Effective leader essay


Every leader is an effective manager, though not every manager is an effective leader (Nolan, 1988). This indicates that conventional capacity of today’s manager as an organizer and mediator of organizational processes and human resources has dramatically shifted over the years towards the modernized perception of the manager’s roles and functions.

Along with the conventional challenges involved in the contemporary business environment, highly-diverse working environments on the internal level, and cutting-edge technologies and innovations on the external level, altogether necessitate deeper examination and understanding of the today’s role of manager (Roberts, J. 1984).

Since the introduction of McKinney’s 7-S model in 1982, business environment has gone beyond the core components of organizational operation:

- Structure;

- Strategy,

- Systems;

- Staff;


- Style, and

- Shared values.

In addition to these core levers, the contemporary perception of successful business performance is unimaginable without such vital factors as technologies and innovations, marketing, and emphasis on individual customer needs. Altogether, these constituents present core challenges to the today’s managers on both internal and external level (Peters and Waterman, 1982; Waterman et al., 1980).

As changes in production methods and technology have taken place, a far higher proportion of costs are to be found in indirect areas. For example, direct labour (a traditional cost allocation base) now represents only a small fraction of corporate costs, while expenses covering, for example, factory support operations, marketing, distribution, engineering, and other overhead functions have exploded. However, these developments, have, until recently, not been paralleled with corresponding changes in cost accounting practices. ABC is a costing technique based on an analysis of the resources actually used to produce a product or provide a service.  It utilizes actual direct material cost, actual direct labour cost, and both manufacturing and non-manufacturing overhead costs actually incurred to produce the product/service (Bouker, n.d.).  Studies have shown that 20% of all customers virtually provide all the profits of a company. Another 60% break even and the remaining 20% only reduce the bottom line.

In general, most traditional costing systems utilize a single basis to distribute the indirect costs to all products and services. This method of allocating indirect costs commonly results in erroneous cost data. In most cases, products that have high volume are over costed. Similarly, the cost of lower volume products are often understated, and many of the indirect costs of these products are overlooked. Rather than relying on a single basis to distribute costs, ABC assigns costs to activities and products based on how the costs are actually consumed by the process or product. By moving away from traditional cost allocation methods and using improved ABC methods of tracing and assignment, ABC provides managers with a clearer picture of cost of processes and the profitability of customers and products (Value Creation Group, Inc, 2005, p. 1)

All management theories so far have largely focused on the management of working processes and people in organizations. Their theoretical relevance to real life situations assumes that managers cope with numerous dilemmas in their daily practices while seeking adequate responses to the two major challenges, i.e. strategic development and change management within organization (Drucker, 1954; Kislik, 2006).

To a large extent, managerial action consists of flexible approaches, which selection depends on particular circumstances, to mediate the routine organizational performance with the set corporate goals. Today’s managers should ensure that organization keeps up with the modern technological developments and relevant HR strategies to maintain competitive advantage on the market and sustain loyal workforce.

For the most part, the contemporary management theory and practice strives to promote manager’s image as an effective leader able to take decisions in critical situations, and respond to internal and external challenges in a flexible way.  Every business-related situation is unique and therefore there is no universal panacea for managers to cope with the emerging challenges. Thus, flexibility and correctly opted leadership approach are the core features that should be possessed by the managers in order to mediate people and organizations.



Bouker, P. Activity Based Costing. Retrieved February 14, 2010 from http://northonline.sccd.ctc.edu/pbouker/ACC230_Folder/Chapter08_Activity%20BasedCosting.htm

Kislik, L. 2006, Coping with change, Multichannel Merchant. Stamford: Oct 2006.Vol.23, Iss. 10; pg. 42

Nolan, D. 1988, Leadership Appraisals: Your Management Style Can Affect Productivity, Executive, 28:4, pp. 36-42.

Peters, T. and Waterman, R. 1982, In Search of Excellence, New York, London: Harper & Row.

Roberts, J. 1984, The Moral Character of Management Practice, Journal of Management Studies 21 (3): 287-302

Value Creation Group, Inc. (1994) Activity Based Costing Capabilities/Case Study Retrieved February 14, 2010 from http://www.valuecreationgroup.com/activity_based_costing_case_study.htm

Waterman, R., Peters, T. and Phillips, J. 1980, Structure Is Not Organisation, Business Horizons, Vol. 23(3), pp.14-26.


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