The leadership of the New Oriental Educational Organisation
StudentID:10652484
Introduction
Chinese government’s attitudes towards extracurricular classes changed over the
decades. However, the New Oriental, as an educational organisation that focuses on
providing extracurricular courses, has maintained its dominant position in this field
over the decades regardless of the policies strict or loose. Its success could not leave
the leadership of the organisation (Smith, 2010). Especially the leadership of Michael
Yu Minhong, the founder and chairman of the organisation, should not be ignored.
This article will look at the leadership team of the New Oriental educational
organisation to analyse the structure of the team. Then, their leadership styles,
especially the leadership types of Chairman Michael Yu, will be identified.
Meanwhile, the limitations of the existing leadership of the New Oriental will be
discussed, with possible recommendations for improvements. To understand and
explain the leadership of the New Oriental, theories of transformational leadership
and transactional leadership will be drawn from relevant literature to be used in the
discussion.
New Oriental EducationalOrganisation
The New Oriental Education & Technology Group Inc., also commonly known as
New Oriental, is an educational organisation which provides private educational
services in China. Currently, it is the largest comprehensive private educational
organisation in China (New Oriental, 2023). The number of program offerings,
student enrollments, and geographic presence demonstrates that New Oriental
dominates the private education service field in China. The New Oriental’s services
cover preschool education, courses for all age levels of students, online education,
overseas study consulting and textbook publishing. Though the New Oriental has
been the leading organisation in China’s private education field these years, it was
only a small business when first established by the founder Michael Yu in 1993 (Wu,
2022). Michael Yu, the chairman of the organisation, and his management team led
the organisation to today’s size and success. The success of the New Oriental
stimulated the establishment of various educational organisations. However, those
educational organisations could only imitate the services provided by the New
Oriental but not replicate the success of the New Oriental. Thus, it might be essential
to investigate the leadership style of the New Oriental to understand its success
(Smith,2010).
In 1993, the New Oriental was established as a school focused on English training for
studying abroad. Apart from making money, the school was run with the vision of
helping individuals ‘find hope from despair’ and improve the quality of their lives
(Wu, 2022). Later, the New Oriental identified ‘freedom, talent and spiritual
satisfaction’as theshared value for theschool. During the past three decades, theNew
Oriental school has become today’s New Oriental Education &Technology Group Inc.
This organisation provides lifetime education and teaches students knowledge or
skills that help them gain advantages in learning or work. The leadership team
developed and changed over the years. Currently,the leadership team consists of three
leaders, the founder and chairman, Michael M Yu, CEO Chenggang Zhou and CFO
Zhihui Yang. Within the structure, Michael Yu, the chairman and also the CEO from
2001 to 2016, was the core and spiritual leader. Thus, when analysing the leadership
style of the New Oriental, this article will take Michael Yu as a representative of the
leadership team and mainlydiscuss his leadership style.
TheTransformationalLeadership andtheTransactional LeadershipTheories
Before discussing New Oriental’s leadership, the transformational and transactional
leadership theories will be introduced. Transformational leadership is a leadership
style that highlights creating emotional and motivational connections between leaders
and their followers. Leaders with this type of leadership are likely to provide a
compelling vision of, as well as a route to, a future that inspires followers to act and
follow their leadership (Burns, 1978; Northouse, 2022). According to Burns’ (1978)
argument, leadership cannot be separated from followers’ needs. Thus, in his
explanation, a transformational leader should use a common vision and inspiring
language or symbolism to develop, motivate and challenge their followers’ intellect.
Meanwhile, Burns (1978) emphasised that leaders should have an ambitious and clear
vision themselves. After decades of development, transformational leadership could
be further explained from four perspectives. First, leaders should begood role models.
Second, leaders should be visionary to motivate followers. Third, leaders should
provide an environment of creativity to stimulate followers’ intelligence. Fourth,
leaders should consider for people they are working with. Similar to Burns’ (1978)
theory and definition, Lussier andAchua (2013) described transformational leaders as
intending to change the position quo by articulating to followers the current issues in
the system and a shared vision of what the organisation could be. In conclusion,
transformational leadership underpins what followers can do for the organisation
(Bass, 1999)and therelationships between leaders and followers.
Transformational leadership has its limitations. Northouse (2022) proposed criticisms
of transformational leadership. From the concept perspective, it takes much work to
define and is vague since it describes various activities and characteristics. Meanwhile,
it emphasises leaders’ charisma, indicating that leadership is a personality trait that
cannot be learnt. In addition to these limitations, one essential criticism about
transformational leadership is its medium to long-term effects. In the short term,
transformational leadership seems to be efficient. It tends to make followers more
engagedand excited because oftransformational leadership.This leadership type does
make its leadership sound attractive, inspirational, daring and pushing boundaries,
contributing to lots of energy in the organisation (Hobman, 2011). However, when
measuring the effectiveness of transofrmational leadership in the medium or long
term, this leadership style ended up destroying the organisations. To be specific,
followers might be emotionally attached to the transformational leader and the vision
they created for the organisation. In that case, followers might not realise that the
objective they passionately followed might lead them over a cliff’s edge. Furthermore,
the overt emotional attachment to transformational leaders may lead to followers not
using their own crucial abilities and not questioning the moral or strategy of things. In
this case, the members of the organisation might blindly follow the transformational
leaders without their own thinking and judgement. In general, the weakness of
transformational leadership might let followers blindly follow the leader or the shared
visioneven as that leader makes mistakes.
The other leadership type that will be used to analyse New Oriental’s leadership is
transactional leadership. Transactional leadership refers to the leadership style that is
linked with management and highlights the exchanges between leaders and followers.
This leadership is mainly based on a system of rewards and punishments between
leaders and followers (Smith, Montagno & Kuzmenko, 2004). The rationale for this
leadership type is straightforward. Followers who complete their work would be
rewarded for reaching performance standards, which provided a sense of equity
(Sashkin & Sashkin, 2003). In the transactional leadership model, leaders clearly state
what is expected of followers (Pieterse et al., 2010). Leaders provide payment,
promotion or positive feedback as different forms of rewards to motivate followers in
exchange for a job well done (Burns, 1978; Northouse, 2022). The levels of rewards
or punishments depend on the specific levels of followers’performance (Bass, 1985).
The transactional leadership style relies on formal rules and procedures. In this
leadership model, leaders need to set goals, grant contingent rewards, and take
immediate action when deviations occur when monitoring followers’ performance
(Bass & Riggio, 2006). It is considered effective in routine task management and
maintenance ofstabilityineducational organisations (Bass, 1985).
Transactional leadership also has its limitations. It is more likely to be considered
effective in the short term (Bass et al., 2003). Since this leadership sees followers as
tools to get things done well and on time, it is likely to ignore the emotional needs of
individuals and followers’motivations. Followers tend to sacrifice their own interests
for the organisation’s benefit (Berkovich, 2019). Thus, in contrast to transformational
leadership, transactional leadership emphasises what the organisation can do for
followers. The ignorance of followers’ abilities and lacking of flexibility and
humanity may lead to dissatisfaction and resentment, which might influence the
effectiveness oftheleadership and theenergy within theorganisation.
TheleadershipoftheNew Oriental Educational Organisation
In the following section, transformational leadership and transactional leadership
theory will be used to discuss the leadership of the New Oriental Educational
Organisation. As aforementioned, the founder and chairman Michael Yu’s leadership
style willbe looked at as therepresentative ofthe NewOriental leader team.
MichaelYuhas been known as an inspiring leader; however,he identified himselfas a
rural boy rather than a good leader. In his TED (TEDx Talks, 2009), Yu said he did
not consider himself a leader since he never got excellent marks in the university.
Nevertheless, Yu’s charisma helped him gain the trust of his schoolmates and friends
at university. Even though Yu’s academic performance at the university was not that
good, he had a good impression and reputation among the class, which allowed himto
attract investments to develop the New Oriental. Yu later applied his personal
charisma in leading the New Oriental. Michael Yu also created relationships of trust
with his followers in the New Oriental, which could be considered a transformational
leadership approach. Besides, as introduced in the previous part, a compelling vision
created by the leader could be a key element in transformational leadership (Burns,
1978; Northouse, 2022). In the New Oriental, MichaelYu also built a shared vision of
helping people ‘find hope from despair’ and improve their life quality (Wu, 2022).
The vision was further developed to ‘freedom, talent and spiritual satisfaction’byYu.
By setting such a common vision, Yu intended to create an energetic environment for
teachers to motivate their creativity and make efforts to the shared value of the New
Oriental. On the website of the New Oriental (2023), Yu explained the meaning of
setting a shared vision. Yu claimed that a successful road could only be formed when
people are headed in the same direction. The same is true for the New Oriental, which
was formed as people with common aspirations gathered to study and work. With a
clear mission, motivation and innovation spirit, the New Oriental would be able to
realise the shared dreams. From this perspective, Yu provided an ambitious shared
vision for the New Oriental to build an environment that encourages creation and
progress (Burns, 1978), which could be considered a highly transformational
leadership.
Apart from the shared vision, Michael Yu’s transformative leadership could also be
identified since he considered the personal development of the followers (Burns,
1978). As mentioned above, the New Oriental intended to help people improve the
quality of their life. Michael Yu’s leadership allowed teachers in the New Oriental to
be creative and innovative. As Michael Yu mentioned in TED (TEDx Talks, 2009),
teachers in the New Oriental were asked to make students enjoy each class they
attended. Meanwhile, Yu also highlighted that teachers in the New Oriental not only
need to teach students knowledge but also teach students how to be good people and
get prepared for their own future. These two points set challenging goals for teachers
in the New Oriental to inspire and develop their intelligence, which could be
considered intellectual stimulation in transformational leadership (Burns, 1978;
Northouse, 2022).
Though transformational leadership characteristics could be identified from the New
Oriental’s leadership, Michael Yu’s leadership style was not completely
transformative. To ensure the effectiveness of mission completion, Yu also applied
transactional leadership in leading the New Oriental (Bass, 1985). Transactional
leadership is based on rewards and punishments to motivate followers to do their jobs
(Bass, 1985). Michael Yu built a system of rewards to encourage his followers. The
rewards system is composed of two forms of reward, mental and physical. The mental
rewards refer to positive feedback or promotion chances, while the physical rewards
are about bonuses or additional payments. Through the rewards system, Michael Yu
aimed to ensure that tasks could be completed timely (Burns, 1978; Northouse, 2022)
withmotivation provided byboth mental and physical aspects.
TheWeakness ofthe NewOriental Leadership
Though Michael Yu applied both transformative and transactional leadership, the
leadership of the New Oriental is still not perfect and has space for improvement. As
one of the main criticism of transformative leadership, Michael Yu’s personal
charisma could be a two-edged sword. On one side, his charisma attracted people to
believe in him and follow his leadership (Northouse, 2022). On the other side, the
leader’s charisma may destroy the organisation in the medium or long term. As
discussed in the weakness of transformational leadership, people tend to become
emotionallyattached to theleaders andfollow theirleadership orvision blindly.When
establishing the New Oriental, Michael Yu’s personal charisma helped him gather
followers and build relationships and trust with his staff. However,with the expansion
of the New Oriental, Yu still used to hold power in his own hand and failed to be
aware of the importance of teamwork. In that case, staff in the New Oriental may not
likely have the opportunity to express their opinion, let alone participate in the
decision-making. If things continue this way, they might give up their own thinking
and blindlyfollowYuMinhong’s leadership.
As well as his transformational leadership, Michael Yu’s transactional leadership also
showed itslimitations.According to thediscussion about thepossible weakness above,
transactional leadership might lead to problems such as ignoring followers’ personal
needs. Since transactional leadership treats followers as tools to complete work,
leaders are likely to ignore staff’s needs. In the long term, the sacrifice of individuals
and the ignorance of the needs might lead to a decrease in followers’motivation.With
low motivation and a sense of dissatisfaction because of needs being ignored,
followers are likely to show low enthusiasm in completing the task set by the leader
and even want to leave the team. These situations will all decrease followers’
efficiency in their work in themedium orthelong term.
Conclusion
To conclude, New Oriental, as an education organisation, is mainly under the
leadership of its founder and chairman, Mr Michael Minhong Yu. The critical
leadership types of Yu used in the New Oriental might be identified as
transformational leadership and transactional leadership. In transformational
leadership, the relationships between leaders and followers might be described as a
bonding process (Sashkin & Sashkin, 2003). Michael Yu built connections with his
followers based on his personal charisma and honesty (TEDx Talks, 2009). The
creation of a compelling vision is one of the essential processes in transformational
leadership (Goodman & Casey, 2010). Yu Minhong described the vision for the New
Oriental as helping people ‘find hope from despair’ and intended to build the New
Oriental as an environment full of ‘freedom, talent and spiritual satisfaction’ (Wu,
2022). Transformational leadership has its advantages in motivating the followers and
developing their royal to the organisation. Leaders with such leadership style are able
to help followers understand the significance of their work, inspire them to look
beyond their own interests and focus on the organisation’s overall benefits. This
allows followers from various backgrounds to work together for a common goal.
However, its effectiveness seems only last for a short term. In the long term,
transformational leaders should be aware of the danger of being individualistic.
Because of emotionally attached to the leader, followers of transformational leaders
may lose the ability to identify or stop the leaders’ mistakes. The New Oriental has
been led by Yu since it was established, and the trend of Yu being individualistic
should not be ignored. Though Chenggang Zhou has been the CEO of the New
Oriental since 2016, the organisation is still under the lead and influence of its
chairman Yu Minhong. The New Oriental leadership team may consider further
reducing the power of Yu Minhong to control the potential trend of individualism in
the leadership or conduct a leadership team structure that is more open and more
equitableof power allocated.
Transactional leadership is about leaders providing reward-based transactions that
motivate followers to achieve goals set by leaders (Smith, Montagno & Kuzmenko,
2004). It was suggested that transactional leadership has its effectiveness in
completing routinetasks and maintainingstability (Bass, 1985).Yuapplied thereward
and punishment system in New Oriental to motivate the staff to get their job done on
time. Nevertheless, similar to transformational leadership, transactional leadership has
also been founded more effective in the short term. As one of the characteristics of
transactional leadership, leaders are likely to ignore the needs, incredibly emotional
needs, of the followers, which might lead to a lack of motivation and an increase in
the sense of dissatisfaction in the long term. Besides, corresponding to the reward
system, transactional leadership also applies the punishment system. Punishments
such as critical comments and reductions in wages may cause pressure on followers
from the aspects of mental well-being and financial condition. Thus, the leadership
team of the New Oriental may need to re-design its reward and punishment system.
The new system should ensure that the motivation provided by rewards will be
enough and last for a longer time. Meanwhile, the punishment policies should be
made with caution to avoid putting the burden on the followers. Additional emphasis
should alsobe put onthefollowers’personal needs.
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