2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
Running Head: ECONOMIC DOWNTURN
Economic Downturn: Leaders Are Integral To Survival
Dr. Sheron Morgan
South University Online; Pittsburg, PA
Phillip Paker, MBA, PMP
Acknowledgements:
Dr. Morgan would like to acknowledge South University for their great staff and wonderful
students. To the company’s that allowed me to be the leader of teams whose accomplishments
demonstrated a significant difference and to aerospace that allowed me to create a new dynamic
statistical model that is used today by the US Government.
Mr. Paker would like to acknowledge Capella University for verifying for me both the difference
between a manager and a leader and that most of criticism in my career, by managers, has been
for acting as a leader. To the teams that have demonstrated with their accomplishments that a
leader can make a difference; especially the team at the County of Orange, California.
June 24-26, 2009
St. Hugh’s College, Oxford University, Oxford, UK
2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
Economic Downturn: Leaders Can Be Integral To Survival
ABSTRACT
Leaders are a critical component to the success or failure of a company, particularly in
times of an economic downturn. They are the ones who know and plan ahead; taking into
account all the factors that could or would impact the company.
This paper will assist in understanding the traits and the ability of Leaders to lead
successfully and make dynamic decisions, providing quality management, preceding and in an
economic downturn.
In addition, it will identify ways Leaders could cause a business to
struggle or fail in an economic downturn. This impact does not suddenly occur, but requires the
effort to be in place and followed prior to any economic downturn. If it is not in place and
followed and an economic downturn occurs, it is critical a company’s Leader(s) immediately
take appropriate action to secure the company during this trying time. Not to say that they will
be able to turn the company around. It is possible the company will fail as they are now in a
reactive mode.
Minimal, if any research, has been conducted regarding the impact of Leadership and a
company’s ability to survive or fail when in an economic downturn. This includes the impact
regarding the criticality of the Leaders’ abilities to make dynamic decisions and to motivate the
organization successfully. This paper will focus on the Leadership style and how it can help or
hinder a company’s survival in an economic downturn.
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2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
INTRODUCTION
The US economy is in poor shape and has not yet completely fallen in order to begin the
road to recovery. The world is small and inter-related, thus the US economy now impacts many
areas. This means that the stability or instability of the US economy can and does impact many
other countries in the world. As a result, many countries are assisting in the stabilization of the
US economy through funding the bailout and/or helping US companies. A big challenge in the
US is to maintain the best Leaders and staffing that can help them stay in business. Leaders and
managers are key, in that employees have demonstrated over the years that they will leave and
go to another company if they do not like or have trust in their managers and the Leadership of
the company.
As the economy in the US continues to fall, the public is reducing their spending to
ensure they have the funds for necessary bills and their needs. This makes it difficult for many
businesses that need the public’s expenditures to remain in business. As a result, more and more
businesses find they need to streamline their operations and focus on those items of necessity to
the public. Businesses that provide products to other businesses also need to streamline to adjust
to the changes in the economy. Thus, the type and capability of management, staff, and its
Leadership is even more critical. The challenge to businesses is to maintain the best staff,
managers, and Leaders who know how to make dynamic decisions and strategically plan, be
innovative. Leadership is the glue that will bind and hold a company together during hard
times. It is the Leadership who plans ahead, acts and does not react. They should have had the
company prepared and as part of their Business Continuity plans, include the possibility of an
economic downturn, They then be more likely to sustain the company through a downturn.
June 24-26, 2009
St. Hugh’s College, Oxford University, Oxford, UK
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2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
This paper will assist in understanding the traits and the ability of Leaders to lead
successfully and make dynamic decisions, providing quality management preceding and in an
economic downturn.
In addition, it will identify ways Leaders could cause a business to
struggle or fail in an economic downturn. This impact does not suddenly occur, but requires the
effort to be in place and followed prior to any economic downturn. If it is not in place and
followed and an economic downturn occurs, it is critical a company’s Leader(s) immediately
take appropriate action to secure the company during this trying time. Money may be a part of
this, but money alone will not provide success, you need a strong Leader who has the authority
to do what is needed to succeed. Not to say that they will be able to turn the company around.
It is possible the company will fail as they are now in a reactive mode.
Minimal, if any research, has been conducted regarding the impact of Leadership and a
company’s ability to survive or fail when in an economic downturn. This includes the impact
regarding the criticality of the Leaders’ abilities to make dynamic decisions and to motivate the
organization successfully. This paper focuses on the Leadership style and how it can help or
hinder a company’s survival in an economic downturn.
REVIEW OF THE LITERATURE
In 1985, Burns created two types of Leadership styles, transformational and transactional.
Over the years, these two styles have been considered by many as the only real styles of
management. It is believed that a manager fits either in one or the other and thus is considered
either a transformational or a transactional manager.
The Multifactor Leadership Questionnaire (MLQ), created by Bass in 1985 assesses the
four aspects of transformational Leadership and two aspects of transactional leadership. These
June 24-26, 2009
St. Hugh’s College, Oxford University, Oxford, UK
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2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
four aspects of transformational Leadership are charisma, intellectual stimulation, individualized
consideration, and inspirational motivation. The aspects of transactional Leadership are
contingent reward and laissez faire Leadership style. The research that has been done only
measures the perceptions of the manager and the perceptions of the staff of their manager’s
Leadership. What this essentially does is tell you the staff understood what the manager was
actually conveying as their style. It does not confirm that it is the best or the worse style of
management. In order to do this, results need to be tied to something, such as the success of the
business, department, the turnover of the staff, etc.
In 2006 Morgan studied the perceptions of the manager and the perceptions and desires
of the staff regarding transformational and transactional Leadership styles in an Information
Technology (IT) environment. This study reflected differences other than those found by Burns
and many others over the years. These differences reflect that the attributes of a manager are no
longer specifically categorized as either transformational or transactional. Nothing more current
could be found, since 2006, regarding this finding. Nor has there been found any similar study
or different study being done.
There is one main reason believed to indicate there should be a difference in those
attributes of a manager. The analysis and study done by Morgan 2006 regarding the perceptions
and desires of the staff in reference to a manager reflects what the staff actually wants in a
manager. What they believe makes the best manager, one that they trust and would do the work
as assigned, to succeed. Their perceptions of a manager provided a clear difference from those
of a leader.
Each company has its own personality that is driven and lead by the Executive staff. This
paper will reflect the differences believed to occur between what a Leader is and how a Leader
June 24-26, 2009
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2009 Oxford Business & Economics Conference Program
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impacts a company and its staff. A Leader essentially leads the company. They may or may not
be managers. Some managers may possess traits of a Leader. Unfortunately, from experience,
most managers are not Leaders nor do they have the traits of a Leader. The manager knows how
to take direction and flow it down to its staff. They generally know and understand what is being
done, what needs to be done and how to get it done. A Leader may be able to perform as a
manager, but their strengths are in being innovative, not afraid to ask why or find a different
method, etc. They are the ones who will help guide a company to success and through an
economic downturn, such as is occurring in the US economy.
Debate has been going on for years regarding the differentiation between management
and Leadership. In Hersey, Blanchard, Johnson 1996 they stated that:
Management is a special kind of leadership in which the achievement of
organizational goals is paramount. […] Leadership occurs whenever one person
attempts to influence the behavior of an individual or group, regardless of reason.
It may be for one’s own goals or for the goals of others and these goals may or
may not be congruent with organizational goals, p.7.
To find and maintain good employees, means you need to manage them properly, such
that they do not want to leave. To maintain a business in a bad economic situation requires a
manager who possesses important qualities. Some of the important qualities are flexibility, the
ability to make dynamic decisions, and the ability to motivate people such that they want to stay
and do the best job they can. The Leader is one who inspires and is innovative. They know how
to think outside of the box and develop solutions for survival. They are proactive and not
reactive. These are the individuals who will look out for the company as if it were their own.
They may also be managers. If so, how they manage, how they make decisions and their
innovation will be apparent as the best job will be done for the company, not themselves.
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2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
Based upon experience, it is believed that companies that have good Leader’s, who have
planned ahead and the company has followed the advice and plans of the Leader, will have a
better opportunity to survive in an economic downturn. There are differences in the traits of a
Leader versus’ that of a manager. A manager focuses on the job, uses the skills they know, does
as asked and/or as told, and follows their manager. Whereas a Leader’s focus is on the company
and its goals, is self confident, assertive, takes responsibility, takes on challenges, works well in
a stressful environment, takes risks, and thinks outside of the box, being innovative.
Bennis in 1984 stated: ”Leaders are people who do the right thing; managers are people
who do things right” (p.8) . This indicates that if a manager follows all the proper methods,
processes and procedures to manage as expected or dictated by a company, they may
successfully accomplish the task, yet may not be a leader who does the right things to help a
company succeed and/or survive. Doing the right thing could mean thinking and working
outside of the box. Not being afraid to put your neck out there and suggest new, innovative
ways that range from changing processes, product, etc. However, one also needs to be a
dynamic decision maker to successfully accomplish this effort.
There are many traits of a Leader. Some examples of the traits that successful Leaders
possess are listed below. This list is not meant to be exhaustive but illustrative.

Passionate - maintains a high level of energy,

Reliable, self confident and dedicated – engenders Trust in others (being ethical helps),

Visionary and intuitive - takes everything into account (holistic) to determine direction and
needs,

Thrives on stress others find too challenging,

Innovative in finding/creating needed solutions,
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St. Hugh’s College, Oxford University, Oxford, UK
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2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1

Empowers and builds teams,

Adapts easily to any situation or occurrence - able to handle constant change and challenges,

Proactive planning - sets operational, tactical and strategic corporate goals,

Knows how to listen and understand a situation, is supportive,

Motivates others - able to provide specific direction,

Results oriented - Sets and example, has and creates a bias for action so others develop and
implement solutions,

Organized and disciplined or has assistants who are,

Ambitious – accomplished through success of the organization rather than self oriented

Exhibits business acumen - understands the customers, economy, industry, company,
societies, global direction and concerns, or knows how to recognize, hire and use the counsel
of those with these skills,

Creates an organization that endures beyond his/her involvement.
The last point is significant; in Good To Great, Collins describes/explains his Level 5
Hierarchy (p17-25) and describes how Darwin Smith anticipated the need for Kimberly-Clark to
change direction and exceeded all of his competition. This endured even after he retired. It can
be contrasted with Lee Iacocca’s involvement with Chrysler which advanced while he was there
and then failed to endure when he left. Collins (p 21) describes the Level 5 Leaders as “Level 5
Leaders channel their ego needs away from themselves and into the larger goal of building a
great company. It’s not that Level 5 Leaders have no ego or self-interest. Indeed, they are
incredibly ambitious – but their ambition is first and foremost for the institution not themselves.”
Collins in chapter 5 (p90- 119) describes the “Hedgehog Concept” and in Chapter 9 p202-209
defines a BHAG “(pronounced bee-hag, short for “Big Hairy, Audacious Goal”).” When
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2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
combined with the overlap of the primary traits of a Leader you have an enduring enterprise that
will survive the vagaries of the economy
The chart reflects in summary the differences between a Leader and a Manager. Some
differences may seem subtle, but they are powerful.
LEADER
INNOVATIVE
EMPOWERS
BUILDS TEAMS
ADAPTABLE
PA
SS
IO
N
PROACTIVE
LISTENS / SUPPORTS
RESULTS ORIENTED / SETS EXAMPLE
AMBITIOUS
/E
MO
TI
ON
PASSION
RELIABLE / SELF CONFIDENCE
VISION / INTUITION
THRIVES ON CHALLENGE
BUSINESS ACUMEN
CREATES A DURABLE ORG.
ANALYZES
PR
OC
ES
S
RI
GO
R
ORGANISES
PLANS
SCHEDULES
BUDGETS
TRAINS
MEASURES
EVALUATES
MANAGES CHANGE
ENFORCES POLICY
PERFORMANCE REVIEWS
DISCIPLINES
SUPERVISES
MANAGER
P. Paker, 2009 ©
Chart 1: Attributes of Leaders and Managers
The economics of each city, state/region, and country throughout the world is influenced
by many factors. Some of those factors consist of the Government and its politics; supply and
June 24-26, 2009
St. Hugh’s College, Oxford University, Oxford, UK
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2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
demand; needs and buying habits; society and its beliefs/culture, its status, budget and so on. It
is all very inter-related. These factors then impact business and their plans, their products, etc.
The spending or lack of spending of the public in any given area or due to any influence, such as
an economic upturn or downturn will also impact a company. A knowledgeable and effective
Leader is prepared and knows how to analyze these factors, be innovative and visionary as to
direction and needs. The results are then flowed down throughout the company.
An example of how an economic impact in one country, impacts other countries is
presented by Ait-Saadi, I, Jusoh, M, Md.Nor, M, (2008). The authors found that over valuation
of currency in Asia resulted in a crisis of its impact on five other Asian countries’ economies.
The world is now so inter-related that one country’s economic crisis can have rippling affects
throughout the world. The current effect of oil prices on the US economy and the rippling effect
on other countries’ economies is very evident today. It is having wide spread effect documented
in the various stock markets and trade balances.
Leaders are a critical component to the success or failure of a company, particularly in
times of an economic downturn. They are the ones who know and plan ahead; taking into
account all the factors that could or would impact the company.
US ECONOMIC SITUATION
Today, the US is in a bad economic situation and many of its citizens are in trouble and
spending less. Some have over extended themselves and are finding they cannot keep up with
the expenses; especially impacted is the housing industry and the global effect that missmanaged mortgages (for unqualified buyers with sub-prime loans) has had. This creates chaos
and a domino effect that extends upward. This upward affect impacts retail businesses, which
then impact manufacturers. Manufacturers then impact those that provide the supplies and goods
June 24-26, 2009
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2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
to be manufactured, to transportation, to resorts, to…. The impact is not just in the US, but
global. Bankruptcy’s can impact companies globally, societies, and economies.
The US economy is struggling and still falling. Information provided reflects poor
predictions as to the potential impact of events that began years earlier. One of the largest
impacts is the possibility of greed that appears to be exhibited within the mortgage and financial
institutions. They were providing loans without verification of the individual’s information or
tracking those that were getting multiple large loans. This seems to have been occurring for
years. Arjoon, (2000) stated: “Codes of conduct or ethics have been traditionally used by
organizations to instill and to promote ethical behavior. An institution's ethical code is not a
minor matter in management and administration, it is like the ultimate nucleus of values around
which all the institution's business revolves (de Garay, 1995, p. 88).” It makes one wonder if
Leadership was used by those companies to exhibit what appears to be greed on such a huge
scale. If so, this questions the overall ethics of those company’s Leaders and tends to make one
wonder about the nucleus of the values in those institutions.
Estrella, stated in his current research that,
The problems go beyond the job market, according to the Mortgage Bankers
Association. Mortgage foreclosures rose 1.2 percent in the second quarter, the
sharpest rate of increase in the 29-year history of the group's survey. On another
note, consumer spending, adjusted for inflation, declined in June and fell somewhat
further in July. Chain store sales in August were also disappointing. The weakness
in consumer spending -- despite the receipt of tax rebate checks, p. 2.
There are many factors that are considered by a Leader when working in a global
environment. These factors consist of, but are not limited to:

Common needs of all customers and potential customers;

Government regulations, policies of all countries pertaining to the business;

Quality requirements established by the company and expected by the customers and any
regulations;
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
Logistics, from production to transportation;

Level and type of technology and its impact;

Time to produce, deliver, etc.;

Services provided, including those unique to each customer;

Accounting & costs that are known and unknown.
ISBN : 978-0-9742114-1-1
Baldwin and Ito in their paper indicated that,
Of the goods that can be clearly classified, we find that the major EU countries
are leading the quality competition race with 50 to 60 % of their exports being
goods in which quality seems to matter in the sense that the goods that get sold to
the most distant markets are the most expensive ones. For Japan and the US the
figures are lower at 38 and 34 % respectively. Canada, Australia and China have
much lower proportions of quality-competition goods, p 8.
This finding by Baldwin and Ito indicates that the products in the US are lower in quality than
other countries. It could be an indication of the lack of Leadership to ensure quality. Or it could
be they believe the increase in quality is not worth the return. However, as other countries
continue to increase quality; maintaining a lower quality will eventually impact the goods sold
by the US. Overall, it appears those company’s may not have actual Leadership only those with
titles.
All these factors and more should be considered by a Leader in their decisions and plans.
They are not just considered when there is a problem or sudden change of the economic status.
The Leaders are the ones who know how to predict, to plan, who have the innovation and
foresight to survive. We are at a point with technology, global communications and interactions
that dictate the need to recognize an integration of elements within an organization for
organizational solutions. This can and will propagate into the restructuring of the architecture of
independent organizations (entities) into consortiums or conglomerate organizations that merge
entities into functional organizations. These may not be the traditional type of organizations but
a new form of organization that has rules of understanding that allow them to share information
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2009 Oxford Business & Economics Conference Program
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and maybe even other resources while remaining, legally, independent. They should take
advantage of economies of scale and other attributes that cut costs and expand their individual
facilities. We will then move toward a truly global economy. A successful Leader can set aside
any religious differences and ideologies and become tolerant, reveling in our diversity, and being
more prosperous than expected. They pass on information, teach others and if they leave, they
leave a company that understands how to survive.
As indicated supra, Leaders are also the ones who may use their Leadership skills to the
wrong end, such that it can cause great harm to their company and to others. This factor makes
the economic forecasting difficult. It is this unknown that is the surprise variable, the anomaly.
SUMMARY & CONCLUSIONS
There is a distinct difference between a Leader and a Manager. Most Managers are not
Leaders. The impact of a Leader could make or break a company. A Leader can have a much
greater impact on a company during an economic downturn or when the company wants to grow.
Leaders can facilitate a company in a positive or negative direction. They also have a big impact
on a company over time, to maintain product viability such that it does not become obsolete or
irrelevant to their customers or to redirect the company to new products before the old ones
become obsolete.
June 24-26, 2009
St. Hugh’s College, Oxford University, Oxford, UK
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2009 Oxford Business & Economics Conference Program
ISBN : 978-0-9742114-1-1
CITED REFERENCES
Ait-Saadi, I, Jusoh, M, Md.Nor, M, (2008). Asian Currency Crisis: Adding Trigger to
Vulnerability. Oxford Business & Economics Conference Program 2008, p. 1-29.
Arjoon, S. Virtue theory as a dynamic theory of business. Journal of Business Ethics.
Dordrecht:Nov 2000. Vol. 28, Iss. 2, Part 2 p. 159-178 (20 pp.)
Baldwin, R., Ito, T. (Sept 2008). Quality Competition Versus Price Competition Goods: An
Empirical Classification. National Bureau of Economic Research, Cambridge, MA, p 1-10.
Bennis, W. (1984). The 4 Competencies of Leadership. Training and development Journal, 40th
Anniversary Series, p. 14-19.
Boerner, B. (2008). Flat or Not: World Economies, Here Comes Business! Oxford Business &
Economics Conference Program 2008, 1-14.
Collins, J. (2001). Good To Great. Why Some Companies Make the Leap … and Others Don’t
Harper Business, p. 1.
Estrella, A. (2008). Rensselaer Polytechnic Institute; Economist's Model Forecasted Current
Economic Slowdown One Year In Advance Anonymous. Insurance Business Weekly.
Atlanta: Oct 19, 2008. p. 23
Hersey, P., Blanchard, K., Johnson, D. (1996). Management of Organizational Behavior.
Prentice Hall, p. 7.
Morgan, S. (2006). Transformational/Transactional Leadership: Managers Perception
Compared to Staffs Perception and Desires, Nova Southeastern University, p. 1-121.
Paker, P. (2009) Attributes of Leaders and Managers, copyrighted February 2009
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BIOGRAPHIES
Sheron Morgan, DBA
P.O. Box 668
Lake Forest, CA 92609-0668
smorgan@southuniversity.edu
Dr. Morgan is an adjunct online faculty within the Business Department at South University. She earned her
Doctoral degree in Business Administration with a concentration in Information Technology Management from
Nova Southeastern University. She earned her Masters degree in Logistics at National University and holds two
independent Bachelors degrees from the University of Utah. Professor Morgan’s research activities are centered on
her interest in management and leadership,, RM&A in software development and maintenance, organizational
behavior, and operations research. She has worked in logistics for many years, including as a Maintainability
Engineer and has worked in software development and maintenance for over 10 years, in positions of management.
Dr Morgan has served as a Sr. Project Manager for multi-million dollar high tech development projects, where she
managed multiple projects at one time, located throughout the USA. She also has worked as a leader in IT
development and maintenance projects and as a. Systems Engineer. Her experience spans both commercial and
aerospace industries. She is the recipient of many high awards, including the Presidential Unit Citation.
Philip Paker, MBA, PMP
9431 Devon St
Rancho Cucamonga, CA 91730-4014
phpaker@earthlink.net
As V.P. of Operations, Mr. Paker provides operational, tactical and strategic, Operations Management at Nobel
Systems for all domestic and international corporate facilities and staff. He is the lead architect in design, operation,
and maintenance of all systems of Nobel’s products and services. His MBA degree is from Capella University in
Business Administration. He is an IT leader specializing in: Process and Software Engineering; using best practices
from several disciplines (CMM, PMP ITIL); With emphasis on team building, motivational leadership and results.
He has over 30 years of successful experience in IT leadership roles in Applications Development, Data
Administration, Quality Assurance, Configuration Management, Disaster Recovery, Business Continuity, Security
Administration and Service Desk Operations also as a Process Engineer, Team Facilitator, Problem Management
and Release Management SME. He has also been effective as a Coach, Mentor and motivational speaker. He has
conducted classes on over 22 technical and business subjects.
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