Leadership Issue: Healthy Firms And Performance

746 words - 3 pages

The 2008 Great Recession spurred unprecedented deviations from conventional business practices and performance standards worldwide. Leaders were forced to operate in a new reality where traditional means of attaining competitive advantage failed beneath encumbrances of unfamiliar change catalysts, reshaping global economies, and an ambiguous future. By 2010, hard management methods of driving performance were no longer effective, business cultures were crumbling, and leaders needed new mental models toward which to direct revolutionary change if their companies were to endure. Consequently, today’s most pressing leadership issue is how to transformatively drive organizational health as an innovative strategy to improve performance and gain competitive edge. This writing sample contains argument, research, and analysis to support the thesis, formatted according to American Psychological Association style.
Leaders use performance to define a firm’s success; leaders deliver performance to stakeholders through competitive advantage. In 1982, Peters and Waterman identified 43 companies as premier U.S. enterprises primarily by their performance. In 1994, Collins and Porras recognized 18 more businesses as having staying power based on their performance. Yet by 2006, and prior to the recession, 20% of the 61 companies had failed, 46% were struggling, and only 33% were thriving (Keller & Price, 2011a). The 2008 recession crushed leaders’mental model of hard management for gaining competitive advantage and forced them to focus inward on their firms’ organizational health for answers.
Organizational health refers to a firm’s ability to innovate, calibrate, and execute faster than its competitors while sustaining outstanding performance over time (Quick, Macik-Frey, & Cooper, 2007). Lencioni (2012) described organizational health as the new mental model leaders needed to lead their organizations toward continuously renewed performance over time. Lencioni found firms led by transformative leaders who worked on cultural health factors such as low turnover, high ethics, minimal politics, high morale, minimal confusion, and high productivity had a significantly greater ability to sustain performance over time than firms whose leaders focused on the hard business aspects of strategy, marketing, finance, and technology.
Ehtesham, Muhammad, and Muhammad (2011) found an empirical correlation between performance and business culture leadership at a .99 confidence level. Surveying over 600,000 employees in over 500 firms worldwide, Keller and...

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