Governmental organizations around the world are being challenged to change the way they are doing business and providing services. This has been especially true throughout Eastern Europe and Latin America as well as in the United States and Canada. Privatization is one way in which governments are changing how they do business, taking governmental services and moving them into the private sector of the nation's economy.

A new leadership team at Primorski Sugar Corporation in Siberia, Russia is one excellent example of successful privatization. The new leadership team at Primorski has transformed the sugar refinery into a diversified world-class company. Primorski, like many governmentally owned enterprises under the old Soviet Union's economic system, had a dismal and discouraging history of chronic problems. These problems included antiquated equipment, low levels of employee productivity, and little leadership.

The new director of Primorski was selected from outside the company, once it was privatized. He challenged the entrenched managers and employees to change and to create a true private enterprise, or to leave. Most left; not the new director. The new leadership team is continuing to transform the old Soviet plant and Primorski is becoming a diversified, world-class organization.

SOURCE: T. Broersma, "Creating the Future: How Organizations Are Meeting the Challenge," Training & Development 49 (1995): 40. Copyright 1995, Training and Development, American Society for Training and Development. Reprinted with permission. All rights reserved.

SCIENTIFIC FOUNDATION

A Cognitive Interpretation of Leadership

Good science is founded on good theory and original data. Recognized with an award from the Center for Creative Leadership, this article adds an important new framework for theorizing about transformational and transactional leadership behaviors. The authors have 18 testable propositions about six mediators in the relationships between feedback, environmental inputs, and leadership behaviors. The crux of the article is the theory that because transformational and transactional leaders think differently, they act and behave differently.

Transformational and transactional leaders think differently about themselves and their followers. Transformational leaders' thoughts emphasize charismatic behavior, individualized consideration, intellectual stimulation, and empowerment; transactional leaders' thoughts emphasize directiveness, social exchange, work assignment, and contingent rewards. Transformational leaders' thoughts about followers emphasize loyalty, self-respect, self-confidence, trust, overall purpose, uniqueness, intellectual capability, and creativity; transactional leaders' thoughts about followers emphasize goal difficulty and commitment, specific task skills and knowledge, work assignment, and effort-performance-reward relationships.

Finally, there are three other cognitive differences between these two types of leaders. Transformational leaders are more abstract, manage diverse and complex inputs better, and emphasize vision over goals. Transactional leaders are less abstract, less able to manage diverse and complex inputs, and emphasize goals over vision.

SOURCE: J. C. Wofford and V. L. Goodwin, "A Cognitive Interpretation of Transactional and Transformational Leadership Theories," Leadership Quarterly 5 (1994): 161-186.

ORGANIZATIONAL REALITY

Ethics and Corporate Leadership

Corporate leaders play a central role in setting the ethical tone and moral values for their organizations. The Johnson & Johnson Credo was presented in Chapter 2 as one basis for ethical behavior at work. As chairman and CEO of Johnson & Johnson, James Burke played a pivotal role in the 1970s and 1980s in modeling ethical leadership at the company. His undergraduate education was at Holy Cross, a Jesuit college where he received important ethical and moral education. His business education came through his graduate work at Harvard Business School.

Burke called Johnson & Johnson executives to a series of Credo challenge meetings in which the significance and meaning of the Credo, at that time 30 years old, was revisited. The importance of reaffirming the ethical and moral basis for the Credo was clear a decade later when Burke and Johnson & Johnson had to face the two Tylenol crises.

Burke concluded from the successes he and Johnson & Johnson had in managing these crises that every relationship that works is based on trust. Further, he believes that trust grows on a groundwork of moral behavior. Finally, as CEO of a company with a long history of institutional trust, he believes that it is the corporate executive's responsibility to maintain the history of trust compiled over the years. Johnson & Johnson ranked No. 1 in the Fortune list of most admired corporations in corporate leadership, in no small part due to the ethical and moral values modeled by James Burke as J&J's corporate leader.

SOURCE: P. B. Murphy and G. Enderle, "Managerial Ethical Leadership: Examples Do Matter," Business Ethics Quarterly 5 (1995): 117-128. Reprinted by permission of Kluwer Academic Publishers.

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