LDR 731 Week 1 Senior Leaders, Values and Direction Example

The Furnace and the Boardroom: Upper Echelons Theory and How Senior Leaders Set Direction at a Global Glass Manufacturer

[Student Name]

University of Phoenix

LDR/731: Contemporary Issues in Leadership

Week 1 Assignment

[Instructor Name]

[Date]

Maumee Glass Group, its executives and its figures are composites written for a model paper.

Maumee Glass Group is a composite family-controlled manufacturer of specialty glass headquartered in Toledo, Ohio. It makes glass for appliances, solar panels, vehicles and buildings in seven plants in Ohio, Mexico, Poland and Malaysia, employs about 4,800 people and earns about $1.3 billion a year. Glassmaking is capital intensive: each float or melting furnace runs continuously for 15 years or more and costs tens of millions of dollars to rebuild. For four decades, the company was led by chief executives who rose through operations. Two years ago, the founding family and a minority private equity investor appointed Laura Brandt, a former consumer products executive, as chief executive. She replaced three of seven top team members with leaders from marketing, digital commerce and finance. Within a year, the company shifted capital from a planned furnace rebuild in Ohio toward a branded architectural glass line and an online ordering platform for contractors. Some plant leaders worry that the shift neglects the furnaces that generate most of the company's profit. Daniel Okafor, vice president of global operations and a doctoral student, wants to understand how the new team's backgrounds shape its choices. This paper applies upper echelons theory to Maumee's senior leadership.

The Original Argument

Hambrick and Mason (1984) proposed that organizational outcomes, including strategic choices and performance, are partially predicted by the characteristics of top managers. Because strategic situations are complex and ambiguous, executives interpret them through their cognitive bases and values, which are shaped by experiences such as functional background, career path, education and age. Since psychological traits are hard to measure, the authors suggested using observable demographic characteristics as proxies. The organization, in this view, becomes a reflection of its top managers.

The Update

Hambrick (2007) revisited upper echelons theory after more than two decades of research. He emphasized that the top management team, rather than the chief executive alone, often predicts outcomes better, and added two moderators. Managerial discretion, the latitude executives have to act, strengthens the link between executives and outcomes. Executive job demands, the pressure executives face, shape how much they rely on familiar patterns. He also called for research on the psychological processes behind demographic proxies.

Top Team Composition

Carpenter et al. (2004) reviewed research on top management team composition. They found that team characteristics such as functional diversity, tenure, educational background and international experience were related to strategic change, innovation, internationalization and performance, though results varied and depended on context. They urged scholars to examine the processes linking composition to outcomes, such as communication and power within the team.

How Much Discretion Does Maumee's Team Have?

Discretion at Maumee is moderate. The glass industry's heavy fixed assets and long furnace cycles limit how quickly strategy can change, reducing discretion. But the company's family ownership, with a supportive board, and its recent investment from a private equity partner seeking growth increase it. The new team has more room to change direction than a typical heavy manufacturer.

Job Demands

The new team faces high demands: rising energy costs, competition from Asian producers in solar glass and investor expectations for growth. Under such pressure, Hambrick (2007) suggests, executives lean on what they know best.

The Team's Backgrounds

Before the change, five of seven top team members came from operations or engineering, with an average tenure at Maumee of 19 years. After the change, three come from consumer products and digital commerce, two from finance and two from operations, with an average tenure of six years. The team is more functionally diverse and less tied to the company's history.

Tracing Choices to Backgrounds

The shift toward branded architectural glass and online ordering matches the new executives' experience in consumer brands and digital channels. They see opportunities in reaching contractors directly and earning higher margins through branding, opportunities the old team rarely discussed. In upper echelons terms, the new team perceives the environment through a marketing lens.

The old team saw the company as a set of furnaces that happened to have customers; the new team sees a set of customers that happens to need furnaces.

Blind Spots

The same lens creates blind spots. Plant leaders note that the Ohio furnace scheduled for rebuild is showing refractory wear; delaying the rebuild by two years raises the risk of an unplanned shutdown, which could cost far more than the rebuild. Only two team members have deep furnace experience, and both have short tenure on the new team, limiting their influence. Carpenter et al. (2004) noted that team processes, such as who holds power in discussions, shape how composition affects decisions.

Benefits of Diversity

Functional diversity also brings benefits. The new team challenges assumptions, such as the belief that Maumee should sell only through distributors, and has opened discussions about energy efficiency investments that the old team had postponed.

How Decisions Are Made in the New Team

Observation of two top team meetings showed that discussions now begin with market data and customer research, followed by financial projections, with operational issues raised at the end if time remains. The chief executive and chief marketing officer speak most. The operations vice president, who raised furnace risk, was asked to return with a proposal at a later meeting. These processes matter: they shape which perspectives influence decisions regardless of who sits on the team.

Values and Direction

The new chief executive introduced a values statement emphasizing customer focus, innovation and accountability. The previous unwritten values emphasized craftsmanship, safety and loyalty to long-serving employees. The shift reflects the new team's backgrounds and signals a change in what the organization will reward, a question for Week 2.

Global Dimensions

The top team is entirely American, while 60 percent of employees work outside the United States. Plant leaders in Poland and Malaysia have little voice in strategy, which may limit the team's understanding of those markets and workforces.

Questions for the Course

The analysis raises questions for later weeks: how the new values will be deployed through the organization; how performance expectations can balance growth with operational reliability; how the company learns from its plants; how it balances family, investor, employee and community interests; how much the chief executive's leadership matters to financial results; how global leadership shapes the company; and how contemporary controversies such as short-termism apply.

Limits of the Approach

Upper echelons theory uses backgrounds as proxies for cognition, which may oversimplify. Interviews with executives about how they reason would strengthen the analysis.

Conclusion

Upper echelons theory explains how executives' experiences and values shape organizational choices, especially when discretion is high, and research on top team composition links team characteristics to strategic change. At Maumee Glass, a new top team with consumer and digital backgrounds has redirected investment toward branding and online sales, bringing fresh perspectives along with a blind spot about furnace reliability. Understanding these patterns frames the course's examination of how senior leaders create balanced value.

References

Carpenter, M. A., Geletkanycz, M. A., & Sanders, W. G. (2004). Upper echelons research revisited: Antecedents, elements, and consequences of top management team composition. Journal of Management, 30(6), 749-778. https://doi.org/10.1016/j.jm.2004.06.001

Hambrick, D. C. (2007). Upper echelons theory: An update. Academy of Management Review, 32(2), 334-343. https://doi.org/10.5465/amr.2007.24345254

Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2), 193-206. https://doi.org/10.5465/amr.1984.4277628