Why India and Nepal Rank Low in Economic Freedom Index

Why India and Nepal Rank Low in Economic Freedom Index

Posted by: on Dec 10, 2012 | 6 Comments

On the face of it, economic freedom is a simple concept. However, it encompasses every aspect of an individual’s life. Economic freedom defines the standard of living and has a significant influence on the quality of life.

How the Concept of Laissez Faire has Evolved

Posted by: on Nov 27, 2012 | One Comment

Laissez Faire is a term that finds its etymological roots in the French language, in which it means ‘allowed to do’. Also referred to as ‘let it be’ economics, Laissez Faire refers to a sect of political thought that does not favor political interference in private sector free markets. It was claimed to have first been first coined by Marquis D’Argenson, who was to later become Louis XV’s foreign minister during the Austrian War, in his work titled Memoires, published in 1736.

Various political groups throughout American history have made it their clarion call, right from Thomas Jefferson to recent political leaders such as Ron Paul.

Laissez-Faire Leadership: An Oxymoron?

Posted by: on Oct 29, 2012 | One Comment

Also known as delegative leadership, laissez-faire leadership is a ‘hands off’ form of leadership, in which the leader believes in freedom of choice for his team. The leader provides minimal direction to the team and delegates most responsibilities to members, allowing them to take decisions. Under this form of leadership, the team has complete freedom to carry out tasks and projects.

Is the Term Laissez-Faire Leadership an Oxymoron?

Laissez-faire leadership seems to be an oxymoron, since the two words – laissez-faire and leadership appear to be absolute opposites. While laissez-faire (a French term) means non-interference, leadership is about giving direction and ensuring everyone is performing to the best of their abilities. Then how can these two words be used together to form a management style?

Providing direction, guidance or mentorship does not necessarily curtail freedom. When Mahatma Gandhi or Winston Churchill motivated multitudes to attain seemingly impossible feats, they were not using force or regulations. They were getting buy-ins. This is exactly what laissez-faire leadership is all about. Laissez-faire leadership is not easy and can go terribly astray if not understood in its entirety or implemented correctly. It needs a strong leader who can develop a vision, get buy-ins from the team towards the vision and establish processes that highlight whether the team’s activities and achievements are in sync with the larger picture. Laissez-faire leadership is about inspiring and motivating people, but most importantly it is about empowering people to set goals within the larger picture and achieve their best.

Characteristics of Laissez-Faire Leadership

Lewin, Lippitt, and White were among the early researchers to consider behavioral characteristics as the parameter to categorize leadership styles. The basic characteristics of laissez-faire leadership are:

  • Minimal guidance or supervision from the leader
  • Absolute freedom of decision making to team members
  • Team members solve problems on their own, without much involvement of the leader
  • Resources are at the disposal of the team to be used to achieve goals

This form of leadership relies heavily on the competence of the team members.

Benefits of Laissez-Faire Leadership

The Laissez-faire form of leadership can prove to be highly advantageous, if executed correctly:

  • Laissez-faire leadership instills a higher sense of responsibility among team members.
  • This form of leadership exposes team members to tough business situations, helping them to gain more experience and grow faster.
  • Laissez-faire leadership keeps team members aware of and continuously working towards the larger picture.
  • This form of leadership can boost the commitment of team members to achieve the desired goals.
  • Minimal intervention by leaders can also bring out the best in members, encouraging greater innovation and out-of-the-box initiatives.

Shortcomings of Laissez-Faire Leadership

If not understood and implemented correctly, laissez-faire leadership can damage and destroy an organization. Here are some of the things one should be aware of when considering this form of leadership:

  • If team members do not have adequate experience or the required skills, the achievement of targets may be at great risk.
  • Important decisions that need to be taken at short notice can go horribly wrong.
  • If people are not self driven and disciplined, laissez-faire leadership can lead to a great deal of inefficiency.
  • The team may become prone to repeating mistakes and may fail to get out of problems that they encounter during a project.
  • Team members may get off track and may not prioritize correctly.

Scenarios Where Laissez-Faire Leadership can Work

Under certain scenarios this form of leadership can foster positive results.

  • Strong Leadership: The prerequisite for laissez-faire leadership is having a strong leader, with a proven track record of success.
  • Team Members Having Expertise: If there are subject matter experts as part of the team, this form of leadership can thrive.
  • Entrusting Responsibilities to Senior Members: The final decision makers can entrust senior members to lead their teams. This should happen in the presence of proper communication. Such initiatives can relieve the top management of everyday decision making, enabling them to focus on the bigger picture and larger issues.
  • Regular or Everyday Tasks: The responsibility of routine tasks can be transitioned to the team. Businesses must identify tasks and projects that can be managed by the team, depending on the complexities involved and the expertise of the team members. This helps both the individual and the company by instilling confidence and accountability among team members.

For laissez faire leadership to be truly beneficial, the leader needs to first build a team of efficient and skilled performers, who are capable of comprehending the bigger goals and can perform without stringent supervision. The leader can be a source of guidance in setting the mission and the broad strategy. He must trust his team members and inspire them to do their best.

Finally, one of the most important factors crucial for this form of leadership is accountability. Everyone taking decisions must be accountable for all the actions and steps adopted. Being a complex form, only a ‘true’ leader, with the right team, can master laissez faire leadership.



Free Market: A Retrospective Through the Eyes of Bollywood

Posted by: on Aug 20, 2012 | No Comments

There is a trend of period movies in Bollywood this season! Directors and producers are lining up to recreate the magic of the golden age of the 70s and the 80s. From ‘The Dirty Picture’ to ‘Once upon a time in Mumbai’, it’s raining period movies all around. In keeping with this trend, you are about to be taken back in time to reminiscence how life was for the common man in these decades. You will also have a more substantial idea of how markets functioned and what it meant for the people of India, Bollywood ishtyle!

Equal Income Distribution – Characteristic of Free Economies?

Posted by: on Jul 13, 2012 | No Comments

The wealthiest countries are those that have free economies. There is a popular belief that the more capitalist economies in Europe, North America and even Asia (like Japan) have greater financial inequalities. But the true picture reflects a different scenario altogether. Such countries are better off than the socialist economies when it comes to distribution of wealth.