Ford Motor Company

Alan Mulally, CEO Ford Motor Company

Abstract

This paper will discuss the leadership Alan Mulally, CEO of Ford Motor Company brings to the company as it is on the verge of financial collapse. It will also provide an overview of how leadership can impact organizational performance, Mulally's leadership style, the impact of goal setting on performance and assess Mulally's communication style and provide a recommendation for how he should lead in the future.

Introduction

Alan Mulally was hired as CEO of Ford in September 2006. The company was on the verge of financial collapse. It lost $12.6 billion in 2006 and another $2.7 billion in 2007 (Hellriegel and Slocum, 2011, p. 543). When he arrived at Ford they owned Jaguar, Aston Martin and Land Rover. Mulally believed that these cars were a "dangerous" distraction from Ford's core business and persuaded Bill Ford to sell off these brands (Hellriegel and Slocum, 2011, p. 543). Mulally sensed a recession in 2006 and decided to borrow $23 billion against Ford's assets. Taking on more debt was not easy; however, Ford was able to say "no" to government loans in 2008 and 2009 when sales declined allowing Ford to maintain its independence (Hellriegel and Slocum, 2011, p. 543). Mulally's leadership style played a significant role in the success Ford achieved during these turbulent times

Leadership is the process of developing ideas and a vision, living by values that support those ideas and that vision, influencing others to embrace them in their own behavior and making hard decisions about human and other resources (Hellriegel and Slocum, 2011, p. 4). Mulally is not intimated to lead. He is direct, demanding and could be considered relentless. Mulally has shaken things up at Ford and overhauled the system. At the same time he has been able to share his vision and get by in from all areas of the organization.

The Impact of Leadership on Organizational Performance

Good leaders are made not born. If you have the desire and willpower, you can become an effective leader. Good leaders develop through a never ending process of self-study, education, training, and experience (Clark, 2004).

To be an effective leader you must be trustworthy. You must also be able to clearly communicate to all employees a vision of where the organization needs to go and make your vision a reality. According to a study by the Hay Group, a global management consultancy, there are 75 key components of employee satisfaction (Lamb, McKee, 2004). They found that trustworthy leadership is "the single most reliable predictor of employee satisfaction (Lamb, McKee, 2004). Employee trust earned by the manner in which the leader communicates the company's business strategy, the employees' role in achieving success, and the success of the employee's own division relative to strategic business objectives (Lamb, McKee, 2004).

Traditionally there are four different leadership styles that describe the role of a leader and the team depending on the level of readiness by the followers. The first style is the telling style. The leader provides specific directions and supervises work closely. The second is the selling style. With this style the leader helps build confidence and motivation in the follower as the leader provides direction and encourages two-way communication. The third style is the participating style. The leader encourages followers to share ideas and facilitates the work by being supportive and helpful to employees. The final style is the delegating style. Here the leader turns over responsibility for making and implementing decisions to the followers (Hellriegel and Slocum, 2011, p.306).

The workplace climate should be assessed by the leader before a leadership style is chosen. The leader should consider the degree of follower readiness, ability to set high but attainable task-related goals and their willingness to accept responsibility for reaching them. Readiness is not a fixed trait of followers it depends upon the task the leader chooses (Hellriegel and Slocum, 2011, p.305). The leader therefore has the power to influence organizational performance in either a positive or negative way.

Mulally's Leadership Style at Ford Motor Company

The Situational Leadership® Model states that the style of leadership should be matched to the level of readiness of the followers (Hellriegel and Slocum, 2011, p. 304). This model identifies the four leadership styles described above: (a) telling style (b) selling style (c) participating style (d) delegating style. Alan Mulally exhibits a selling leadership style as the CEO of Ford Motor Company. He provides direction, encourages two-way communication, and helps build confidence and motivation on the part of the Ford team.

Mulally's selling style is evident by his actions. Mulally devised a plan that identified specific goals for the company. In addition, he created a process that moved it toward those goals and installed a management system to make sure the company reached the goals. He knew it was important to create employee "buy in" if his plan was to be followed and the ultimate goal, "An exciting viable Ford delivering profitable growth for all" was to be achieved. His slogan is "Communicate, communicate, communicate" because, he explains, "Everyone has to know the plan, its status and areas that need special attention" (Hellriegel and Slocum, 2011, p. 544). Mulally's openness won him support throughout the organization. Manufacturing VP Joe Hinrichs says "Alan brings infectious energy. This is a person people want to follow" (Hellriegel and Slocum, 2011, p. 544). Mulally's leadership style was able to foster the support needed within the Ford organization to successfully make some tough strategic moves that allowed the company to say "no" to government loans in order to maintain its independence.

Performance improvements as a result of goal setting at Ford

Prior to his arrival at Ford Mulally spent nearly 40 years in the commercial airplane business. He had no experience in the automotive industry; however, he spent time interviewing Ford employees, analysts and consultants gaining as much insight on the industry as he could. This research along with his experiences at Boeing allowed him to develop a strategy about the auto business and the steps necessary to save an American