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Trump-Pelosi Trade Maneuvers: USMCA, China Tariffs, & Brazil-Argentina Steel

By Jack Rasmus

Today the Trump administration, with Democrats & AFLCIO leaders in tow, announced new final revisions and deal with Mexico on the new NAFTA 2.0 free trade agreement called the USMCA.

According to the corporate media, revisions to the USMCA demanded by Democrats since the initial agreement was reached with Mexico a year ago, have been agreed to by Trump, Pelosi, and the president of Mexico, Lopez-Obrador. The revisions reportedly mean more protections for US labor in particular. However, all we have at the moment is what’s reported in the corporate and mainstream media about the revisions. We’ll have to wait to read the final print of the actual agreement. But even the media reports are not much more than vague generalities about the terms and conditions of the revisions. The much heralded improvements to US labor interests in particular don’t appear that different from Trump’s originally negotiated deal a year ago.

The official media story line is that the new revisions provide protections for American workers now that did not exist previously during the 20+ years of NAFTA 1.0. During that period, easily 4-5 million US jobs were diverted to Mexico.

At issue during negotiations on revisions to NAFTA–now called the USMCA–was whether US inspectors would be allowed access to Mexico factories and businesses to ensure that the new labor terms of the revised USMCA trade deal were being enforced. Lopez Obrador and Mexican business have been adamantly opposed to allowing US inspectors access to Mexican factories, which suggests they had something to hide. (Mexico and AMLO both are in agreement on this issue). THey demanded that, instead of inspectors, there would be a joint US-Mexican panel to arbitrate labor disputes. But the issue is independent inspection, not a panel to rule on disputes that may never rise due to absence of inspection. What good is a panel of any kind ruling on a dispute that doesn’t get raised because there’s no independent inspection in the first place? Also important is whether the inspectors inspect unannounced, or whether they have to give a pre-notice before they inspect (that phony arrangement is how the US OSHA law has functioned with little effect for decades). Moreover, if there’s panel, how is it determined and what is its composition? If it’s equal US-Mexico representation, it might never come to a final decision.

In other words, if the final terms and conditions in print for the USMCA provide only for panels, in lieu of unannounced inspectors, then the so-called great labor protections touted by Democrats as part of a final deal are really just another fig leaf of labor protection.

While the mainstream media and Democrats talk up the labor revisions in today’s final deal, the real substance of the recent revisions–sought by Trump and US corporations and bankers–has had more to do with protecting the interests of US big pharma companies and US oil and bankers.

Big pharma has always wanted NAFTA-USMCA to include what it wanted in the Trans Pacific Partnership (TPP) deal it didn’t get in 2017: i.e. protections on pricing of its drugs in Mexico at levels closer to its price gouging levels in the US. The fine print in the USMCA will tell whether it got this, or at least got a big change from Mexico’s current rules that keep the price of drugs lower in Mexico than in the US.

Another reported big concession by Mexico in the recent revisions apparently addresses the protection of US oil and energy, telecom and banker interests. Since assuming the Mexico presidency, Lopez-Obrador (AMLO) has been moving toward re-nationalizing Mexico’s PEMEX oil company that had come increasingly under financial control in recent decades by US investors and banks. AMLO wants to restore it to its former Mexican government ownership, or at least to control by Mexican banks and capital. Legislation has been drawn up by the AMLO adminstration to enable re-nationalization. US bankers and oil interests in response have wanted changes in the NAFTA-USMCA (NAFTA 2.0) to protect them from re-nationalization. They apparently have gotten it. Reportedly language in the USMCA now exempts oil, gas, power, transport, cement, banks and telecom from any potential future Mexican re-nationalization.

Free trade treaties are always more about money capital flows (from the US into the host country) than about goods flows across borders, even though the goods flows is what’s mostly reported in the media and press. NAFTA has been no different. Free trade–whether the original NAFTA 1.0 or the current 2.0 revisions called the USMCA–is about financing the relocation of US business and manufacturing from the US to the host country.Then about allowing US companies thereafter doing business in the host country to ship their lower cost goods back into the US market without having to pay tariffs. US corporations make greater profits, not only from cheaper production costs and absence of tariffs, but from continuing to charge higher prices in the US when they ship them back, tariff free, as well. But this is all greater profits from production and goods flows.

Free trade provides even greater profits for US investors and bankers who ‘grease the wheels’, so to speak, of the money capital flows in the first place. The money flows are what make profits from production of goods flows all possible int he first place. Banks charge the interest on the loans, and big fees on mergers and acquisitions by US business in the host country, now allowed by the free trade treaty. Banks also buy up the banks in the host country and make more money from lending to host country businesses. Offshore production and lending also allow US multinational corporations to engage in what’s called ‘intra-company’ price manipulation which permit them to reduce taxes on lower reported profits in the US. The offshored, foreign subsidiary operations ‘book’ all the profits–kept offshore and reduced in the US by means of intra-company price manipulation. Profits are still further boosted as now, under Trump, US multinational corporations get to avoid virtually all taxes on their offshore operations, as a result of Trump’s 2018 multi-trillion dollar tax cuts for multinationals.

Yet Trump, the Democrats, and the US corporate media would have us think the USMCA revisions are all about protecting US workers’ interests by introducing dispute panels. The five million US workers who have lost their jobs under NAFTA gained nothing, and paid everything in lost jobs, under NAFTA 1.0. And that’s not changing one iota under NAFTA 2.0, e.g. USMCA by introducing panels–or even if actual independent inspections were allowed. Under Trump no jobs have come back to the US due to any of his trade wars; and none will after USMCA revisions are signed off either.

Free trade is about enriching bankers and investors who ‘grease the wheels’ of US corporate foreign direct investment into the host country, now permitted by the free trade deal. Free trade is about raising profits and stock prices of US multinational corporations once they set up operations or buy up companies in the host country. Free trade is about politicians in both wings of the Corporate Party of America (aka Democrats and Republicans) fooling workers that they are somehow protecting their interests.

US workers will get, as they have been getting, nothing out of the USMCA or any Trump trade deal so far, more lost jobs and higher prices on imported goods– to be exact $42 billion more in higher prices.

So why the closing of the USMCA deal and revisions now? After a year of stalemate in Congress? Likely because Democrat leaders are desperate to show their impeachment proceedings against Trump are not preventing them from passing legislation otherwise. But does anyone think that Trump, his Trumpublicans in Congress, i.e. Mitch McConnell and other Republican political sycophants, would likewise sign a deal if they were in the Democrats place? No, they’d play hardball and continue to refuse to agree to anything right up to the 2020 election.

Trump has recently softened his USMCA position as well in an attempt to close a USMCA deal with Congress and Mexico. Why now? Because Trump’s trade war with China has stumbled and stalled. It appears, per the Wall St. Journal today, that Trump will postpone his scheduled December 15 additional tariffs on China as a concession to get China to buy more of US farm goods. Trump needs to show something from his 18 months of trade wars. The US trade deficit has barely shifted at all during the period, still running near $50b a month. He desperately needs the USMCA deal–any deal–given that the China-US ‘mini’ trade deal is going nowhere and may not even get signed next year. (And it won’t if Trump does not agree in 2020 to further cut US tariffs if he wants more China farm purchases).

Trump’s recent re-imposition of tariffs on Brazil-Argentina steel should also be viewed as part of the mix of trade events in recent weeks. as the China mini-deal stalled, he had to look tough somewhere. Re-imposing steel tariffs was also a not so veiled threat to Brazil-Argentina (which hardly import any steel to the US at all) that they should think twice about increasing sales of wheat and soybeans to China. Trump’s tariffs on their steel is a shot across their trade bow. Both Trump’s concessions on USMCA and his re-imposing of steel tariffs on Brazil-Argentina are indications of his failing trade policy and his weakening bargaining position on such policy as the US 2020 election grows nearer.

Both he and the Democrats want to ‘look good’ for 2020 election purposes: Trump wants to show (and later exaggerate) what he achieved in the revisions to USMCA. Pelosi-Shumer want to argue (and will also exaggerate) the phony labor protections they achieved in the revised USMCA.

But US workers will get, as they have been getting, nothing out of the USMCA or any Trump trade deal so far, more lost jobs and higher prices on imported goods– to be exact $42 billion more in higher prices, according to the NY Fed, and $1000 per month in reduced household income due to the higher import prices, according to estimates by Chase Bank research.

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About the Author

Jack Rasmus is author of the just released book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020, which is now available for purchase at 20% discount from his blog, jackrasmus.com, and website, http://kyklosproductions.com

Why art is the secret weapon in the battle to make business more productive

By Patrick McCrae

The positive impact of art on our physical and mental health has long been understood. Florence Nightingale recognized this 160 years ago – long before the term ‘wellbeing’ had been coined – when she wrote: ‘Little as we know about the way in which we are affected by form, by colour, and light, we do know this, that they have an actual physical effect.”

However, the potential to build more creative, productive workplaces through the power of art is rarely discussed. Research has shown that the character of a workplace affects job satisfaction, motivation and mood. Art needs to become part of this conversation.

Art activates the brain’s default mode network – the area associated with internally orientated thinking – helping us to retrieve memories and think about the future, as well as engaging our pleasure and reward systems.

Some business leaders might be sceptical that art can improve the quality of their staff’s work, but the concept is supported by a solid evidential base. Dr Oshin Vartanian, from the University of Toronto, has conducted extensive research on the neuroscience of aesthetics and creativity; he found that art activates the brain’s default mode network – the area associated with internally orientated thinking – helping us to retrieve memories and think about the future, as well as engaging our pleasure and reward systems.

In 2019, a survey of 81,000 employees for the Leesman Index, a comprehensive study of workplaces, found a median satisfaction of office and office photography of just 37%. 75% of those sampled said artwork and photography provisioning in their workspace was 55% satisfactory or less.

Research by Dr Jenny Thomas, Director of Performance Consultancy, found that, whilst many organisations had installed artwork in their reception or meeting rooms, few had introduced it to the main office area. Seven out of ten workplaces had no artwork installed and 95% of people could not see any art from their workstation.

She conducted experimental studies, changing aspects of a workplace, including the temperature and air movement and providing access to a new breakout space, but the biggest impact came from introducing artwork. Staff said they were more alert in the afternoons, avoiding the traditional post-lunch dip in concentration, and the art promoted social interaction.

Research by ARTIQ suggested that people were 14.3% more productive when they were in a workplace that featured art compared to a workplace that featured no art; According to research by the British Council for Offices in 2013, 61% of employees said artwork inspired them to think and work more creatively.

We should not be surprised because art enables positive, cognitive distraction and creates spaces that are both active and connective. It engages staff and clients, helping them to think beyond the four walls that surround them.

An office art collection should tell a story; it should connect to the brand values and heritage of a business, creating a clear and authentic narrative.

Art has this impact because it is innately human, encouraging the viewer to engage and find meaning. Yet having artwork in the workplace is meaningless if no thought has been given to its relevance to the specific environment. An office art collection should tell a story; it should connect to the brand values and heritage of a business, creating a clear and authentic narrative.

Global law firm Mayer Brown recently worked with ARTIQ to develop an art collection for its London office, following an extensive modernisation and refurbishment programme. An art committee was set up, bringing together a group of partners and employees from across the office to choose works for the collection, including painting, sculpture, prints and street art. It was developed around the themes of diversity and equality to reflect Mayer Brown’s commitment to promoting a diverse workforce – 86% of the art is by female artists. Artists from outside the UK, or who have recently graduated and are trying to build a career, are also well represented.

Not only has the art collection become a talking point amongst staff, it is also a visual representation of the firm’s values, which can easily be explained to visitors and prospective clients. By supporting emerging artists, the firm is also acting as a patron, supporting the creative economy at a time when it is under increasing strain – the UK invests 40% less than the European average as a % of GDP in art – and bridging the gap between the corporate and creative worlds.

Investec, the international banking and wealth management group, wanted the art collection at two of its London offices to reflect its culture of diversity and innovation and to compliment the design by architectural and design firm tp bennett. Reflecting the business’ heritage, the collection features the work of vibrant, dynamic South African artists alongside London-based artists, telling stories of identity and diversity.

ARTIQ catalogued the collection and worked closely with Investec to design and build an online auction platform, giving employees the opportunity to purchase the artwork that has been part of their working environment for many years. The initiative worked on two levels: first, as an effective means of employee engagement, including a pop-up exhibition to mark the launch of the new collection; and secondly, as a way of supporting contemporary artists.

Investing in an office art collection might sound like the preserve of big corporates, but in fact it does not have to be unaffordable. An art rental model allows any business to host an expertly curated collection without breaking the bank – £1,600 a month might be typical for a medium-sized business. It also allows a business to refresh the collection every few months, making it a continuing talking point amongst staff and a point of interest to clients visiting the workplace.

But, above all, an art collection is a compelling way for a business to articulate its values and express its identity – both to its own staff and to the wider world.

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About the Author

Patrick McCrae is Chief Executive of art consultancy ARTIQ He founded ARTIQ in 2009 to bridge the gap between the art and business worlds and to promote a fair deal for artists. ARTIQ is now on of the UK’s leading art consultancies, working with businesses to embed creativity into their culture and to harness the great power of art. In 2017 he was named ‘Creative Industries Entrepreneur of the Year (London and South East)’ at the NatWest Great British Entrepreneur Awards.

Explore Soft Leadership to Achieve Global Stability, Peace and Prosperity

By M.S. Rao

This article explores “soft leadership” to achieve global peace, prosperity, and stability. It explains the causes, effects, and remedies for global conflicts and wars, outlines a blueprint to achieve global peace and prosperity. It illustrates with inspiring examples of great global leaders including Mahatma Gandhi, Martin Luther King Jr, Mother Teresa, and Nelson Mandela.

 

Introduction

“An eye for an eye only ends up making the whole world blind.” – Mahatma Gandhi

Presently people across the globe are getting impatient, intolerant, and agitated on others for petty issues.  It appears that there is a lack of respect for others’ religions, regions, races, languages, ethnicities, cultures, and communities. Additionally, the aspirations and expectations of all stakeholders are rising rapidly. For instance, children demand more from their parents; students demand more from educators; subordinates demand more from superiors; employees demand more from employers; followers demand more from leaders, and people demand more from nations. In fact, people are becoming more rights-oriented rather than duty-oriented. 

There must be a shift in the mindset of the people. There must be a need for tolerance and respect toward others. People must be duty-oriented rather than rights-oriented. Empathy is the answer to several pressing global challenges. Empathy is the ability to step into the shoes of others and look at the issues from others’ perspectives. However, presently people rarely empathize with others.  When we empathize with others most of the global challenges and conflicts can be resolved easily. Through empathy, we can put an end to intolerance, impatience, and instability. Through empathy, we can resolve several global challenges amicably. Empathy is essential for global peace, prosperity, stability, and security. 

Some people resort to violence to settle their scores. Some countries wage wars to settle their long-pending issues. Violence is not the solution to several global issues. Ralph Waldo Emerson rightly remarked, “Peace cannot be achieved through violence, it can only be attained through understanding.” Hence, people must shed their violent attitude and respect others through empathy
and understanding.

Global Conflicts

People often use force to settle their scores resulting in conflicts and nations use their military force resulting in wars. They hardly understand the fact that there is always room for dialogue and discussion to resolve their vexing issues. Some nations go for a war on pride and some leaders declare war to show their strength and supremacy. Some religions declare war on others to show their supremacy. Some nations go for war to divert attention from their internal challenges. Likewise, there are many reasons for alarming conflicts and wars globally.

 

The present global scenario calls for a new leadership perspective emphasizing respect to all regions, religions, communities, and ethnicities. It calls for a new leadership perspective involving negotiation and persuasion with an emphasis on empathy.

Need for Soft Leadership

The present global scenario calls for a new leadership perspective emphasizing respect to all regions, religions, communities, creeds, and ethnicities. It calls for a new leadership perspective involving negotiation and persuasion with an emphasis on empathy. It calls for partnership, not followership.  Hence, emphasize “soft leadership” to resolve various conflicts globally through discussion, dialogue, persuasion, and negotiation. This innovative leadership perspective can also be used to lead people assertively; to turnaround ailing global organizations; and to achieve organizational excellence and effectiveness. 

 

What is Soft Leadership?

Leadership depends on three aspects – how you communicate with others; how you make decisions; and how you take action. When you can execute these three activities effectively you become a successful leader. However, to evolve as a soft leader, you must communicate with an emphasis on soft skills; make decisions by blending your head, heart, and gut; and take action keeping the ground realities and goals in your view without compromising people-orientation. There are 11 Cs that constitute soft leadership. They are character, charisma, conscience, conviction, courage, communication, compassion, commitment, consistency, consideration and contribution. It is highly challenging for people to cultivate these 11 characteristics. However, if people possess more than six traits they get into the fold of soft leadership.

 

How to Excel as a Soft Leader?

When you want to excel as a soft leader there must not be ‘character gap’, ‘communication gap’, ‘commitment gap’ and ‘courage gap’. When you stick to these four principles you can excel as a soft leader. ‘Treat the people the way you want to be treated’ is the old adage. But as a soft leader, you must treat all people with respect especially the people who are lower to you. The soft leaders possess humility and a servant attitude.  They help their people grow beyond what people dream of growing. That is the hallmark of soft leadership.

 

Growing Intolerance Globally

There are several reasons for the current growing intolerance and conflicts globally. Here are some of them. People are very impatient. They want immediate results. They lack patience and perseverance. They fail to empathize with others. They try to prove their point right rather than looking at the points from others’ perspectives. They want to resort to short cuts, not smart cuts.  They want to win their case through win-lose, not through win-win.

 

Causes for Global Conflicts

There are several causes of growing intolerance and global violence. The basic ones include scarcity of resources, a threat to one’s position or authority, ego, miscommunication, use of gut rather than head and heart, irrational thinking, superstitions, and supremacy. When some sections of people are oppressed for a long time, it leads to conflicts. Hence, understanding the root cause of the conflicts helps resolve issues amicably. At times, the fundamental forces create violence in the name of their religions. Remember, no religion preaches violence. All religions emphasize tolerance and brotherhood.

We must create a space to accommodate others. Let us be tolerant as intolerance has no place in the history of any religion and any part of the world. If you want to change society, you need citizens who are highly committed and dedicated. Hence, let us build a global society of citizens with universal brotherhood and fraternity to achieve our ultimate objective of global peace, prosperity, and stability. 

 

Resolve Global Conflicts Amicably

Some leaders opine that militarization is the symbol of masculinity. It is, in fact, a myth indeed! The greatness lies in the person who is bearing the pain than the one who is inflicting the pain. It is the truth and non-violence wins, not violence. Mahatma Gandhi achieved India’s independence through truth and non-violence when the entire world believed in violence. Hence, there is a need to look at resolving global issues with peaceful means emphasizing what is just and right. Additionally, look at what is right or wrong, not who is right or wrong to achieve the desired outcomes.

 

Groom Global Citizens

Groom people as global citizens to enable them to become not only well-rounded personalities but also worthy citizens in the world.  Here are some tools and techniques to achieve international peace: Be a humanist first. Have a positive, right and strong attitude. Cultivate the attitude of letting go and moving on with your life. Be magnanimous to forgive others. Accommodate others with a big heart. Demonstrate compassion. Look at the character in people, not color. Evolve as a global citizen with a global mindset rather than with a local mindset. Respect all people. Love your mother but don’t hate another person’s mother.

 

Mahatma Gandhi and Non-Violence

The person who puts up with an attack is stronger than the person who attacks. The person who has the stamina to bear pain is stronger than the person who inflicts pain. The person who pioneers non-violence is stronger than the person who practices violence as Mahatma Gandhi rightly remarked, “Nonviolence is a weapon of the strong.” Hence, it is essential to preach and practice non-violence than violence. Additionally, we must develop compassion toward others.

Mahatma Gandhi’s principles were not only confined to India’s freedom struggle but also relevant to the world. Martin Luther King Jr. once remarked, “If humanity is to progress, Gandhi is inescapable. He lived, thought, acted and inspired by the vision of humanity evolving toward a world of peace and harmony.” Currently, the world is encountering several challenges including intolerance, impatience, and terrorism. Hence, it is essential to follow the ideas and ideals of Mahatma Gandhi especially truth and non-violence to achieve international peace
and prosperity.

 

Replace Religion with Love

See good in others. Improve your attitude to make this world a better place to live. Grow as a global citizen with a universal mindset. Treat all religions as equal and respect them. Remember, no religion preaches violence. It is the misguided elements who spread wrong messages in the name of religion to create ill-will among the individuals. Above all, we must remember that given the choice between the sword and spirit, it is the spirit which is always stronger than the sword.  Hence, develop the spirit and replace religion with love to promote world peace.

 

Soft Leadership is the Solution

It is essential to adopt soft leadership to achieve global peace, prosperity, stability, and security. I have coined this new leadership perspective which is gaining global recognition and attention. People are taking it seriously and applying it to achieve organizational excellence and effectiveness. It can be applied to individuals, organizations, and nations. Here is the description of this new leadership perspective in a nutshell: 

Soft leadership is a blend of courageous leadership, thought leadership, servant leadership, and inspirational leadership. It characterizes 11C’s such as character, charisma, conscience, conviction, courage, communication, compassion, commitment, consistency, consideration and contribution. It suggests a soft approach rather than a hard approach. It believes in a transformational rather than transactional approach. It appreciates people-orientation rather than task-orientation. It underscores partnership rather than the so-called traditional command-and-control approach. It is the need of the hour for the new generation especially millennials who are eager to apply it to unlock their potential to contribute their best to organizations. It stresses on soft skills rather than hard skills. It emphasizes personality, attitude, and behavior rather than technical competency or domain knowledge which can be acquired when people possess the right attitude and behavior. Succinctly, soft leadership can be defined as the process of setting goals; influencing people through persuasion; building strong teams; negotiating them with a win-win attitude; respecting their failures; handholding them; motivating them constantly; aligning their energies and efforts; recognizing and appreciating their contribution in accomplishing the organizational objectives with an emphasis on soft skills. It is based on the right mindset, skillset, and toolset.

 

Love Your Mother but Don’t Hate another Person’s Mother

“I’m a little pencil in the hand of a writing God, who is sending a love letter to the world.” – Mother Teresa

Love your mother but don’t hate another person’s mother. As your mother is precious to you, another person’s mother is equally precious to them. As your race, religion, region, language, ethnicity, culture, and community are precious to you; they are equally precious to others.

People must learn to empathize with others to make a difference in the lives of others. We need empathetic leaders like Mahatma Gandhi, Martin Luther King, Mother Teresa, Nelson Mandela, Mikhail Gorbachev, and Dalai Lama; and religious leaders like Jesus, Buddha, and Muhammad to achieve global peace, prosperity, stability, and security. Remember, what Mother Teresa said when asked what you can do to promote world peace: “Go home and love your family.”  As charity begins at home, let us promote global peace by loving our families and empathizing with others first.

 

Conclusion

“War does not determine who is right – only who is left.” – Bertrand Russell

Starting a war is easy but nobody knows when it ends, where it ends, and how it ends. However, we can imagine the damage and suffering that causes to the humanity. Hence, war is not the solution to all problems. Many people die and there is a loss to nations. It brings agony to the people and takes the nations backward by many years. We have seen how many years it took for Germany and Japan to recover from the Second World War. To summarize, conflicts must be resolved amicably through discussion and dialogue. So, adopt soft leadership during the dialogue and discussion to achieve global stability, peace, and prosperity.

Note: This article is an adapted excerpt from the author’s bestselling book, “Soft Leadership: An Innovative Leadership Style to Resolve Conflicts Amicably through Soft Skills and Negotiation Skills to Achieve Global Stability, Peace and Prosperity” URL: https://www.amazon.com/Soft-Leadership-Innovative-Negotiation-Prosperity/dp/1628655909

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About the Author

Professor M.S. Rao, Ph.D. is the Father of “Soft Leadership” and Founder of MSR Leadership Consultants, India. He is an International Leadership Guru with 38 years of experience and the author of over 45 books including the award-winning ‘21 Success Sutras for CEOs’. He is a C-Suite advisor and a sought-after keynote speaker globally. He brings a strategic eye and long-range vision given his multifaceted professional experience including military, teaching, training, research, consultancy, and philosophy. He is passionate about serving and making a difference in the lives of others. He trains a new generation of leaders through leadership education and publications. His vision is to build one million students as global leaders by 2030.  He advocates gender equality globally (#HeForShe).

References
1. https://www.amazon.com/Soft-Leadership-Innovative-Negotiation-Prosperity/dp/1628655909
2. http://www.emeraldinsight.com/journals.htm?articleid=17087126
3. http://onlinelibrary.wiley.com/doi/10.1002/ltl.20019/abstract
4. http://www.ila-net.org/Webinars/Archive/Rao082012.html    

What’s The Most Holistic Model for Knowledge?

By Mostafa Sayyadi

Insufficient consideration of the completeness of knowledge management models has been exposed and the author attempts to address this concern for the first time. This article investigates the crossover potential of scholarly research and how it can be applied in the organizational boardroom.

 

Strategic Management and the Knowledge-based View

Although the knowledge-based view emerged in the field of strategy, its origins and foundations stem from the resource-based view of the firm. The resource-based view highlights the role of organizational resources in achieving a higher degree of competitiveness. When executives embrace the resource-based view, organizational resources are crucial for competitiveness if they are valuable, rare, inimitable and non-substitutable. However, internal resources of companies manifest themselves in tangible (such as physical properties and machinery) and intangible (such as intellectual capital) forms. Intangible resources, in form of intellectual capital, exist primarily as knowledge in human resources and cannot be easily imitated. This, by far, is why some organizations are successful and some are not. The reason for success and failure of organizations, based on this resource-based view is that there are two capabilities – causal ambiguity and social complexity. Operational risk of large organizations is at risk if they can be easily imitated by the competition. Therefore, decreasing the imitability of an organization’s products or services also decreases the operational risk. While causal ambiguity refers to multiple interpretations of knowledge, social complexity has been regarded as “the extent to which resources are embedded in multiple organizational members and the relationships among them”.1 Thus, harder to copy or imitate.

To remain competitive, executives realise that they have to quickly create and share new ideas and knowledge to be more responsive to market changes. Organisations are “social communities that specialise in the creation and internal transfer of knowledge”.

Executives know that discontinuity exists at all levels of product and services and they do not want to find themselves caught off guard and become obsolete. To remain competitive, executives realise that they have to quickly create and share new ideas and knowledge to be more responsive to market changes. Organizations are “social communities that specialise in the creation and internal transfer of knowledge”.2   Importantly, knowledge held by organizational members is the most strategic resource for competitive advantage, and also through the way it is managed by executives.

Knowledge Management Models May Shed Light on Executive Success

Executives need to at least take a look at models associated with knowledge management, which is directed at developing a better understanding of the concept of knowledge management within organizations. 

 

Knowledge Creation Model

Hirotaka Takeuchi and Ikujiro Nonaka argue that tacit and explicit knowledge interact through four processes, including socialisation (i.e. tacit to tacit), externalisation (i.e. tacit to explicit), combination (i.e. explicit to explicit), and internalisation (i.e. explicit to tacit).3 Executives can use socialisation which is associated with coaching and mentoring activities by sharing experiences gained by imitating, observing and practicing. In the externalisation process, tacit knowledge is articulated into formal language that represents official statements, and is equivalent to explicit knowledge. Executives have their internet technology departments to create a combination which reshapes existing explicit knowledge to more systematic and complex forms by, for example, using internal databases. Most importantly, in internalisation, explicit knowledge is internalised through “learning by doing” which is more engaging.  Figure 1 illustrates how knowledge can be converted to create new knowledge that executives can view and implement immediately in managerial decision making.

 

While executives can use this model for knowledge management, they must be aware of some criticism from other scholars. For example, René Jorna criticizes Nonaka and Takeuchi’s model, because of its failure to account for the commitment of various groups that may have special knowledge from competitors or different types of organizations.4 In addition, Baiyin Yang, Wei Zheng and Chris Viere believe that there might be differences in how to manage individual knowledge from managing knowledge at the organizational level, and they observe that this model has also failed to pay attention to this matter.5 Barring the criticisms, this model can immediately be applied to large organizations and executives can have someone on their team implement it accordingly.

 

Executives can use Learning with Knowledge Cycle Model

Another easy model for executives to use is Rowley’s knowledge management model. This model includes knowledge creation and construction, knowledge articulation, knowledge repository updating, knowledge access, knowledge use, and knowledge revision. Jennifer Rowley says learning in organizations is the ultimate outcome of the knowledge cycle by which implicit knowledge is created and acquired by connecting knowledge with other companies that want to share successes and failures.6 This leads to converting acquired knowledge into organizational processes and activities to improve or discontinue processes that either contribute or inhibit success.

There are other scholars that feel that “meaningful learning in social contexts requires both participation and reification to be in interplay,” and highlight the strategic role of communities of practice in enhancing a shared understanding among members.7

Implicit knowledge is incorporated into formal language and subsequently becomes available to be shared within organisations.

Etienne Wenger also sees communities of practice as social “containers” of competences, and defines them as “groups of people who share a concern or a passion for something they do and learn how to do it better as they interact regularly”.8 Executives can help followers add meaningfulness to their work in ways utilizing social contexts or social containers to enhance engagement.

Implicit knowledge is incorporated into formal language and subsequently becomes available to be shared within organizations. Moreover, organizing explicit knowledge using databases and archives can make knowledge available throughout the organization – organized knowledge can be disseminated and searched by others.

As executive trainers, I agree with Jennifer Rowley who suggests training courses as an effective way to share explicit knowledge. Most importantly, applying knowledge aimed at providing better decision-making and work related practices and creating new knowledge through innovation. Knowledge has to be measured in some way, many trainers talk about return-on-investment of training which is hard to measure, training satisfaction measurement by participants and their desire to apply it to the workplace is a an excellent barometer of learning new skills or building upon old ones. Once knowledge is accumulated, the current processes may be supplemented or even substituted. Figure 2 depicts this knowledge cycle based on Rowley’s model. The key point in the model is the knowledge use section coupled with testing and re-testing to ensure that the knowledge is actually helping the organization grow both professionally for individuals and profitably for all stakeholders.

 

Executives must be aware of some of the limitations of Rowley’s (2001) model. For example, Baiyin Yang, Wei Zheng and Chris Viere argue that this model is not concerned about how knowledge moves from one stage to another, and only described the activities related to each stage separately.5 Secondly, the model does not visualise the potential interactions between implicit and explicit knowledge, and fails to account for the critical role of dynamic interrelationships among followers and business units in enhancing learning processes within large organizations. The model is challenged in that the processes of use, measurement, and revision for implicit knowledge, if not impossible, are very hard. Although Rowley’s model strongly contributes to the conceptualisation of knowledge conversion from the individual level to the organizational level, this model itself suffers from several limitations. While the limitations of the model may only be at the surface level, executives may miss opportunities to fully develop knowledge management systems based upon these weaknesses. On the other hand, Baiyin Yang, Wei Zheng and Chris Viere extensively propose a holistic knowledge management model that may be more appropriate to encompass more aspects of knowledge management.

 

Holistic Knowledge Management Model

As executives attempt to apply the holistic knowledge management model, they incorporate perceptual (i.e. implicit), conceptual (i.e. explicit), and affective (i.e. sentiment and emotion).5 These scholars argue that their model is more appropriate for executive use because knowledge could be managed in the three epistemological areas; technical, practical, and critical, and also in six ontological dimensions; institutionalisation, indoctrination, externalisation, internalisation, inspiration, and integration. These scholars posit that the levels of knowledge are enhanced – especially at the technical level. This is strongly relevant to conceptual knowledge that is found to be at the higher echelons of large organizations. Furthermore, activities that executives perform relate to managing formal procedures and rules. The practical level can be associated with perceptual knowledge such as social norms and shared experiences which can add to cultural norms. Affective knowledge, which is reflected in moral and ethical standards and the degree of awareness about organizational visions and missions can in-turn be used in strategic decision making. Another important aspect of this model for executives is Ann Tenbrunsel, Kristina Diekmann, Kimberly Wade-Benzoni and Max Bazerman’s view.9 These scholars look at moral emotions in neuroscience that are manifested in a trichotomy of prediction, action, and recollection. This aspect can further develop executive decision making because there is significance evidence of an influence upon various cognitive functions such as problem-solving.

 

 

Executives are faced with challenging economic conditions today with global competition increasing and the need to be number one or two in an industry or fail to keep up with the market place. This new economic environment may have a negative emotionality that can seriously reduce people’s capabilities in changing and overcoming challenging situations.10 The trichotomy is described further with Ann Tenbrunsel, Kristina Diekmann, Kimberly Wade-Benzoni and Max Bazerman who posit that “people predict that they will behave more ethically than they actually do, and when evaluating past unethical behavior, they believe they behaved more ethically than they actually did”.9 Ergo, the ruination of corporate giants such as Enron and WorldCom just to name a few fiascos. 

To offset the negativity associated with widening the gaps of success and failure, Baiyin Yang, Wei Zheng and Chris Viere propose nine knowledge management processes in the epistemological dimension, including socialisation (i.e. implicit to implicit ), systematisation (i.e. explicit to explicit), transformation (i.e. affectual to affectual), formalisation (i.e. implicit to explicit), routinisation (i.e. explicit to implicit), evaluation (i.e. affectual to explicit), orientation (i.e. explicit to affectual), deliberation (i.e. implicit to affectual), and realisation (i.e. affectual to implicit).5 This may be the answer executives need but may also lack the fundamental fortitude necessary to be an all-encompassing model to predict customer satisfaction, employee or follower satisfaction, and financial profitability. Figure 3 portrays these processes within organizations: 

Executives can review the nine knowledge management processes in the three epistemological areas of technical, practical, and critical knowledge are described in the following table.

 

In Conclusion

Executives embrace the holistic knowledge management model because it takes a task-based approach by translating the management of knowledge into a complete set of processes. In fact, the holistic knowledge management model develops an integrated approach by which organizational knowledge provides a significant contribution to financial objectives through the context-dependent way it is managed.

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About the Author

Mostafa Sayyadi, CAHRI, AFAIM, CPMgr, works with senior business leaders to effectively develop innovation in companies, and helps companies – from start-ups to the Fortune 100 – succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to HR.com and Consulting Magazine and his work has been featured in these top-flight business publications.

References
1. Reus, T.H. (2004). A knowledge-based view of international acquisition performance (Doctoral Dissertation). The Florida State University, USA.
2. Kogut, B., & Zander, U. (1993). Knowledge of the firm and the evolutionary theory of the multinational corporation. Journal of International Business Studies, 24(4), 625-645.
3. Nonaka, I., & Takeuchi, H. (1995). The knowledge-creating company: how Japanese companies create the dynamics of innovation, New York: Oxford University Press.
4. Jorna, R. (1998). Managing knowledge. Semiotic Review of Books. Faculty of Arts & Science, University of Toronto.
5. Yang, B., Zheng, W., & Viere, C. (2009). Holistic Views of Knowledge Management Models. Advances in Developing Human Resources, 11(3), 273-289.
6. Rowley, J. (2001). Knowledge management in pursuit of learning: the learning with knowledge cycle. Journal of Information Science, 27(4), 227-237.
7. Wenger, E.C. (2010). Communities of practice and social learning systems: the career of a concept. In C. Blackmore (Eds.), Social Learning Systems and communities of practice. Berlin: Springer Verlag.
8. Wenger, E.C. (2009). Communities of practice a brief introduction. The University of Sydney.
9. Tenbrunsel, A.E., Diekmann, K.A., Wade-Benzoni, K.A., Bazerman, M.H. (2009). The Ethical Mirage: A Temporal Explanation as to Why We Aren’t as Ethical as We Think We Are. Harvard University.
10. Okon-Singer, H., Hendler,T., Pessoa, L., Shackman, A. (2015). The neurobiology of emotion–cognition interactions: fundamental questions and strategies for future research, Frontiers in Human Neuroscience, 9, 1-14.

How to Manage Loans and Improve Credit Score

From time to time, many people fall under dire financial constraints and are forced to borrow. Unfortunately, unforeseen occurrences sometimes lead to late payments or defaults that affect your credit score. As negative credit scores are available as a public record, it’s safe to assume that they affect many areas of your life. As expected, it’s only natural to want to improve your credit scores. Below are five ways on how to manage loads and improve credit scores.

 

1. Review Your Credit Report

To fix your credit report, you first have to know how it is. Fortunately, you are entitled to requesting a free credit report, which you can quickly request from a credit score agency. Make use of this report and review it carefully and see what you need to do to fix it. Though this will not boost credit score overnight, it is the closest thing you can get to a quick fix. Aim to dispute any errors that you might find. Additionally, take steps to alert reporting agencies of any outdated information or wrong information about your credit scores. Overall, this will give you a bearing of your financial state, allowing you to note where you need to improve.

 

2. Set Up Payment Reminders

Ideally, a simple way of how to improve credit score is to start paying off your outstanding loans. Make a note of all bills that you have in a journal or planner and mark them accordingly. Embrace the use of reminders to alert you on any upcoming payments, as this will eliminate additional late fee payments. Regularly making payments on your loans can raise your credit score within a few months and make you eligible for other financial opportunities.

 

3. Pay More Than Once in a Billing Cycle

Often, people assume that they need to make at least one payment a month for their credit scores to start improving. However, a simple way of how to increase credit score quickly is to make even more payments. If you can afford it, aim to make bi-weekly payments to lower your credit utilization. Though not a guarantee, a negative credit score can be removed in just two years instead of seven full years.

 

4. Contact Your Creditors

A simple way of raise credit score instantly is to repair the relationship you have with your creditors. After reviewing your report, make quick arrangements to pay off your debts. Make a plan on how you can fix any late payment deadlines should you fall short on funds. Consider if you qualify for loans by searching sites like bad credit auto loans Canada to offset a pending investment so as not to have another default. By quickly addressing overdue payments, you will easily avoid additional adverse effects on outstanding balances.

 

5. Apply for New Credit Sparingly

Even though you might qualify for new credit,   try and avoid doing so if possible. Opening new credit affects your credit scores further as it leads to additional inquiries that stay in your credit score for two years. If necessary, open a new account after some time to repay outstanding loans and reduce instances where you seem like a serial defaulter. Additionally, when it comes to unused card accounts, don’t hasten to close your accounts, especially if they have a longer and better credit history. Instead, opt for paying off and closing newer credit cards to improve your credit scores.

 

Conclusion

Bad credit scores like delinquencies and bankruptcies reports stay in your credit report for as long as seven years or more. As expected, this means that improving your credit scores does not happen overnight. However, by applying the various management strategies, you can quickly improve your credit report and improve your credit ratings for a better future.

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Top Two Providers of Virtual Terminals for Multiple Currencies

If you’re looking for a virtual terminal to handle your payment solutions, there’s a good chance you won’t be sure what the best option is. There are many different virtual terminal options available that offer similar services, but what sets them apart? One of the main advantages of using a virtual terminal like the one provided by Powercash21 is that they can handle multiple currencies. If you’re a global company that sells goods or services to many different geographies, then these are our best recommendations for you.

 

Payzone

Features

  • Start taking payments online, in-store, and virtually with Payzone’s services.
  • Also, take payments through the mail and over the phone if needed.
  • All major debit and credit cards are covered.
  • Use your virtual terminal through your phone or tablet, as well as your computer for added convenience.
  • Add additional users to your system.
  • See all of your reporting and analytics in real-time.
  • UK-based support that can be contacted over the phone or email every day of the week
  • No initial fees

Payzone is another good option if you need to take payments over the phone or online through a virtual terminal. One of the key benefits is the support you receive, which is 24/7 and all UK-based, meaning you’ll be able to get any issues resolved quickly and efficiently. There are also multiple packages to choose from, depending on what your needs are and how large your company is. If you run a small business, this could be a good option as there are no fees for joining or for cancellation.

 

Global Payments

Features:

  • Take payments from customers from any mobile or desktop device.
  • Access your payment portal from a fully responsive browser.
  • The user interface is simple to use and user-friendly.
  • Transactions are verified instantly.
  • It’s PCI-compliant, meaning you can store customer payment information for recurring payments.
  • Schedule payments for a later date if needed.
  • Fully secure system which has been created to fight fraud
  • A reporting dashboard with analytics on performance and insights
  • Add all of your information into one system to reduce your own time and admin.

Global Payments is a virtual terminal software that allows you to take payments from your customers on any device you may have, including your laptop or mobile phone. If you need to take payments from people around the world online, then this is one of your best options with the ability to handle over 140 different currencies. This makes it an ideal choice for anyone that operates globally. Because Global Payments’ system is all accessible online rather than through an app, you can take payments on any device, including new devices or someone else’s device, if yours isn’t available. This is great for if you’re on the move or don’t have immediate access to your computer. The online tool is simple to navigate and use, and Global Payments have PCI-regulated security, meaning you don’t need to worry about fraud.

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The Workings of Payday Loans: What’s Fact and What’s Fiction

For so long, people have viewed payday loans as these debt traps that send people deeper into debt than they originally started out. Well, that’s because when you take out a payday loan or any type of loan, you’re essentially borrowing money that you don’t have, right? Yes, and everybody has taken out a loan at some point in their life so what makes a payday loan so horrible in comparison to a regular loan? Well, let’s first get to the basics of a payday loan and its purpose.

 

What is a Payday Loan and Its Purpose?

Payday loans are short-term loans of small amounts where the repayment terms are based on when you get paid. With these loans, the interest rates tend to be much higher than that of a traditional personal loan.

The purpose of a payday loan is to help those who have an urgent financial need to get the money they need, fast. In knowing what a payday loan is and its purpose, you’re probably wondering what does what you spend the money on having to do with falling into a debt trap. Well, it has a lot to do with it. It has to do with being a responsible borrower.

With payday loans, there’s no credit check involved, the approval process is easy, and you can get the money you need the very same day… just look at how easy the process is. Why would you think a financial establishment would make money so easily available like that? Because it’s for emergencies.

When you have a financial emergency, you’re not trying to wait a few days to get the money… you need it right then! But emergencies never come at a “good” time, do they? No. They typically happen in between pay periods, so what’s the financial option that is easy with no hassle? Payday loans. It’s people who misuse the loans who tend to fall into the “trap.”

 

What’s the Payday Loan “Trap?”

The payday loan “trap” is where you take out a payday loan but don’t ever have enough money to pay the loan off. A lot of the times, if people were to pay the loan off right then, they wouldn’t have enough money to get them through to their next pay period, so instead of paying it off, they’ll just renew the loan for an additional fee.

If you think about it, it makes complete sense why people would renew. There are so many jobs in the world today but you would think that because of job growth, wages would grow too… but that’s not the case in our economic world… job growth no longer induces wage growth. That’s why people need extra financial help when emergencies arise.

 

How Can You Avoid the “Trap?”

The payday loan “trap” is something that people deem as a vicious cycle. But what people fail to realize is that it’s completely avoidable. If you are a responsible borrower and clearly understand the terms of your agreement, you won’t fall into the “trap.”

 

Utilize Payday Loans For Emergencies Only

Because of the ease and convenience of payday loans, they should only be used for emergencies when you need money fast. Maybe you need a car repair or your refrigerator went out and you need a new one… those are both emergencies that are pivotal to the functioning of your daily life. You need to get your car repaired so that you can get back and forth to work. You need a new refrigerator to keep food stored safely in your home.

In your mind, you might be thinking, “if you have an emergency come up, why not just take money from your savings account to pay for it?” Well, the reality behind that logic is that people don’t have enough money saved up for emergencies. In fact, according to CNN, one in four Americans have no emergency funds saved up. That reason alone is why payday loans are so helpful to people in their times of need.

 

Find a Trusted Payday Loan Company to Do Business With

A lot of the times, when people opt for payday loan companies, they’ll do a basic Google search of payday loan companies and go with the first one they see. They won’t even take the time out to do any research on that particular company.

Before you take out a payday loan, whether you do it online or in-person, always do your research, especially when looking online. If you’re unsure of how to go about searching, here is a list of trusted and reputable payday loan companies.

When you get your payday loan services from a trusted and reputable company, they’re going to lay everything out there for you. They’re going to make the terms of your agreement clear and easy to understand and if you opt for an online company, they’re going to have a contact number for you to call to speak with someone to help you better understand how the loan works.

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Things People Get Wrong about Slot Games

Slot machines are perhaps some of the most misunderstood devices. Different people have different perceptions about slot games- some positive and others negative.  Knowing these things can help you improve your gaming strategy and stand a better chance of winning big. 

Slot Machines Don’t Alter Their Odds

If you’re planning to play slot machines, it’s an incredible idea to know exactly how the odds work. However, this won’t help you win more regularly, though. But it might go a long way in preventing you from making wrong decisions based on a faulty premise.

In a slot machine with 3 reels, each featuring 8 symbols, it means that each symbol has a 1/8 probability of popping up on a given spin. This is because the symbols aren’t weighted in any special way.

The jackpot for such a game is 500 coins. And the probability of hitting that particular jackpot lies in the possibility of getting 3 similar symbols in a row. When calculating the probability of having multiple events happening concurrently, you multiply all the probabilities by each other.

Casinos Never Change the Game’s Programming

Once you understand how slot machines work mathematically, it becomes easier to see why the casino wouldn’t find it necessary for changing the programming. The casino isn’t actually bothered if you win. Winning is carefully baked into the game’s math and advantage. Remember, no one would play slots if it were completely impossible to win. Plus, a large casino with over 5000 slot machines wouldn’t find it reasonable to re-programming specific machines after wins. It would actually end up being counter-productive since the casino is looking at a bigger picture.

Your Players Club Card Isn’t A Winning Tool

At no point does your Player’s Club Card interact with the casino’s random generator. Both programs are designed to serve different purposes. The main idea behind the player’s club card is that the casino will reward you with rebates as well as free food to inspire you to play the slots more often. Typically, they do so by crediting 0.2 or 0.3 percent of your action to your rewards account.

Progressive Jackpots Are Extremely Hard to Hit

Some players love playing progressive jackpot games. They enjoy the idea of winning one big jackpot that could change completely transform their lives. It’s more like playing the lottery. But the main problem is that such progressive slots are extremely hard to hit. In most cases, people measure how “loose” a particular slot machine is by checking its payback percentage.

The Bottom-Line on Slots

Now that you’ve known that casinos and slot sites don’t change the game’s odds or programming, you can play without any worries. Gambling is solely dependent on luck as well as mathematical calculations. So, if things don’t happen the way you expected, don’t blame the casino. Accept the outcome and move on. If you don’t win now, tomorrow is still another day. Keep on trying until you hit your target. And always try as much as you can to gamble within your budget.

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To Rent or To Buy A Home: Which is a Better Choice For You?

It’s exciting to hear your friend talk about the new condo he just moved into. You want to have a place of your own too, someday. But just as you begin to get lost in the fantasy over your own home, you are reminded of the people who get submerged in the costs of their mortgage monthly payments and other ongoing costs after they’ve bought the house – the house-poor.

So, should you rent or buy? A buying a house checklist can help you decide.

 

Short-term vs. Long-term budget

You have to first consider your financial situation. You might have your eyes set on buying a house in a particular neighbourhood, or a condo with state-of-the-art amenities, but you might not be able to afford that for now. Renting a house could be a valid short term option in this scenario. In the long run though, buying a house is an excellent choice from a financial perspective. The money that you spend on rent can go towards equity on your home, not to mention the additional appreciation that you will get over time. It’s an investment that often pays out well in the future.

 

Are You Ready To Settle?

Be sure that you’ll be staying in a single city or neighborhood for at least the next 5 years. Otherwise, renting might be a good option. This is because the added costs of moving from one place to another might be substantial especially if you’re making the move before the 5 year mark. Consider the fact that you might still have a mortgage over your head during this period, and incurring costs upon costs might not be so smart!

 

Fully Utilize Online Real Estate Tools

To get a better idea of your situation, you can use mortgage affordability calculator to get an assessment of how much you can afford to spend on a home right now. They can provide a realistic guide on what you can afford to buy and help you to make the choice of either buying or renting a home on the basis of your budget. Are you in love with a house that’s way over your budget? Maybe it’s better to rent and save up for a while longer. With the aid of these online tools, you can easily work out your available options.

 

Tax Benefits from Buying A Home

If you buy a home as a primary residence, you can benefit from certain tax benefits. In Canada, if you have lived in the home since you bought it, any appreciation you get from the sale is not taxed at all. In the US, there is an exemption for a certain amount of gains from the sale of a primary residence, allowing you to keep most, if not all, of your gains tax-free.

 

Wrapping Up

The decision of either renting or buying a home is one that can’t be made on a whim and there is no one size fits all approach to making a choice. After carefully weighing the points raised in this article, you should be able to make a decision on which one suits your needs most right now. You can always use online tools and guides to help you make a final decision.You may also check out this article about the pros and cons of renting by Movingsoon to give you more clarity and aid in your decision making.

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Innovation and the Art of Transformational Leadership

By Mostafa Sayyadi

Executives willing to succeed in the knowledge-based economy will need to adopt transformational leadership at the highest organizational levels in order to develop innovation. This article adopts a holistic approach to address the following research question: how can transformational leaders meet the need for innovative products and services?

Transformational leaders solve problems and people across industries members frequently solve technical problems and share their ideas and knowledge together – especially when it comes to charitable and disaster-type events. This frequent contact and keenness to share existing practice and knowledge in solving daily technical problems can in turn enhance a shared understanding among organizations that make up certain industries and it does not even matter if they are in the same industry.

Frequent contact and keenness to share existing practice and knowledge in solving daily technical problems can in turn enhance a shared understanding among organizations.

To provide an array of leadership theories and models, the next section examines some theories and models that are directed at developing a better understanding of the concept and evolution of leadership thought. There have been several shifts in the study of leadership, and subsequently newer approaches to leadership emerged leading up to the emergence of transformational leadership as a key enabler for organizational innovation.

A Look at Leadership Theories and Models from a Critical Perspective

Behavioral Theory

Behavioral theory could have been the impetus for a change in the focus of leadership studies, and encouraged researchers instead to embark on empirical studies to identify leader behaviors and accompanying categorization schemes.1&2 Ralph Stogdill, Alvin Coons and Rensis Likert investigated the behaviors of leaders at both Ohio and Michigan Universities.3&4 These authors classified leadership styles resulting in two aspects of task and people. These studies aimed to portray the best leadership style when delegating task to people, and also illustrate the behaviors of effective versus ineffective leaders. Task behavior tended to be elaborate and tenuous, leaving leaders exhausted at the end of the day while people behavior, sometimes referred to as relationship behavior, led to leaders spending and inordinate time with followers also leading to exhaustion and, in some cases, frustration do the hand-holding and continuous feedback necessary to complete the work in question.

 

Ohio State Studies

To investigate effective behaviors in leaders, Ralph Stogdill and Alvin Coons conducted an empirical study in which they employed a Leader Behavior Description Questionnaire (LBDQ) for subordinates to evaluate the behaviors of their leaders, using 150 items that reflect important functions of a leader.3 More importantly, Ralph Stogdill and Alvin Coons rated these behaviors using a range between two aspects – initiating structure and consideration. Leaders can score high or low on each of these aspects.3

Initiating structure refers to the behavior that organizes and defines relationships or roles, and establishes well-defined patterns of organization, channels of communication, and ways of getting the job done, consideration, on the other hand, has been highlighted as the behavior indicative of friendship, mutual trust, respect, and warmth.5

In Ralph Stogdill and Alvin Coons’ view, there can be four types of leadership styles.3 These are classified as low initiating structure and low consideration, low initiating structure and high consideration, high initiating structure and low consideration, and high initiating structure and high consideration. Conceptually, these four leadership styles resulted from a combination of initiating structure and consideration which ware on an X/Y chart with initiating structure on the left and consideration along the bottom. Based on this chart, transformation of leadership approaches from a set of universal traits to some context-dependent styles left the behavioral model lacking the necessary application to be useful in large corporations. However, the two dimensions were considered important when leaders determined how to utilize human resources, train people, and guide them.

 

Michigan University Studies

Rensis Likert conducted another empirical study at the University of Michigan, which aimed to define the relationship between leadership behavior, group performance and processes within a group.4 This research adopted a mixed method approach, and used both survey questionnaire and qualitative interviews to classify effective versus ineffective leaders. This classification highlights several interesting differences in the behaviors of these leaders, and reveals three styles of leadership which emerge differently with respect to effective or ineffective leaders. Accordingly, Rensis Likert suggested the three leadership styles as: 4

task-oriented, which focuses on planning the work, organizing employees and technically supporting them to achieve their business goals. These are similar functions to initiating structure as identified by the Ohio State Studies;

relationship-oriented behavior that reflects supportive behaviors for subordinates, and is consequently equivalent to consideration as described by the Ohio State studies, and;

participative behavior which is reflected by paying attention to both task-oriented and relationship-oriented behaviors, and demonstrating some behavioral aspects such as being supportive, collaborative, cooperative, and highly oriented towards accomplishing high performance, solving problems, and facilitating conflict resolution.

It is number three above that began the new leadership research that large corporations needed to better apply leadership theory and models. Without a framework, the Ohio State studies and Michigan State studies did not provide closure for leaders attempting to run corporations in a hypercompetitive global environment. For example, Peter Northouse posits that a leader who practices participative leadership is one who invites others to share in the ways and means of getting things done.6 They work to establish a climate that is open to new and diverse opinions. This type of leader consults with others, obtains their ideas and opinions, and integrates their suggestions into the decisions regarding how the group or organization will proceed. In Rensis Likert’s view, most effective leaders have a dual concern for task-orientation and relationship-orientation, and undertake a participative leadership style to enhance a climate of openness within organizations.4 Leaders in large organizations began to apply this knowledge and managerial implications where beginning to surface as beneficial and worthwhile.

In the corridors of universities, scholars challenged these two studies, because of the failure to account for situational variables in order to recommend the best leadership style, and also the methodological limitations of these studies.7&8 Gary Yukl explains these limitations in that the selection of behavioral items for a questionnaire is usually influenced by preconceptions about effective leadership or the desire to develop a measure of key behaviors in a leadership theory.9 He also expressed that the sample of respondents is seldom systematic, and the accuracy of most behavior questionnaires is seriously reduced by respondent biases and attributions. He criticized this construct of the theory for applying the fundamental assumption of factor analysis, which searches for high association among variables in terms of a similar category. Furthermore, he argues that this basic assumption could be effective for leaders when they only need to take one alternative way among a category of various behaviors – sort of satisficing to end the search for the optimal choice of action necessary for high performance and productivity. While the behavioral perspective adopts a new approach to overcome the problems of trait theory, the empirical studies themselves suffer from several limitations leaving leaders in large companies salivating for a more congruent and applicable theory or model.

  

Situational Leadership Model 

Situational Leadership is a model. Unlike theories, it has its good attributes but has not empirically been tested. Therefore, scholars look at it as a passing fancy, a myth, or a schematic diagram that has not been tried and true. Unfortunately for scholars, this is not true. Millions of managers were trained in situational leadership and it has advanced into law-enforcement, parenting, and customer service. Basically, situational leadership was developed to highlight the importance of situational factors and how they impact the effectiveness of leadership. Albert Murphy argues that leadership is naturally situational, and that leadership study calls for a situational approach; this is a fundamentally sociological viewpoint, not a psychological one.10

According to this model, leadership does not reside in a person. It is a function of the whole situation or a particular situation. Henry Sims, Samer Faraj and Seokhwa Yun also explain the fundamental idea of situational leadership, and highly recommend that one type of leadership will be effective in one situation while but may be ineffective in other situations.11 Consequently, this model, unlike behavioral and trait theories, highlights that there is no best single leadership style for all the situations, and conversely encourages leaders to consider the impact that situational variables can have on the effectiveness of a behavior.

Peter Northouse is one scholar that critiqued this theory and provides its strengths and weaknesses.6 In his book titled “Leadership: Theory and Practice,” he identified the limitations of situational theory. He asserts that situational theory suffers from several weaknesses. First, this theory has been challenged based on the lack of empirical studies to test its hypotheses. Secondly, there exists a high degree of ambiguity that is highly reflected in a failure to theoretically justify the relationships between the variables presented in the models. The third criticism relates to the fact that even these models themselves lack a theoretical rationale by which these relationships can be justified. Moreover, the studies replicated by other researchers could not have actually supported the fundamental prescriptions of this theory. In addition, this theory has been criticized because of the failure to account for the critical role of demographics in its prescriptions. Furthermore, situational leadership failed to sufficiently differentiate between group and one-to-one leadership within organizations, and consequently could not have adequately addressed these concepts. Finally, the methods of data gathering generally suffer from bias, particularly in those questionnaires that have been constructed to force respondents to describe leadership style in terms of the specific parameters of situational leadership…rather than in terms of other leadership behaviors.6 Therefore, this finding supports Claude Graeff’s argument that the situational approach cannot even represent a theory or a practical model to study leadership.12 Barring this sporadic but relevant criticism, situational leadership provides prescriptive and anecdotal applications that leaders and supervisors can grasp. It is straightforward and uses a variety of guidelines for both leaders and followers alike.

 

Transformational Leadership: The Focal Point of Innovation

Executives around the globe realize that they play a critical role to achieve the best climate and for creating innovation and growing the organization. Engaging followers and getting them to participate in leadership activities is an important part of organizational innovation.13 Success is dependent upon how executives formulated their organization’s mission and vision. The key is for executives to inculcate a culture of trust and transparency of knowledge sharing within organizations so that information can be found and used instantaneously.

Two prominent scholars on organizational innovation are Ikujiro Nonaka and Dave Ulrich who suggest that executives build a climate of trust for individuals to exchange ideas.14&15 Like tacit knowledge, individual knowledge can become a valuable resource by developing an organizational climate of trust for members to exchange their ideas and insights. A climate of trust is a big part of organizational innovation and can inspire organizational members to share their individual knowledge to generate new ideas within companies. This is where the transformational leader can attempt to achieve the best corporate climate and inspire followers to achieve business goals–stemming from a shared or distributed form of leadership across pivotal areas on the organization.

Organizations today require a form of leadership in which “the freedom to explore new ideas and set its own agenda” in an empowering way which frees followers from the shackles of organizational missives.

It is apparent that transformational leadership theory is associated with trust-based relationships for centuries that go back to Sun Tzu. An example of this comes from the work of Jon Pemberton, Sharon Mavin and Brenda Stalker, who posit that communities that work in tangent with each other as a group of like-minded people whose interconnectedness brings richer and more comprehensive knowledge and experience.16 Organizations today require a form of leadership in which “the freedom to explore new ideas and set its own agenda” in an empowering way which frees followers from the shackles of organizational missives.16 The outcome is success which narrows the gap between success and failure and this can be achieved by the commitment of its members and facilitated by an executive acting as a transformational leader for the purposes of organizing meetings and communication. Thus, transformational leadership theory is a necessary precursor to create new knowledge in organizations. And transformational leaders enhance competitive advantage by creating new ideas and storing knowledge that can be tapped into at the right place and time.

 

In Conclusion

By facilitating and fostering a culture that enables followers, transformational leaders are effective trust builders who develop innovation and provide a flow of knowledge and ideas. Clearly, transformational leaders unfold results in organizations, influencing employee individual interests to align with institutional interests, and through inspiring employees to develop trust-based relationships and create new ideas and innovations for effective business outcomes. The key is to see the practices, consider implementing them for followers and anticipate a large change in the leadership gaps that exist in the organization.

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About the Author

Mostafa Sayyadi, CAHRI, AFAIM, CPMgr, works with senior business leaders to effectively develop innovation in companies, and helps companies – from start-ups to the Fortune 100 – succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to HR.com and Consulting Magazine and his work has been featured in these top-flight business publications.

References
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4. Likert, R. (1961). New patterns of management. New York: McGraw-Hill.
5. Yunker, G.W., & Hunt, J.G. (1976). An empirical comparison of the Michigan four-factor and ohio state LBDQ leadership scales. Organizational Behaviour and Human Performance, 17(1), 45-65.
6. Northouse, P. (2010). Leadership: theory and practice. Thousand Oaks, CA: Sage Publications.
7. Fisher, B.M., & Edwards, J.E. (1988). Consideration and initiating structure and their relationship with leader effectiveness: A meta-analysis. Proceedings of the Academy of Management. Anaheim, CA.
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9. Yukl, G. (2012). Effective leadership behavior: what we know and what questions need more attention. Academy Of Management Perspectives, 26(4), 66-85.
10.Murphy, A.J. (1941). A study of the leadership process. In J.L. Pierce & J.W. Newstrom (Eds.), Leaders & the leadership process: Readings, self-assessments, & applications, Boston, MA: McGraw-Hill/Irwin.
11. Sims, H.P., Faraj, S., & Yun, S. (2009). When should a leader be directive or empowering? How to develop your own situational theory of leadership. Business Horizons, 52(2), 149-158.
12. Graeff, C.L. (1997). Evolution of situational leadership theory: A critical review. The Leadership Quarterly, 8(2), 153-170.
13. Merat, A & Bo, D. (2013). Strategic analysis of knowledge firms: the links between knowledge management and leadership. Journal of Knowledge Management, 17(1), 3-15.
14. Nonaka, I. (1994). A Dynamic Theory of Organizational Knowledge Creation. Organization Science, 5(1), 14-37.
15. Ulrich, D. (1997). Human resource champions the next agenda for adding value and delivering results. Boston, MA: Harvard Business School Press.
16. Pemberton, J., Mavin, S., & Stalker, B. (2007). Scratching beneath the surface of communities of (mal)practice. Learning Organization, 14(1), 62-73.

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