It’s commonly perceived notion that people are one of the pillars of an organization. They can make an organization prosper even under most adverse conditions. This particularly holds good for some industries e.g. the service sector where people can be the key assets of the organization. As long as people are in sync with the organization, there is not an iota of doubt about the growth of the organization. However, it’s only through the strong sense of responsibility and accountability to the organization that this sync can be established whatever the challenges may be. And, this condition may not always be fulfilled. In that situation, an organization may find it challenging to (re)orient the people in unison with itself. Following paragraphs describe the various situations when (and how) the organizations need to intervene.

i) Affiliation need: Certain degree of affiliation need may help in increasing individual’s productivity. However, sometimes, it may be so strong that an individual may find it difficult to safeguard the organization’s interest at the cost of his personal relations with some other individual(s). So, the organization must ensure that there is a balance between the two. In case this balance disturbs, the organization must step in to safeguard its interests.
ii) Competitive Strength: The organization must analyze strengths and weaknesses of its people on a continuous basis and endeavor to overcome their weaknesses. Lack of competitive strength vis-à-vis the peers may tempt some individuals to find some easier path even if it is at odds with the organization’s interest and objectives. Organizations must find ways to pre-empt this situation. Some of the ways may be through training and development of the people and by creating an enabling environment.
iii) Subjectivity vs Objectivity: Sometimes, subjectivity may outdo the objectivity to the extent that an individual may become self-centric so much so that he is oblivious of his obligations towards the organization. Such a tendency must be discouraged through conducive work environment and organization culture. If it doesn’t work, the organization’s rules and regulations must be strong and effective enough to overcome the same.
iv) Super Ego: Human ego can be productive as long as it motivates an individual to excel and accomplish. However, super ego of an individual may make him reluctant to accept or even heed to others’ ideas which may be in the interest of the organization but at variance with his wishful thinking. The organization must be careful not to allow the culture of super ego to sprout in its environs.
v) Ethics and Integrity: Ethics and integrity must be the key ingredient of an organization’s culture and policy. Lack of rectitude may force an individual to serve his own vested interests at the cost of the organization’s interests. The organization must have zero tolerance to unethical practices.
vi) Personal Power vs Institutional Power: The greed for personal power (as against institutional power) may guide an individual to direct all his energy and efforts to invoke the personal loyalty instead of the organizational loyalty. On the other hand, institutional power is exercised to pursue organization’s goals and objectives. The organization must rein in the exercise of personal power in the guise of institutional power.
vii) Inertia: Human inertia is a strong obstacle in the path of an individual’s productivity and efficiency. It may lead to resistance to change which may be necessary to enhance productivity and efficiency, and achieve organizational goals and objectives. Resistance to change may cause stagnation and apathy which may again strengthen inertial forces. Thus, a vicious circle is created. Once it is created, it becomes challenging to break the same. Therefore, organizations must not allow the inertia to thrive and become the part of the practice by providing opportunities to the people to remain agile and dynamic.
viii) Recognition: While recognition for work well done acts as a motivation to perform better, false eulogy has tendency to make a person recalcitrant, conceited, show active or passive aggression, and may discourage others to perform well. Hence, organizations must ensure that recognitions are objective, driven purely by the merit, and not to be used just to fulfill affiliation needs of the individuals.

The organizations must be vigilant to pre-empt the occurrence of the situations which are inimical to their interest, mission, goals and objectives. People development with a focus on inculcating strong sense of responsibility and accountability to the organization should be made part of the organizational development process. Therefore, it should be implemented in a planned and systematic manner instead of following an ad hoc approach. Further, organizations must have strong and effective interventional mechanism in place which can be applied (if required) to dovetail individual need with the organization’s interest.

About Author: Satyendra Kumar Singh, B.Tech. (Chemical Technology) + M.B.A., is proprietor of Satsha Management Services-an award winning design engineering and management consulting company (www.satshamanagement.com). He possesses approximately 25 years’ experience in engineering consultancy in process and energy industries. Satyendra has authored several papers on energy, business and management, which have been published in some renowned journals/magazines such as ‘Chemical Engineering’, ‘Process Worldwide’, ‘Modern Manufacturing India’. He may be reached at satyendra.singh@satshamanagement.com, Ph. +919811293605.

Leadership plays a key role in shaping an organization’s growth trajectory and fulfillment of its objectives. An organization can be a corporate, a unit, a division, a department or a team. Leadership influences the organizational efficiency and effectiveness through the utilization of the organization’s human resources and guiding its corporate culture. Leadership style is nothing but expression of the leadership qualities, capability, inner strength and personality of a leader. Leadership qualities include selflessness, character, courage, will-power, initiative and knowledge (of the job, handling the people and self). Presence or absence of those qualities gets reflected in the style of functioning of a leader. Leadership style of a leader leaves significant influence on the motivation level of the people of an organization, their decision making ability, self-initiative potential, team spirit and commitment to work, thereby, impacting meaningfully their efficiency and, hence, overall efficiency of the organization.

Various Leadership Styles and their Impact on Organizational Efficiency

A leadership style can broadly be classified into two types-authoritarian and participative.

Authoritarian Style

In authoritarian style, the leader makes decision on his own without involving those who are affected by the decision. The leader may not have the complete idea and understanding of the situation, circumstances and the purpose, but, still prefers to be sole decision maker only to satisfy his own ego and vested interests. Also, sometimes, a leader may feel a sense of insecurity from others, which discourages him to involve others in decision making. Obviously such a decision may not serve the organization’s interests and fulfill its objectives. Furthermore, as those affected are left out of decision making process, they get demotivated and demoralized. Their decision making ability, self-initiative power, commitment to work and team spirit get eroded. All those factors lead to loss of individual and organizational efficiency.

Participative Style

On the other hand, participative style requires participation of all the affected in decision making process. The leader allows everyone to express his ideas and views freely and fearlessly. As a result, a well thought decision emerges out. Such a decision aims at fulfilling organization’s interests and objectives instead of any individual’s interests. Moreover, it gives a sense of belongingness to all the concerned and acts as a great source of motivation to them. This increases their efficiency and overall organizational efficiency. Further, decision gets implemented easily and smoothly as all the concerned have already been involved in decision making. Decision is perceived well by everyone and no one has any element of doubt or suspicion about the repercussions of the decision. The Leader may also allow the sub-ordinate to function with autonomy within limits defined by him. This develops the sub-ordinate’s decision making ability and infuses into him the sense of self-responsibility and self-accountability.

Other Styles

Authoritarian and participative styles are the two extreme ends. However, in practice, a leadership style varies between the two extreme ends depending upon the situation, task and the group to be led.
A leadership style can also be viewed as a mix of persuasion, compulsion and self-example. In certain situation, persuasion is the most effective way to motivate the people to fulfill the organizational task. When the people understand the purpose and circumstances, they put their best efforts to perform even most challenging task. Compulsion in certain circumstances is used as a measure of last resort to discipline the crooked, incompetent or mischievous. A leadership style of self-example is considered as most effective one. If the leader himself demonstrates the example of sincerity, honesty, integrity, commitment, or whatever, it automatically percolates through the people in most effective way. People follow the standards set by their leader, and, therefore, self-example is the most potent way to influence them.

Concluding Note

A leadership style has significant impact on the efficiency of the people and the organization as a whole. An authoritarian style can demotivate the people, reduce their decision-making ability and self-initiative capability. Thus, it hinders the optimum utilization of the human resources of the organization leading to loss of organizational efficiency. On the other hand, a participative style enhances motivation level of the people and infuses a sense of belongingness into them. This results into optimum utilization of the human resources leading to enhanced organizational efficiency. A leadership style of personal example is considered as the best and most effective style. By setting the personal example, a leader can inspire the people most effectively to do something which he expects them to do.

An organization, being made of the people, cannot remain free from the activities its people do to satisfy their needs while doing their works. One of such needs and an important one is the social need. In order to satisfy their social need, people interact with each other beyond what is warranted by the organization’s formal channels. Thus, they create their own informal channels as against the formal channels which are created by the organization’s structure. These informal channels grow over a period of time and may become strong enough to extend beyond just means of social interactions. The informal channels, then, may manifest themselves in following ways:

i) Pressure Groups: The people may use the informal channels to create the pressure groups. Such pressure groups exert the pressure to deter the authorities of the organization from taking the steps which are not liked by such people even if they are required in the best interest of the organization. People have tendency to remain in comfort zone, but that may lead to inefficiency and unproductivity in the organization. Hence, the responsible authorities may be obliged to bring about change in order to ensure efficiency and productivity in the organization. Such a change may entail the people to break the inertia and come out of their comfort zone, which may be resisted by such pressure groups.
ii) Parallel Authorities: The informal channels may become so strong that they may lead to creation of parallel authorities. These parallel authorities may compete with the real authorities of the organization and may become threat to their effective functioning. This tends to demotivate the functionaries of the organization and discourage them from taking bold and decisive steps in the interest of the organization, thus weakening the very fabric of the organization. Parallel authorities may also influence others to get distracted from their duties and responsibilities towards the organization thus denting the organizational productivity.
iii) Inhygenic Factors: The informal channels may also lead to development of inhygenic factors in the organization’s work environment such as sycophancy, crookedness, indiscipline, irresponsibility, dereliction of duty, lack of integrity, turpitude, arrogance, conceit, so forth and so on. Such inhygenic factors vitiate the work environment and hamper the productivity and efficiency of everyone and hence of the organization as a whole.
iv) Organization Culture: There could be development of an organization culture wherein people tend to act in the interest of individuals and against the interest of the organization, by-pass the system in deference to some individuals or to pursue their own preferences, show the loyalty to individuals instead of the organization, discriminate one person from other based only on their liking or disliking, be subjective in the approach, lose the sense of purpose, show predisposition in their decision making, etc. Such an organization culture, no doubt, saps the organization of all its vigour and energy, and acts against its growth and development.
v) Potential Threat: There could be tendency among the people to brush aside the organization’s mission, goals and objectives as these may be of little importance and may not find a place in the people’s activities carried out through the informal channels. When an organization’s mission, goals and objectives are not given due importance by the people, it may be a potential threat to very existence of the organization itself.

The Way-out

Informal channels, if unbridled, have potential to inflict all pervasive damage to an organization. Therefore, the organization must step in to check their growth before they can overpower the formal structure of the organization. For that to happen, the organization must do the following:

i) Empower its functionaries to enable them to discharge their duties and functions without getting distracted and daunted by the pressure groups. This would also allow them to drive the people towards the organization’s goals and objectives. Moreover, they can thwart the challenges and threats posed by the pressure groups. This can also discourage the harmful activities carried out through informal channels.
ii) Put the system in place and ensure its implementation. This would discourage any one to by-pass the authorities and indulge in activities inimical to the interest of the organization. Putting the system in place also ensures that people adhere to the set path of goal accomplishment without diverting to undesirable path.
iii) Enforce the organizational rules meticulously. This would ensure no one, what so ever his position be, can be above the organization. It would not allow any individual irrespective of his position or status to compromise the interest of the organization. This would also mean that every individual in the organization would be aligned with the goals and objectives of the organization leaving little scope for informal channels to compete with the formal organizational structure.
iv) Create an organization culture wherein everyone acts in sync with the organization’s mission, goals and objectives. The organizational culture plays a vital role in growth and development of an organization by aligning its people to the interests of the organization. Therefore, creating a healthy organization culture can be an effective means to drive the people to goal accomplishment of the organization and discourage the creation of informal channels.
v) Strengthen the organization structure. The very purpose of an organization structure is to define a channel through which its people can interact and communicate to achieve its goals and objectives and that no other parallel channels can crop up in the organizational set up. Therefore, an organization must make every endeavor to strengthen its structure and ensure that it is strong enough to function effectively and counter the threats and challenges from any other informal channels. It must not be just a formality. In fact, the stronger the organization structure is, the weaker would be the informal channels and the better would be the growth and development of the organization.