Calsonic Kansei: Leadership Principles and Practices Evaluation

1 Introduction

The main theme within this academic report is to comprehend the leadership practices, process and behaviours that are currently demonstrated within Calsonic Kansei. The report will also look at how these practices, processes, and behaviours link to Leadership theories in existence at the time of this report. The research carried out by the author has looked at industry specific analysis, management theories, and internal documentation.

Calsonic Kansei (please refer to appendix 1 for the company website), are an automotive parts manufacturer that operate in Asia, Europe, and the Americas. Calsonic is currently owned by Global Investment firm KKR. Calsonic’s major customers are Nissan and Renault. Calsonic sells electronics, exhaust systems, engine cooling, interior, climate control and compressor parts.

The automotive industry is presently a challenging business sector. In reviewing the sector, Nieuenhuis and Wells (2015) suggested that the in the future the sector would be “driven by regulation, which usually sees the issues surrounding sustainable automobility as primarily, or even solely, technological” (p. 219). In recent times this has been evident with reduction in UK sales of diesel cars 31.3% between 2017 and 2018 (SMMT Car Registrations, 2018). Following the recent scandals surrounding the fuel emissions of the significant car industry retailers (Volkswagen, Nissan, Renault) the Government are increasing taxes on cars that do not meet the Real Driving Emissions 2 Standard (www.gov.uk).

As with many industries within the UK the automotive industry will be heavily impacted by the laws and regulation changes that will happen post-Brexit. Calsonic within the UK heavily relies on automotive parts brought in from Asia. As an example, if legislation changed to adopt the World Tariff Organisations tariff system this could lead to a significant increase in costs and potentially lead to Calsonic losing customers due to the increased cost.

2 Calsonic Kansei Leadership Practice

During this section of the report it will be discussed how the leadership team behaves and works within the organisation. The behaviours and processes that leaders undertake on a regular basis will be explored. This will be using the observations made of the organisation within their plant in the North East of England. Within CKNE (Calsonic Kansei North East) it could be argued that there are presently two different leadership practices taking place. The differences in leadership are split amongst two broad sections of the organisations departmental structure.

The first section to review is the production department. As the production department must run to strict deadlines to meet customer delivery the leadership is ordered and structured precisely. The customer sends in a precise requirement of parts needed and the vehicle that it is attached to. Following this indication from the customer a production plan is made to achieve the strict deadline. Any line stoppages with the customer attract hefty fines due to the number of suppliers that fit parts on the customer’s line.

The department is setup with a hierarchal structure (please see appendix 2 for details). Employees are instructed exactly what is required of them, which machine they need to be at, what parts are to be made, and what expected production KPI’s (Key performance indicators) they are required to achieve. Making of the parts and how to use the machines is dictated to staff via standard operating procedures. This means very little risk can be undertaken during the production process, as this could have an impact on delivery to the customer. Due to costs targets within the business to stay competitive no time can be wasted as a result. Staff must work to strict deadlines and can often feel a lack of empowerment within their roles as their work is instructed to them. Within the production process over several years there has been situations where leaders of the production process have had to become physically involved to ensure targets/deadlines are met.

In the second section – administration – a different style of leadership takes place. The focus of leadership is split out into different areas. Focus is placed on not only the tasks/objectives of the department, but the considerations of what the team requires, and employee needs are taken into consideration. Whilst the administration departments have key deadlines/objectives to reach more time is allowed where discussion and debate can take place. Regular tasks need to be carried out in this area, however ad-hoc tasks are more prevalent, which require leaders to discuss potential solutions to tasks with their subordinates. Delegation can occur also within these functions more regularly that within production, however the leader retains the overall right to make the final decision. Debate can lead to conflict or differences of opinion between colleagues. Leaders are seen to have to resolve conflict between colleagues in the same department and that of other departments.

3 Leadership Theories within Calsonic Kansei

Leadership within Calsonic Kansei is show in different ways throughout the organisation. It could be argued that this could be split between the production and admin areas, where there are several theories in existence. Production departmental leaders differ in their approach to that of the admin function. Therefore, in this section leadership theories in existence will be discussed within production and then within administration.

Within the production area there are two main leadership theories in existence. Firstly, the behaviours and practices are linked to Burns’ Transactional Leadership theory (1978). Bass (1985) defined transactional leadership as behaviour that is based on reward and punishment. This only works if the employee follows the instructions. If unsuccessful this could lead to consequences for the employee. Within the production area the leaders determine the production plan by part number to meet customer demands. Production staff are then measured on regular KPI’s to ensure they are achieving their targets.

Secondly, the leadership style could be linked to that of the Leadership Continuum of Tannenbaum and Schmidt (1973). Tannenbaum and Schmidt identified four main styles of Leadership, which included the style of ‘Tells’.

Tells is defined by Mullins and Christy (2016) state that tells is where “the manager identifies a problem, makes a decision, and announces this to the subordinates expecting them to implement it without an opportunity for participation” (p. 318). Tells is appropriate within the production environment as there is very little time for discussion to take place as they need to ensure deadlines are achieved and targets are met to meet customer demand.

Within the administration area the key leadership theory in existence is that of Action Centred Leadership by John Adair (1979). There are three key themes highlighted in the action-centred leadership model (see appendix 3 for a pictorial representation). The themes are Task, Team, and Individual. Adair (1979) suggests that a leader’s performance will depend on how they meet these three areas. Task relates to the needs of defining the task, duties, and responsibilities. Team considers the team morale, training, and communication required to finalise the task. Finally, individual relates to conflict resolution, individual performance review, and attends to the individual’s problems.

Leaders within the admin areas are expected to balance these three key areas daily. Whilst ensuring goals, deadlines, and targets are achieved they take into consideration the thoughts and opinions of their teams. As more often ad-hoc tasks are more prevalent this requires leaders to gain more opinion / conversation from their subordinates. In admin functions, subordinates will have more knowledge/skills in relation to specific tasks then the leader. They will be the idea generators that resolve the problems that occur. Specialists are employed within each chosen field with the leader overseeing their team of specialists. Whilst the leader might not have full detailed understanding of a task in hand this means the leader has to rely on their subordinates. As discussed in Best of John Adair on Management and Leadership (2008) “At whatever level of leadership task, team and individual needs must be constantly thought about” (p.138).

4 Conflicting Leadership Theories with Calsonic Kansei

Whilst there are certain leadership theories in place within Calsonic Kansei at present there are alternative theories that would not be fitting of the practice at Calsonic. During this section I will discuss three different theories that could not be used within the organisation.

Firstly, within the path-goal theory model as created by House (1971), there are four types of leadership. One of the leadership styles identified was that of Participative Leadership. This involves consulting with team members and understanding their opinions/ideas in completing a task. The manager/leader still retains the final decision. This type of theory may not work well within an automotive company like Calsonic Kansei, especially within the production section. There is a large workforce within the production environment and not all members of staff can be consulted in the decision-making precision. Furthermore, due to the fast paced, just in time, and right first-time concepts of automotive decisions need to be made swiftly. Additionally, with the size of the work force vital information could be accidentally shared with competitors because of sharing information with a larger team. This could lead to Calsonic losing its competitive edge.

Secondly, the Theory Z model as created by William G Ouchi (1981) had distinguishing features of leadership. The features included mutual trust, close bond between organisation and employees, employee participation, an integrated organisation, Coordination, an informal control system, and HR development. This was a theory designed on both Japanese and American culture. It suggests that organisations are large human systems in which they succeed depending on the use of its employees. Within the Calsonic Kansei environment this theory would be difficult to enforce. Theory Z suggests an informal control system; this is fundamentally different to CK at present where a formal structure is in place throughout the organisation. If there was no structure in existence this could cause delays in decision making and mean staff would not take responsibility for their actions. Theory Z suggests a common thinking process throughout the organisation. As Calsonic Kansei operates across different cultures and locations this would be extremely difficult to achieve. Operating this theory would not work under the current organisation structure and significant changes would be needed to make this work.

Finally, Daniel Goleman (2017) found six different leadership styles following a study of over 3,000 executives. One of the leadership styles was that of pacesetting. The pacesetting style is described as a leader who sets high performance standards. If employees do not meet this standard they are asked to perform better, or risk being replaced. Within Calsonic Kansei, turnover within the various functions is quite low. Employees appear to want to stay with Calsonic Kansei. The pacesetting leadership could lead to high turnover which could make meeting deadlines/targets difficult, which also giving the impression that Calsonic isn’t a company that prospective employees might want to work for. Furthermore, this encourages the leader to jump in at any point where a problem exists. Within Calsonic there are a lot of different processes in place at any one time. A leader might not be able to spread themselves to cover every eventuality. It also suggests that the leader may not give feedback to employees on their performance. Within Calsonic staff are motivated by participation, the feeling of ‘involvement’ and the receiving of feedback.

5 Conclusion

Calsonic Kansei operate different leadership practices across production and admin. Whilst production staff must follow a strategy that is instructed and detailed, the administration staff can focus more on people as well as the task in hand.

Whilst both sections differ in their approaches this had led the company to become successful over recent years, 29^th in the world of OEM parts suppliers(Autonews 2018). Following a successful take over by KKR from the previous ownership and with the announcement recently of the merger with Magnetti Marelli the company continues to go from strength to strength. Employee turnover is very low, and employees want to stay on within the organisation. Calsonic Kansei continues to be a good prospective employer for people to join.

It could be considered that the right adoption of leadership styles is being undertaken in separating production and admin, however it highlights the need for the organisation to be dynamic in its approach to leadership. Future leaders of the business need to be made aware of the different leadership styles and theories that are in existence. Leaders also need to understand when and how to deliver the different theories and styles. All existing staff from Section Leader and above (see appendix 2), should understand what additional tools they have available at their disposal. Calsonic do not actively train staff in leadership styles and it could be hypothesised that this would be of great benefit to the organisation.

6 References

• Nieuwenhuis, P. and Wells, P. (2015) The Global Automotive Industry. 1st edn. Chichester: John Wiley & Sons Ltd, p. 219.
• Mullins, L. and Christy, G. (2016) Management & organisational behaviour. 11th edn. Harlow [etc.]: Pearson, p. 318.
• Adair, J. and Thomas, N. (2008) The best of John Adair on leadership and management. London: Thorogood, p. 138.

7 Appendices

1. Calsonic Kansei Website: www.ckeurope.com

2. CK Hierarchal Structure

President

Vice President

Senior General Manager

General Manager

Senior Executive Manager

Executive Manager

Section Leader

Senior

Controller

Coordinator

Technician

Administrator

3. Action-Centred Leadership Diagram

https://en.wikipedia.org/wiki/Functional_leadership_model#/media/File:John_Adair%27s_Action_Centred_Leadership_Model.png

8 Bibliography

• Nieuwenhuis, P. and Wells, P. (2015) The Global Automotive Industry. 1st edn. Chichester: John Wiley & Sons Ltd.
• Car Registrations (2018). Available at: https://www.smmt.co.uk/vehicle-data/car-registrations/ (Accessed: 25 October 2018).
• Vehicle tax rates (2018). Available at: https://www.gov.uk/vehicle-tax-rate-tables (Accessed: 25 October 2018).
• Mullins, L. and Christy, G. (2016) Management & organisational behaviour. 11th edn. Harlow [etc.]: Pearson.
• Bass, B. M. (1985). Leadership and performance beyond expectations. New York, NY: Free Press; Collier Macmillan.
• Tannenbaum, R. and Schimdt, W.H. How to choose a leadership pattern. Harvard Business Review, May – June 1973.
• Adair, J. (1979) Action Centred Leadership. Gower.
• Adair, J. and Thomas, N. (2008) The best of John Adair on leadership and management. London: Thorogood.
• House, R. J. A Path-Goal Theory of Leadership Effectiveness Administrative Science Quarterly, vol. 16, September 1971.
• Ouchi, W. (1993) Theory Z: How American Business can meet the Japanese Challenge Avon.
• Goleman, D. (2017) Leadership That Gets Results (Harvard Business Review Classics). 1st edn. Boston: Harvard Business Review.
• Top 100 global OEM parts suppliers (2018). Available at: https://www.autonews.com/assets/PDF/CA116090622.PDF (Accessed: 26 October 2018).