Mc or more of these styles to effectively manage

 Mc
Shane and Glinow define leadership as the process of persuading, inspiring, and
enabling others to contribute toward the effectiveness and success of
organisations which they are members (Mc Shane and Glinow, 2015). Within the
business world, there are a number of varying leadership styles, all possessing
differing advantages and disadvantages. These styles include, but are not
limited to, Autocratic, Transformational, Charismatic, and Democratic styles.
Some leaders often adopt a combination of two or more of these styles to
effectively manage their groups and organisations. This paper serves to
illustrate the leadership style adopted at a financial institution known as
Directional Lending Credit Union (DLCU) by highlighting the current style and
managerial culture, along with the negative impacts this has had on the overall
productivity of the organisation. It will also provide possible solutions and
recommendations for improvement, and further growth and productivity.

Directional
Lending Credit Union has been in operation since 1973 and has managed to build
quite a name for itself over the years. They have opened nine (9) branches
throughout Trinidad and Tobago and have successfully become the premier Credit
Union in both product and service type and delivery. They have gone beyond what
is generally expected of a credit union, so much so that their main competitors
are now banks, as opposed to other credit unions like itself. Within DLCU, an
autocratic leadership style has generally always been assumed. This means that
one person or group, in this case, the board, executive management and upward,
controls all decisions with little to no input from the rest of the staff body.
These decisions are usually made based on their own beliefs and views. This
type of leadership is common among financial institutions since the main goal
of these organisations is to make choices with error-free outcomes (Tsolakis,
2016). It is argued that this style also allows for quicker decision making,
reduced time wastage, and increased efficiency.

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Lately,
however, in addition to this already autocratic style, a new management style
has also emerged and is becoming more prominent. Some executive managers have
now become more concerned with the feelings and needs of members in their
particular “group”. This “group” consists of employees from varying levels of
the organisational chart (See Appendix). 
This type of management as described by Blake Mouton on the Managerial
Grid, is known as Country Club Management. In the 1960’s Robert Blake and Jane
Mouton devised a graphic representation of five leadership styles in
organisations and the level of their focus on people and production (Heskett et
al, 2008). These styles are tiered from one (1) to nine (9) on the grid, with
nine being the highest level of concern, and one being the lowest. With County
Club Management, managers usually have little or no concern for production, but
rather, promote an environment for members of their group that is more relaxed
and friendly. In this case, responsibilities are given on the basis of trust,
as opposed to actual efficiency (Farooq, 2009). As a result of this, promotions
to new jobs are usually given to those who are a part of the “group”. Hard work
and effort are frequently disregarded in an attempt to ensure that these other adherents
are satisfied. Consequently, the efficient employees feel victimised and
unrewarded for the work that they do. 
Centralisation is also practiced; therefore, all formal decision-making
authority is held by the executive managers (Mc Shane 2015). These leaders, are
for the most part, on level one of the John Maxwell’s leadership scale known as
“Position” (Maxwell,2016). The majority of staff are unwilling to follow these
leaders, and only do so because they have to, based on the title and position
of those in charge.

In
the financial sector, profits are directly related to the status of the
economy.  Presently, Trinidad and Tobago
are encountering an economic recession. 
According to the Cambridge dictionary, a recession occurs during a period
of general economic decline marked by reducing GDP over six months, high
unemployment rates, stagnant wages, and a fall in retail sales. An article
written in the Trinidad Guardian stated that this is evident in our country due
to the cutbacks in government spending, layoffs in many industries and sectors,
and the conscious spending of citizens (Williams-Sambrano, 2017). This
recession has also affected DLCU through reduced member share investments,
reduced lending occurring, and increased delinquency profiles. To combat this,
staff are heavily relied on to work twice as diligently and effectively as they
usually would. However, as indicated prior, this hard work is usually not
rewarded as it should be, leaving the employees feeling dissatisfied with their
jobs. Once the remaining staff body is not satisfied they then begin feeling
unmotivated. It is critical that employees feel appreciated for the work they
do because this would encourage and inspire them to put in even more effort
than they already are. This extra effort is what is needed to continue pushing
DLCU in the right direction. Job satisfaction, as described by Mc Shane, 2015,
is a person’s evaluation of their job and work context. Job satisfaction
affects many individual behaviours including performance, absenteeism, and
organisational citizenship. Staff at DLCU have responded to this job
satisfaction in a number of ways. To illustrate the behaviour thus far at
Directional Lending Credit Union, the EVLN Model will be observed.  The EVLN model identifies four ways in which
employees respond to dissatisfaction at work.

Action 1: Exit – A few
employees have transferred to different branches and departments. Some have
opted to leave the organisation entirely and seek employment at other
organisations. However, due to the instability of the economy and difficulty in
finding employment, many prefer to not consider exiting the institution
altogether.

Action 2: Voice –
Employees voice their opinions and concerns about upper management and their
decision making on a nearly daily basis. However, these often fall on deaf ears
as generally, the talk of dissatisfaction usually does not go any further than
the Branch manager level. Formal complaints or suggestions are rarely given to
upper management as several employees perceive that this action will cause
further victimisation to them.

Action 3:  Loyalty – As mentioned previously, many of
the workers prefer to remain quiet about the situation. They wait penitently,
and sometimes “suffer in silence”, for the problem to work itself out or for
others to resolve them. 

Action 4: Neglect – This
seems to be the preferred method of dealing with job dissatisfaction by DLCU
staff. This is evident in the reduced work efforts by some, reduced quality of
services to customers, and increased absenteeism and lateness.

There
is a reasonably positive relationship between job satisfaction and employee
performance. Mc Shane 2015 highlighted that workers tend to be more productive
when they have more positive attitudes towards their jobs and workplace. There
is also a positive relationship between job satisfaction and customer
service.  Great customer service is
extremely important at Directional Lending Credit Union, as well as all other
service related organisations. Our customers are the ones that ensure that the
business thrives, and employee satisfaction usually results in customer
satisfaction as well. The service profit chain model (Appendix) suggests that
job satisfaction has a positive effect on customer service, which, in turn,
increases stockholder financial returns (Mc Shane, 2015). Coincidentally, as
recent as the reduced employee job satisfaction, reduced motivation and
downfall in production, the level of customer service has also declined. All of
these aspects are interrelated and can be a result of an ineffective style of
leadership and management.

With
a reduction in job satisfaction, comes a reduction in staff motivation and
morale as well. Both Maslow’s Hierarchy of Needs model, and the Max Neef model
of human scale development, seek to illustrate the importance of self-esteem
and self-actualisation within the workplace. According to Maslow, the need for
self- fulfilment, and esteem (recognition for a particular action) are at the
top of the motivational hierarchy. Employees who are not considered a part of
the” country club” often feel as though their hard work and efforts are being
overlooked and opportunities for growth, given to someone else based on
preference. As a result, employees work esteem needs cannot be fulfilled.   Max Neef’s model looks at human needs more
as a whole, as compared to a hierarchical structure. However, it still
indicates the importance of fulfilling the need for participation and esteem.

Currently,
DLCU is at a stage where productivity is at an all-time low, and staff morale
is also at an all-time low. The low staff morale is seen as an effect of the
poor leadership and managerial styles adopted. In order to combat this,
management has to make drastic changes in the way operations are done in an
attempt to get staff back to that point they once were. This first
recommendation is that both the leadership style and managerial style are
changed. Although it is customary for financial institutions to have a somewhat
autocratic style of leadership (Tsolakis, 2016), given the size of DLCU, it
should allow for more decentralisation. In a research study conducted by the
Modul Vienna University on effective leadership styles, examining the Royal
Bank of Scotland and the Hong Kong Shanghai Banking Corporation, it was
concluded that authoritarian leadership styles lead to a hostile and
unproductive working environment (Tsolakis,2016). What ought to be implemented
is a leadership style which is more in sync with the overall goals and
objectives of the Credit Union, which would be a blended style of Transactional
and Transformational styles.  A
Transactional leader places emphasis on the organisation, performance
evaluations, and reward systems, and is task and outcome oriented. In this
regard, DLCU will still maintain to an extent, its inflexible nature (as is
with many institutions in the financial sector) and other operations through
the existing boundaries of processes and goals. Increased employee performance
will now be promoted through the use of rewards and incentives. If management
clearly illustrates to all workers that their increased endeavours will be
substantially rewarded and recognised, it is more than likely that more
individuals may feel a sense of purpose, knowing that their efforts are
contributing to the overall production of the organisation. However, because it
is believed that Transactional leadership only satisfies a human’s basic needs
and barely addresses those on the higher level of Maslow’s Hierarchy of needs,
a blend of a Transformational leader is encouraged (Lumen Learning, Accessed 2018).
This style of leadership focuses on employee motivation and encourages
engagement by attempting to connect the individual self, with the goals of the
organisation. The ideal individual or individuals for this type of style leads
prominently by example and therefore, must be at least a level three (3) on
John Maxwell’s leadership levels (Maxwell, 2016). According to Mc Shane and
Glinow 2015, under this style subordinates feel more satisfied, have a higher
organisational commitment, better job perception and encourages more creative
decision making. One study on bank branches reported that this organisational
commitment and financial performance seemed to increase whenever a branch
manager finished a transformational leadership training programme (Mc Shane and
Glinow, 2015). Transformational leadership focuses on the higher levels of
Maslow’s hierarchy by focusing on individualised consideration and motivation.

When
considering a change in the leadership style of DLCU, we must also take into
account the management style. The leadership style depends on the Board of
Directors, CEO and Deputy CEO in DLCU’s Organisational Chart, however, the
management style depends mainly on the executive management team, and the
branch managers. As indicated before, the seemingly prevalent Management style
which has recently infiltrated the organisation is one of a Country club
according to the Blake Mouton grid. In terms of effectiveness, this grid
measures this management style as being a level nine for focus on concern for
people (people in the group) and level one for concern for tasks. In the
opinion of this model, the most effective management style occurs when Team
Management is implemented (Farooq, 2009). Team management focuses on both the
organisations production needs and the needs of all of the employees. It does
not exclude a particular group from its focus, but instead, seeks to understand
how the work of each individual can benefit the organisation in its
entirety. 

In
conclusion, the ineffective leadership and management at Directional Lending
Credit Union have had negative effects on both employee motivation and staff
morale, and as a result, organisational productivity and service delivery have
suffered. The only way things may begin to change for the better is if we adopt
new and effective ways of leading and managing the overall staff body.