Managerial Leadership and Building Organizational Morale

In 2007, the United States economy faced a tremendous setback. The stock market crashed, thousands of jobs were lost, and countless businesses went under. It was not just a shock to the nation, but it dealt a significant impact on the rest of the world. When popular media discusses this experience, a lot of it comes from what those outside of these changing organizations (businesses, nonprofits, etc.) thought, however, within these businesses, there was as unique experience, a mini culture inside of the main dominant national culture. This change had perhaps the strongest impact on those in that organization, those that it directly impacted in some manner. Research over the last 30 years has really been studying the dynamics of organizations. In fact, organizational Management has become a very study in itself. Loosely defined organizational management here is whatever process, organization, planning, and research management and control within an entity that aims to meet the organizational objectives. There are many facets to organizational management. When a leader assumes their position, they are responsible to make sure certain areas include organizational coaching to ensure a productive organization. One important area is organizational morale among employees, staff, and all stakeholders. 

According to Finger (2005), “morale is more influenced from the top down than from the bottom up.  There is no single factor that consistently explains good or poor morale.  Rather, a combination of related factors results in good or poor morale” (Finger, 2005, n.p.). Management or leadership assumes the role of morale builders when they take their position, and this not a light task at all, although very important. For the purposes of this project morale is loosely defined as the descriptions of emotions, sentiments, feelings, attitudes, satisfaction, and general outlook of an organization's employees during the time they are in the workplace environment. What are their perceptions of the environment, what do they like or dislike?  

While it is important to discuss morale when organizations are experiencing difficult economic setbacks. Morale is still important at other times, even when the organization is experiencing success, and is possibly growing in size. The organization The Independent Filmmaker Project (IFP), which according to their website (2013), 

“Debut with a program in the 1979 New York Film Festival, is a nonprofit that has evolved into the nation’s oldest and largest organization of independent filmmakers, and also the premier advocate for them. Since its start, IFP has supported the production of 7,000 films and provided resources to more than 20,000 filmmakers’ voices that otherwise might not have been heard. IFP believes that independent films broaden the palette of cinema, seeding the global culture with new ideas, kindling awareness, and fostering activism” (Independent Filmmakers Project, 2013).         

Recently the organization’s Request for a Proposal (RFP) for procurement was granted by the city of New York. This resulted in a major change for the organization. The budget doubled from 2,5,00,000 to 5,000,000. Although this was a well-received change, this change also brought an increase in the organization’s workload. This increased workload has also seemed to make the morale among workers at IFP reduce dramatically. With a seemingly positive change due to organizational growth, comes this potential negative impact. As stated, it is important for management or organizational leadership to take the reins on helping to keep employee motivation and morale at a satisfactory level, but as also stated this can be a complicated task. The following research will look at building organizational moral. What is the purpose of building organizational morale, and why is it important? What are the most effective ways? How can leadership strategically plan moral building with other organizational priorities? These and other questions will be answered in relation to the low morale at IFP.   

Parameters of the Review

This literature review includes scholarly research published and peer-reviewed in the United States into building organizational morale within the following parameters. First, only those articles published in or after 1990 and before 2011 are included. The present study is concerned with the recent development of managerial methods for building organizational morale in the last 25 to 30 years. Secondly, studies of a psychological nature will not be the focus of this literature review or the study itself, although a few may be briefly mentioned in passing. This study relates to organizational practices themselves, and not really as to the psychological reasoning to low company morale. It is important that the study stay in the context of organizational management, and not get distracted to more complex studies. This leaves opportunities for later studies in the subject matter. Thirdly, the review is concerned with organizational management in the broadest sense. Therefore, it is intent of the study to cover as general as a study to include and organization, whether it is nonprofit or for profit. For this reason, the term organization has been chosen instead of other business-related terminology. Finally, the review included a variety of research studies from case studies, phonological studies, etc., to set the parameters of the current study which will be a mixed model study of building company morale in an organization. 

The following databases were searched from 1990 to 2011 for peer-reviewed, English language papers containing the keywords “organizational morale”, “business management”, “organizational development”, and “business management”: Academic Search Elite United States Reference Centre;, EBSCOhost Online Citations ebooks and journals; ERIC; Business Source Complete Elite, ABI/INFORM Complete; Psychology and Behavioural Sciences Collection, Emerald Management Journals, and SAGE Premier. In addition, papers located for previous reviews by the authors and previous multidiscipline research such as ProQuest Central and Academic Search Complete were included, as were papers cited in the reference list of these papers. The internet was also searched using the keywords “scholarly articles on organizational moral” and “organizational management” was also used for source materials. The author intend continue to search for relevant literature during the course of the research.

The topics of particular interest in the present study are the case studies, phenomenology studies on organizational morale, organizational morale building, and business management that focused on the leadership’s role in creating a high morale environment, in addition to leadership-employee relations, and general organizational relations practice models. A small section on cost-effectiveness has also been included in the literature review as well because cost was often discussed in the literature, but this is not the focus of the current research study.

Section One of this review outlines the models described in the literature. Section Two will be a brief discussion of the disadvantages and advantages of working in a nonprofit organization. Finally, Section Three will provide a summary and critique of the literature reviewed.

Section 1: Reasons for Low Morale and Models of Morale-building in Organizations 

Recent research has shown that unscheduled employee absenteeism is increased when there is low morale in the workplace. One study by CCH Incorporated (2007) gave a survey of reasons why employees have unscheduled absences with their employment. 66% of the absences were because of reasons listed as other, whereas personal illness only accounted for 34%. Within that 66% much of it had to do with some type of displeasure with the work environment. In fact Branham (2005) asserts that, “it seems clear that one quarter to one half of all workers are feeling some level of dysfunction due to stress, which is undoubtedly having a negative impact on their productivity and the probability that they will stay with their employers” (Branham, 2005, n.p.). Morale can be the fuel that drives an organization forward or the fuel that feeds the fires of employee discontent, poor performance, and absenteeism (Ewton, 2007, n.p.) In fact, Gregory (2009) states that,

“When a company expects their employees to perform outside normal working hours, it detracts from those employees relaxation time. Personal time is essential in maintaining relationships, personal wellbeing, and sanity. The extra strain of needing to finish an unreasonable amount of work to keep the job dramatically increases employee anxiety. Employees that struggle to finish their tasks become less likely to attempt advancement and more likely to begin the search for a new job elsewhere” (Gregory, 2009, p.30-31).

Given this type of information, researchers have spent a lot of time looking at morale in the workplace. Two leadership models that deal directly with the work environment pertain to leadership, Service Leadership, and Transformational Leadership.   

The current study aims to describe organizational morale-building models in the United States and internationally, utilizing data derived from focus groups investigating the current models of organizational morale building that are being practiced throughout the United States and internationally. This section of the review will examine models of types of morale-building in organizational management as described in the literature. This will provide a basis for comparison of the many different methods and practices or organizational morale-building within the field of organizational management. The critique of these studies will be discussed in sections two and three.

Fifteen studies have been chosen that discussed or described some aspects of their models of organizational morale-building during difficult times or times of growth. This section outlines some of consistent features across the organizational morale-building programs and practices described, as well as some of the features that are unique to particular organizations. However, it is limited to what was actually reported in the literature. It may be that many more programs and practices share the features described by one or two, but if these features have not been reported in this article, they have not been included in this description. This is given the time constraints for the preparation of this research study.

Models

The first level of organizational morale-building research discusses the two sub-points: service leadership and transformative leadership. According to O’Malley, (2005), “Service excellence requires you to lead more than manage. Executives and senior managers need to lead by example. They must walk the service talk—better yet, run. Furthermore, SL is not solely the responsibility of management (O’Malley, 2005, p.12). In reference to transformational leadership, Chowdhary & Saraswat (2003) states that “based on previous studies (Podsakoff, MacKenzie, Moorman, & Fetter, 1990; Bass, Avolio, Jung, & Berson, 2003; Yukl, 2010), the present work evaluates the importance of Transformative Leadership TL in relation to organizational behaviors by promoting cooperation to reach common goals, having high performance expectations, encouraging employees to re-think their earlier service outcome so that they can evaluate how to perform better, modeling, articulating a vision of a better service outcome, and showing respect and concern for employees’ personal feelings and needs” (Yang, 2012, 316). Transformative Leadership described by the literature like Chowdhary & Saraswat (2003),

“Leaders have a very informal relationship with employees. ‘The friend’ or ‘the colleague’ invariably replaces the boss. In some situations, the boss has worked along sides others as apprentices before taking on as directors or managers. Leaders are sensitized towards the wellbeing of their employees. Leaders believe that their job is to support their employees who in turn would serve their customers. They are a part of a big family, each joining the other in family functions and occasions. Relationships are not restricted to workplace; they extend well beyond that. Leaders of these companies have been particularly successful in eliciting the uncompromising loyalty of their employees” (Chowdhary & Saraswat, 2003, p.114). 

The idea is to create a new kind of work environment. One that goes beyond the typical manager/employee relationship, to a more family-type atmosphere. Creating this family type of relationship helps to give employees a sense of responsibility and loyalty to their employer. Creating this type of culture was found throughout the literature (Ewton, 2007, Finger, 2005, Schuler, 2004, & Shein, 1992). According to O’Malley (2005), “SL is germane to providing differentiating service from the inside out” (O’Malley, 2005, p. 12). The research purports the idea that an organization strong in SL and TL, have good implications for all stakeholders involved. Those inside and outside of the organization. Lillis & Macaulay (2008) believe that “An organization is the product of its history, its resources, and experiences. Its previous investments in service provision, plus the range and type of service processes that have developed over time, will constrain what it does in the future. Any development efforts to enhance service competency have a much longer tail than is commonly thought. So it often helps to take a look backwards in order to move forwards” (Lillis & Macaulay, 2008, p. 41).

Therefore, if a leader knows the history and purpose of the organization as predicated by leaders before him/her, they have a strong commitment to improving their leadership style to better serve all customers, inside and outside of the organization. The literature in this area shows that is leadership is involved and becomes part of the organization, the more employees are likely to feel part of the organization and committed to its success. On study even liked the idea of SL and TL to a specific African leadership style Ubantu. Ncube (2010) states,

“Although most leadership philosophies tend to be conceptualized from the leader’s perspective, they nonetheless recognize the important role of relationships with subordinates or followers. At the heart of Ubuntu is the relationship with others. Ubuntu encourages humanness and recognizes the sanctity of human life. No individual is more sacred than another. The respect of another’s basic humanity is absolute” (Ncube, 2010, p. 76).       

Organizational Change

The next model of building morale in an organization is the idea of organizational change. The leading study in this model is Kezar (2001). In the study the research talks about the “six main categories of theories of change assist in understanding, describing, and developing insights about the change process: (1) evolutionary, (2) teleological, (3) life cycle, (4) dialectical, (5) social cognition, and (6) cultural” (Kezar, 2001, p. 17). As it relates to the study of morale-building in an organization the two categories of theories that best fit are social cognition and cultural. According to Harris (1996) social-cognition models look at how leaders shape the change process through framing and interpretation, and how individuals within the organization interpret and make sense of change (good or bad) within the organization… change can be understood and enacted only through individuals within the organization, and everyone is different (Harris, 1996, n.p.). Other researchers have suggested the differences among individuals within an organization (Cohen & March (1991a, 1991b); Bolman & Deal (1991); Morgan (1986); and Weick (1995). According to Kezar (2001), “Cognitive models built on the foundation of life-cycle models by examining in greater detail how learning occurs and even tying the notion of change more directly to learning” (Kezar, 2001, p.45).  In addition Kezar (2001) states that “organizational leaders need to identify the social-cognition approach of employees, their theories of action, and align them with espoused organizational values and change initiatives” (Kezar, 2001, p. 47).    

The next level of organizational change is cultural. According to Smirich (1983), “change can be planned or unplanned, can be regressive or progressive, and can contain intended or unintended outcomes and actions…change tends to be nonlinear, irrational, non-predictable, ongoing, and dynamic” (Smirich, 1983, n.p.). Therefore, since organizational change is not something that can be planned for with much detail, and is always expected, leadership should build a culture that is adaptable to this change. There should be an expectation of this change. If this culture of expecting change is created, then there would not be a shift (or much of a shift) in employee morale in an organization, because of the expectation of change. Organizations are dynamic organisms, and change is inevitable. 

Communication is a major factor in building a culture to raise morale in an organization, or even avoiding morale going low. This openness helps ensure that employer and their employees are on the same page. There is a mutual agreement of the organizational mission, purpose, and goal. Schuler (2004) states “a loss of confidence in leadership follows when people believe that those in charge either don’t really know what they’re doing, don’t care about employees or are fundamentally dishonest (Schuler, 2004, n.p.).” Too much “professional” distance among people who work together often keeps a team from reaching its peak of morale and productivity, and when you don’t know or understand the people around you very well, it’s much easier to misunderstand them” (Schuler, 2004, n.p.). In general the idea found throughout the literature is to create a community aspect, one where the employer is approachable, and that the employees are allowed to have a voice because they are seen as an important, if not the most important factor to organizational success. Workplace Performance Solutions state that “Communication that lacks clarity, focus, important details, is too infrequent, lacks meaning, and does not allow staff to respond and discuss their concerns can contribute to morale problems in the workplace.  To help prevent morale issues in the workplace leaders need to spend time communicating their vision to ensure that “everyone is on the same page”(Workplace Performance Solutions, 2006, n.p.).    

The High Cost of Low Morale

All the research reviewed makes it clear that there is a high cost to any organization when the morale is low. One of the better ones on the high costs associated with organizational low morale is was the Workplace Performance Solutions (2006) text. The text states, “leaders who fail to address morale issues in the workplace face the following:  decreased productivity, increased rates of absenteeism and associated costs, increased conflicts in the work environment, increased patient complaints and dissatisfied consumers of care, and increased employee turnover rates and costs associated with hiring and training replacement staff” (Workplace Performance Solutions, 2006, n.p.). These types of consequences could have a disastrous impact on a nonprofit organization, even leading to closure. Many organizations are founded in the United States a year, but a lot do not survive due to some of these factors. In addition, According to the CCH Unscheduled Absence Survey, “employers have failed to make significant headway against the costly absenteeism problem that takes billions of dollars off the bottom line for U.S. businesses.  The nation’s largest employers estimate that unscheduled absenteeism costs their businesses more than $760,000 per year in direct payroll costs, and even more when lower productivity, lost revenue, and the effects of poor morale are considered” ("CCH 2007 Unscheduled," 2007). Not only is the environment damaged due to low morale, but organizations can also lose a lot of revenue when workers do not come to work. 

Section Two: Advantages and Disadvantages of Working in a Nonprofit Organization 

The research points out that there are many advantages and disadvantages to working in a nonprofit organization. One common disadvantage found is that work environments can be frustrating. Typically due to funding, there is old and outdated technology that makes performing work tasks difficult. Some even consider that there is a lot of bureaucratic red tape, working at a nonprofit can be downright exasperating. As is the case with IFP Employees are asked to do more work with fewer resources, and take these limited resources and do quite a bit while at the same time satisfy competing interests. In addition the bottom line is not clear, and many employees deal with the potential of low job security. Otting (2007) points out that “The level of burnout is high. Those who enter the nonprofit workforce with a specific mission and goal in mind do so with great purpose. This great purpose often places a heavy weight on the shoulders of those doing the work” (Otting, 2007, n.p.). In addition to having a high workload added stress is given in the fact that there is increasing importance in fundraising. 

“There is a constant focus on fundraising. Nonprofit executives wake up every morning and go to bed every night worrying about the location of their next fundraised dollar. This constant pressure leads to certain internal issues going unaddressed until a crisis emerges, takes the chief executive away from the office for long periods of time, and can lend itself to mission drift” (Otting, 2007, n.p.).

In addition, many people do not view working at a nonprofit as permanent or stable. Otting points out that 

“Turnover can be high in nonprofit organizations for a variety of reasons:  People move on to better paying jobs or higher level positions, go back to school, or switch sectors; large number of younger people tend to change jobs more frequently; lack of organizational infrastructure tools (professional development, leadership training, and so on) to retain their employees; and a single person’s departure can mean the loss of a good deal of institutional memory and community connections” (Otting, 2007, n.p.).

These issues with working in a nonprofit organization can create a sentiment among employees that make the environment a stress-filled environment, where morale is typically low. However, the research points out that there are some advantages to working in the nonprofit sector. Much of the research points to the fact that in nonprofit organizations unparalleled growth opportunities exist. While in the corporate arena three corporate employees may be assigned to one project, one nonprofit employee may find himself assigned to three projects. “This can lead to faster career development and more varied job responsibilities for those looking to get ahead quickly” because there is more opportunity to learn the entire organization (Otting, 2007, n.p.). They are allowed to wear several. There is also a “greater levels of responsibility. Professionals in nonprofits are often allowed or required to take on more responsibilities than professionals in other sectors where there may be more resources to hire additional staff. Examples include: managing staff and volunteers, working on projects outside of their expertise, and collaborating with outside individuals and organizations in a meaningful capacity (Otting, 2007, n.p.)”.  In addition there is a greater organization culture of like-minded people, which inspires teamwork and fosters and environment collaboration instead of internal competition that sometimes plague the private sector. Often, nonprofit employees are strongly dedicated to the work that they do, and this can help to avoid the morale going low. There is a passion for the work being done. 

Section Three: Summary and Critique

The review of the models indicates that there are two main aspects of leadership improving organizational morale during a time of change.  These different studies fall into two main themes or models: service or transformational leadership and organizational change.  All studies made it clear that there was a need to address employee stress.  All studies examined although, most emphasized that there are very differences in stress factors among employees, focused on the idea that it is management or leadership’s responsibility to improve organizational morale.  They varied according to how to specifically address the issue. Many agreed that the uses of a multi-model approach may be best to address this issue. There were studies that suggested the interaction of the employee and the employees and increasing the level of interaction between the two groups. In other words making the work environment more family-like. This model emphasizes that leadership should demonstrate that they are committed to completing the huge amount of work as well, this helps to build morale and creates a sentiment of ‘togetherness.’   

The second model deals with changing the entire organization, because of the recent change. Two models discussed where the social cognition and the cultural models. Social cognition deals with working with the different beliefs that employees bring to their workplace from outside influences and their previous experiences. The literature purports that organizational leaders need to identify the social-cognition approach of employees, they need to take these varying ideas, thought, and beliefs, and somehow align them with the needs and the culture of the organization. Other aspects of the literature as it related to the culture is the aspect of preparing employees of an organization for change prior to change actually happening. The research shows that it is important for leadership to create a culture that anticipates change, and expects it as part of the norm of the organization.  

A lot of the research offers an incentivizing approach to building organizational morale. These researchers point out that if there is an extra incentive offered other than the typical paycheck, this will help to increase not only productivity, but it will make employees eager to work. An additional point that has been found throughout the research as it relates to culture effective communication. Almost all of the research in general points to improving communication between employers and employees, and opening the chain of communication, which should follow a top-down and bottom-up approach. It is emphasized that this will help create an open culture and will help to increase organizational morale because employees feel valued enough to be heard. 

In addition to the models of organizational morale-building, the literature reviewed discussed the advantages and disadvantages of working at a nonprofit organization. Although the research thus far has been limited in this field, it has been pretty consistent. Some of the disadvantages are employees are asked to do more work with fewer resources, work environments can be demanding and employees take these limited resources and do quite a bit while at the same time satisfy competing interests. Most of these disadvantages are tied to resources and funding because these organizations are not for profit, they require a great deal of care when dealing with resources. However, there are many advantages. One is that there is an unparalleled growth opportunity. Because professionals in this sector wear many hats, they become familiar with many functions of the organization and others like it. This helps them to get the experience to move up in the organization. In addition, most people in a nonprofit organization have a sense of purpose that unites them on the job, and therefore many times collaboration and teamwork come easier in a nonprofit because of this shared mission. This is not always the case in for-profit organizations where sometimes competitive forces are at an all-time high. 

One critique of the literature is more specific to the need for applicable information on the nonprofit sector itself. The literature that is available relates to for-profit organizations. For the purpose of this study it had to be used in relation to IFP which is a nonprofit organization. Although there are many similarities, there are certain issues that relate specifically to morale-building in a nonprofit organization, that had literature been available would have been useful in this study. Some of those nonprofit specific issues would be the low morale due to the inherent assumption that job stability is always on the line, that there is a low amount of resources allocated to professional training, and much of it is on the job training, and lastly the idea that at some mismanaged nonprofits some employees do not get benefits nor even pay sometimes. These are nonprofit specific concerns that could be addressed more in the literature.  In addition, another critique would be on the lack of literature that focuses on morale in a field of interest by the employees. It is assumed for IFP, these are not typical employees as they are passionate about filmmaking, and this may perhaps curve their morale going low.  

References

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