Carlos Ghosn is a French businessman born in Brazil. Ghosn is currently the Chairman of Nissan Motor Co. Ltd, a position he has held since 2008. Ghosn also served as the president and the Chief Executive Officer (CEO) of Nissan since 2000 and 2001 respectively. Apart from holding leadership positions at Nissan, Ghosn is also the president and the Chairman at Renault Motor Ltd. Among the leadership, decisions that threw Ghosn into the limelight include spearheading downsizing and closure of several factories at Nissan which culminated in the turnaround of the company (Magee, 2003).
Ghosn’s leadership style
As Nissan Ltd CEO, Ghosn believed in transparency and openness. He was democratic enough to empower those under him to achieve their targets by welcoming their suggestions. For example, he toured Nissan plants in Japan as well as in other parts of the world after taking over as the chief operating officer (COO) at Nissan. The familiarization tour aimed to determine the problems faced by employees and the possible solutions (Rivas-Micoud, 2006). This gave the employees a chance to determine ways of putting a stop to the problems they faced. This is one of the character traits exhibited by democratic leaders who take employees input seriously.
Ghosn believed in empowering employees to stay motivated. This would enable them to assimilate the company goals. As the CEO at Nissan, Ghosn believed in transparency. For example, all the company’s problems were stated (at the beginning of his stint at the helm) and measures of addressing them. This arose from his belief that by giving the real picture of the company, the media and the staff would buy into the steps undertaken to resuscitate the organization.
Ghosn respected people’s culture and believed that every culture is unique. For instance, he learned Japanese language, which enabled him to settle into the Japanese environment. Ghosn very well knew about respecting the diversity of various cultures. This made him use various approaches to do business in other regions. For example, in order to penetrate into European and North America markets, Ghosn changed Nissan’s official language from Japanese to English (Ahlstrom & Bruton, 2009). Ghosn was also people oriented. He was always with the co-workers and interacted with them often. He always lets the workers know how much they had contributed to achieving the goals outlined. His firm belief in use of people skills is exhibited in his desire to establish cross-functional teams. This would foster communication and collaboration between employees and various departments in an organization.
Ghosn is a transformational leader. After being appointed the CEO at Nissan, Ghosn spent three months to examine the business aspects that had made the company a failure. The company lacked vision and leadership. This prompted Ghosn to organize cross-functional teams that were meant to spearhead new corporate culture. He always believed that a strong team works cross-functionally. He spearheaded change of corporate culture at Nissan. He applied situational leadership. This involves adopting strategies that can let the situation at hand be successful.
Ghosn’s effectiveness as a leader
Ghosn used transformational leadership to make Nissan a success story. Before joining Nissan as the chief operating officer in 1999, the company was making losses and debt had stood at $ 20 billion. Out of the 48 company models Nissan had at that time, only three were making a profit. Before taking over as the CEO at Nissan, the company had struggled for eight years without making a profit. The costs of manufacturing were too high, and the profit margins were low. Nissan’s product innovation was not effective, and the company struggled to compete using outdated models. Collaboration and communication between the departments was low (Daft, 2007).
Ghosn was bold enough to defy the corporate culture at Nissan and push for downsizing of the company jobs. Ghosn reduced the workforce by 14 % and cut down 21,000 jobs. Ghosn was also bold enough to push for shutting down of some domestic plants, and auctioning of the company’s assets, such as its aerospace unit. Although these decisions went against the public opinion at that time and caused public outrage, within a year, the company’s profit jumped to $ 2.7 billion. This was compared to a $ 6.1 billion loss made in the previous year. After three years at the helm, Nissan was one of the profit making automobile makers in the world. The company’s operating margins rose to 9 %, a figure which was twice the industry average (Gaspar, 2005).
As the Nissan CEO, Ghosn also spearheaded the change in the corporate culture at Nissan. For example, Ghosn changed the company’s official language from Japanese to English. The company also positioned itself in Europe and North America by taking executives from those geographical areas. This made the company make inroads in Europe and North America markets. Such a feat would not have been achieved without change of official language from Japanese to English. Ghosn also ended Keiretsu – a Japanese operating model which involves companies doing business with other companies with cross-holdings (Magee, 2003).
Initially, the company relied on a company with cross holdings at Nissan for spare parts. This had culminated into loses at Nissan. After doing away with the Keiretsu, the company’s manufacturing costs came down, and the profit margins rose to 9 % within three years. This made Nissan be back on its feet once again. Although Ghosn’s leadership was quite transformational and went against the established corporate culture at Nissan, it was phenomenal in turning around the company fortunes.
Leadership traits Carlos Ghosn exhibits
Ghosn exhibits various leadership styles; he is a democratic, transformational leader who lets his team do the job while monitoring them closely. Carlos Ghosn is a democratic leader. Democratic leadership follows the tenets of inclusiveness, and equal participation in decision making. The leader believes in the empowerment of the employees and takes the subordinates seriously. This encourages communication at all levels of the organization and motivates the employees to perform. As the Nissan COO, Ghosn toured various plants in an attempt to understand the employees’ problems. During the visits, he encouraged the employees to come up with means of solving the problems. Before Ghosn took over Nissan, there was little or no communication at all between the employees and the departments. Through the adoption of cross-functional teams, he facilitated communication and interdepartmental collaboration (Daft, 2007).
Transformational leadership was another aspect of Goshn’s leadership style. This involves rallying employees towards the vision and goals of the company. It may involve sitting, with the employees, to come up with a challenging vision and establishment a strategy to achieve the vision. The plan is the implemented through maintaining confidence and optimism that everything would be implemented. The situation at Nissan required a dramatic change. The turnaround at Nissan required Ghosn to implement a plan that would make the company rise make profits, compete effectively once again and cut costs. This was facilitated through sacking of many employees, shutting down some factories and changing the organization culture. During his stint at the helm, 21, 000 jobs were downsized, and the Keiretsu culture came to an end. The Nissan revival plan was implemented and brought favorable results (Ahlstrom & Bruton, 2009).
Laissez-faire leadership is another aspect of Goshn’s leadership. The premise of this leadership style is the leader allows the team members to work on their own while monitoring them closely. The leader then monitors by allowing the executives to report to him/her regularly. Ghosn formed cross-functional teams that would be given a task to complete. This gave the executives to choose the best means of achieving the target. This leadership style motivated the employees and facilitated collaboration between various departments.
Ghosn exhibits people-oriented leadership. People oriented leadership involves focusing on organizing, and developing people and their teams.
This facilitates teamwork and creative cooperation. In the Nissan Revival Plan, he brought his executive team together and established cross-functional teams. He empowered his teams to make a choice on the best means of achieving their target. He also lets his teams know how they contributed to the goals of the company. The teams made up of individuals from various departments to focus on tasks that were not necessarily areas of their specialization. This enabled them to look beyond their own domains and have a vision that would incorporate other areas, as well. This tore up the structural barriers in the organization. Communication links were opened, and soon the company was thriving again.
Ahlstrom, D., & Bruton, G. D. (2009). International Management. Stamford : Cengage learning .
Daft, R. L. (2007). Management. Stamford : Cengage Learning.
Gaspar, J. E. (2005). Introduction to Business. Stamford : Cengage learning .
Magee, D. (2003). Turnaround:How Carlos Ghosn Rescued Nissan. New York : HarperBusiness.
Rivas-Micoud, M. (2006). The Ghosn Facto: 24 Lessons from the World's Most Dynamic CEO. New York : McGraw-Hill Professional.