ShopbizShop: Emotional Intelligence Training & Business Leadership Reviews

The Six Stages of Real Power

2005-08-21T16:54:00.000-07:00

Janet Hagberg's lifework is an application and combination of these disciplines: psychology, spirituality and organizational empowerment. In Real Power, she mentions six stages.

Stage 1: Powerlessness is characterized mostly by a nagging feeling of being stuck, tied down with no relief (p. 1). You may also feel helpless but not hopeless, uninformed and with low self-esteem. She offers ways to get out of this stage by using these resources or engaging in any of these: Build self-esteem,confront your fears, appreciate and share yourself, talk with your boss or change jobs, get support, develop skills, get into treatment or counseling.

Stage 2: Power by Association. In this age, you may be dependent on supervisor. You are an apprentice who is learning the ropes and the culture. You may have a new self-awareness. The ways to move out of this stage are to: find a mentor, get feedback, be competent, get credentials, take risks, develop your ego, develop network, take care of yourself, do something on your own, examine your image, take on the masculine if necessary.

Stage 3: Power by Achievement. Some of the characteristics are a mature ego and to be ambitious and competitive. One of the ways to move out is to accept the potential change. Stage III people love symbols of success. For example, they like body proportions, a great tan, birth of a child, award/certification, title, MVP, prestigious car and owning a home (p.45).

Stage 4: Power by Reflection. Stage IV people have moved beyond being defined by what they have accumulated. they are more likely to "reflect more accurately than every before on their own competence and their own style of operating, as opposed to organizational style" (p. 73). They are more likely to be chosen as mentors.

She recommends to hit the wall. The characteristics of the wall are: finding intimacy with your core, letting go of control, moving beyond your intellect, glimpsing wisdom etc.

Stage 5. Power by Purpose. It's characterized mostly by self-acceptance, courage, calm, serenity, generous in empowering others, confident of life calling, humility etc.

Stage 6. Power by Wisdom is characterized mostly by compassion for the world, quietness in service, powerlessness, Integrating shadow, unafraid of death etc. The catalyst for movement is humanness. (www.janethagberg.com)

It's interesting to find out that powerlessness is also found at stage 6. As shown in stage 3, there's always this continuous effort to obtain material goods. After obtaining them, we tend to want to go higher on Maslow's hierarchy of needs. It's appropriate to paraphrase King Solomon who wanted wisdom and a just measure of material possesions in order not to feel tempted by them.

The Sarbanes-Oxley (SOX) Act: Benefits and Change

2005-08-21T14:59:00.000-07:00

What are the benefits?

Sarbanes-Oxley Act is a system of federal oversight of corporate accounting practices. It makes fraudulent financial reporting a criminal offense. It strengthens penalties for corporate fraud. It requires corporations to establish codes of ethics for financial reporting and develop greater transparency in financial reporting to investors and other shareholders. It creates greater accountability for managers and is a good tool in the hands of investors and shareholders whose faith is renewed. Once for all, corporations will have to assume greater responsibility for their decisions and actions.

How does it impact ethics at work?

It’s incumbent on senior management to lead by example, create a code of ethics that employees and boards of directors can follow. Leaders who had previous ethical problems can not be part of the ethical committee. The law requires top managers to certify that their firms’ financial reports are complete and accurate, making CEOs and CFOs personally accountable for the credibility and accuracy of their companies’ financial statements. It forbids loans to senior managers or any other employees. There are new standards of ethical behavior in business and new rules for auditors and accounting firms. The law attempts to eliminate conflicts of interest by prohibiting accounting firms from providing both auditing and consulting services to the same client.

How did it come to be?

This law came about as a direct response to the outrage over the accounting scandals involving companies such as Enron, WorldCom, Tyco, Adelphia, Kmart and hundreds of other businesses.

What has it changed?

The new law eliminates conflicts of interests, prevents accounting firms from giving both auditing and consulting services, makes CEOs and CFOs more accountable, renews investors and shareholders’ confidence, requires code of ethics for senior financial officers. The code must be registered with the SEC. It mandates “whistle-blower protection” for persons who disclose wrongdoing to authorities, establishes a ten-year penalty for mail/wire fraud. In all, it prohibits corporations from making offering loans to officers of board members.

Rise and Fall of Enron, Power Failure, Cheating Culture Fueled by Consumerism, Conspiracy of Fools: The Faces of Ethical Failure

2005-08-13T22:31:00.000-07:00

With major titles and subtitles, Fortune has a great coverage of the Enron meltdown. It has a photo essay and behind-the-scene scoop on the energy company that knew boom and bust. "Greed, Love, Sex and massive amount of Ego," "Employees are the best line of defense," "Strip clubs, Daredevil trips and $1 million paychecks," "What Does Andy Fastow Know?" and "Partners in Crime" are some of the titles you will be pleased to read. If you want a subscription to read them, it will be worth it. Fortune is a good magazine that I have been reading off and on for the past 15 years.

Advantages and Disadvantages of a Centralized organization structure

2005-06-02T15:55:00.000-07:00

In the Centralized organization, the CIO is described as the head, the gatekeeper, the one from all the functions descend. He manages all relationships outside the organization's borders. The CIO of such an organization decides which work will be carried out and who will do it. He/she may use mechanisms such as alliances, liaisons or relationship to meet his goals or facilitate relationship.

The benefits of a centralized IT organization are as follows:

Mechanism provided by single IT group to share expertise and learning (Knowledgeable colleagues and ready peer group are available for problem solving)
Clear career paths and training programs are established
Oversupply of staff can cause skill redundancy with staff capable of substituting for each other; support and consistency in cases of emergencies and unexpected turnovers.
Managers who are experts in information technology and familiar with the projects carry out employee evaluations
Easy definition and promulgation of standards throughout the organization
A centralized organization is not criticism-free. Here's a list of the major criticisms:

Centralized Organization is unresponsive to individual business unit needs (a sense that the centralized IT organization's first priority is to headquartes and other functions of the company must stand in line)
There is no one in the centralized organization who really understands the business area. There are no functional experts. Everyone is a technical specialist and a business generalist.
Centralized organization can become insular and unaware fo the world outside its borders, yet still within the firm. It has a language and a culture of its own.
A tendency to form an invory tower mentaliy because the IT professionals become focused on perfection rather than solving the business problems.
If these perceptions linger despite the efforts of a talented IT manager, the relationship between IT and the business will ultimately be damaged. There is no way that alignment of IT with the business will happen.

The CIO must work laboriously to remove these perceptions from his IT team. In the end, no perfection will be meaningful if the company is not getting a good ROI.

Scholarly Writing vs. Popular Writing: Daniel Goleman, Lonergran, W. Edwards Deming in Servant Leadership

2005-05-28T11:41:00.000-07:00

Abstract

There’s no doubt that measurement is at the center of science. To measure, we need to experience and understand. That automatically connects with our innate desire to know and find out. This desire is sometimes summarized as PUDK, Pure Unrestricted Desire to Know. The question is how we structure our experience. Through previous experiences and insights of other scientists and researchers, we should be able to test and replicate the same experiment. It goes without saying that the scholarly community has its own goods of order referred to as L2. What makes scholarly writing different from non-scholarly writing? We hope to compare and contrast these two types of writings in this essay. We may ultimately uncover the relationship between scholarly writing and leadership and find out what role ethics plays in both.

Curiosity is at the basis of the human experience. It drives our quest to find out. That’s why many scientists and researchers spend a huge number of hours and years conducting researches, testing and investigating conventions and other data. According to Canadian philosopher and theologian, Lonergran, cognitional activity deals with our curiosity, our desire to know. We ask questions. The PUDK is defined as a “dynamic that is immanent, that inheres, that is permanently present in us…”
To better grasp the concept of scholarly, we must take a look at how knowledge itself is generated. We get to a certain knowledge of something by asking questions. Therefore, the purpose of writing any scholarly papers is to share knowledge. In some cases, it could be to bring more attention and focus on a particular issue which has been written about or to discard any doubt in light of recently uncovered data. For example, Daniel Goleman et al. who have come to publish many books and articles on the characteristics and value of EI was not the one who pioneered the research into this area. His books only served to popularize the theme. In this case, the first major instigator of emotions in organizational behavior was Arlie Hochschild (1983). He introduced the concepts of emotional labor and emotional work.

What is scholarly writing? What’s non-scholarly writing?

Scholarly writing is supposed to be more than inspiration. It has to be clear, written according to the conventions of the scholarly community. Such writings can be replicated. In other words, subsequent researchers must be able to retrace and conduct the experiment using the same variables to arrive at the same conclusions. Scholarly writings usually make use of theories and hypotheses. They are rigorous. They use an operational definition. Scholarly writing is explanatory in that it compares things to each other. However, non-scholarly writing is often said to be popular. The non-scholarly writing is descriptive. This may be why Daniel Goleman had some critics even among scientists. He wrote in a very popular style which catapulted him to the bestseller lists after writing for the New York Times. That’s why we find the structure of references, citations, clarity, definitions which help compare things to each other in the scholarly writing.

Teaching LED608 at National University, Professor Daniel Mayer said that “the intellectual pattern of experience seeks the explanatory. This leads to the definition of measurement. It’s a key of relating things to each other.” Measurement also allows us to reach a certain knowledge of things. “To know anything, you need a subject to experience, understand, judge. When it’s explanatory, it’s any subject. When it’s descriptive, it’s this subject.” (BB/Class notes)

Adhering to the rules of scholarly writing will force one researcher to list his sources. This will also lead to another benefit. The researcher will most likely refrain from plagiarizing. This leads to the ethical intersection between leadership and writing. We also know that the scholarly community upholds the goods of order (L2). To understand in ethics is to understand L1, L2, and L3. By plagiarizing, we are conveying the clear message that we don’t want to ask to ask pertinent questions. How can we assume to be researching if we don’t make any efforts of inquiry. Ethics must be at all three levels: individual goods, goods of order and goods of value. Just like in Leadership, we want a recurrence of abiding by the rules if we want our work to be taken seriously. After all, judgment takes place in a scheme of recurrence.

As I am about to complete this class, I can look back on the value of research whose foundation is measurement. Leadership is also about measurement, the type of which gives autonomy to subordinates or employees. I learned about the guru of quality, Deming, who advocates the elimination of fear, quotas and objectives. People will strive to meet them, regardless of quality. I learned that it’s important to eliminate fear if we want good quality. Servant Leadership helps eliminate fear in the followers by helping the followers to help themselves. Servant leadership takes away the fear of failure, fear of repercussions, fear of inadequacy. I also learned that to be an effective servant leader, I can not simply jump from L1 to L3. I must go through L2. With the article on The Work of Leadership by Heifetz, Ronald and A. Laurie, I learned to cope with my adaptive challenges. In fact, they were numerous all throughout this class. “Leadersh have to see a context of change or create one. They must be able to identify struggles over values and power…”
Doing research in Organizational Leadership is very important because it allows the researcher to uncover, find out the theories, hypotheses, models and problems raised by other Leadership pioneers. If leadership is about getting things done, there are many ways about getting done. Each time someone conducts a research, more knowledge is brought to the field.

Doing research in Org. Leadership allows to review the writings of psychologists Peter Salovey and John Mayer, who studied why some bright people fail to be successful. They are considered the pioneers of Emotional Intelligence. Research in this area will automatically lead to Daniel Goleman, a science writer for the New York Times. He argues that success in life is based more on one's self-motivation, persistence in the face of frustration, mood management, ability to adapt, and ability to empathize and get along with others than on one's analytic intelligence or IQ. As we do research in Leadership, we will be able to build on the findings of previous researchers.

As Max DePree said, "Leaders are responsible for future leadership."

It's important to continue doing research in Leadership.

References

Goleman D, Boyatzis R, Mckee A. Primal Leadership: Learning to Lead With Emotional Intelligence. Boston, Mass: Harvard Business School Press: 2002: 3-20.
The Lonergran Institutue. About page. Retrieved and bookmarked on May 12, 2005 from the World Wide Web: http://www.lonergan.org/Online_Books/cronin/8.htm
Mayer, D. L (2005). LED608. BB/Class/Lecture notes on Bernard Lonergran. National University. http://www.nu.edu.
The W. Edwards Deming Institute. About page. Retrieved on May 24, 2005 from the world Wide Web. http://www.deming.org/theman/biography.html

MegaMerger: America's West and US Airways Merged

2005-05-20T08:12:00.000-07:00

Does this merger between America's West and US Airways represent a challenge for Southwest in the low fares market?

Yes. But as always, Southwest will win over the competitor. Southwest has created the niche market and will be able to devise new marketing techniques to attract the customers.

America's West has a strong clientele base in the West. US Airways which would have to declare bankruptcy without the merger is particularly strong in the eastern part of the country. This merger is a lifesaver for the company. It will take time before any real benefits are seen since the culture of both companies has to be merged.

In the meantime, other low fares competitors such as Jet Blue and Allegiant Air may have been working hard on keeping their customers.

Who is benefitting? Regular fliers are benefitting. With more competition in the air, we, consumers, can only benefit. Let's wait and see what's going to happen in the next few months.

Leading Organizations With Emotions:

2005-05-18T21:08:00.000-07:00

Abstract

Without any doubt, Emotional Intelligence has been studied by many Leadership scientists, psychologists, and even behaviorists in an effort to help identify the set of traits and skills possessed by effective leaders. Needless to say that it has been the subject of numerous heated discussions and controversies! Various researches have shown that EI is a valid component and attribute of the transformational leadership. Some of the studies have even shown that those with high levels of emotional intelligence have greater career success, develop stronger personal relations, have far superior leadership skills and lead a healthier lifestyle than those with low emotional Intelligence, often referred to as EQ (as in Emotional Quotient, differentiating from IQ). Those who believe in the full potential of EI embrace its promising qualities and capacities to help create personal and organizational success, develop trusting and honest relationships, give rise to a fearless working environment, promote open communications that lead to high organizational performance in a global market specifically marked by conflicts born out of constant change. No wonder that many individuals and companies have jumped on the bandwagon of EI and found both success and profits.

Leading Organizations with Emotions

In these times of rapid global change, mergers, re-engineering, restructuring, technological advances quickly rendering skills and technology obsolete, any company that cares about its shareholders and a viable future will embrace most gimmicks to give it a competitive edge, a clear advantage over its competitors. The application of EI-related traits and capacities is known to make a huge difference in the bottom line of many businesses. Since Leadership is about interacting with others and getting things done, we can see how important it is for organizational leaders and employees to have what is commonly referred to as “good people skills.” Followers want to see transformational leadership. They want to see a leader who leads with passion. Being able to lead with emotions will have the potential of creating a collaborative environment with a far greater output. How can EI influence Leadership? Do emotions precede Cognition? What are the EI-related traits or skills most responsible for the emergence of Leadership? In other words, it is fair to examine the effect of EI on personal and/or occupational success and effective leadership. The aim of this paper is to explore not only the relationship between EI and effective leadership, but also, the possibilities of developing a successful career, great relationships in life and contributing to organizational success.

What are Emotion and EI?

A quick review of the organizational literature will reveal that it has been dominated by a cognitive orientation (Ilgen & Klein, 1989) with feelings being ignored or being seen as something that gets in the way of rationality and effective decision making (Albrow, 1992). In her paper, Jennifer set out to show how leadership theory and research have not adequately considered how leaders’ moods and emotions influence their effectiveness as leaders. She quickly mentions two preliminary studies that suggest that leaders’ feelings may play an important role in leadership. Furthermore, studies have shown that there had not been too much interest in the exploration of the effect of Emotional Intelligence on Leadership. The existing studies tend to provide lots of details about “what leaders are like, what they do, and how they make decisions, the effects of leaders’ feelings or their moods and emotions and, more generally, the role of emotions in the leadership process are often not explicitly considered in the leadership literature, with the notable exception of work on charisma (e.g. Conger & Kanungo, 1998; Lindholm, 1990).
In Latin, Emotion means, “the spirit that moves us.” According to some researchers, our emotions, as much as or more than our minds, contain our histories- every chapter and verse of every experience, deep understanding, and relationships in our lives. Others state that they make up who we are, and they enter our human system as a source of energy that radiates and resonates.

The Role of Feelings in Human Interaction

Fortunately, more and more leadership researchers are focusing on the interaction between moods and emotions. Let’s take a deeper look at the definition of these feelings. Moods are pervasive and generalized feeling states that are not tied to the events or circumstances which may have caused the mood in the first place (Morris, 1989). Moods are relatively low intensity feelings which do not interrupt ongoing activities (Forgas, 1992a.) On the other hand, emotions are high intensity feelings that are triggered by specific stimuli (either internal or external to the individual), demand attention, and interrupt cognitive processes and behaviors (Forgas, 1992a; Morris, 1989; Simon, 1982). Jon L. Pierce and Jon W. Newstrom said, in “Leaders and the Leadership Process, “Emotions tend to be more fleeting than moods because of t heir intensity. Emotions often feed into moods so that, once the intensity of an emotion subsides because the individual has cognitively or behaviorally dealt with its cause, the emotion lingers on in the form of a less intense feeling or mood.”

Feelings have been shown to influence the judgments that people make, material recalled from memory, attributions for success and failure, creativity and inductive and deductive reasoning . (Pierce et al, 2005).
When people are in positive moods, for example, their perceptions and evaluations are likely to be more favorable, they are more prone to remember positive information, they are self-assured, they are likely to take credit for successes and avoid blame for failures, and they are more helpful to others. Positive moods have been found to enhance flexibility on categorization tasks and facilitate creativity and inductive reasoning (Isen et al., 1985, 1987).

Several modern industries have asked their leaders to check their emotions at the door. By that, they undoubtedly place more emphasis on the analytical part of the brain of these leaders. Their mind becomes more valuable than their heart. For example, leaders in health care have been educated, selected, promoted, and retained based on their analytical and creativity skills. “Today’s health care leaders must also have emotional intelligence. Emotional intelligence is primal for passion. Emotional intelligence, which leads to passion, is crucial to the survivability of today’s health care organizations,” stated Llewellyn E. Piper, PhD, Onslow Memorial Hospital Jacksonville, NC. Piper notes that passion is an emotion that is as powerful as love (Goleman et al., 2002). Without passion in the followers, the passion of the leader will fail to be ineffective. Passion is applied to leadership to inspire followers. It makes sense that leadership itself is about entrusting others with the ability to carry out specific projects, motivating them to get things done. Through passion, leaders and followers become more motivated to accomplish the mission of serving others, including customers and suppliers. J. Collins proposed the following: “To go from good to great, organizational leadership must instill passion. This passion comes from emotional intelligence. As the logic goes, to have a great organization, the organization must have great people, and essential to greatness is leadership that inspires followers through passion.”
How can we better grasp the power of passion? We have to take a look at the role of the cognitive function.

Cognition is about how the brain functions in processing information from the environment. It is about how a person perceives, learns, remembers, and thinks. So passion is an emotion that is triggered by the way a person perceives the stimuli from the environment. The basic stimuli are related to the senses of vision, hearing, taste, smell, and touch. Passion evolves from the way the person receives and interprets these stimuli. How the person remembers these experiences, and how the person thinks about these experiences (Goleman et al., and Sternberg R.).
Furthermore, we stumble upon the phenomenon of Nature/Nurture championed by two Greek philosophers. They may help us understand better how humans interact with the environmental stimuli. Aristotle and Plato, the student of Socrates discussed how a person receives and responds to these stimuli. Aristotle believed that behavior is determined by the environment. As for Plato, he believed that humans have inborn innate qualities that direct how they perceive, learn, and think. Plato believed that human behavior is determined by nature.

Another look at the concept of cognition allows us to grasp that “intelligence is the ability to process information, to learn from the experience of the information processed, and to adapt to the environment. Intelligence is a multifaceted construct that includes more than academic and practical abilities. It includes the ability to perform well in academics. It also includes spatial intelligence, musical intelligence, word fluency, verbal comprehension, sociability, and reasoning, to mention just a few (Anastai, 1997). Consequently, Sternberg, Anastai and Urbina concluded that a person may have one or more specific types of intelligence; one type may be more dominant than another. How can we afford not to take a holistic approach to leadership?

Neurosurgeons and other scientists examine the functional areas of the brain and found out that the fontal lobe is responsible for logic, thinking, reasoning, and judgment. It takes care of concrete thinking, abstract thinking, and creativity. In that mindset, leaders have been selected and promoted based on their analytical and visionary abilities. Little or no thought has been given to the emotional part of the brain that drives passion. The limbic system is the force behind our passion or emotions (Carlson, 2002). It is believed that there exists a crucial emotional regulatory circuit that runs from the prefrontal region of the brain to the amygdale of the limbic system. While the amygdale is the single most important part of the brain for the expression of emotional responses, the orbitofrontal cortex, which is located at the base of the anterior frontal lobes, plays an important role in emotional behavior by affecting a variety of behaviors including emotional responses organized by the amygdala. The question to ask is why leaders should not use this portion of their brain (Carlson, 2002).

How can we appreciate the relevance and role played by emotions in predicting cognitive skills?

Studies conducted by other researchers focusing on the brain have determined that emotion precedes or at least accompanies cognition and thus, emotion and affective information provides a unique source of information that can improve cognition (Dickman & Stanford-Blair, 2002, Zajonc, 1998). It is true that scholars have long recognized the relevance of cognition to problem solving and leadership. Unfortunately, the relevance of emotion has been historically discounted (Salovey et al., 2000). At this point, it’s worth noting the key difference between cognitive skills and emotional intelligence. “Emotional intelligence involves the integration of emotion with thoughts, enabling one to understand what others are feeling, while cognitive skills involve integration, organization, and ordering of thoughts,” wrote Goleman in 2001. Even for the emergence of leadership, research has shown that the budding leaders must be able to take in and understand emotional information. This brings us to the notion of self-monitoring which is also an aspect of EI. Researchers such as Kenny and Zaccaro describe leadership in terms of self-monitoring which refers to the ability and willingness to read verbal and nonverbal social cues and alter one’s behavior accordingly (Snyder, 1979). High self-monitors (HSMs) are adept both at reading social cues and at regulating their self-presentation to fit a particular situation. Whereas low self-monitors (LSMs) lack either the motivation or ability to regulate their self-presentation (Dobbins G. H. et al., 1990).

What’s EI all about?

We’ll take a look at its definition by various researchers and its specific characteristics.
Emotional Intelligence is defined as one’s ability to accurately identify, appraise, and discriminate among emotions in oneself and others, understand emotions, assimilate emotions in thought, and to regulate both positive and negative emotions in self and others (Mayer, Caruso, & Salovey, 2000; Salovey & Mayer, 1990). A major component of EI is empathy which is defined as actively seeking to identify with another’s emotions so that one experiences oneself to be similar to or nearly identical with the other person (Sally, 2000). Goleman, Boyatzis, and McKee argue that emotional intelligence is what is needed to lead. “Great leaders move us. They ignite our passion and inspire the best in us…Great leadership works through the emotions,” they state. This passion in leadership comes from the cognitive ability of emotional intelligence. Leadership scientists refer to this cognitive ability as the ACE factor (A for analytical ability, C for creativity ability, and E for emotional ability). Isn’t it high time that executive boards, CEOs and company recruiters take a holistic approach to leadership? Goleman et al. go a few steps further. They state that the role of emotions in the workplace is powerful. It can invoke anger and hostility, doom and gloom, or it can invoke passion with higher morale, motivation, and commitment.
In 1990, two psychologists, Peter Salovey and John Mayer, first coined the term emotional intelligence (EI), referring to EI as an ability to recognize the meaning of emotions and their relationships, and to reason and solve problems on the basis of them. These two researchers concluded that EI consisted of three mental processes: appraising and expressing emotions in the self and others, regulating emotion in self and others, and using emotions in adaptive ways. In 1991, they refined EI into four mental abilities: Perceiving/identifying emotions, integrating emotions into thought processes, understanding emotions, and managing emotions. It had to take Daniel Goleman to bring EI into the spotlight with his books entitled, Emotional Intelligence: Why It Can Matter More Than IQ and Working with Emotional Intelligence. While Goleman argues that EI can be learned and improves with age, Salovey and Mayer prefer to say that IE develops with age and that emotional knowledge can be enhanced and emotional skills can be learned.

Knowing that leadership is primarily a field of interaction between the leader, follower and the context, we can safely say that EI has an important role to play. We also know that more and more interpersonal skills have become more integral to effective leadership (Goleman, 1998). Where leaders were once seen to control, plan and inspect the overall running of an organization, in today’s more service-oriented industries, leadership roles are also to motivate and inspire others, to foster positive attitudes at work, and to create a sense of contribution and importance with and among employees (Hogan et al., 1994). Who would not want to have the freedom of choosing how to respond to any significant event? It must be the most powerful freedom for emotionally intelligent leaders and employees. In an age of drastic change brought on by the realities of the marketplace, being able to react appropriately can increase the trust level with the public. At the same time, consumers will feel confident to purchase from the company’s range of products and services. In a study conducted by Benjamin Palmer, Melissa Walls, Zena Burgess, and Con Stough, it has been shown that the ability to monitor and manage emotions may part of the underlying attributes that manifest the individual consideration component of effective transformational leadership. For example, sensing when a subordinate needs a more or less challenging task may depend on the ability to monitor emotions, i.e. monitoring when a subordinate is bored or frustrated with a given task. Sensing with a subordinate or colleague requires feedback may first involve monitoring and detecting the existence of emotions that suggest this need, but in this case, also managing their emotions or feelings. Another good example would be to monitor and detect feelings from subordinates such as not being appreciated for one’s work, and managing their emotions, perhaps by providing positive feedback so as to elevate feelings of not being appreciated
The companies whose leaders have embraced EI have reaped large profits. The individuals who use emotional intelligence in the workplace relate very well to their peers. They have a higher level of satisfaction and professional success. Companies such as 3M, Disney, Southwest Airlines find ways to give wings to their employees’ dreams. In 1950, Richard Carlton, CEO of 3M, said, “Our company has, indeed, stumbled onto some of its new products and services. But never forget that you can only stumble if you’re moving.” We have seen the impact of this kind of drive from 3M in innovations such as waterproof sandpaper and Post-it notes and more recently Thinsulate. Disney needs no presentation here. As for Southwest, the company has been profitable for more than 32 years. That’s unheard of in the airline industry. Since inception, Southwest has valued its Customers. “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”

In one of his books, precisely, in the chapter on emotional intelligence, Goleman presents the example a domineering airline pilot named Melburn McBroom. One day in 1978, his plane developed a problem with the landing gear as it approached the airport. McBroom turned the plane over to the copilot and began trying to fix the problem. As the plane circled the airport, the cockpit crew noticed that the fuel gauges were approaching empty. But they were so fearful of McBroom’s wrath that they said nothing. The plane crashed, killing 10 people. The FAA states that pilots’ mistakes cause many deaths. Many scientists have come to understand the basic concept behind emotional intelligence. Success and happiness depend on more than IQ. In fact, the lack of EI can be fatal. Citing a New England Journal of Medicine study on malpractice cases, Goleman said concluded that failures of emotional intelligence also have their price. “About 1 percent of all hospital patients have something happen that could be grounds for a malpractice suit, but only a tiny percentage of these patients sue. Doctors that patients don’t like get sued more; although their medical skills may be comparable to other doctors’, the patient feels, ‘He did not care about me. He didn’t listen. He didn’t let me ask questions.’ If you were a medical school, you’d want to prepare your students by cultivating qualities of empathy.” More than that sole aspect, Craig Lambert, writing for Harvard Magazine, borrowed Goleman’s definitions of EI. “It’s a blanket term that includes, “self-awareness, managing your emotions effectively, motivation, empathy, reading other people’s feelings accurately, social skills like teamwork, persuasion, leadership, and managing relationship.”

In 1998, writing for Educational Leadership, Cary Cherniss said, “IQ accounts for only 20 percent of the factors that determine success in life. Unlike IQ, emotional intelligence is a cluster of personal and social competencies. These include self-awareness and self-control, motivation and persistence, empathy, and the ability to form mutually satisfying relationships.”

EI Summary: The Impact on Leadership

All in all, this paper managed to explore the relationship between emotional intelligence and effective leadership. What is clear is that, to the extent that EI measures the ability to monitor and manage emotions within oneself and others, it may an underlying competency of transformational leadership. At least, we found out that EI plays an important role in leadership defined as a field of interaction between the leaders and the followers. Companies and individuals that embrace the characteristics of EI find themselves on the path to success. Obviously, we should note that any future research in this area can focus on the relationship between EI and leadership on a deeper level. Human Resources department, selection boards and recruiting agencies will have vested interests in researchers examining the relationship between EI and transformational leadership. Looking at emergent leaders and leaders from various industries and different levels of leadership will also add more depth. As an analytical competency, IQ may be useful but it only represents 20 percent of the brain functions whereas EQ, representing a cluster of abilities, may be the most envied. After all, you want to be a leader known for using both mind and heart. Why let your amygdale rust? It’s time that today’s leaders start focusing on a holistic approach to leadership. The time to connect emotions to the brain may have finally arrived.

References:

Albrow, M. Sine ira et studio—or do organizations have feelings? Organization Studies, 1992, 13, 313-29.
Anastai, A, Urbina S. Psychological testing. 7th ed. Saddle River, NJ: Prentice Hall; 1997:295-321.
Carlson N. Foundations of Physiological Psychology. 5th ed. Boston, Mass: Allyn and Bacon; 2002:293-297.
Collins, J. Good to Great. New York, NY: Harper Collins: 2001:109-110.
Conger, J. A. & Kanungo, R. N. Charismatic leadership in organizations. Thousand Oaks, CA: Sage, 1998.
Cherniss, C. Social and emotional learning for leaders. Educational Leadership. 1998 v55 p26 (3).
Dickman, M. H., & Stanford-Blair, N. (2002). Connecting Leadership to the brain. Thousand Oaks, CA: Sage.
Dobbins, G.H., Long, W.S. Dedrick, E.J., Clemons,T. C. The Role of Self-monitoring and Gender on Leader Emergence: A Laboratory and Field Study. Southern Management Association. Journal of Management. . Vol. 16, no. 3. 1990, pp 609-618
Ilgen, D.R. & Klein, H. J. Organizational behavior. In M. R. Rosenzweig & L. W. Porter (Ed), Annual Review of Psychology, Vol. 40. Palo Alto, CA: Annual Reviews, 1989, pp. 327-51.
Goleman, D. (1998), “What makes a leader?”, Harvard Business Review, Vol. 76, pp. 93-104.
Goleman, D. (2001). An EI-based theory of Performance. In C. Chemiss & D. Goleman (Eds.), The Emotionally Intelligent Workplace (pp. 27-44). San Francisco, CA: Jossey-Bass.
Goleman D., Boyatzis R, McKee A. Primal Leadership: Learning to Lead with Emotional Intelligence. Boston, Mass: Harvard Business Press; 2002: 3-30.
George M. G. (2000). Human Relations, 53, 8 pp. 1027-1055. Sage Publications, Ltd., 2000.
Goleman D, Boyatzis R, Mckee A. Primal Leadership: Learning to Lead With Emotional Intelligence. Boston, Mass: Harvard Business School Press: 2002: 3-20.
Hogan, R., Curphy, G. and Hogan, J. (1994), “What we know about leadership effectiveness and personality”, American Psychologist, Vol. 49, pp. 493-504.
Isen, A. M. Johnson, M. M. S. Mertz, E & Robinson G. F. The influence of positive affect on the unusualness of word associations. Journal of Personality and Social Psychology, 1985, 48, 1413-26.
Lambert, C. The Emotional Path to Success. Harvard Magazine. September/October 1998 pp. 60-4, 95.
Piper, L. E. Passion in Today’s Health Care Leaders. The Health Care Manager, Jan-March 2005 v24 i1 p44 (4). Aspen Publishers.
Mayer, J., Caruso, D., & Salovey, P. (1990). Perceiving affective content in ambiguous visual stimuli: a component of emotional intelligence. Journal of Personality Assessment, 54, 772-781.
Morris, W. N. Mood: Mood: The frame of mind. New York: Springer-Verlag, 1989.
Pierce, J. L. and Newstrom, J. W. (2005). Leaders & The Leadership Process: Readings, Self-Assessments, & Applications 3/e. Boston, MA: Higher Education McGraw-Hill.
Salovey, P. & Mayer, J. D. (1990) Emotional Intelligence. Imagination, Cognition, and Personality, 9, 185-211.
Salovey, P. Bedell, B.T., Detweiler, J. B., & Mayer, J.D. (2000). Current Directions in emotional intelligence research. In M. Lewis & J.M. Haviland-Jones (Eds.), Handbook of emotions (2nd ed.) (pp. 504-522). New York: Guilford Press.
Sally, D. (2000). A general theory of sympathy, mind-reading, and social interaction, with an application to the Prisoners’ Dilemma. Social Science Information, 39(4), 567-634.
Snyder, M. 1979. Self-monitoring processes. In L. Berkowitz (ed.), Advances in experimental social psychology, 12: 86-128. New York: Academic Press.
Sternberg, R. . Cognitive Psychology. Belmont, Calif.: Thomson Wadsworth; 2003: 2-6.
Zajonc, R. B. (1998). Emotions. In D. T. Gilbert, S. T. Fiske & G. Lindzey (Eds.), The handbook of social psychology, Vol. 1 (4th ed.) (pp. 591-632). Boston, MA. McGraw-Hill

Leading Organizations With Emotions:

2005-05-18T21:05:00.000-07:00

LEADING ORGANIZATIONS WITH EMOTIONS: THE IMPACT OF EMOTIONAL INTELLIGENCE ON OCCUPATIONAL SUCCESS AND LEADERSHIP

2005-05-18T20:56:00.000-07:00

Abstract

Without any doubt, Emotional Intelligence has been studied by many Leadership scientists, psychologists, and even behaviorists in an effort to help identify the set of traits and skills possessed by effective leaders. Needless to say that it has been the subject of numerous heated discussions and controversies! Various researches have shown that EI is a valid component and attribute of the transformational leadership. Some of the studies have even shown that those with high levels of emotional intelligence have greater career success, develop stronger personal relations, have far superior leadership skills and lead a healthier lifestyle than those with low emotional Intelligence, often referred to as EQ (as in Emotional Quotient, differentiating from IQ). Those who believe in the full potential of EI embrace its promising qualities and capacities to help create personal and organizational success, develop trusting and honest relationships, give rise to a fearless working environment, promote open communications that lead to high organizational performance in a global market specifically marked by conflicts born out of constant change. No wonder that many individuals and companies have jumped on the bandwagon of EI and found both success and profits.

Leading Organizations with Emotions

In these times of rapid global change, mergers, re-engineering, restructuring, technological advances quickly rendering skills and technology obsolete, any company that cares about its shareholders and a viable future will embrace most gimmicks to give it a competitive edge, a clear advantage over its competitors. The application of EI-related traits and capacities is known to make a huge difference in the bottom line of many businesses. Since Leadership is about interacting with others and getting things done, we can see how important it is for organizational leaders and employees to have what is commonly referred to as “good people skills.” Followers want to see transformational leadership. They want to see a leader who leads with passion. Being able to lead with emotions will have the potential of creating a collaborative environment with a far greater output. How can EI influence Leadership? Do emotions precede Cognition? What are the EI-related traits or skills most responsible for the emergence of Leadership? In other words, it is fair to examine the effect of EI on personal and/or occupational success and effective leadership. The aim of this paper is to explore not only the relationship between EI and effective leadership, but also, the possibilities of developing a successful career, great relationships in life and contributing to organizational success.

What are Emotion and EI?
A quick review of the organizational literature will reveal that it has been dominated by a cognitive orientation (Ilgen & Klein, 1989) with feelings being ignored or being seen as something that gets in the way of rationality and effective decision making (Albrow, 1992). In her paper, Jennifer set out to show how leadership theory and research have not adequately considered how leaders’ moods and emotions influence their effectiveness as leaders. She quickly mentions two preliminary studies that suggest that leaders’ feelings may play an important role in leadership. Furthermore, studies have shown that there had not been too much interest in the exploration of the effect of Emotional Intelligence on Leadership. The existing studies tend to provide lots of details about “what leaders are like, what they do, and how they make decisions, the effects of leaders’ feelings or their moods and emotions and, more generally, the role of emotions in the leadership process are often not explicitly considered in the leadership literature, with the notable exception of work on charisma (e.g. Conger & Kanungo, 1998; Lindholm, 1990).
In Latin, Emotion means, “the spirit that moves us.” According to some researchers, our emotions, as much as or more than our minds, contain our histories- every chapter and verse of every experience, deep understanding, and relationships in our lives. Others state that they make up who we are, and they enter our human system as a source of energy that radiates and resonates.

The Role of Feelings in Human Interaction

Fortunately, more and more leadership researchers are focusing on the interaction between moods and emotions. Let’s take a deeper look at the definition of these feelings. Moods are pervasive and generalized feeling states that are not tied to the events or circumstances which may have caused the mood in the first place (Morris, 1989). Moods are relatively low intensity feelings which do not interrupt ongoing activities (Forgas, 1992a.) On the other hand, emotions are high intensity feelings that are triggered by specific stimuli (either internal or external to the individual), demand attention, and interrupt cognitive processes and behaviors (Forgas, 1992a; Morris, 1989; Simon, 1982). Jon L. Pierce and Jon W. Newstrom said, in “Leaders and the Leadership Process, “Emotions tend to be more fleeting than moods because of t heir intensity. Emotions often feed into moods so that, once the intensity of an emotion subsides because the individual has cognitively or behaviorally dealt with its cause, the emotion lingers on in the form of a less intense feeling or mood.”
Feelings have been shown to influence the judgments that people make, material recalled from memory, attributions for success and failure, creativity and inductive and deductive reasoning . (Pierce et al, 2005).
When people are in positive moods, for example, their perceptions and evaluations are likely to be more favorable, they are more prone to remember positive information, they are self-assured, they are likely to take credit for successes and avoid blame for failures, and they are more helpful to others. Positive moods have been found to enhance flexibility on categorization tasks and facilitate creativity and inductive reasoning (Isen et al., 1985, 1987).

Several modern industries have asked their leaders to check their emotions at the door. By that, they undoubtedly place more emphasis on the analytical part of the brain of these leaders. Their mind becomes more valuable than their heart. For example, leaders in health care have been educated, selected, promoted, and retained based on their analytical and creativity skills. “Today’s health care leaders must also have emotional intelligence. Emotional intelligence is primal for passion. Emotional intelligence, which leads to passion, is crucial to the survivability of today’s health care organizations,” stated Llewellyn E. Piper, PhD, Onslow Memorial Hospital Jacksonville, NC. Piper notes that passion is an emotion that is as powerful as love (Goleman et al., 2002). Without passion in the followers, the passion of the leader will fail to be ineffective. Passion is applied to leadership to inspire followers. It makes sense that leadership itself is about entrusting others with the ability to carry out specific projects, motivating them to get things done. Through passion, leaders and followers become more motivated to accomplish the mission of serving others, including customers and suppliers. J. Collins proposed the following: “To go from good to great, organizational leadership must instill passion. This passion comes from emotional intelligence. As the logic goes, to have a great organization, the organization must have great people, and essential to greatness is leadership that inspires followers through passion.”

How can we better grasp the power of passion? We have to take a look at the role of the cognitive function.

Cognition is about how the brain functions in processing information from the environment. It is about how a person perceives, learns, remembers, and thinks. So passion is an emotion that is triggered by the way a person perceives the stimuli from the environment. The basic stimuli are related to the senses of vision, hearing, taste, smell, and touch. Passion evolves from the way the person receives and interprets these stimuli. How the person remembers these experiences, and how the person thinks about these experiences (Goleman et al., and Sternberg R.).
Furthermore, we stumble upon the phenomenon of Nature/Nurture championed by two Greek philosophers. They may help us understand better how humans interact with the environmental stimuli. Aristotle and Plato, the student of Socrates discussed how a person receives and responds to these stimuli. Aristotle believed that behavior is determined by the environment. As for Plato, he believed that humans have inborn innate qualities that direct how they perceive, learn, and think. Plato believed that human behavior is determined by nature.

Another look at the concept of cognition allows us to grasp that “intelligence is the ability to process information, to learn from the experience of the information processed, and to adapt to the environment. Intelligence is a multifaceted construct that includes more than academic and practical abilities. It includes the ability to perform well in academics. It also includes spatial intelligence, musical intelligence, word fluency, verbal comprehension, sociability, and reasoning, to mention just a few (Anastai, 1997). Consequently, Sternberg, Anastai and Urbina concluded that a person may have one or more specific types of intelligence; one type may be more dominant than another.

How can we afford not to take a holistic approach to leadership?

Neurosurgeons and other scientists examine the functional areas of the brain and found out that the fontal lobe is responsible for logic, thinking, reasoning, and judgment. It takes care of concrete thinking, abstract thinking, and creativity. In that mindset, leaders have been selected and promoted based on their analytical and visionary abilities. Little or no thought has been given to the emotional part of the brain that drives passion. The limbic system is the force behind our passion or emotions (Carlson, 2002). It is believed that there exists a crucial emotional regulatory circuit that runs from the prefrontal region of the brain to the amygdale of the limbic system. While the amygdale is the single most important part of the brain for the expression of emotional responses, the orbitofrontal cortex, which is located at the base of the anterior frontal lobes, plays an important role in emotional behavior by affecting a variety of behaviors including emotional responses organized by the amygdala. The question to ask is why leaders should not use this portion of their brain (Carlson, 2002).

How can we appreciate the relevance and role played by emotions in predicting cognitive skills?

Studies conducted by other researchers focusing on the brain have determined that emotion precedes or at least accompanies cognition and thus, emotion and affective information provides a unique source of information that can improve cognition (Dickman & Stanford-Blair, 2002, Zajonc, 1998). It is true that scholars have long recognized the relevance of cognition to problem solving and leadership. Unfortunately, the relevance of emotion has been historically discounted (Salovey et al., 2000). At this point, it’s worth noting the key difference between cognitive skills and emotional intelligence. “Emotional intelligence involves the integration of emotion with thoughts, enabling one to understand what others are feeling, while cognitive skills involve integration, organization, and ordering of thoughts,” wrote Goleman in 2001. Even for the emergence of leadership, research has shown that the budding leaders must be able to take in and understand emotional information. This brings us to the notion of self-monitoring which is also an aspect of EI. Researchers such as Kenny and Zaccaro describe leadership in terms of self-monitoring which refers to the ability and willingness to read verbal and nonverbal social cues and alter one’s behavior accordingly (Snyder, 1979). High self-monitors (HSMs) are adept both at reading social cues and at regulating their self-presentation to fit a particular situation. Whereas low self-monitors (LSMs) lack either the motivation or ability to regulate their self-presentation (Dobbins G. H. et al., 1990).

What’s EI all about?
We’ll take a look at its definition by various researchers and its specific characteristics.

Emotional Intelligence is defined as one’s ability to accurately identify, appraise, and discriminate among emotions in oneself and others, understand emotions, assimilate emotions in thought, and to regulate both positive and negative emotions in self and others (Mayer, Caruso, & Salovey, 2000; Salovey & Mayer, 1990). A major component of EI is empathy which is defined as actively seeking to identify with another’s emotions so that one experiences oneself to be similar to or nearly identical with the other person (Sally, 2000). Goleman, Boyatzis, and McKee argue that emotional intelligence is what is needed to lead. “Great leaders move us. They ignite our passion and inspire the best in us…Great leadership works through the emotions,” they state. This passion in leadership comes from the cognitive ability of emotional intelligence. Leadership scientists refer to this cognitive ability as the ACE factor (A for analytical ability, C for creativity ability, and E for emotional ability). Isn’t it high time that executive boards, CEOs and company recruiters take a holistic approach to leadership? Goleman et al. go a few steps further. They state that the role of emotions in the workplace is powerful. It can invoke anger and hostility, doom and gloom, or it can invoke passion with higher morale, motivation, and commitment.

In 1990, two psychologists, Peter Salovey and John Mayer, first coined the term emotional intelligence (EI), referring to EI as an ability to recognize the meaning of emotions and their relationships, and to reason and solve problems on the basis of them. These two researchers concluded that EI consisted of three mental processes: appraising and expressing emotions in the self and others, regulating emotion in self and others, and using emotions in adaptive ways. In 1991, they refined EI into four mental abilities: Perceiving/identifying emotions, integrating emotions into thought processes, understanding emotions, and managing emotions. It had to take Daniel Goleman to bring EI into the spotlight with his books entitled, Emotional Intelligence: Why It Can Matter More Than IQ and Working with Emotional Intelligence. While Goleman argues that EI can be learned and improves with age, Salovey and Mayer prefer to say that IE develops with age and that emotional knowledge can be enhanced and emotional skills can be learned.
Knowing that leadership is primarily a field of interaction between the leader, follower and the context, we can safely say that EI has an important role to play. We also know that more and more interpersonal skills have become more integral to effective leadership (Goleman, 1998). Where leaders were once seen to control, plan and inspect the overall running of an organization, in today’s more service-oriented industries, leadership roles are also to motivate and inspire others, to foster positive attitudes at work, and to create a sense of contribution and importance with and among employees (Hogan et al., 1994). Who would not want to have the freedom of choosing how to respond to any significant event? It must be the most powerful freedom for emotionally intelligent leaders and employees. In an age of drastic change brought on by the realities of the marketplace, being able to react appropriately can increase the trust level with the public. At the same time, consumers will feel confident to purchase from the company’s range of products and services. In a study conducted by Benjamin Palmer, Melissa Walls, Zena Burgess, and Con Stough, it has been shown that the ability to monitor and manage emotions may part of the underlying attributes that manifest the individual consideration component of effective transformational leadership. For example, sensing when a subordinate needs a more or less challenging task may depend on the ability to monitor emotions, i.e. monitoring when a subordinate is bored or frustrated with a given task. Sensing with a subordinate or colleague requires feedback may first involve monitoring and detecting the existence of emotions that suggest this need, but in this case, also managing their emotions or feelings. Another good example would be to monitor and detect feelings from subordinates such as not being appreciated for one’s work, and managing their emotions, perhaps by providing positive feedback so as to elevate feelings of not being appreciated
The companies whose leaders have embraced EI have reaped large profits. The individuals who use emotional intelligence in the workplace relate very well to their peers. They have a higher level of satisfaction and professional success. Companies such as 3M, Disney, Southwest Airlines find ways to give wings to their employees’ dreams. In 1950, Richard Carlton, CEO of 3M, said, “Our company has, indeed, stumbled onto some of its new products and services. But never forget that you can only stumble if you’re moving.” We have seen the impact of this kind of drive from 3M in innovations such as waterproof sandpaper and Post-it notes and more recently Thinsulate. Disney needs no presentation here. As for Southwest, the company has been profitable for more than 32 years. That’s unheard of in the airline industry. Since inception, Southwest has valued its Customers. “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”

In one of his books, precisely, in the chapter on emotional intelligence, Goleman presents the example a domineering airline pilot named Melburn McBroom. One day in 1978, his plane developed a problem with the landing gear as it approached the airport. McBroom turned the plane over to the copilot and began trying to fix the problem. As the plane circled the airport, the cockpit crew noticed that the fuel gauges were approaching empty. But they were so fearful of McBroom’s wrath that they said nothing. The plane crashed, killing 10 people. The FAA states that pilots’ mistakes cause many deaths. Many scientists have come to understand the basic concept behind emotional intelligence. Success and happiness depend on more than IQ. In fact, the lack of EI can be fatal. Citing a New England Journal of Medicine study on malpractice cases, Goleman said concluded that failures of emotional intelligence also have their price. “About 1 percent of all hospital patients have something happen that could be grounds for a malpractice suit, but only a tiny percentage of these patients sue. Doctors that patients don’t like get sued more; although their medical skills may be comparable to other doctors’, the patient feels, ‘He did not care about me. He didn’t listen. He didn’t let me ask questions.’ If you were a medical school, you’d want to prepare your students by cultivating qualities of empathy.” More than that sole aspect, Craig Lambert, writing for Harvard Magazine, borrowed Goleman’s definitions of EI. “It’s a blanket term that includes, “self-awareness, managing your emotions effectively, motivation, empathy, reading other people’s feelings accurately, social skills like teamwork, persuasion, leadership, and managing relationship.”
In 1998, writing for Educational Leadership, Cary Cherniss said, “IQ accounts for only 20 percent of the factors that determine success in life. Unlike IQ, emotional intelligence is a cluster of personal and social competencies. These include self-awareness and self-control, motivation and persistence, empathy, and the ability to form mutually satisfying relationships.”

EI Summary: The Impact on Leadership
All in all, this paper managed to explore the relationship between emotional intelligence and effective leadership. What is clear is that, to the extent that EI measures the ability to monitor and manage emotions within oneself and others, it may an underlying competency of transformational leadership. At least, we found out that EI plays an important role in leadership defined as a field of interaction between the leaders and the followers. Companies and individuals that embrace the characteristics of EI find themselves on the path to success. Obviously, we should note that any future research in this area can focus on the relationship between EI and leadership on a deeper level. Human Resources department, selection boards and recruiting agencies will have vested interests in researchers examining the relationship between EI and transformational leadership. Looking at emergent leaders and leaders from various industries and different levels of leadership will also add more depth. As an analytical competency, IQ may be useful but it only represents 20 percent of the brain functions whereas EQ, representing a cluster of abilities, may be the most envied. After all, you want to be a leader known for using both mind and heart. Why let your amygdale rust? It’s time that today’s leaders start focusing on a holistic approach to leadership. The time to connect emotions to the brain may have finally arrived.

References:
Albrow, M. Sine ira et studio—or do organizations have feelings? Organization Studies, 1992, 13, 313-29.
Anastai, A, Urbina S. Psychological testing. 7th ed. Saddle River, NJ: Prentice Hall; 1997:295-321.
Carlson N. Foundations of Physiological Psychology. 5th ed. Boston, Mass: Allyn and Bacon; 2002:293-297.
Collins, J. Good to Great. New York, NY: Harper Collins: 2001:109-110.
Conger, J. A. & Kanungo, R. N. Charismatic leadership in organizations. Thousand Oaks, CA: Sage, 1998.
Cherniss, C. Social and emotional learning for leaders. Educational Leadership. 1998 v55 p26 (3).
Dickman, M. H., & Stanford-Blair, N. (2002). Connecting Leadership to the brain. Thousand Oaks, CA: Sage.
Dobbins, G.H., Long, W.S. Dedrick, E.J., Clemons,T. C. The Role of Self-monitoring and Gender on Leader Emergence: A Laboratory and Field Study. Southern Management Association. Journal of Management. . Vol. 16, no. 3. 1990, pp 609-618
Ilgen, D.R. & Klein, H. J. Organizational behavior. In M. R. Rosenzweig & L. W. Porter (Ed), Annual Review of Psychology, Vol. 40. Palo Alto, CA: Annual Reviews, 1989, pp. 327-51.
Goleman, D. (1998), “What makes a leader?”, Harvard Business Review, Vol. 76, pp. 93-104.
Goleman, D. (2001). An EI-based theory of Performance. In C. Chemiss & D. Goleman (Eds.), The Emotionally Intelligent Workplace (pp. 27-44). San Francisco, CA: Jossey-Bass.
Goleman D., Boyatzis R, McKee A. Primal Leadership: Learning to Lead with Emotional Intelligence. Boston, Mass: Harvard Business Press; 2002: 3-30.
George M. G. (2000). Human Relations, 53, 8 pp. 1027-1055. Sage Publications, Ltd., 2000.
Goleman D, Boyatzis R, Mckee A. Primal Leadership: Learning to Lead With Emotional Intelligence. Boston, Mass: Harvard Business School Press: 2002: 3-20.
Hogan, R., Curphy, G. and Hogan, J. (1994), “What we know about leadership effectiveness and personality”, American Psychologist, Vol. 49, pp. 493-504.
Isen, A. M. Johnson, M. M. S. Mertz, E & Robinson G. F. The influence of positive affect on the unusualness of word associations. Journal of Personality and Social Psychology, 1985, 48, 1413-26.
Lambert, C. The Emotional Path to Success. Harvard Magazine. September/October 1998 pp. 60-4, 95.
Piper, L. E. Passion in Today’s Health Care Leaders. The Health Care Manager, Jan-March 2005 v24 i1 p44 (4). Aspen Publishers.
Mayer, J., Caruso, D., & Salovey, P. (1990). Perceiving affective content in ambiguous visual stimuli: a component of emotional intelligence. Journal of Personality Assessment, 54, 772-781.
Morris, W. N. Mood: Mood: The frame of mind. New York: Springer-Verlag, 1989.
Pierce, J. L. and Newstrom, J. W. (2005). Leaders & The Leadership Process: Readings, Self-Assessments, & Applications 3/e. Boston, MA: Higher Education McGraw-Hill.
Salovey, P. & Mayer, J. D. (1990) Emotional Intelligence. Imagination, Cognition, and Personality, 9, 185-211.
Salovey, P. Bedell, B.T., Detweiler, J. B., & Mayer, J.D. (2000). Current Directions in emotional intelligence research. In M. Lewis & J.M. Haviland-Jones (Eds.), Handbook of emotions (2nd ed.) (pp. 504-522). New York: Guilford Press.
Sally, D. (2000). A general theory of sympathy, mind-reading, and social interaction, with an application to the Prisoners’ Dilemma. Social Science Information, 39(4), 567-634.
Snyder, M. 1979. Self-monitoring processes. In L. Berkowitz (ed.), Advances in experimental social psychology, 12: 86-128. New York: Academic Press.
Sternberg, R. . Cognitive Psychology. Belmont, Calif.: Thomson Wadsworth; 2003: 2-6.
Zajonc, R. B. (1998). Emotions. In D. T. Gilbert, S. T. Fiske & G. Lindzey (Eds.), The handbook of social psychology, Vol. 1 (4th ed.) (pp. 591-632). Boston, MA. McGraw-Hill

Emergent Leadership, Emotional Intelligence: Sex and Gender Role

2005-05-14T12:39:00.000-07:00

Abstract:
Whoever gets to emerge as a leader may be the one with the right mix of individual traits that the rest of the group may find easy to identify with. Then, does it really matter whether a man or a woman becomes leader? Some observers, leaning on stereotypical data and research, tend to believe that leadership emergene favors men more than women.
We are living in a global market economy where more and more organizations are embracing group projects or teamwork. Team leadership becomes an important buzzword at the same time. There is a large increase of diverse people working shoulder to shoulder on various tasks and goals. Men and women group themselves or are grouped by the organizations in order to reach higher quotas and achieve more productivity. It’s important to note that the effects of sex, gender role on self- and group perceptions of leader emergence fall under the large umbrella of interactive relation. After all, Pierce and Newstrom state in Leaders and the Leadership Process that “leadership can be seen as a working relationship among members of a group.” Commenting on Stogdill’s observation, these two authors suggest that “leadership is a relationship that is associated with the attainment of group objectives, implying that it is an activity, consisting of movement and getting work accomplished.”

There is no doubt that the leadership role is coveted by many people in the group. Therefore, becoming a leader will require more than the application of traits as suggested by the Great Man Theory. Being entrusted with the responsibility of leading the group to performance and satisfaction will require the use of strategies and keen observation. A considerable amount of research has been devoted to understanding the factors associated with individuals emerging as leaders in groups. Two of these characteristics are biological sex and gender role (Goktepe & Schneier, 1989). Past research has consistently shown that men more often emerge as leaders than women (Carbonnell, 1984; Megargee, 1969). Kent, R. L. and Moss, S.E. provides an overview of the literature in Effects of sex and gender role on leaders emergence published by the Academy of Management Journal. They said that this phenomenon has been attributed to internal (Teborg, 1977; Wentworth & Anderson, 1984; White, DeSanctis, & Crino, 1981) and external (Ahrons, 2976; Bowman, Worthy, & Greyson, 1965; Goodale & Hall, 1976; Powell, 1993; Weisman, Morlock, Sack, & Levine, 1976) barriers limiting women’s leader emergence. We must rejoice in the fact that some recent evidence is suggesting that there have been shifts in societal acceptance of women as leaders (Sutton & Moore, 1985) and that some of the barriers that prevented women from emerging as leaders may be coming down (Brenner, Tomkiewicz, & Schein, 1989; Chusmir & Koberg, 1991).

In this paper, we will try to show the relationship between leader emergence and the characteristics of sex and gender role. It’s hoped that we will meet our objectives by clarifying and answering these three questions: (1) Are men more likely to emerge as
leaders in group situations, (2) what are the effects of gender role on leader emergence, and (3) is sex and gender role a good predictor of leader emergence?

It’s appropriate to agree on the definition of leader emergence. “Leader emergence, as contrasted with leadership, is a product of social interaction and results in a consensus among group members that one (or more) individual(s) could serve the group more usefully in attaining group goals than the other members” (Bass, 1981:13). Most of the research investigating emergent leadership has been directed by the trait approach, which assumes that leaders are endowed with certain characteristics that predispose them to be effective in a wide range of situations. Despite the intuitive appeal of the trait approach, strong and consistent empirical support has been lacking. Dobbins, G.H., Long, W.S. & Dedrick, E.J’s article, “The Role of Self-monitoring and Gender on Leader Emergence: A Laboratory and Field Study” is reviewed by Tayna Cheer Clemons. There is a suggestion that leader abilities, aptitudes, interests and personality characteristics typically account for less than 10 percent of the variance in leader emergence. Based on these results, many researchers conclude that a leadership trait or constellation of traits does not exist (e.g., Jenkins, 1947).
If leadership traits are not sufficient in predicting the rise to leadership, Lord, De Vader, and Alliger (1986) conducted a meta-analysis and concluded that previous reviews were far too pessimistic. They suggest that some variance in leader emergence can be predicted by the dominance, intelligence, and masculinity-femininity of the leader. Further, Kenny and Zaccaro (1983) proposed that persons who are consistently cast into leadership positions possess the ability to perceive and predict variations in group situations and pattern their own behavior accordingly. Kenny and Zaccaro’s description of leadership is very similar to the social psychological construct of self-monitoring. Some researchers are saying that females are good at studying social cues. Self-monitoring refers to the ability and willingness to read verbal and non-verbal social cues and alter one’s behaviors (Snyder, 1979). High self-monitors (HSMs) are adept both at reading social cues and at regulating their self-presentation to fit a particular situation. HSMs are typically good actors and are able to display unfelt emotions. They place a premium on impression management and adopt what they see as a pragmatic interpersonal orientation. They rely more on situational factors to determine behavioral appropriateness and less upon their inner feelings, attitudes, and dispositions. They communicate better than low self-monitors. HSMs can spend time more time and energy reviewing background information so that they accurately understand their audience (Elliot, 1979). It is fair to say that self-monitoring has both genetic and environmental precursors though nobody is clear about its origins. HSMs, in contrast to LSMs, are attentive to social comparison information, concerned about the appropriateness of social behavior, relatively adept at acting, able to control behavior and optimize self-presentations (Gangestad & Snyder, 1985). HSMs tend to accurately read the settings and feelings of group members and subsequently exhibit behaviors that match group members’ expectations. As a result, they tend to emerge as leaders more frequently than will LSMs.
It’s worth pondering, for a moment, the effects of sex and gender on leadership emergence. How do women fare with the self-monitoring description? A review of the literature will help us understand what women have had to put up with. Garland and Beard (1979) who tested the prediction found that self-monitoring predicted leader emergence only for women. However, there may be some problems with this testing. The relationship between self-monitoring and emergence can be attenuated because self-monitoring cannot predict emergence when all groups are either high or low. When it comes to accounting for gender effects, a lot of research finds that men emerge as leaders much more frequently than do women. Margargee (1969) examined the effects of dominance of leader emergence and found that men emerged more frequently than women irrespective of dominance levels. The same way, Nyquist and Spence (1986) found that 90 percent of high dominant women, and only 25 percent of high dominant women emerged as leaders over low dominant men. And Wentworth and Anderson (1984) found that men emerged as leaders in 86 percent of mixed-sex groups. Other studies by the same researchers and Fleischer and Chertkoff suggest that women may have been slightly more likely to emerge as leaders in the 1980s than in the 1960s, but their chances of doing so were best when they were perceived as experts.

The major study conducted by Megargee (1969) can shed some more light on the effects of sex and gender on the emergence of leadership within a group. She initially intended the study to be gender-neutral. The subjects rated high on dominance, as measured by the dominance scale on the California Personality Inventory and working in same-sex dyads emerged as leaders 69 percent of the time. In mixed-sex dyads with high-dominance men and low-dominance women, the men emerged as leaders 88 percent of the time. However, in mixed-sex dyads with high-dominance women and low-dominance men, the women emerged as leaders only 25 percent of the time. Anticipating that shifts in societal gender-role expectations would affect the frequency of women’s leader emergence, researchers such as Nyquist and Spence have tried to replicate Megargee’s original study. They also found similar results despite the fact they set up their study to be a more gender-neutral one.

In almost all of the studies conducted by the various researchers, gender-role effects were an important factor. Fagenson (1990) is suggesting that because of traditional gender stereotypes, it appears that the possession of feminine characteristics is detrimental to leader emergence while the possession of masculine ones is beneficial. These days, with so many changes in the workplace, the roles of the sexes have been blurred. The recent women’s liberation movement of the past decades, the mass entrance of women in the work force, the increasing number of female managers (Powell, Posner, & Schmidt, 1984), and the societal shifts in gender-role perceptions have all contributed to these changes. It would be interesting to find out whether because of all these changes women today possess more masculine characteristics than they have at any time in the past. Furthermore, many studies have shown masculinity to be associated with leader emergence. Pierce and Newstrom report “in a study by Goktepe and Schneier (1989), college students performed gender-neutral tasks over the course of a semester. The
effects of both sex and gender role on the leader emergence were assessed. The results indicated that sex had no effect on leader emergence, but gender role did. Specifically, regardless of sex, masculine subjects were more likely to emerge as leaders than feminine, androgynous, and undifferentiated individuals.” In view of these findings, Pierce and Newstrom developed four hypotheses: (1)Men will more often emerge as leaders in group situations than women (2) Group members high in masculinity will emerge as leaders more frequently than those low in masculinity (3) Gender identity will account for more variance in leader emergence than biological sex (4) Individuals classified as masculine or androgynous will emerge as leaders more frequently than individuals classified as feminine or undifferentiated. The study, however, did not indicate whether having feminine characteristics would strengthen or weaken the prospects of leader emergence for those high on masculinity.

It is important to note a few results of this study. The above-named researchers found out that androgynous or hermaphroditic individuals have the same chances of emerging as leader as masculine individuals. The implications of the study can be summarized as follows. First, consistent with previous studies and in support of Hypothesis 2, it is clear that masculinity is still an important predictor of leader emergence. Second, contrary to previous findings, the emergence of androgynous leaders suggests that the possession of feminine characteristics does not decrease an individual’s chances of emerging as a leader as long as the individual also possesses masculine characteristics. Third, as an extension, if women in other contexts are more likely to be androgynous than masculine, as they were in the study, they may have better chances of rising to leadership status. There will have to be verification of androgyny as being related to leader emergence in other settings in future studies. Nothing is conclusive.
Let’s take a look at Eagly’s gender-role theory. It suggests that men are more likely to emerge as leaders in task-oriented groups, but women are more likely to emerge as leaders in socially oriented groups. Conventional wisdom or common sense suggests that systematic connections exist between gender, interaction, and leadership. We all know that group of women are believed to organize social life differently than men. In other words, women are expected to enact less instrumental behavior than men and to create hierarchical structures of power and prestige less often. In mixed-gender settings, women are expected to hold a disproportionate share of low-status positions on power and prestige hierarchies,” observed Walker, Henry A, Llardi, Barbara C, McMahon, Anne M, Fennell, Mary L. in Gender, Interactions, and leadership.

Gender is a status characteristic in U.S. society, and females possess the low state of characteristic (Berger, Rosentholtz, and Zelditch 1980). Let’s look at some of the additional theories behind gender, interaction and leadership.

Walker et al. said “the world of experience appears to verify these presuppositions. Males exercise more influence than females in face-to-face groups such
as families (Strodtbeck 1951; Zelditch 1955) and juries (Strodtbeck, James and Hawkins 1957; Strodtbeck and Mann 1956). They are also more likely than females to become members of prestigious occupations, to hold positions of authority at work (Wolf and Fligstein 1979) and to achieve powerful positions in the corporate and civic worlds (Kanter 1977; Kathlene 1994). After considering the data on gender, interaction and leadership, one may not wonder why there has never been a woman president in the history of the United States.

Based on the gender-role socialization theory, girls and boys are taught to enact gender-typed behaviors; the tendencies, once established, are stable and relatively inflexible. Gender-role socialization (GRS) arguments build on functional theories of role differentiation to explain gender differences in behavior (Bales 1953; Durkheim 1964; Zeditch 1955. GRS arguments predict uniform gender differences. They presume that females enact more expressive than instrumental behaviors, whereas males perform a higher proportion of instrumental acts. What to remember is the following: Gender-role socialization (GRS1) suggests that all-female groups are less likely than all-male groups to develop hierarchical patterns of power and prestige. GRS2 suggests that females are less likely than males to hold top positions on power and prestige structures in mixed-gender groups. Furthermore, we can take a look at the legitimacy theories. LEG 1 stipulate that all-femaile groups are as likely as all-male groups to develop hierarchical patterns of power and prestige. LEG 2 states that females are as likely as males to hold top positions on power and prestige structures in mixed-gender groups. Walker et. al say that the legitimacy arguments presume that some combinations of actors (or identities), roles, and behaviors are more legitimate than others; that is, they are constitutively prescribed or normatively defined as more appropriate. These theories imply that actors whose identities possess equal legitimacy enact similar behavior. Members of homogeneous groups possess equally legitimate identities-in-action.

A more profound review of the existing literature seems to shed more light on the effects of gender role, leader emergence and whether sex and gender role is a good predictor of emergent leadership. Without even taking the natural occurrence of birth order, many females have had lots of experience being leaders. Many of these women are used to holding leadership positions. Ronk (1993) in her study of gender gaps in management failed to find differences between male and female leadership styles based on personality traits and their relationship to leadership quality. The same study also reports that there is no difference between male and female managerial styles and values that predict behavior in men and women. Ronk was not the only researcher who came up with this conclusion. Phillip A. et al. provide the study conducted by Campbell et al. (1993) which concludes that gender has no substantive impact on leadership style. Furthermore, Maccoby and Schein are said to present a large body of literature on sex-role stereotyping which might predispose an individual to expect a particular type of leadership approach from a female leader. Butterfield and Powell (1981) argued that sex-role stereotypes, not sex, are predictors of leadership styles and that leader sex effects appear to be decreasing.. Kent and Moss (1994) also concluded that although women were slightly more likely than men to be perceived as leaders, gender role had a stronger effect than sex on emergent leadership.
In view of all these research results, it remains clear that women have a better chance of being themselves if they want to rise to leadership positions. Rojahn and Willemsen (1994) found only limited support for the gender-role hypothesis that women are more favorably accepted when they act like women and not like men.

References:

Books:
Pierce, J.L. and Newstrom, J.W. Leaders and the Leadership Process. (New York: McGraw Hill Higher Education, 2003)
Powell, G.N. (1988). Women & Men in management. Newbury Park, CA: Sage

Stogdill, R. M. Handbook of leadership: A survey of the literature (New York: Free Press, 1974)
Ahrons, C.R. 1976. Counselor’s perceptions of career images of women. Journal of Vocational Behavior, 8: 197-207.

Berger, J., Rosenholtz, S. J., and Zelditch, M. 1980. “Status organizing Processes.” Annual Review of Sociology 6:479-508. Bischoping, K. 1993. .

Bowman, G.W., Worthy, N.B., & Greyson, S.A. 1965. Problems in review: Are women executives people? Harvard Business Review, 43 (4): 52-67.

Carbonell, J.L. 1984. Sex Roles and leadership revisited. Journal of Applied Psychology, 69: 44-49.

Elliot, G.C. 1979. Some effects of deception and level of self-monitoring on planning and reacting to self presentation. Journal of Personality and Social Psychology, 37: 1282-1292.

Fagenson, E. A.,. 1990. Perceived masculine and feminine attributes examined as a function of individuals’ sex and level in the organizational power hierarchy: A test of four theoretical perspectives. Journal of Applied Psychology, 75: 204-211.

Jenkins, W.O. 1947. A Review of leadership studies with particular reference to military problems. Psychological Bulletin, 44: 54-79

Goktepe, J.R., B Schneier, C.E. 1989. Role of sex, gender roles, and attraction in predicting emergent leaders. Journal of Applied Psychology, 74: 165-167.

Goodale, J.G., & Hall, D.T. 1976. Inheriting a career: The influence of sex, values, and parents. Journal of Vocational Behavior, 8: 19-30.

Kent, R. L., & Moss, S.E. 1990. Self-monitoring as a predictor of leader emergence. Psychological Reports, 66: 875-881

Kenny, D., & Zaccaro, S. 1983. An estimate of variance due to traits in leadership. Journal of Applied Psychology, 68: 678-685.

Megargee, E.I. 1969. Influence of sex roles on the manifestation of leadership. Journal of Applied Psychology, 53: 377-382.
Snyder, M. 1979. Self-monitoring processes. In L. Berkowitz (ed.), Advances in experimental social psychology, 12:86-128. New York: Academic Press.

Nyquist, L.V., & Spence, J.T. 1986. Effects of dispositional dominance and sex role expectations on leadership behaviors. Journal of Personality and Social Psychology, 50:87-93.
Snyder, M. 1986. Public appearances/private realities. New York: Freeman and Company.
Ronk, LA. (1993), “Gender gaps with management”, Nursing Management, May, pp. 65-7.
Strodtbeck, F.L., 1951. “Husband-Wife Interaction over Revealed Differences.” American Sociological Review 16: 468-73.
Terborg, J.R. 1977. Women in Management: A research review. Journal of Applied Psychology, 62:647-664.

Wentworth, D. K., & Anderson, L.R. 1984. Emergent Leadership as a function of sex and task type. Sex Roles, 11: 513-523.

Walker, H. A., Llardi, B.C., McMahon, Anne M., Fennell, M.L. Gender, Interactions, and leadership. Social Psychology Quarterly. Washington: Sep 1996. Vol. 59, Iss. 3; pg. 255, 18 pgs.

White, M.C., DeSanctis, G., & Crino, M.D. 1981. Achievement, self-confidence, personality traits, and leadership ability: A review of literature on sex differences. Psychological Reports, 48: 547-569.

Why Should You Fly Southwest? Safety in the Sky, Vision and Top Leadership

2005-05-01T17:35:00.000-07:00

Analysis of Southwest Airlines Co.
Southwest Airlines Co
P.O.Box 36611
Dallas, Texas 75235-1611
214-792-4000
1.800.I.FLYSWA
www.southwest.com

To better analyze Southwest Airlines Co., it would be wise to take a look at its Mission Statement, the nature of the business it’s in, the type of cut-throat competition it is facing, its competitive edge, and its financial position over its years of operations.

“The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”

Southwest’s target market can be summarized as follows: “To provide short or medium-haul, point-to-point, high-frequency, low-fare, and high Customer satisfaction service.”

There is no doubt that Southwest Airlines has grown way beyond its roots. After overcoming all types of obstacles in its starting days, the company that became airborne with three Boeing 737 aircraft serving three Texas cities –Dallas, Houston and San Antonio- has surprised many of its competitors. Just recently, in 2004, the company has announced its 31st consecutive year of profitability. That’s a major success considering it’s seen as the number 6th company in the airlines industry. It has done this feast without any accidents under the firm direction of Herb Kelleher, a transplanted New Jersey native. No wonder that he was appointed to a Homeland Security panel under Tom Ridge! On May, 2004, SWA launched services to Philadelphia which became its 60th airport.

With the addition of its Philadelphia service, SWA now operates 2,800 daily flights to 60 airports in 59 cities across the United States.

Incorporated in Texas in 1967, Southwest commenced Customer Service on June 18, 1971. One may wonder why it took so long for SWA to become airborne despite the fact it had secured some aircraft from Boeing. Despite Herb Kelleher’s research and feasibility study, he had to contend with the Civil Aeronautics Board which is the federal regulatory body that had jurisdiction over the airlines. This board had not authorized the creation of a major airline since before World War II. What came to be known by many in the industry was that the real function of the CAB was to prevent competition. Its jurisdiction extended only to interstate airlines-those with routes extending across state lines. By flying only within the state of Texas, Southwest might be able to avoid CAB jurisdiction.

Looking around, Kelleher found a precedent in the Pacific Southwest Airlines (PSA) which had flown for years as interstate airline. PSA avoided the suffocating regulation of the CAB. With the stimulus of competition, the California airline market had become the most highly developed in the world. Why couldn’t Texas support the same kind of service? Kelleher and his partner were familiar with the sorry state of air service in Texas. Fares were high, flights were often late, and schedules frequently were dictated by the availability of aircraft after flying more lucrative, longer-haul flights where the CAB-regulated airlines made their real money. Short-haul, intrastate service was merely and afterthought, existing primarily as a tail-end segment of a long flight coming in from New York or Minneapolis or other areas.

Kelleher concluded that Texas was ripe for an airline that would focus on the intrastate passenger, offering good, reliable service at a reduced fare and on a schedule designed to meet the needs of local travelers rather than passengers coming in from far-off points. This may explain why the company’s mission statement is focusing on this niche market.

In order to get started, SWA visionary executive had to find aircraft. He turned to Boeing that, due to a slow market, had three new 737-200 planes sitting on the tarmac. Southwest recognized the 737 as the perfect aircraft for the mission it had in mind. The 737’s modern, fuel-efficient, twin engine configuration would allow highly reliable, efficient, and economical operation in Texas’ short-haul intrastate markets. Agreeing to finance 90 percent of the cost of the new planes, Boeing let Southwest make use of the planes. CAB, defending the interests of the traditional service airlines was not finished with Southwest. Even though another judge threw out the complaints brought on by Braniff and Texas International, a friendly judge in Austin helped them win a restraining order against Southwest on the eve of the day when they were to start flying. In the days ahead, despite the success of Southwest, its opponents would take the battle from the court to the sky in the forms of advertising and propaganda.

The preceding just showed that any new business must have a good business plan to guide it and spearhead it in the times when competitors are gearing to taking it apart. Kelleher and his team just hanged on while working diligently to secure capital. It was true that Braniff and Texas International ultimately would be convicted of federal criminal antitrust violations because of their tactics, but insolvency was just a few days ahead. Remaining viable was Southwest’s preoccupation.

The niche market needed to be served. Boeing believed the business plan which Kelleher managed to sell to them. No wonder they agreed to support the new airline company. In 1973, Southwest recorded its first profit. Its fleet has grown from three 737-200s to more than 220 modern Boeing 737 aircraft. So strong is Southwest’s loyalty to the 737 that it is the only major U.S. airline with an all-Boeing fleet. Southwest has also served as the launch customer for three new models of the 737: the 737-300, now the workhorse of the fleet, the 737-500, and the upcoming 737-700 which was delivered in 1997. Based on its annual reports, this year, Southwest is planning on retiring the old models.

Greg Wells, Vice President Safety, Security, and Flight Dispatch for Southwest Airlines, talked about airport security. In a speech titled, “Preserving Southwest Airlines' Customer Service Leadership in the face of Security Challenges” he said the following:
“It is an understatement to say that the events of September 11, 2001 changed the lives of all Americans and particularly our relatively unfettered ability to travel by air. While all of us were accustomed to some level of security at domestic airports, the imposition was minimal compared to what was in place at major airports in the Middle East, as well as throughout Europe and Asia. All of what we knew changed as the result of the diabolical endeavors of a relative few, and the new procedures, while still evolving, will likely be with us in perpetuity.
Customer Service has always been a major tenet of Southwest Airlines’ product – quick, easy access to high frequency, low cost air transportation. Multiple hour waits throughout our System threatened the foundation of our business. The People of Southwest Airlines rose to the occasion, and we seized and continue to assume a leadership role in positioning Southwest to help the Transportation Security Administration (TSA) and our Company improve Customer Service while enhancing security.”

It’s shown that after, 9-11, safety and security has become a major issue for all airline companies. Southwest once again rose to the occasion by becoming a noticeable leader in the field.

As far as the overall content of the Financial Plan module is concerned, we’ll take a look at the company’s financials.

The company’s balance sheet shows assets of $11337 million in 2004 whereas in 2003, it was only $9,878 million. The Income statement shows values for 2002, 2003 and 2004. It is the income statement for 3 years ended in 2004. It shows the operating revenues and operating expenses to arrive at the operating income. The operating income was increasing year after year. The annual cash flow statement shows the values for 2002, 2003 and 2004. It shows the cash flows from operating activities, investing activities and financing activities. Then, there are also the quarterly balance sheet, the quarterly income statement and quarterly cash flow statements.
In order to identify the planning process for the company, we’ll have to take a look at the major capital investment decisions made by the leaders of Southwest and analyze the type of working capital and/or banking arrangements they might have.
Southwest is committed to providing low fares and understands that maintaining its low cost structure is the way to protect its competitive advantage and maintain job security. For more than 32 years, it has known profitability. This fact has not gone unnoticed by the major news media and specially, Fortune Magazine. “Southwest was once again recognized by Fortune as on of America’s Most Admired Companies and America’s most admired airline. We are proud of the magnificent People of Southwest. Their greatness and accomplishments are unsurpassed in the airline industry.”

Business Traveler calls Southwest, “the best low-cost carrier.”
Other newspapers and magazines have also sung the praise of this small company that can. The San Francisco Chronicle states, “Let’s see, Southwest pays Employees well and makes it clear through actions rather than ‘managementspeak’ that it appreciates and trusts its workers. And the company succeeds where others fail. What a shock! (San Francisco Chronicle, Aug. 13, 2003).
In December4, 2003, Airline Financial News reports the following, “Southwest Airline may only be the nation’s sixth largest airline, but it does not act like no. 6. In many ways, it may be no. 1. The grandfather of the low cost airline has set the pace and provided the model for the latest crops of low-fare carriers. Southwest’s financial superlatives in these days of airline bankruptcies of chest-pounding stuff.”

Southwest’s airline’s planning process can be analyzed in its Executive Summary accompanying the 2004 annual report. The leaders of the company reported that in 2004, the company had a profit of $313 million which exceeded 2003’s profit of $298 million. They were quick to point out the effects of fuel and oil costs on the industry in general. Thanks to Southwest’s forward-thinking and planning, the first part of 2005 should find them in good conditions for fuel. In fact, Southwest is in a better economic position thanks to its previously signed contract to pay a fixed price. For the entirety of 2005, Southwest is 85 percent hedged with prices capped at the equivalent of $26 per barrel of crude oil. Since prices are so high on the 15 percent unhedged portion of its anticipated requirements and because oil refiner spreads for converting crude oil to jet fuel are unusually high, the company anticipates that prices are going to remain high for the first quarter of 2005.

As of January 28, 2004, the report shows the following representatives of the company in their capacities: Herbert D. Kelleher, Chairman of the Board of Directors, James F. Parker, Chief Executive Officer and Director, Colleen C. Barret, President, Chief Operating Officer and Director, Gary C. Kelly, Executive Vice President and Chief Financial Officer etc. Under the leadership of legendary founder Herb Kelleher, Southwest continues to surprise many naysayers. The company’s organizational structure is safe and sound. The greatest product or service will not be a financial success if no one is interested in buying it. Herb Kelleher and his old pal Rollin King had already conducted market analysis and feasibility study. King and Kelleher had long concluded that Texas and other major metropolitan areas were ripe for an airline that would focus on the intrastate passenger, offering, good, reliable service at a reduced fare and on a schedule designed to meet the needs of local travelers rather than passengers coming in from far-off points. In Texas, the CAB-regulated airlines offered a golden opportunity to those who would be interested in short-haul, intrastate service or segment of the market. Southwest was created to put an end to high fares, late flights and lack of decent schedules. Just as in its early days, Southwest knows one thing or two about how to address competition which could force it to liquidate its small assets. It had to find a way to remain appealing to customers. From the reward of a bottle of premium liquor such as Chivas Regal, Crown, Royal, or Smirnoff to the famous headline going after its fierce competitors “Nobody is going to shoot Southwest out of the sky for a lousy $13.”

The airline industry is cyclical, labor-intensive, energy-intensive, capital-intensive and highly competitive as to fares, frequent flyer benefits, routes, and service, and some carriers competing with Southwest have larger fleets and wider name recognition. Certain major United States airlines have established marketing and codesharing alliances with each other, including Northwest Airlines/Continental Airlines/Delta Air Lines; American Airlines/Alaska Airlines; and United Airlines/US Airways.

One of Southwest’s primary competitive strengths is its low operating costs. Among the factors contributing to its low cost structure are a single aircraft type, an efficient, high-utilization, point-to-point route structure, and hardworking, innovative, and highly productive employees. Low costs attract Customers who will become frequent flyers. The in-flows or revenue streams won’t stop any time soon. The company has also recognized how cyclical the business can be. Quarterly operating income and, to a lesser extent, revenues tent to be lower in the first quarter (January 1 – March 31) and fourth quarter (October 1 – December 31) of most years.

From the earlier premium alcoholic beverages to the high-revenue bringing internet site (www.southwest.com), Rapid Check-IN, Rapid Rewards and access to increased credit by the use of services of non-airline partners such as car rental agencies, hotels, telecommunications companies and credit card partners (Southwest Airlines Chase Visa card and newsletter Inside Flyer, Customers are paying attention to the low fares offered by this company. They know they can depend on the Southwest brand. Southwest’s low fares, convenience (numerous flights to each point), friendly Customer Service, robust route system and longstanding profitability record have made it one of the premier airlines in the industry. The Southwest Culture has fast become the measuring stick for most corporations in America.
When it comes to the financial plan and financial feasibility, Southwest’s leaders are very selective and prudent about the airports they choose to serve. They prefer to fly from airports that support a high number of frequencies and their low operating costs. Most of their airports have more than 100 departures per day. No wonder that they had close shops at Houston George Bush International Airport. Also, they schedule their aircraft to minimize the amount of time at the gate, which is a way for them to have the highest aircraft utilization and employee productivity. The planes may be at the gates for less than 20 minutes.
There’s no doubt that Southwest has been able to maintain this strong financial position thanks to its continued profitability. Its business has fixed operating costs. Its operations are susceptible to weather conditions, natural disasters, and federal oversight. Since September 11, safety and security issues have been on the fore front of each passenger’s mind. Careful, timely planning and discipline have allowed the company to have the strongest balance sheet in the airline industry. Southwest is the only U.S. airline with an investment grade credit rating. The leaders are happy to report that they have ample liquidity and access to capital. They started 2004, for example, with $1.3 in cash and fully available bank revolving credit facility of $575 million, $682 million in cash deposits at Boeing for future aircraft deliveries. Its unmortgaged assets have a value of over $5 billion, and our debt to total capital is under 40 percent, including aircraft leases as debt.

Southwest’s common stock is traded on the New York Stock Exchange and is traded under the symbol LUV. The high and low sales prices of the stocks are as follows. When the same period of 2004 is compared to that of 2003, we can see that the dividend was rather high. According to information collected by the company, total operating revenues for third quarter 2004 increased 7.8 percent to $1.67 billion for third quarter 2003. Operating income was $191 million, compared to $185 million in third quarter 2003. Total third quarter 2004 operating expenses were $1.48 billion, an increase of 8.4 percent, compared to $1.37 billion in third quarter 2003. What’s clear is that the company’s hedging program resulted in an offset to fuel and oil expense of $131 million in third quarter 2004. Fuel and oil expenses are being closely watched by SWA. The company ended third quarter 2004 with $1.88 billion cash on hand plus its fully available unsecured revolving credit line of $575 million.

Some of the major capital investment decisions that the leaders of Southwest Airlines have been able to make are due to the fact that cash was available. They have been able to react quickly to growth opportunities even in bad economic times. While they want to maintain growth at a managed growth rate of roughly 8 percent per year, the company’s leaders and employees have enough experience, wherewithal and flexibility to take advantage of any growth opportunities as they arise or at any market. While all other airlines are besieged with losses, Southwest has been able to start service to Philadelphia last May, 2004. The customers of this route have responded en masse. That explains why the company increased the flights from 14 to 41 in a relatively very short time. Next month (May 2005), Southwest will start flying to Pittsburg, which will be its 60th city. No wonder that it’s been known as a growth company by any industry insiders and customers. The leaders know how to exploit opportunities when they arise.
Furthermore, Southwest acquired the leasehold rights to six additional gates through the competitive bid process in the ATA Airlines, Inc. bankruptcy proceedings, bringing its total gates in Chicago Midway to 25. It acquired the six gates and a six-bay maintenance hangar in Chicago for a purchase price of $40 million. It does make sense to have cash on hand! Southwest signed a codeshare agreement with ATA. Thanks to this accord, Southwest customers will be able to initially connect in Chicago Midway for travel between select cities and following ATA destinations.

Operating an all-coach, Boeing 737 fleet of 417 aircraft, Southwest is not resting on its laurels. Its leaders are looking at potential investments. It has future orders, options, and purchase rights with the Boeing Company for 2005 through 2012 for 737-700s. They consider that the average age of its young fleet is less than 10 years. The company is in the process of renewing the interior and exterior of its entire fleet with leather-covered seats. Southwest pins its future prosperity on the 737-700 aircraft. They want 34 new 737-700s.
Southwest has a well-known brand. Customers are attracted to its low fares. They are buying tickets to their final destinations while participating in its Rapid Rewards or frequent flyer miles program. They have acquired gate and maintenance hangar access from ATA whose planes Southwest customers have been able to board on connecting flights. The leaders have also gotten enough early fuel and oil contracts to place the company in a good position for the first two quarters of 2005. Controlling costs is an on-going process. To do so, Southwest started adding “blended winglets” to approximately 92 percent of its fleet of 737-700 aircraft. The addition of these wing enhancements are expected to be completed for all 737-700 this year. They will extend the range of these aircraft, save fuel, lower potential engine maintenance costs and reduce takeoff noise. The company expects annual fuel consumption of 3% for each aircraft outfitted with the winglets. Commission paid out to travel agents was phased out. All other U.S. airlines have done the same thing. Southwest ended up saving $50 million by just initiating this policy change.

Thanks to its low-cost, high production, high customer satisfaction, competitive edge, protective fuel hedging position, and excellent workers, it will be able to face the future and know prosperity. With a strong financial backing, it will be able to find new sources of investment and take on the competitors attracted to the Low Cost Carriers (LCC) advantage. Even high cost carriers are trying to make a few dents in this rewarding niche market too.

Sources:

1. http://www.southwest.com
2. http://www.reportgallery.com