Leadership in the Construction Industry

Developing Authentic Leaders in a Dynamic World

George Ofori, Shamas-ur-Rehman Toor

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000350357
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Gestión

This book presents a new framework for leadership in the construction industry which draws from the authentic leadership construct. The framework has three major themes: self-leadership, self-transcendent leadership, and sustainable leadership.

Despite its significance, leadership has not been given due importance in the construction industry as focus is placed on managerial functionalism. At the project level, even with the technological advances in the industry in recent years, construction is realized in the form of people undertaking distinct interdependent activities which require effective leadership. The industry faces many challenges including: demanding client requirements and project parameters; more stringent regulations, codes and systems; intense competition in the industry; and threats from disruptive enterprise. In such a complex environment, technology-driven and tool-based project and corporate management is insufficient. It must be complemented by a strategic, genuine, stakeholder-focused and ethical leadership.

Leadership in the Construction Industry is based on a study on authentic leadership and its development in Singapore. Leadership theories and concepts are reviewed; the importance of leadership in the construction industry is discussed; and the grounded theory approach which was applied in the study is explained. Many eminent construction professionals in Singapore were interviewed in the field study. Emerging from the experiences of the leaders documented in this book are three major themes: (1) self-leadership: how leaders engage in various self-related processes such as self-awareness, self-regulation, and role modeling. (2) self-transcendent leadership: how leaders go beyond leading themselves to leading others through servant leadership, shared leadership, spiritual leadership, and socially-responsible leadership; and, finally, (3) sustainable leadership or the strategies leaders employ to make the impact of their leadership lasting. A synthesis of these themes and their implications for leadership development is presented before the book concludes with some recommendations for current and aspiring leaders about how they can engage with them. This book is essential reading for all construction practitioners from all backgrounds; and researchers on leadership and management in construction.

1 The leadership crisis

Introduction

The world faces several complex challenges, many of which are unprecedented. Demographic change, a rapidly worsening climate which is increasing the frequency and severity of natural disasters, rapid urbanization leading to crises in the management of cities, social and political instability, repeated cycles of economic recessions, and deadly pandemics are threatening the world. Many view the less than adequate response to these challenges as a collective failure of leadership at many levels of society.

Leadership has never been more critical, and yet more difficult. A UK government report notes that the challenges of leadership and management in the twenty-first century include: working in an environment of constant change; having to deal with a difficult economic climate and growing international competition; learning about and effectively using the new technologies, the knowledge economy, and the rise of social media (Department for Business, Innovation and Skills Leadership and Management Network Group, 2012). There is also a need for greater transparency; an increase in consumer demands; concern with environmental resources and climate challenges underlined by evidence of destructive weather events. The World Economic Forum’s (2016a) Global Risks Report identified these risks for 2016: failure of climate change mitigation and adaptation; weapons of mass destruction; water crises; large-scale involuntary migration; and severe energy price shocks. With good leadership, these risks can be turned into opportunities, which may prevent the risks.

Corporate scandals in many countries have exposed leaders who not only have deceived the internal stakeholders of their organizations but also have breached the trust of a large number of other legitimate stakeholders, often across national boundaries, Over recent decades, high amounts of executive compensation, evidence of unethical managerial practices, and poor corporate governance have left scars on the world’s history. Despite the efforts which have been made to restore confidence in corporate leadership, including regulations, the advocacy of pressure groups and consumer action, some leaders have continued to break the basic tenets of ethics. The public has had good cause to lose confidence in corporate leadership. The repeated episodes of corporate leadership failure make a fresh look at ethical leadership practices in organizations necessary.

This chapter highlights the crucial role that leadership plays in commercial organizations. Organizations need to have, to deploy and to further develop appropriate forms of leadership at all levels. It is argued here that a new approach to leadership that is grounded in the authenticity of leaders must be adopted in order for corporations to reap the benefits that the talented people employed in today’s business organizations have to offer.

Leadership crises in business

In the best of times, we tend to forget how urgent the study of leadership is. But leadership always matters, and it has never mattered more than it does now … the subject is vast, amorphous, slippery, and, above all, desperately important.

(Bennis, 2007, p. 2)

In the early 2000s, the corporate scandals in the telecommunication organizations, One.Tel, WorldCom, and Adelphia Communications; the energy firm Enron; and the accounting firm Arthur Anderson all made the headlines. The frequency of the occurrence of these incidents of corporate malpractice, the magnitude of the losses, the geographical spread of the negative impact, and the number of other organizations and persons affected during this era were unprecedented. Scholars and commentators started to point the finger at the type of leaders who were at the head of these organizations. The number of papers and books on leadership grew substantially in the aftermath of these scandals, and new models of leadership were proposed.

After that wave of scandals, the world might have thought that appropriate lessons had been learned, regulatory measures had been introduced and improvements in corporate governance and oversight had been effected. The optimism was misplaced. In mid-2008, the shockwaves of an approaching financial crisis, perhaps the worst economic crisis in history, began to be felt. The wave of what many now call the 2008 Global Financial Crisis, which started in the United States, had an impact on almost every country. The fall of the housing finance institutions in the United States, Fannie Mae and Freddie Mac, was the beginning of the episode. When world giants of the finance sector such as Merrill Lynch and Lehman Brothers faced major difficulties, the whole world felt the jolts of the severe economic earthquake. Companies in various countries such as Bradford and Bingley (the United Kingdom), Wachovia (the United States), Lloyds TSB (the United Kingdom), and Hypo Real Estate (Germany) followed in the series of financial failures.

Thus, not only did many venerable financial institutions in many countries go bankrupt and many major stock markets lose large proportions of their values, but also, seemingly unrelated sectors such as manufacturing, information and communications technology (ICT) and services were severely affected. The ordinary person around the world was also facing high levels of uncertainty. Several companies were forced to lay off workers, and some reduced salaries, did not pay other compensations, and slashed workers’ benefits. It was estimated that some 50 million people around the world lost their jobs.

In the global financial crisis of 2008, it became evident that poor and/or dishonest leadership and bad managerial practices had resulted in the loss of the savings and livelihoods of large numbers of people. During the period, there were renewed calls for authentic forms of leadership. Many conferences were held to debate the importance of ethics, authenticity, and the service of leaders. Books on authentic leadership topped the bestseller lists. The momentum for substantive change built up, only to subside again as the business world seemed to get back to normal.

A few years later, the world faced another series of corporate leadership crises. Nissan, Volkswagen, and Tesla (in the car manufacturing sector); Facebook and Google (in the information and technology sector); WeWork (commercial real estate), Theranos (health technology); Commonwealth Bank (in Australia), Wells Fargo (in the United States) and Abraaj (based in the Middle East) (in the finance sector) were in the news. For example, it was revealed that the privacy of Facebook users might have been compromised; users’ private information and data might have been sold to another firm without their knowledge. People’s confidence in the security of their personal information on social media platforms dipped.

Research shows that ineffective management costs businesses in the United Kingdom over £19 billion per year in lost working hours; 43 percent of UK managers rate their line managers as ineffective; nearly three-quarters of organizations in England reported a deficit of management and leadership skills in 2012, and this deficit was considered to be contributing to the productivity gap with countries, such as the USA, Germany, and Japan; and incompetence or bad management of company directors was found to be causing 56 percent of corporate failures (Department for Business, Innovation and Skills Leadership and Management Network Group, 2012). Studies show that employees are not satisfied with the leadership of their organizations. The 2019 Edelman Trust Barometer (Expectations for CEOs) Report shows that “CEOs are falling short of expectations among employees, underperforming in their societal leadership and in areas of ethics and character” (Edelman, 2019). Some 79 percent of employees expect their management to “tell the truth” but only 55 percent believe they do. Similarly, 74 percent of employees expect chief executive officers (CEOs) to embody their organizations’ values but only 60 percent agree that CEOs are doing so.

On the other hand, good leadership and management have a significant impact on organizational performance (Department for Business, Innovation and Skills Leadership and Management Network Group, 2012): best-practice management development can result in a 23 percent increase in organizational performance; and a single point improvement in management practices (on a five-point scale) is associated with the same increase in output as a 25 percent increase in the labor force or a 65 percent increase in invested capital. The report concludes that: “Improving our leadership and management capability … helping managers at all levels to develop the right skills and behaviours will ensure organisations have the ability to adapt, innovate and evolve, and seize the growth opportunities that lie ahead” (ibid., p. 7).

Leadership at all levels has seen perhaps the most difficult challenge of recent times in the form of the Coronavirus-19 (COVID-19) pandemic. Leaders at the national level and in public and private organizations are having to make some difficult decisions. Their leadership values, competence, ability to deal with crises, and emotional intelligence are being tested. The leaders’ ability to engage with their teams, communicate with effectiveness, and show empathy toward their employees is more critical than ever. As companies go under and large numbers of people lose their jobs, leaders at all levels of society have to demonstrate that their leadership is relevant and needed in these times of crisis.

It is pertinent to note that most corporate leaders receive high monetary compensations and many other perks. According to the American Federation of Labor and Congress of Industrial Organizations (Executive Paywatch, 2018), there is a massive imbalance between the remunerations of CEOs and those of the workers. The average total compensation of CEOs of S&P 500 companies was US$14.5 million per annum, resulting in a CEO-to-worker pay ratio of 287 to 1.

A critical reality that these crises have exposed is the lack of leadership qualities on the part of executives, including those at the helm of global giants. Public polls also suggest widespread disappointment with leadership. For example, a Gallup Poll revealed that public confidence in the business leadership in the USA has not changed over a period of 30 years. On a scale from 0–100, the confidence in the business leadership averages below 30 whereas the average of confidence in the military leadership is 80 (see Avolio and Luthans, 2006). The world is facing a leadership deficit:

Around the globe, humanity currently faces three extraordinary threats: the threat of annihilation as a result of nuclear accident or war, the threat of a worldwide plague or ecological catastrophe, and a deepening leadership crisis in most of our institutions. Unlike the possibility of plague or nuclear holocaust, the leadership crisis will probably not become the basis for a best-seller or a blockbuster movie, but in many ways it is the most urgent and dangerous of the threats we face today, if only because it is insufficiently recognized and little understood.

(Bennis, 1996)

The transgressions among executives revealed in the many corporate scandals (see Mehta, 2003; Revell, 2003; Brown and Treviño, 2006; Manz et al., 2008) showed that there were unethical and even toxic leaders who were able to override governance procedures and management systems to take actions to the detriment of their organizations, their employees, and society (see Padilla et al., 2007; Schaubroeck et al., 2007). Rock (2006) observed that many business organizations lacked the right people and adequate talent to take up the leadership positions. The ethics and authenticity of leaders have been questioned (see Avolio and Gardner, 2005).

Leadership crises in government

The leadership crisis is not limited to the corporate world. Nearly all institutions of society are experiencing it. The way the populace have been expressing their unhappiness with their governments in many parts of the world in the past decade is unprecedented. The Arab Spring, which started in 2011, engulfed several countries in the Middle East, and led to the toppling of many governments, began with protests in Tunisia and quickly spread to several other nations in the region. The protests were led by the educated youth over high levels of youth unemployment, lack of freedom, and perceived lack of future prospects. More recently, in 2018–2019, another wave of civil unrest occurred in several countries in Latin America: in Bolivia, Chile, Ecuador, Honduras, Nicaragua, and Venezuela for different reasons including high prices and shortages of basic items, unemployment, political corruption, and lack of personal safety owing to the high levels of crime, and these problems still persist in some of these countries. The mass protests are an indicator that people have lost trust in their leaders and in the political system.

The global score on the Democracy Index of The Economist Intelligence Unit (2019) declined between 2014 and 2017, and stabilized in 2018. With several countries around the world facing social unrest marked by massive demonstrations (Chile, France, Hong Kong, Iran, Iraq, Lebanon, and so on) and instability (Democratic Republic of Congo, Libya, and Yemen), the democracy index for 2019 declined to the worst average global score since 2006.

A poll conducted by WorldPublicOpinion.org for the University of Maryland’s Program on International Policy Attitudes, in 2008, showed that no major international political leader enjoys a high rating of public trust and confidence abroad.¹ Reporting on a more recent survey, the same organization noted: “It’s … remarkable to see confidence ratings for major world figures cluster within such a narrow and low band,” said the pollsters (see also, World Public Opinion, 2019). According to Freedom House, an independent watchdog organization which advocates the expansion of freedom and democracy around the world, freedom (political rights and civil liberties) declined for 13 years consecutively from 2005 to 2018. Countries for which the freedom score declined were consistently greater in number than those whose scores improved over these years.

Where have all the leaders gone?

Where have all the leaders gone? Bill George (2003) raises a simple, but in reality, a very complicated question in his bestselling book on authentic leadership. Describing the challenges facing modern business enterprises, George argues that capitalism has become a victim of its own success. To him, measures of business development such as growth, cash flow, and return on investment are fading away and the new criterion of success is “meeting the expectations of security analysts.” To reach the earnings targets, investments are cut back, negatively affecting the long-term growth potential of the company. To achieve the targets of profit maximization and to satisfy shareholders, CEOs forget the need to nurture the human and social capitals which earn long-term success for the organizations.

In their book on positive organizational scholarship, Cameron et al. (2003) present a picture of organizations which are characterized by greed, selfishness, manipulation, secrecy, and a single-minded focus on winning. Employees suffer from anxiety, fear, burnout, and feelings of abuse. Mistrust is common in social interactions. Such leadership illness is found in several organizations today. Sensing the so-called “leadership crisis,” scholars have realized that leadership is not merely a style, a matter of charisma, motivation, inspiration, or strategy. It should be considered as character, positive behavior, and authenticity (see, for example, Luthans and Avolio, 2003; Avolio and Gardner, 2005).

The increasing unethical practices among leaders evident in the many corporate scandals, coupled with an increase in societal challenges, have together necessitated a more positive leadership that is genuine, reliable, trustworthy, ethical, self-disciplined, and selfless. George (2003) believes that these leaders, whom he calls “authentic leaders,” possess the highest level of integrity, a deep sense of purpose, courage, genuine passion,...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of illustrations
• Preface
• Abbreviations
• 1. The leadership crisis
• 2. The role of leadership in the construction industry
• 3. Understanding leadership
• 4. Authentic leadership
• 5. Research design and the grounded theory approach
• 6. Leadership development: A lifelong journey
• 7. Self-leadership
• 8. Self-transcendent leadership
• 9. Sustainable leadership
• 10. Integration: Reconciliation of self with social realities
• 11. Further development and application of the root construct
• 12. A final reflection
• Appendix 1: Leadership interview questions
• Appendix 2: List of interviewees
• Appendix 3: List of questions for validation exercise
• Appendix 4: Results of ANOVA for various demographic groups
• Appendix 5: Frequencies for significant individuals
• Appendix 6: Ranking of significant individuals
• Appendix 7: Frequencies for significant experiences
• Appendix 8: Ranking of significant experiences
• Appendix 9: List of questions for follow-up study in 2020
• References
• Index