Contemporary management models, ranging from the classic ones such as strategic and behavioural management to the more revolutionary ones, such as lean and Total Quality Management (TQM), devot
e considerable space to the role of leadership in organisational success. The delegation of responsibilities, the creation and sustenance of proactive, problem-solving work force/human resources, and the imperatives of shared decision-making are all incontrovertibly important and accordingly have been interpreted by some theorists as testament to the decreasing importance of leadership (Gilbert, 2004; Svensson, 2005; Rad, 2005).
This is an erroneous assumption, predicated on a misunderstanding of the distinction between authoritarian leadership and involved, proactive leadership. The distinction between the two is not only real but is one which makes all the difference between organisational success and failure; between organisational atrophy and organisational flexibility. As Baker et al. (1993) asserts, effective organisational leadership is a leadership which acknowledges the inherent value of delegation and autonomy but which at the same time is present and involved; a leadership which displays not only acumen in decision-making and strategic planning but which has the capacity to react proactively to extraordinary circumstances through the utilisation of both change and crisis management tools. The effective leader is, in other words, one who has successfully negotiated the fine balance between involvement and delegation.
Defining effective leadership is a challenging endeavour and within the limits of the present research, an impossible one. Nevertheless, by clarifying the research’s focus and delimiting the scope of its exploration, the study shall communicate the characteristics of the effective leader within the matrix of Total Quality Management. The reason for selecting TQM as the theoretical paradigm from within which the characteristics of the effective leader shall be defined is not because it happens to be the most popular and result-oriented management paradigm today but because, as Gilbert (2004) notes, leadership within TQM organisations are, by definition, highly effective leaders who have successfully negotiated between the exigencies of involvement and delegation. They also function as the founding bloc for an organisational culture which, beyond being fundamentally founded upon strategic management and planning, is constructively responsive to both change and crisis.
Indeed, empirical studies have established that leaders within TQM organisations tend towards the display of higher levels of decision-making and strategic planning acumen than those in non-TQM organisations because strategic planning is both research-based and holistic, and because decision-making is shared and knowledge-based. Following a review of the characteristics of the effective leader and an analysis of effective leadership within the matrix of strategic planning and decision making the research shall look towards case studies drawn from the IT sector in order to demonstrate the extent to which effective leadership is an inherently TQM one, based on an acknowledgement of the imperatives of information-based strategic planning and shared decision-making, while ineffective leadership is the very antithesis of the stated.
2: Leadership in TQM Theory
TQM is, as Easton and Jarrell (1998) maintain, a comprehensive organisational management system which is based upon the integration of several managerial perspectives, approaches and theories into one, in acknowledgement of the complexity of organisational structures themselves. However, the quasi-comprehensive organisational management approach forwarded by TQM does not imply that its adoption may support abandonment of strategic planning and organisational decision-making models (Sila, 2007). Certainly, TQM, insofar as it is predicated upon strategic management, well-defined decision-making models, statistical rigour, project management and performance measurement, embraces the tools particular to each of the stated (Sila, 2007). It is, as may be inferred from the aforementioned, a total quality management approach because it is founded upon a fundamental awareness of the inherent value of a wide array of management approaches.
Literature on TQM confirms the above stated and establishes it as a management philosophy which, rather than forward a novel management theory, discriminately embraces several management and organisational development theories and constructively exploits their strengths and tools for the formulation of a single, totalising management philosophy: TQM. In fact, according to Pike, Pike and Barnes (2005) the value of TQM lies in the fact that it seeks to build upon the existent body of management theories rather than, as is the customary approach, invalidate and replace them.
Fundamental to TQM, as numerous management, organizational leadership, and OD scholars have concluded, is effective leadership (Johnson, 2001; Raelin, 2003; Pike, Pike and Barnes, 2005). Effective leadership, within the context of TQM, subscribes to a leadership model which employs management tools particular to information-based, goal-oriented strategic planning, decentralised and cooperative decision-making models, and an inherent capacity for proactive crisis and change management.
As Raelin (2003) explains, proactive responsiveness to crisis may sound oxymoronic insofar as crises supposedly erupt unexpectedly but,
this is not necessarily true. Strategic planning which is based upon an awareness of, and an accounting for, the nature of the external environment, the sector and market within which the organisation is located and, above all, which has the flexibility requisite for immediate response to changing external environmental and market conditions, lends to strategic plans which allow organisational leadership the requisite leeway for proactive response towards nascent crises before their development into full-fledged crises.
The implication here is that effective leadership, at least from within the matrix of TQM theory, is not simply a leadership which has an acumen for strategic planning and decision making but, whose acumen for either derives from both research-based knowledge and the utilisation of a wide array of proven management tools and strategies.
To better explain the extent to which leadership in TQM is fundamentally founded upon knowledge-based acumen in strategic planning and decision-making, it is necessary to briefly overview the theoretical parameters of either.
2.1: TQM Leadership in Strategic Planning
The classical approach to strategy argues that it is a rational and deliberate process in which realised and intended strategies match (Mintzberg and Waters, Chapter 1 in Segal-Horn, 1998; Whittington, 2001; Wheelen and Hunger, 2005). In direct comparison, the evolutionary approach defines strategy as a creative and emergent process and, as such, is interpreted as a critique of the classical approach (Mintzberg and Waters, Chapter 1 in Segal-Horn, 1998; Whittington, 2001; Wheelen and Hunger, 2005).
TQM compromises between these seeming opposites, defining strategy as a blueprint for the means by which an organisation will realise its strategic goals, emphasising both rationalism and flexibility. Successful strategic planning, at the heart of which is an organisational leadership which displays commitment to rational and deliberate strategy during periods of intra- and extra-environmental stability and the flexibility required for the re-articulation/re-design of strategic plans during periods of crisis, change and conflict, is the primary determinant of an organisation’s capacity to satisfy its short and long-term objectives (Beaver and Prince, 2004).
The claim that the nature of an organisation’s leadership makes the difference between organisational success and failure is validated by empirical evidence. Reviewing the correlation between strategic plans which are responsive to intra- and extra-environmental conditions and leadership, on the one hand, and the relationship between positive financial/non-financial performance indicators and organisational leadership across 32 TQM IT organisations, Oakland (2003) forwarded a number of interesting findings.
Briefly stated 94% of respondents determined that profitability was immediately related to strategic planning while 91% asserted that organisational leadership both enabled and provided the framework for successful strategic plans. As noted, leadership enabled successful strategic plans through resource allocation, capacity to respond to crisis/change/conflict through the re-direction of the strategic plan in question, when and if needed, and through the dissemination of an interactive and communicative organisational culture in which management listens to its work force 9new ideas proposals) and has strong ties with the external environment (Oakland, 2003). In other words, leadership
is at the heart of successful strategic plans, a primary factor in organisational success.
2.2: TQM Leadership in Decision-Making
Within the context of TQM, the correlation between leadership and strategic plans which constructively contribute to organisational success, are paralleled/d by an empirically-validate relationship between leadership, decision-making and organisational success/ ability to survive crisis, change and conflict. According to Bhushan and Rai (2004), decisions impact the organisation as a whole and can function as either obstacles to, or enablers of, the realisation of strategic goals, hence the attainment of organisational success.
Involving the informed selection of one out of several options for action, effective decision-making needs to be a shared process but it must, paradoxically, also be a centralised one. In explaining the aforementioned, Bhushan and Rai (2004) note that decision-making needs to be a shared process in the sense that the various departments and mangers within the organisation present their proposals for solution (the need for decision-making implies the presence of a problem) and centralised in the sense that it is ultimately the organisation’s leadership which selects the most effective option among the many presented.
Empirical studies indicate that organisational leadership is at the core of effective strategic decision making, such as which guides an organisation through change, conflict and crisis, lending to the contention that acumen in decision-making is a testament to effective leadership. As outlined in a study supervised by the European Institute for Technology and Innovation (2005), a survey of 62 IT firms indicated that survival within this highly turbulent, ever-changing and intensely competitive market is, more often than not, a highly challenging endeavour which can only be successfully met if leadership has effective strategic decision-making skills.
This assertion was established through a review of failing and successful (TQM-oriented) IT firms. The 28 failing forms which were studied did not utilise TQM tools and strategies and, more importantly, eschewed the aforementioned paradigm’s decision-making models. Consequently, decisions tended to be borne out of crisis and reflected neither the cooperative/shared and centralised characteristics of the decisions particular to the 34 successful TQM IT firms reviewed. This, according to the European Institute for Technology and innovation (2005) is indicative of the value of effective leadership, on the one hand, and the correlation between decision-making acumen and effective leadership, on the other.
Bearing the foregoing in mind, a review of a number of examples drawn from the IT sector will, in practical terms, establish the relationship between effective leadership and strategic planning and decision-making acumen, as which leads to the maximisation of the organisation’s capacity to overcome crisis and realise its strategic objectives.
3: Practical Implications
The ultimate test for determination of the validity of theoretical claims lays in a review of their practical implications. For validation of the foregoing argument, that acumen in both strategic planning and decision-making is the mark of the effective leader, the leadership strategies deployed in both failing and successful organisations shall be analysed.
3.1: Failing Organisation – Sega case study
Originally a jukebox importer, Sega Corporation moved on to developing arcade machines, and then on to developing videogames consoles and software in the early 1980s. After enjoying considerable sales and success with their early consoles the Master System and its follow-up the MegaDrive, Sega then began to make a series of costly errors, directly attributed by critics to ineffective leadership and its persistent inability to utilize either strategic planning or decision-making(Gantayat, 2000). Evidencing the stated, Sega’s leadership decided that the solution to its crisis lay in the development and manufacturing of a new generation of videogame systems, the Saturn. It did so without either formulating an information-based strategic plan or by studying alternatives. The consequence was that, apart from the fact that very few, if any, software developers were willing to cooperate and design games for the system, the Saturn system was ultimately much more expensive than the system manufactured and marketed by Sega’s leading competitor, Sony (Harney, 2001). The Saturn was pulled out of the market and Sega has been reporting substantial losses ever since.
Sega’s problems are an immediate consequence of ineffective leadership, a leadership which has neither the acumen for strategic planning nor decision-making. As Gordon et al (2000) explains, it is not at all uncommon for companies which have successful past performance records to experience a downward spiral and in the majority of cases the reason lays in leadership’s commitment to the status quo, resulting in adherence to failing strategies. In other words, commitment to past, successful, strategies without accounting for changing extra-environmental conditions, including both industry and market factors, signifies leadership’s insistence on defining strategy as a rational and deliberate process and its stubborn refusal to consider that strategy must be simultaneously regarded as a evolutionary and developing process so as to allow for the flexibility required for constructive response to change, crisis and conflict.
Indeed, Sega’s leadership, believing that past successes could be replicated through adherence to past strategies, exhibited neither acumen in strategic planning nor decision-making (`Where Sega went,’ 2001). Indeed, Sega’s leadership’s incontrovertibly contributed to corporate loss and failure, not only because of its persistent failure to engage in information and knowledge-based strategic planning and decision-making but, because, in the absence of the stated,, the consequence was an atrophying corporate entity which operated in virtual isolation from its market, surrounding environment and industry trends.
As indicated through the Sega case study, the literature on the correlation between leadership’s effectiveness at both strategic planning and decision making and organisational success is applicable to real-world examples. At the heart of Sega’s failure is a leadership whose adherence to the status quo and whose commitment to failing strategies is symptomatic of the virtual absence of information and knowledge-based strategic planning and decision-making acumen.
3.2: Successful Organisations – Empyrean Management Group case study
Oakland (2003), Bhushan and Rai (2004) and Rad (2005), among others, contend that the true measure of sustainable organisational success is not leadership’s effectiveness at decision-making and strategy planning during periods of intra and extra-environmental stability but, the extent to wish leadership displays decision-making and strategic planning acumen during periods of instability, whether crisis, change or conflict. Despite opinions to the contrary, Empyrean Management Group stands out as an interesting case study in effective leadership.
Empyrean Management Group, a family-owned and managed recruiting and staffing company, had, almost immediate to its foundation, reported substantial successes, as measured through financial returns and attainment of strategic goals. As may be inferred from Dahl’s (2006) anatomical analysis of the company’s performance, much of its success was due to a leadership strategy, strongly suggestive of TQM. The company’s founder-majority owner, president, Michael Kalinsky, is deeply involved in both long and short-term strategic planning, on the one hand, and in both day-to-day and strategic decision-making, on the other. The running of the company was a shared responsibility with his brother-in-law, co-investor/founder and vice-president and, to complicate matters further, Kalinsky’s father-in-law was a major investor.
Divorce and deteriorating relationships with his brother-in-law lent to the development of a number of management and leadership problems. In the first place, Kalinsky’s firmer brother-in-law and vice president was increasing derelict in his duties with the consequence being an IRS audit. In the second place, Empyrean’s vice-president’s failure to oversee corporate accounts, as was his responsibility, led to the loss of the company’s most important client. Thirdly, disputes and conflicts between the co-owners/founders/the ex-brothers-in-law undermined leadership unity and coherence (Dahl, 2006). The company, in other words, was confronting a crisis, largely as a result of internal conflicts.
The key to conflict resolution, the re-stabilisation of the company and the re-capture of former successes lay in leadership’s reasserting itself and making the required bold decisions. Accordingly, Kalinsky decided to fire his brother-in-law and in the wake of that decision/action, formulated a strategic plan targeted at problem resolution, the re-articulation of corporate objectives and the design of the strategies required for the realisation of those objectives (Dahl, 2006).
While Kalinsky’s decision has been criticised by some who believe that other, less destabilising, alternatives existed (Dahl, 2006), the consequence of that decision both validate it and establish Kalinsky’s position as an effective leader. Certainly, alternatives to firing his vice-president may have existed but this decision quite effectively, and uncompromisingly, addressed the challenge Empyrean’s vice-president posed to leadership and, hence, organisational unity, not to mention intra-organisational conflict levels as which distracted leadership from adherence to strategies for the fulfilment of defined organisational objectives.
Accordingly, if measured in terms of that which it was supposed to resolve, on the one hand, and the impact upon financial performance on the other, the discussed decision and the strategies subsequently employed are indicative of an effective leadership which possesses decision-making and strategic planning acumen. Indeed, given that Empyrean re-captured its past successes in the wake of the discussed decision, this case validates the argument that, not only is effective leadership measured in terms of decision-making and strategic planning acumen, but effective leadership is at the very core of organisational success.
Proceeding from the above-argued, it is evident that TQM theory on the benchmarks of effective leadership is borne out by real-world cases. The intense competition which confronts practically ever corporate entity, regardless of the industry/sector within which it is located and the market which it serves, has maximised the importance of strategic planning, decision making and effective leadership. Indeed, it has culminated in the redefinition of effective leadership in TQM terms, whereby decision-making and strategic planning acumen have become the hallmarks of the effective leader. This is where management and OD theory stands and this is what real-world examples have confirmed.
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