Alan Mulally, CEO, Ford Motor Company
Instructor: Dr. Yohannes Abate
Leadership and Organizational Behavior ? BUS 520010VA016
August 7, 2011
This case focuses on the challenges Alan Mulally (Mulally); CEO of Ford Motor Company faces to implement a new beginning for Ford. Upon Mulally?s arrival, Ford was on the verge of a financial collapse, reporting a $12.6 billion dollar loss in 2006 and a $2.7 billion dollar loss in 2007.Bill Ford hired Mulally to lead the company as he felt that only an outsider could take the extreme steps needed to save the company from financial failure. In a strategic move to ensure Ford maintained its independence and sensing a recession as well as not to be forced to accept a government loan , Mulally borrowed $23 billion against Ford?s assets. This was a strategic move in the hopes that Ford would maintain its independence.
This case study will highlight the challenges faced by Mulally, his management and leadership style and what changes were implemented into the organizations culture to ensure its success and place in the car industry.
Mulally moved to Ford in September 2006. When starting at Ford, he had not engineered, designed or built any cars. He came from the defense industry. Previously, he had been employed with Boeing since 1969. At Boeing, he held a number of engineering and program management positions, making contributions to the Boeing 727, 737, 747, 757, 767 and 777 projects. (Wikipedia, 2011).He was known at Boeing for enriching Phil Condit’s (Chairman and CEO of Boeing) “Working Together”-philosophy through and beyond the 777-program. Mulally had no previous experience in sales arena and he certainly was not known, as the quote goes, as a ?Detroit car man,” much less a car man at all. What was clear was his ?results oriented” leadership style. His management style is invigorating, reliable and authoritative. His leadership style is what brought him to Ford. As an intelligent leader, with little or no car experience, he defers to Ford?s design experts, on the ins and outs of the product lines. On the big questions of the company’s past misfortunes, mistakes and where the company wanted to go in the future, was in now going to be driven by Mulally, his leadership and management style, and desire for success.
Discuss the role of leadership and how it can impact organizational performance.
Leadership as described by Noel Tichy (Hellriegel and Slocum (2011), who has studied many outstanding leaders, describes leadership in these words:
Leadership is accomplishing something through other people that wouldn?t have happened if you weren?t there. And in today?s world, that?s less and less through command and control, and more and more through changing people?s mindsets and hence altering the way they behave. Today, leadership is being able to mobilize ideas and values that energize other people. (p. 4).
Leadership is vital to an organization as successful leadership implements decisions successfully. Successful leaders influence the judgment, outlook, attitude, and behaviors of others. Leaders put in place a path for those to follow, they help employees to see the future, not just the past or the present, but what lies ahead, they assist employees in setting goals for what they can achieve; they support, encourage and motivate team members. Successful leaders can transform an employee from a worker simply completing assignments to a valuable team member.Leadership skills can help change an employee?s mentality by instilling an ownership attitude. Employees who believe they have this type of ownership relationship with the organization will find ways to improve their attitude, motivation and productivity. Without successful leadership, on conflict exists. Successful leaders energize people toward a common goal. Leadership will result in high levels of unity, commitment, trust, loyalty, motivation, and consequently high performance in the organizations environment.
Discuss Mulally?s leadership style at Ford Motor Company and provide examples of how his actions fit this style.
Arriving at Ford Mulally dived in head first, interviewing dozens of employees, analysts, and consultants, and filling those five binders with typed notes. His extensive research and investigation allowed him to develop a point of view about the auto industry which would frame his decision-making process. Mulally?s style was to focus on the Ford brand (nobody buys a house of brands?); compete in every market segment with carefully defined products (small, medium, and large; cars, utilities, and trucks); market fewer nameplates (40 worldwide by 2013, down from 97 worldwide in 2006); and become best in class in quality, fuel efficiency, safety, and value. (Hellriegel and Slocum, 2011, p. 544).
Mulally?s role was to save an American and global icon. He is no less than a perfectionist and drives performance with the Business Plan Review, a meeting with his direct reports, on a weekly basis. His discussions at the weekly meeting begin with Ford’s four profit centers: the Americas, Europe, Asia Pacific, and Ford Credit. Immediately following are presentations from the 12 functional areas. Mulally?s leadership style was ?every functional discipline on my team is included because everybody in this place had to be involved and had to know everything?.(Hellriegel and Slocum, 2011, p. 544).
Mulally has a relationship behavior leadership style. Hellriegel defines this style as ?includes using two-way communication, listing, encouraging and involving followers in decision making and giving emotional support. (Hellriegel and Slocum, 2011, p. 300). Two-way communication is important in any organization and Mulally demonstrates this by communicating to all employees; not just upper level management as to what, when, why and how the company was going to move forward. He set goals and behaviors for the employees so that all employees know where the company is headed.
Discuss how goal setting helped Ford improve its performance.
Having a clear organizational vision and mission statement is not enough is today?s organizational structure. Company?s must train and educate its employees the value of the vision and mission statement, make sure they understand it, and how the entire organization can work as a team to ensure the vision and mission statement applies to their everyday business. Mulally had a vision of moving to integrate Ford globally, despite several failed attempts in the past (Hellriegel and Slocum, 2011). He also wanted to get back to selling only the ?Ford? name; therefore, the decision was made to sell off Jaguar and Land Rover, and focus all resources on the brand name. Under Mulally?s direction, was the only major auto manufacture that did not pursue government bail-out. In order to decide which direction to take, an executive must develop scenarios of risks associated with that direction as well as the desirable outcome the decision can lead to ? the future state of the organization is based on all decisions made. This decision can be based on a vision, a dream, a mission statement, or just simply a thought. Mulally?s definition of the company ?One Team, One Plan, One Goal? helped set the structure for reaching his goals and vision. The vision of Ford is simple yet powerful, ?to become the world?s leading Consumer Company for automotive products and services? (Hellriegel and Slocum, 2011 p. 543-545).
Assess Mulally on each element in communication openness including message transmission, trust, agendas and goals
It is evident, Mulally demonstrated organizational innovation when he entered Ford.In business, organizational innovation is the catalyst to growth. It is the introduction of changes which are new to the organization and are created by management. The introduction of such changes was the first on Mulally agenda when he joined Ford.
Implementing his ideas and vision as experienced at Boeing, he brought in ideas from outside the current administration of Ford. His message is simple: planning, execution, selection and implementation.By making the decision to focus on fewer products to produce sustainably improvement and service innovation he expressed his personal characteristics that the future plan was to achieve the goals of a new and improved Ford. Mulally believes everyone has to know the plan, its status and areas that need specific attention. He ensures this gets conveyed to his management staff by conducting a weekly meeting. He believes the answer is ?communicate, communicate, and communicate. ? Mulally has demonstrated a plan to serve and satisfy customers, employees, increase market shares, increase profits and at the top of this plan is communication. A successful leader utilizes the skill and expertise of their staff to achieve the goals of the organization and communication is most important element.
Evaluate the effectiveness of Mulally?s leadership style and recommend whether he
should continue with this style, or use a different style
Mulally has ensured that the entire organization knows the plan and goals and he expects open communication from all team members. Mulally views problems as challenges and as an opportunity for the company to investigate a new direction. His style is that if the plan isn?t working, change it. Due to Mulally?s laid back leadership style, and his weekly meetings with management, this has assisted in identifying problems early on and taking care of them sooner rather than later. He provides clear direction and goal setting, encourages open communication and builds motivation among the employees of the organization.
Mulally?s communication style and openness has won him support throughout the organization. As Manufacturing VP Joe Hinrichs says, ?Alan brings infectious energy. This is a person people want t follow.? (Hellriegel and Slocum, 2011 p. 543-545).
Wikipedia. (2011). Alan Mulally. Retrieved August 6, 2011 from http://en.wikipedia.org/wiki/Alan_Mulally
Hellriegel, D., ; Slocum, J. W., Jr. (2011). Organizational behavior: 2011 custom edition (13th Ed.). Mason, OH: South-Western Cengage Learning.