussieco's owner, but insistence upon making decisions means that his ability to influence subordinates is surely compromised and interdepartmental communication is also slack.
Furthermore, the owner is described as embracing a "dictatorial attitude" in the workplace (p. 84). Goleman (2000) identified six major leadership styles and attempted to show the relationship between these styles and the overall effect on organizational climate. Of the six (Coercive, Authoritative, Affiliative, Democratic, Pacesetting and Coaching), Authoritative showed the most positive effect on productivity with a . 54 correlation.
Yet with Aussieco, the poor results of its leadership and management implies that such a style is not enough on its own, it must be combined with 'Affiliative, Coaching and Democratic' styles, which show similarly high levels of correlation. Lewin's Iowa Studies reinforced this idea, in showing that Authoritative forms of leadership in the Boy Scouts only worked effectively when the leader was actually present and overseeing the group's progress (Schram et al, 1997 p. 80-85).
In terms of Aussieco's employment of Managers, it seems that as with Conger and Canungo (1987), they believe in a Leader Emergence approach in which given the right situation, individuals will show themselves to be strong leaders, as opposed to theories by Judge, Bono, Ilies and Gerhardt (2002) which sought to use meta-analysis to show the link between McCrae's Five Factor Model (1992)' and effective leaders. The general manager is described on p. 81 as someone who 'wanders around', 'does not talk to anyone' and is generally anonymous within the company.
His personality and actions within the case study do not in the least seem to conform with Judge et al's meta-analysis, which showed a relatively strong relationship between leader effectiveness and Extraversion (r=. 18) and Openness (r=. 19) (2002). This lack of leader to subordinate interaction continues with the Administration Manager and Executive Managing Director who are playing Golf together and are thus not contactable (p81). The Production Supervisor is a 'qualified carpet fitter' and seems neither to know nor care about why the assembly-line workers fail to meet production targets.
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