Philip Ransome
Liberty University
BMAL501: Strategic Leadership and Management (C01)
Edward Thomas
08/10/2022
RST Carports and Metal Roofing
As per the case study, after the RST company was sold to WXY, there was a great decrease in
performance and profitability causing the company to operate at a loss by the third year after the sale.
Any takeover is expected to have drastic changes, and that’s exactly what happened at the company.
Executive management was reduced by half, the middle and lower management was reduced by 40%
while the non-management employees were reduced by 30%. This reduction was done to improve
profitability, unfortunately, it had the opposite effect. The company went from making a profit of 10.9
million in 2017 to making a loss of 2.3 million in 2020. Apart from the loss of profitability, the company
also lost its quality, it experienced an increase in accidents and also there was an increase in overtime
expected from both the management and non-management employees.
In addition to the retrenching of the personnel of executive management, roles were also
overhauled. Some positions such as the CFO and HR manager, Engineering Manager and Maintenance
Manager, and Purchasing Manager and Materials Manager were consolidated into one. These changes
led to changes in leadership styles management decision styles, and the types of power exercised within
the company over the middle and lower-level managers and the non-management employees. It can be
said that these changes are most likely what caused the company to eventually become unprofitable
Experience Levels of Employees
One of the major factors that caused the company to experience losses is the fact that they
made drastic changes in the upper management making them lose a wide spread of experience. If we
compare the previous leadership and the current leadership using the information provided in the case
study, one thing that shows that the company is going to fail is the complete overhaul in management.
According to the end year of service listed for all the managers, only Earl Engle was retained. But even,
he only stayed for two years before quitting
The company did not find a better replacement for the experience that they have lost and that
was most likely a major cause for the drastic decline in the performance and profitability of the company.
The average experience of the pre-acquisition management group was approximately 31 years (not
including the HR Manager and Purchasing Manager replacements from 2010-2017) while the highest
experience level of the current management is only three years. This loss of experience cannot be
replaced in any way.
How Leadership Styles Could Have Affected the Change at RST
Another factor that was a contributor to the fall of the RST company after being sold to WXY was
the leadership style. Whatever leadership style the upper management decides to implement will affect
the middle management and the non-management employees. Given that the performance level of the
middle management and the non-management employees greatly determines the profitability of the
company, the style of leadership is important. Except for the CFO/HR Manager, the current leadership
functions in a transactional leadership style unlike the previous management which implemented a
mixed style of leadership while focusing on transformational leadership. This change of leadership will
without a doubt impact the employees given that the transformational and transactional leadership
styles are different.
Under transformational leadership, employees are taken care of, not in exchange for their
performance, but because of the belief that improving the quality of life for the employees will benefit
the organization (Satterlee, 2018). For employees who worked under this type of leadership, being cared
for their sake, it would be a drastic change to move to a transactional leadership style where reward and
positive treatment are only in return for good work.
Prasad & Junni (2016), believed that the characteristics of these types of leadership styles are
“opposite ends of a continuum” (p.1547). In their books, both Masa’deh, Obeidat, & Tarhini (2016) and
Prasad & Junni (2016) are convinced that transactional “addresses the intrinsic needs of followers”
(Prasad & Junni, 2016, p.1547), connecting to the subordinates to motivate and inspire workers towards
the organizational vision as a greater purpose than their self-interests (Masa’deh, Obeidat, & Tarhini,
2016; Prasad & Junni, 2016). Leaders who implement the transformational leadership style are more
concerned about those whom they foresee, they take care of them not because of their performance,
but because they believe that by improving the employee quality of life, the organization’s performance
will also improve (Satterlee, 2018). Employees who have already worked under the transformational
type of leadership will find it hard to switch to a transactional leadership style whereby one is only
rewarded for good work.
How Management Decision Styles Could Have Affected the Change at RST
Just like the leadership style, the management style of the company was also changed when RST
was sold to WXY. The previous leadership practiced a democratic decision-making style while the current
leadership is using an autocratic decision style. Just like the transformational and transactional
leadership styles, the democratic decision style and autocratic decision style are different. The autocratic
leader is an authoritarian while a democratic leader will include and take input from subordinates
(Satterlee, 2018). Leaders who practice an autocratic decision style only focus on finishing the task at
hand, while democratic leadership is often expected to positively affect the performance of employees
(Caillier, 2020).
The decision style that a leader uses relates very well to the leadership style. Transformational
leadership style focuses on the employees just like how the democratic decision style focuses on the
employees. Employees during the reign of the RST company were included and cared for while
employees under the current management are neglected ad all focus has been shifted to their
performance. The employees under this leadership are just tools to accomplish a goal.
How Types of Power Could Have Affected the Change at RST
The main power types that are being utilized by the current management are coercive and
reward while the previous management used a mix of power types including expert power and referent
power which are generally considered to be more influential than the other power types according to
Satterlee (2018).
Coercive power and reward power are like two sides of the same coin. Coercive power functions with
help of threats, while reward power is motivated by the thought of a reward (Satterlee, 2018). This
means that coercive and reward power is simply performance-based and focused on the task at hand
respectively. Expert power, on the other hand, is due to the possession of specialized skills or knowledge
that will make the subordinates want to learn and also because the value of the expert leader to the
company is recognized. When RST was sold to WXY it interrupted the development of the employees,
there was not only a loss of experience but also a continuous revolving door of new employees who
needed experience. More experienced leaders with expert power would improve the training and could
have led with their experience, their ability and skills could have prevented a lot of the loss in quality and
increase in accidents.
A Pareto Analysis of the Three Main Problems That Could Have Affected the Change at RST
The charts below represent the profit and loss the company occurred from rejects, accidents,
management over time, and worker overtime. The profit values were calculated using correlation
coefficients and the data from annual profit, quality, management overtime, worker overtime, and
accidents
profit
oss
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millions)
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2018
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2019
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100%
profit
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Recommendations
From the Pareto analysis, we can see that the company declined mostly because of the
downstream effect on the non-management employees whom most of the day-to-day operations of the
company fall into their hands. There has been a rise in rejects, accidents and worker overtime over the
three years after RST was sold to WXY. These three factors had a great impact on the overall profitability.
one of the major changes that should be made is that the company should employ managers who can
make use of expert power to their advantage. This will help reduce accidents and rejects. Having expert
power available would cut down the time used in training and also allow more efficient and effective
work from the current employees.
Another change that I would recommend is that the company should look for more
transformational leaders and avoid the constant revolving door of new employees While the high levels
of worker overtime can be detrimental to morale, transformational leaders would be able to mitigate
that by investing and caring for the employees.
Biblical Integration
To some extent this case study allows us to explore more Matthew 20:25-28 where it says But
Jesus called them to him and said, “You know that the rulers of the Gentiles lord it over them, and their
great ones exercise authority over them. It shall not be so among you. But whoever would be great
among you must be your servant, and whoever would be first among you must be your slave, even as
the Son of Man came not to be served but to serve, and to give his life as a ransom for many.” This verse
allows us to understand that if we want to lead effectively, we should first understand how it is to be led
by someone else. This will help us care for those whom we lead.
Conclusions
The best conclusion that can be reached from this case study is that the leadership style that a
company chooses is very crucial to its development. As Satterlee (2018) explained, leadership is multi-
dimensional and requires an understanding of leadership abilities and how they are used to help a
company achieve its goals. This case study proves that leadership qualities and abilities made all the
difference between a successful, profitable company and one that was unprofitable.
References
Caillier, J.G. (2020). Testing the influence of autocratic leadership, democratic leadership, and public
service motivation on citizen ratings of an agency head’s performance. Public Performance &
Management Review, 43(4). 918-941.
https://doiorg.ezproxy.liberty.edu/10.1080/15309576.2020.1730919
Masa'deh, R., Obeidat, B.Y. & Tarhini, A. (2016). A Jordanian empirical study of the associations among
transformational leadership, transactional leadership, knowledge sharing, job performance, and
firm performance: A structural equation modelling approach. Journal of Management
Development, 35(5), 681-705. https://doiorg.ezproxy.liberty.edu/10.1108/JMD-09-2015-0134
Prasad, B., & Junni, P. (2016). CEO transformational and transactional leadership and organizational
innovation: The moderating role of environmental dynamism. Management Decision, 54(7),
1542-1568. https://doiorg.ezproxy.liberty.edu/10.1108/MD-11-2014-0651
Satterlee, A. (2018). Organizational management and leadership: A Christian perspective (Third edition).
Raleigh, NC. Synergistics International.
