Well-organized leaders possess a common characteristic; their capability to stimulate and inspire the followers to achieve valuable goals (Dubrin, 2010). The achievement of these goals is intensified after formulation of a strategic framework. This framework should consider the competitive environment, future uncertainty, human resource management, and financial management. In addition, leadership also involves being able to focus on a development of a plan through which the organizations operations will prevail in the future against uncertainty. However for many organizations, uncertainty has been a major challenge that has prevented these companies from implementing their future leadership assignments.
Dubrin (2010) further explains that well-organized leadership should enable the company to prevail against the competitive forces in the market and excel through increasing earnings. Bank of Thailand has for a long time excelled in its operations since its establishment in 1942 (Bank of Thailand, 2006). Operating various branch organizations in foreign countries is a clear prove of the company’s excellence spearheaded by the leaders from the head bank in Thailand. However, the trend has hardly been smooth in the New York Branch Bank. As a leader, I will comprehensively provide a background of this organization, the major challenges and a strategic approach for addressing these challenges.
Background of New York Bank of Thailand
Located in 29 Broadway New York, the Bank of Thailand is one of the many foreign investment organizations that have thrived and worked effortlessly to maximize profit in an environment dominated by giant banking Halls. The foundation of this organization can be traced back to the origin country where under the National Banking Act; the Bank started its operations in 1942 (Bank of Thailand, 2006). The leadership meeting that convened shortly after its foundation conclusively recommended for adoption of a skimming marketing strategy of business expansion. Although this strategy was perceived by many leaders as disastrous and with a high likelihood of collapsing the infant business, success was witnessed through opening of 14 more branches in Thailand within the first two years of operation (Zaccaro &Banks, 2004). However, venturing in United States has been a challenging investment. The major challenge has been the stiff competition against the already established banking organizations (Cummings & Worley, 2007).
In its operation, this organization has been involved with various roles which are inclusive of: management of the bank’s assets, acting as one of the registrar to the bonds belonging to the government, provision of banking facilities to the customers who include other institutional banks, establishing and supporting the system of payment, management of the foreign exchange rate of the country under the ForEx System, and monitoring the foreign exchange in harmony with the Currency Act (Bank of Thailand, 2006). The company is chaired by a board of directors headed by the governor; Mr.Prasarn Trairatvorakul. At the next rank is the remuneration and audit committee which is closely followed by the audit committee. At the lower levels are different departments which are inclusive of division of credit card, distribution and procurement division together with administration and support. The administration and support division incorporates credit management, technology division, research division, risk management division, and credit management division.
Adopted from the mission of the head bank in Thailand, the New York bank’s mission is to ensure that a stable environment is created to enhance sustainable growth of the financial economy (Bank of Thailand, 2006). In addition, being able to extend its operations beyond borders obviously qualifies this organization as an international company. Apart from Bangkok where various subsidiary offices are located, BOT has additional branch operations in all the Pacific Asian countries, North Europe, and United States. In addition, outrivaling the stiff competition is a clear depiction of success in the organization’s leaders. Dubrin (2010) explains that success is enhanced by comprehensive implementation of a strategy that addresses the issues requiring immediate action.
In foreign operations, various unique packages have been initiated to convince the already “taken” customers to choose the company’s services as opposed to other competitors. The most successful initiative was the 2009 reduction in the lending rates for business loans. This decision was reached through consultation between the leaders at the products and service department. After reducing the interest rates by 5.4%, the customers increased by 16% three months following the initiative. This initiative has however been countered by the competitors who have lowered their interest rates even further. These competitors include City Group Inc., Sun Trust Bank, Fifth Third Bancorp, Harris Financial Corp, GE Money Bank, and Commerce Banshares Inc. among others. With such a stiff competition, the future of business success in a foreign country remains uncertain (Bank of Thailand, 2006).
Being one of the highly adventurous organization (consider its ability to venture in a completely hostile business environment), this organization has attracted workers from diverse backgrounds. Laszlo (2004) notes that it is through exploring the unique and unforeseen opportunities that leaders can continually perfect their skills. As a result of uncertainty, leaders in such organizations are challenged to continually explore new ways through which the organizations returns can continually be sustained.
Problems currently facing BOT
With a management characterized with diversity, the New York branch of Thailand Bank has been able to engage its leaders in unending researches with an aim of exploring investment options that can enhance maximization on the returns. As various institutions equally explore for more unique and competitive packages through which they can win more customers, it is apparent that the leaders are facing challenges ahead if this organization has to prevail through this competition. Every other day the banks are reducing interest rates on lending of loans. Their marketing staffs are increasingly becoming aggressive in promoting the new products in an environment that is very familiar to them unlike this foreign bank that has to intrude the already established market field. Worse still, the main challenge has been exploring for new ways of staying in the competitive business environment.
During its financial year 2008, an Annual General Meeting convened by the organizations leaders projected a 35% increases in the profits before tax the coming year. Within the next financial year, the management embarked on a strategy that was geared towards achievement of this financial goal. These initiatives involved inclusion of two foreign managers from Thailand to spearhead the management of New York’s branch in meeting the desired goals. Mr. Parsaran Traitratvorakul, the governor of the Head Bank directed recruitment of three more investment managers who were later posted to the New York bank to assist in the implementation of the financial goal that was targeted by the company. However, these leaders failed to understand that the in visionary leadership, there is a variation in the styles of leadership from one situation to another. This fact is also supported by the Contingency Theory, which insists that leaders can be able to effectively shift from the already perfected skill to another in a different environment through more training (Bass & Bass, 2008). Therefore, although the two recommended leaders had successfully assisted the foreign bank to increase its financial performance, United States presents a completely different business environment requiring varying leadership approaches.
Description of leadership role
In this organization, the leaders have played a vital role when it comes to projecting the type of image required to enhance achievement of the set goals. Allio (2005) explains that the leaders help to improve the employees, stakeholders, and customers’ commitment. This commitment is enhanced when these parties share a strong vision through which rapid implantations can be instigated (Allio, 2005). For the vision to be transformed into reality, Allio (2005) adds that the leaders engage in roles of initiating, managing, and driving the change. Through this approach, they are able to revitalize the strategies, structures and policies, create a culture that is innovative, together with allocating the required resources (Arvey et al., 2006).
Leading the organization through change
According to Fiedler, the style of the managers’ leadership is usually determined by the extent to which this leader is task motivated or relationship motivated (Bass & Bass, 2008). Fiedler essentially emphasizes that the style in a leader is usually somewhat a long-lasting behavioral aspect and hence modification may be difficult. Looking at BOT, it is clear that the foreign leaders are exposed to a completely different environment which they can hardly adapt to in the short run. These leaders have perfected their skills to enhance effectiveness in Thailand business environment. Through these home grown skills, they have been able to enhance excellent performance in Thailand; performance clearly proved by the bank’s previous profit which increased from 2004 to 2005 by 46% (Cummings & Worley, 2007). It is also their excelling ability that has earned these leaders a recommendation to spearhead operations in a foreign country. Learning from this organization, it is apparent that once a particular style of leadership has been understood, they are supposed to uphold that particular skill. Therefore, changing the environment will be one way of reducing the effectiveness and ability to continue being highly productive (Benson et al., 2001).
Evaluation of leadership in the organization
Dubrin (2010) explains that visionary leadership is enhanced when the capability is considered from various aspects. One of these aspects is strategic management. Through this approach, there is a clear demonstration of the future envisioning by the effective leaders, execution of the strategic processes of management, and utilization of various qualities of leadership vision implementation (Manning & Robertson, 2002). For a comprehensive understanding of organizational leadership, let us evaluate the strategic management together with leadership behavior and personality.
Strategic management: In order for the organization to achieve strategic competitiveness and generation of a future that is viable, Benson et al., (2001) emphasizes on development of a strategic management process. In addition, Benson et al. (2001) explains that the future leaders are supposed to antedate, envision and uphold flexibility. In addition, they should be able to encourage other leaders to initiate the required strategic changes. Benson et al., (2001) has highlighted the most important component in strategic leadership as; defining the strategic trend, ensuring that the core competencies are explored and maintained, establishment of organizational controls that are balanced, and ensuring effective management of the organizations portfolio together with strongly insisting on ethical practices.
The leadership behavior and personality: In the leadership, Hitt et al., (2005) insists that there is an interrelationship between the follower, leader, and the situation. McCarthy, O’Connell, & Hall (2005) add that leaders are supposed to be aware of the adaptability and self-leadership in addition to responding to the challenges and crisis in an appropriate manner. Sashkin & Sashkin (2003) alternatively recognize three visionary leadership contexts. In the first context, the authors describe the visionary leadership characters as patience, confidence, persistence, independence, sincerity, honesty, creativity, and forcefulness. On the other side the characteristics of a visionary leader are inclusive of risk taking, mentoring, and appreciating others by giving them credit (Zaccaro, 2007). Sashkin & Sashkin (2003) conclude by providing the visionary context of culture building which is: creating attention, team involvement, commitment to aims, searching for information, having a clear understanding to the system, and understanding environment. When BOT incorporated new leaders from Thailand to spearhead the management of the New York branch, little was known by these managers about the requirements and business operations in a new environment. The strategies that were implanted during the 2010 financial year came from some of the best organizations leaders. However, these leaders hardly adapted to the new environment. The competitive forces had some dissimilarity with the forces that were experienced by the banks operating in Thailand. Therefore, the 6% growth in the profits before tax in 2010 financial year was largely attributed to leaders’ challenges of adapting to the new environment and lack of a visionary leadership strategy.
Resolving the challenges
According to the contingency model, it is apparent that the leaders’ skills are perfected to operate in one particular environment. Therefore, changing the environment and re-defining the roles have a high possibility of reducing the leadership effectiveness. This is the leadership mistake that was made by BOT when it incorporated foreign management in New York Branch.
Under the contingency theory, the normative decision model provide a resourceful guideline that can be adopted by the head leaders in the Bank on Thailand to ensure that the decisions made are not disastrous and are capable of supporting the organization to achieve the main goal which is profit maximization. The normative model provides a good strategic guideline which if effectively adapted can enhance success in the New York branch business operations. The first step in the normative model involves making an individual decision or sharing it with the close experts in the organization (Lussier & Achua, 2010). Consultation is highly emphasized on in this approach. Through consultation, the problem is presented by the leader to the members of the group with an aim of gathering their suggestion on the best solution (Dubrin, 2010). The decision to involve the foreign managers in the New York Branch was individually enforced by the governor from the head bank. Without prior consultation, the decision was hardly able to yield positive results. From the normative model, this leader was supposed to present the new idea and then assume the responsibility of being a facilitator. With a delegation team, the leader should have in addition allowed a collective decision making from the group (Dubrin, 2010).
In relation to uncertainty, Laszlo (2004) insist on building future leaders who can be able to persistently change the direction, capabilities, and structure of the organization. This is the only approach through which the organization can foresee and adapt to the ever-changing demands from the internal and external customers (Moran & Brigntman, 2001). In addition, these future leaders will be able to establish an environment involving people in the process of change. These people are hence encouraged to have a new mind set, transform the old expectations in favor of the new assumptions, and overcome the change resistance. Moreover, Laszlo (2004) insists that the power to change in response to the future events will be enhanced by the people’s participation. To reduce uncertainty in the future leadership, the same author emphasizes on the leader’s change agent roles. These roles are inclusive of collaborating with other leaders to solve emerging problems, identification of alternative investment opportunities to explore in case of future failure of the existing business trend, and researching for more facts on the existing business (Laszlo, 2001; Spillane et al., 2004).
Currently, BOT New York branch is effortlessly exploring for the best way through which leadership can be enhanced. Through application of the contingency theory in the organization, it is possible for a leader-member relationship to be developed (Dubrin, 2010). This will be a milestone towards addressing the major challenges experienced as a result of making individual decisions from the top level (Hernez-Broome & Hughes, 2004). Involvement of more staff in the leadership roles will in addition be a way of building visionary leaders that can be able to develop long term strategic plans for the organization therefore overcoming future uncertainty.
Conclusion and Recommendations
After a comprehensive examination of the management operations New York branch, it can obviously be concluded that effective leadership results in enhanced performance. In addition, leadership effectiveness can be portrayed through improved financial performance. From this case, it is apparent that as a result of change in environment, the leader’s performance is highly likely to deteriorate.
The challenge of future uncertainty needs to be addressed. This will be enhanced by ensuring that the leaders are able to evaluate various scenarios in the future. In addition, the leaders are supposed to focus on the opportunities that are emerging. Furthermore, the leaders in this organization should divert the skills and resources in adapting to change, transforming the vision into plans that are tactical and strategic, together with influencing and motivating the subordinates. Considering the intensity of competition in this foreign country, BOT needs to divert its leadership improvement initiatives and visioning skills if the visionary leadership in this bank is to be achieved.
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