The organizational leadership of the post Baby Boom generation: an upper echelon theory approach.

Seaton, L. Jeff ; Boyd, Michael

ABSTRACT

Organizations entering into the new global economy of the 21st century face challenges and threats never before experienced. Researchers have predicted that the key to success in this new era of globalization lies in the organizational leaders' ability to provide strategic leadership. The upper echelon theory suggests that leaders of organizations are subconsciously bounded by psychological factors within the leaders' personal criteria which they have been socialized to in their lifetimes. This paper will use an upper echelon theory approach to explain how the ethical and entrepreneur perspective differences of the newer generation of leaders will affect the strategic leadership of the 21st century.

INTRODUCTION

"The generation gap phenomenon has been extensively described and discussed ... today contemporary students are seen as being lower in authoritarianism, desirous of personal freedom of expression and oriented toward shorter term achievement horizons ... " (Ondrack, 1973)

While this statement could easily be a part of an article in any of today's business publications, it was published in a 1973 issue of The Academy of Management Journal by D. A. Ondrack (1973). This article stressed a concern with generational diversity, which has been an ongoing part of organizational behavior research for several decades. Ondrack (1973) posited that the strategic leaders of the Baby Boom generation (born 1943 through 1964) would change the face of the business environment by seeking more entrepreneurial activities and gravitating away from bureaucratic organizations with their strict rules, policies and cultural standards.

With the tremendous growth in entrepreneurial businesses and the diversion from the status quo of the 70s, 80s, and 90s, we can safely say that the Baby Boom generation has indeed lived up to Ondrack's predictions. Timmons and Spinelli (2004) stated that during the last 30 years the strategic leadership of the Baby Boom generation has permanently altered the economic and social structure of the world with their entrepreneurial and diverse ideas.

The next logical question concerning researchers who examine generational differences in organizations should be: what happens with the next generation of strategic leaders, referred to as Generation X (born 1965 through 1976) and Generation Y (born 1977 through 1994)? Will they be as diverse from the Baby Boomers as the Baby Boomers were from the Silent Generation (born before 1943)? If so, what types of strategic leadership differences should we expect in the future of our organizations?

STRATEGIC LEADERSHIP

Organizations in the global economy of the 21st century face challenges and threats never before experienced. Today, changes are revolutionary and no longer evolutionary in nature (Greenwood and Hinings, 1996). Revolutionary changes are constant, swift, frequent, and affect virtually all parts of an organization simultaneously. While these changes may invoke a sense of fear and anxiety to the organizations unprepared for the future, organizations with strong strategic leadership will welcome this new millennium as a great opportunity to excel.

An effective strategic leader will create a viable future for the organization by anticipating, envisioning, maintaining flexibility, thinking strategically, and working with others to initiate change (Christensen, 1997). Effective strategic leadership can enhance a firm's ability to cope with the turbulent and unpredictable environments that are exemplified in today's global environment (Huey, 1994).

While many previous authors have accurately pointed out the importance of strong strategic leadership in today's business environment, little is published to describe the influences that affect the new generations' ability to provide such strong strategic leadership for today's business organizations.

GENERATIONAL DIFFERENCES

Recent studies have indicated that, like the Baby Boomers, Generations X and Y have continued to move further away from the bureaucratic axioms of the past (Longenecker, McKinney, & Moore, 1989).

Generation X was raised in a time of cultural revelation in our country with the appearance of such things as the insurgence of rock music, computers, Watergate scandals, and the assassinations of President Kennedy and Martin Luther King, Jr. Also, this generation grew up seeing their parents being more focused on work and less family oriented than generations in recent history. These individuals saw a very strong change in the way people perceived work, entertainment, ethical behavior, war, racial diversity, and the government, just to name a few.

Generation Y has grown up with even more diverse experiences. This generation is the product of more single parent families than any generation before. This generation has seen a new wave of unethical behavior in our society with the O.J. Simpson trial, multiple school shootings, the perjury trial and impending impeachment of President Clinton, and the downfall of organizational icons such as Enron, Arthur Anderson, and Martha Stewart.

The emergence of violent video games, sexually explicit rap music, "reality TV" and other current entertainment programming, has increased the amount of violence, language and sexual content that this generation has been allowed to experience and associate with acceptable behavior (Pelton & Sheb, 2004).

The value system of the newer generations began in their early life as they were taught to behave according to their parents' expectations. Their value systems were further developed in later life as the individuals watched TV, listened to music, joined sports teams, attended schools, universities, social institutions, and began to work in organizations (Meglino & Ravlin, 1998). This generation has witnessed the introduction of quick and endless information by using lap top computers, the internet, cell phones, etc. They have been raised in an information and technology explosion era (Wolberg and Pokrywczynski 2001).

The days of waiting for a letter, going to the library, and searching through encyclopedias for needed information, has not been experienced by this generation. They expect instant results and returns, which has lead to a lifetime of instant gratification and, ultimately, the disappearance of the virtue of patience.

This generation experienced more parental divorce than in any generation before them. They experienced higher insecurity in financial needs and family needs as they watched their parents lose their jobs because of corporate downsizing and economic strains on commerce.

Generations X and Y have developed a lower value on work, are less willing to sacrifice personal life styles and career for the organization, and hold less loyalty to the firm. As they saw the organization's perception of the social contract between worker and firm erode, they became less secure in their future with any organization (Davis, Pawloski, and Houston 2006). They shifted their focus from the "nose to the grindstone" paradigm of their parents and grandparents, to a higher quality of life paradigm that cherishes free time and searches for a balance between work and play.

Pelton and True (2004) suggests that because of the experiences, socialization of accepted behaviors, and creation of new paradigms by the newer generations, the leaders of these generations will be the most consumption-oriented and ethnically-diverse leaders in history. They suggest that the entrepreneurial and ethical perspectives of these new leaders should, as the Baby Boom leaders did before them, change the face of the business environment forever.

ETHICAL DIFFERENCES

In today's business environment, more and more incidents of unethical behavior by organizational leaders are surfacing throughout business organizations. Petress (2003) suggests the publicized situations of individuals in corporate America exhibiting ethical lapses are not a result of a sudden decline in moral values. Instead, much of their ethical behavior developed over time.

The newer generations of managers are believed to accept and become involved in unethical behavior much more readily than do their predecessors. Longenecker and colleagues (1989) conducted a study that examined the ethical beliefs of individuals from different generations. The study used 16 ethical dilemma vignettes to measure the ethical behavior of the respondents. In 14 of the study's 16 vignettes, the new generation respondents showed greater tolerance of ethically questionable behavior than did the older respondents. One of the primary findings of the study was that when considering ethical issues such as padding expense accounts, evading taxes, bid rigging, giving illegal gifts for business purposes, using insider information, engaging in copyrighting violations, and willingness to change financial reports, the younger generation's acceptance of these behaviors were significantly more tolerable than those of the older respondents. These findings were also reflected in a recent Gallup Poll (March, 2004), where approximately 67% of older Americans stated that they were dissatisfied with the moral and ethical climate of the nation, while only about 47% of the newer generations voiced a dissatisfaction with the present climate.

These numbers are a concern in today's business environment because as the later part of the Baby Boom generation moves toward retirement, Generation X and Y managers are slowly and quietly moving into the management teams of business organizations (Wood, 2005).

ENTREPRENEURIAL DIFFERENCES

Entrepreneurial thinking has always been an important mainstay in our business environment. As we progressed from agrarian existence, thru the industrial age, to now, it has been entrepreneurs who often forged the way to change.

The Baby Boomers used entrepreneurial innovation to help our country grow into the top-producing nation in the world. With their strong work ethic, they conceptualized and brought to fruition many new business ideas and concepts that made this country's business environment the envy of all who saw it.

Technology was the primary driver of growth and change for this generation. Through new technology, they were able to create goods and service companies that had the ability to change quickly to the market's erratic fluctuations. This generation's materialistic paradigm created an entrepreneurial spirit like never before seen in the business world.

The newer generations are even more tech savvy than their generational predecessors (Johns, 2003). For this reason, we can expect that entrepreneurial growth will continue to be spurred on by the cutting edge technology of today. Though similar in this respect, the entrepreneurial ideas of the Baby Boomers and generation X and Y become much more delineated at that point.

The newer generations have been described as individualistic, distrustful of corporations, lacking in company loyalty, living their lives on the edge, embracing of change, and very outcome focused (Allen, 2004). The newer generation will try to get things done quicker, even if it means bending the rules a little (Eisner, 2005).

Most of the entrepreneurs of the Baby Boom generation started their careers working for a company. After acquiring knowledge and experience, their confidence in their own ideas and their abilities to contribute something meaningful by starting their own company increased. They then moved into their own companies in order to pursue their entrepreneurial ideas.

The newer generations are more confident in themselves and much quicker in their careers. These generations have been told that they can do anything and they tend to believe it from the start (Martin, 2004). They need and demand instant gratification in their careers. This generation is more likely to "rock the boat" than any generation before them (Johns, 2003).

The goal of gaining status and material worth, sought by the entrepreneurs of the Baby Boom generation, has been replaced with the newer generation's desire to find intellectually challenging work that makes a difference and helps society. Therefore, the newer generation is just as happy being an entrepreneur within the boundaries of their present company. This type of entrepreneur, referred to as an intrepreneur, find challenges within the company that satisfies their creative desire while helping them to create something they feel is meaningful and contributes to society.

While the entrepreneurial spirit of this newer generation is energetic, to say the least, it lacks direction (Eisner, 2005). The newer generation of entrepreneurs are inclined to plunge themselves in to work they find interesting and important even if they know little about it (Lewis, 2003). Since the desire to work on challenging tasks has taken the place of the goal of maximization of profits for this generation, it is much more accepting for this generation's entrepreneurial ideas to conclude with no financial gain.

The newer generation is also more likely than their generational predecessors to become dissatisfied and uninterested in the present idea if a newer seemingly more interesting or meaningful idea arises (Eisner, 2005). These entrepreneurial differences have made this generation more unpredictable than any before them.

UPPER ECHELON THEORY

The upper echelon theory is based upon the idea that top management teams form cognitive maps that are created from their own past experiences (Hambrick and Mason, 1984). These past experiences act to constrain top management team members as they can only consider solutions that fall within their cognitive map, referred to as their bounded rationality.

Hofstede (1996) describes an individual's personal criteria, or bounded rationality, as a type of accumulation of past and present experiences which Hofstede refers to as "software of the mind". He posits that individuals become what they are, perceive things as they do, and react as they will as a result of the people, events, and social relationships experienced in their lives. This type of learned behavior is a product of what researchers refer to as socialization (Allen and Meyer, 1990; Ashforth & Saks, 1996; Jones, 1986).

When an individual is born, he/she begins to experience their environment's distinct way of life complete with its own rhythms, rewards, relationships, demands, languages and potentials. The individual entering this environment is naive and begins searching for ways to make sense of the new environment, as well as a means of relieving the stress associated with the ambiguity of the situation. Socialization facilitates adjustments to the individual's internal value system as to which behaviors and perspectives are acceptable, customary, and desirable, and which behaviors and perspectives are considered deviant, taboo, and unacceptable (Ashforth & Saks, 1996). Stated specifically, individuals will interpret their experiences within the context of their environment's milieu (Fisher, 1986; Van Maanen, 1976). The key to understanding this new environment, and thus becoming an effective member of the environment, lies in the acquiring of a variety of information and behaviors (Fisher, 1986; Louis, 1980; Weick, 1995).

As the current paper has stated, the present generation is very diverse from their generational predecessors. The ethical and entrepreneur perceptions of this generation are a product of a very different set of experiences.

Unethical behaviors in the organization seem to be based on the culture of the people who reside in the organization. The culture for each of the generations being described in this paper have some very different beliefs about right and wrong, moral and immoral, or ethical and unethical behaviors. As unethical behaviors have become more acceptable to the newer generations, the presence of these behaviors in today's organizations has become more prevalent.

The entrepreneurial spirit is still alive and well within our business environment but has taken different courses over time. The Baby Boomers wanted to be self sufficient, stand independently, and create material wealth while generation X and Y are impatient, do not have a lot of loyalty to the organization, are willing to be innovative either inside or outside of the corporation, demand a balance between work and self interest, and are willing to give up monetary gains in exchange for interesting and meaningful returns.

According to the upper echelon theory, as these new generations of leaders move into top positions in our organizations, they will make strategic decisions that fall within their own rational boundaries. These boundaries include the tolerance of more unethical behavior and the pursuit of more interesting, and socially meaningful entrepreneurial ideas that lead to less profitable outcomes for the organizations they represent.

More and more we are hearing about unethical behaviors in our organizations. We are also hearing of organizations that are becoming more socially responsible while foregoing opportunities to increase profits. This adds support to this paper's proposal that as the baby boomers are moving out of the top management teams and succession leads to the presence of the new generation of leaders, the strategic leadership in the organizations reflect more of the perspectives of the newer generations.

CONCLUSION

The generational differences that exist within our organizations are extremely salient and well defined in organizational literature. The baby boomers are a generation that has a strong work ethic, strives for materialistic rewards, is willing to give up family obligations in order to fulfill professional requirements, seeks more entrepreneurial activities while gravitating away from bureaucratic organizations with their strict rules, policies and cultural standards and is, for the most part, ethical minded.

The X and Y generations are very different from their generational predecessors. These generations are less willing to sacrifice quality of life for career or the organization, they hold less loyalty to a firm, they desire interesting and meaningful work, and are somewhat less ethical than the generations before them.

Based on the upper echelon theory, which states that upper management's decision making is based on the manager's lifetime accumulated bounded rationally, the generational differences that exists in the newer generations will manifest themselves in the strategic decisions of the managers of today's organizations.

The changes in the new generation's characteristics will definitely affect our future progress and accomplishments in organizations. As the Baby Boomers retire out of upper management positions and more Generation X and Y comes on board, we can expect to see decisions that are based more on interest and meaningfulness of the decision and less on opportunities to make profits. Also, the decisions will be grounded in the search for quicker returns that may require less consideration of ethical standards.

As our generations continue to revolve, so shall the decisions of our organizations strategic leaders.

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L. Jeff Seaton, Murray State University

Michael Boyd, Western Carolina University