People, Culture, and Contemporary Leadership - Crisis Management

This report delves into the realm of people, culture, and contemporary leadership, focusing on organizational crisis management, using the Toyota product recall as a case study. It begins by identifying the likely reasons behind such crises, emphasizing consumer safety, legal compliance, corporate image, and financial implications. The report then explores the consequences of such crises, including financial costs, damage to corporate image, impacts on cash flow, and effects on share prices. The core of the report examines the transformational leadership style, highlighting its advantages in retaining customers and employees during a crisis. It also acknowledges the style's disadvantages, such as potential stress and high levels of risk. Finally, the report suggests recommendations to overcome these disadvantages, such as a planned vision and a balance of work-life for employees, aiming to enhance the effectiveness of leadership during organizational crises. The report uses academic references to support its arguments.

Running head: People, Culture And Contemporary Leadership 1
PEOPLE, CULTURE AND
CONTEMPORARY LEADERSHIP

People, Culture And Contemporary Leadership 2
Table of Contents
Likely Reasons for the Organizational Crisis......................................................................3
Consequences of Such Crisis...............................................................................................4
Advantages of the Selected Leadership Style......................................................................5
Disadvantages of the Selected Leadership Style.................................................................6
Recommendations to Overcome The Disadvantages Of The Leadership Style..................7
References............................................................................................................................8

People, Culture And Contemporary Leadership 3
Likely Reasons for the Organizational Crisis
Organizational crisis is something that can affect the financial position of the company or
damage the well being and health of its employees as well as its customers or losing of public’s
trust on it. The organizational crisis that will be studied in this report is Product recalls of Toyota
Motor Corporation. This type of organizational crisis occurs due to some faults detected in the
finished products (The Guardian, 2010). For example an automobile company may face an
organizational crisis if any faulty part has been detected in the automobiles.
The likely causes or reasons for such type of organizational crisis are given below:
 Consumer’s safety: the safety of the consumers should be the topmost priority of
any organization. The manufacturers of the organization should perform certain
product recalls in order to ensure that there are no defects in the products that
could harm their customers.
 Legal reasons: certain types of product recalls are required to be done in order to
comply with some legal policies and rules. There may be any changes in these
rules which are required to improve the quality of these products.
 Corporate image: Such type of organizational crisis needs to be performed in
order to bring up a better image of the manufacturers of the organization. It may
be possible that there are certain types of corporate negligence in the organization
due to which there are possibilities of the increase in liabilities of the
organization.
 Financial loss: when there are different complaints of the customers regarding the
defects in the finished products, there are chances of huge economic loss of the
organization. In order to solve such type of issues, product recalls is the best
option.

People, Culture And Contemporary Leadership 4
Consequences of Such Crisis
There are different types of consequences on the organization facing the product recall
crisis. The consequences are as follows:
 Cost: the organization has to pay a huge cost in the product recalls organizational
crisis. The organization has to replace all the faulty parts of their finished products
to their customers free of charge. The cost of these replaced parts has to be paid
by the organization.
 Impact on the organization or company’s image: the product recall organizational
crisis affects the image of the organization severely. They leave an impression of
selling the faulty products to their customers.
 Impact on cash flow of the organization: this type of organizational crisis can lead
to a decrease in the cash flow of the company or the organization. The
organization may also have to face a number of liabilities for a short period of
their time.
 Effect on the share price: this type of organizational crisis also affects the share
price of the organization in the market. It may lead to a decrease in the share price
of the company in the equity market because the company’s performance was not
as good as it had been expected.

People, Culture And Contemporary Leadership 5
Advantages of the Selected Leadership Style
The leadership style which is used in this type of organizational crisis is transformational
leadership style. In this type of leadership, the leader has an important role of guiding his team or
group towards a specific change (Martin, 2015). He inspires his group or team for a vision in
order to create a commitment towards all the goals of the organization. He plays an important
role in dealing this type of organizational crisis. In the product recall organizational crisis, the
employees of the organization requires inspiration as well as support while replacing the faulty
parts of the defective products. The transformational leaders help to keep the employees
motivated during this crisis and also for the long term goals of the organization.
The advantages of this transformational type of leadership are:
 Ability of retaining customers: the transformational leaders have a vision for long
term goals of the company and therefore they can identify the issues that can
affect the company’s image as well as their company’s long term goals. Therefore
they try to solve these types of problems faced by the company as well as the
grievances which are being faced by the consumers so that the company could
attain all its goals.
 Ability of retaining employees: the transformational leaders can also retain their
employees. They motivate and support the employees of the company or while
dealing with the situations of this organizational crisis so that the company could
achieve all its goals.

People, Culture And Contemporary Leadership 6
Disadvantages of the Selected Leadership Style
The transformational leadership style that has been selected for this type of organizational
crisis has certain facts which are not useful in solving this crisis. They are:
 Stress: this type of leadership is very useful for the better development of the
organization. However certain activities which lead the organization for achieving
these goals can be very stressful for its employees (Moye et al, 2017). The
employees would have to work for longer period of time in a day for achieving
this change which may create a high stress level in them.
 High level of risk: this transformational type of leadership can be risky for the
organization. in this type of leadership, the employees simply follow all the
direction of these leaders without proper consideration. Therefore when the
leader’s vision lacks efficiency, the whole group of employees as well as the
organization suffers.

People, Culture And Contemporary Leadership 7
Recommendations to Overcome The Disadvantages Of The Leadership Style
The disadvantages due to the transformational type of leadership can be solved with the
help of the following measures:
 A planned vision: if the transformational leader has a planned vision, it would
ensure that the leader is not misguiding the employees of the organization towards
its goals. The goals of the crisis must be clearly stated by them in order to
decrease the stress of its employees.
 The balance of work in life: this leadership style should create a balance of work
in life so that the employees could perform efficiently.

People, Culture And Contemporary Leadership 8
References
Martin, J. (2015). Transformational and transactional leadership: An exploration of gender,
experience, and institution type. Portal: Libraries and the Academy, 15(2), 331-351.
Moye, N., Mueller‐Hanson, R., & Langfred, C. (2017). Assessment for Leader
Development. The Wiley Blackwell Handbook of the Psychology of Recruitment,
Selection and Employee Retention, 353-375.
The Guardian (2010). Timeline: Toyota's recall woes. Retrieved from
https://www.theguardian.com/business/2010/jan/29/timeline-toyota-recall-accelerator-
pedal