GM503 Unit 5 Housing Nonprofit Authenticity Case Example

Telling Everyone the Same Afternoon: A Unit 5 Authentic Leadership Case at a Nonprofit Housing Developer

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Purdue University Global

GM503: Leadership Theory and Practice II

Unit 5 Authentic Leadership Case

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[Date]

The housing developer, its staff, its projects and every figure are composite and illustrative; the framework and studies cited are real.

The Organization and the Loss

Cedar Row Housing develops and manages affordable rental housing in a metropolitan region of about two million people. It owns about 1,400 apartments and typically has two or three new developments underway, each financed largely through federal low-income housing tax credits allocated competitively by the state housing finance agency. Its executive director, Diane Morales, has led the organization for six years.

In March, the state announced its annual allocations, and Cedar Row's application for a 72-unit senior building, which staff had worked on for two years, was not funded. The project's predevelopment costs, about $640,000, had already been spent, and the land option would expire in nine months.

The Disclosure

Morales learned of the decision at 11 a.m. By 3 p.m. she had gathered all forty staff, in person and by video. She told them the application had lost, that the organization would absorb the predevelopment costs from reserves this year and that the reserves could cover the loss without layoffs. She also told them what she did not know: whether the board would want to reapply, whether the land could be held another year and whether the loss reflected the application's quality or simply the number of competing projects. She said she would share each answer as she learned it, and she did, in three updates over the following month.

Authentic Leadership

Bruce Avolio and William Gardner described authentic leadership as a pattern of behavior grounded in self-awareness and positive psychological capacities, which fosters authenticity in followers as well (Avolio & Gardner, 2005). Fred Walumbwa and colleagues built a measure around four parts. Self-awareness is knowing one's own strengths, limits and effect on people. Relational transparency is saying what one actually thinks and knows. Balanced processing is weighing the evidence and the dissenting views before choosing. And an internalized moral perspective is steering by one's own values when outside pressure pulls the other way (Walumbwa et al., 2008).

Morales's disclosure illustrates relational transparency most directly: she shared bad news, its cost and her uncertainty, all at once. It also reflects balanced processing, since she asked staff in the same meeting what they thought had gone wrong with the application.

What the Disclosure Made Possible

Three consequences followed over the next year, and staff in interviews linked each to the March meeting.

First, problems surfaced earlier. In June, a project manager on a different development noticed that construction bids were coming in about 8 percent above budget and raised the issue with Morales a month before the organization's usual cost review would have caught it. He said he raised it early "because she'd shown us she wanted bad news fast."

Second, staff contributed solutions. Two members of the development team proposed financing the senior building in two phases, the first using a smaller tax-credit request that would be more competitive. The board adopted the plan in September, and the first phase was funded in the next allocation round.

Third, staff stayed. Turnover in the following year was 7 percent, against 15 percent the year before.

By sharing what she did not know, the director signaled that uncertainty could be discussed openly, and staff began bringing her their own uncertainties sooner.

The Broken Assurance

The second half of the case turns on a promise. In November, the board told Morales that rising insurance costs required cutting the operating budget. Two weeks earlier, at an all-staff meeting, she had said there would be no position cuts that year. Under pressure from the board, she eliminated two vacant positions and one filled position in property management, and the affected employee learned of the decision from a human resources notice before Morales spoke with her.

Morales later said she had not considered the vacant positions to count against her assurance and had planned to speak with the affected employee the following morning. Staff saw it differently. In interviews, several said the cut itself was understandable; what changed their view was that the assurance had been broken without explanation.

What Stopped Reaching Her

In the months after November, the early warnings that had characterized the previous year declined. A property manager learned of a significant roof leak at one building in January but did not report it to Morales until it appeared in a tenant complaint to the city, three weeks later. Two project managers said they had begun waiting for formal reviews before raising budget concerns. One said, "We used to tell her everything. Now we tell her what she'll find out anyway."

Elizabeth Morrison and Frances Milliken used the term organizational silence for a climate where many employees, independently, decide that raising problems is pointless or dangerous and keep quiet (Morrison & Milliken, 2000). The change at Cedar Row fits that description. The broken assurance did not stop staff from working hard, but it stopped them from bringing problems early.

Linking Components to Consequences

Relational transparency in March led to earlier warnings and the phased financing proposal. Balanced processing, shown in her request for staff views on the lost application, led to the phasing idea itself. The November lapse, a failure of relational transparency in explaining a broken promise, led to delayed reporting of the roof leak and budget concerns. An internalized moral perspective was tested by the board's pressure; staff judged that she yielded without telling them why.

What the Case Suggests

Authentic leadership is often discussed as a stable quality of a leader. This case suggests its effects depend on consistency over time. Staff responded to the March disclosure because it matched what they expected from Morales; they responded to the November lapse because it did not. A single inconsistency, especially one involving a public assurance, undid much of what a year of transparency had built. It also suggests what repair might require: Morales could acknowledge the November promise at an all-staff meeting, explain the board's pressure and her own misjudgment about the vacant positions, and restore the habit of sharing uncertainty early.

Conclusion

Morales's same-afternoon disclosure of the lost allocation, including what she did not know, produced earlier warnings, a financing proposal that rescued the project and lower turnover. A later broken assurance, unexplained, produced silence about problems that had previously reached her quickly. The authentic leadership framework explains both, and the case shows that its benefits depend on sustained consistency rather than a single act.

References

Avolio, B. J., & Gardner, W. L. (2005). Authentic leadership development: Getting to the root of positive forms of leadership. The Leadership Quarterly, 16(3), 315-338. https://doi.org/10.1016/j.leaqua.2005.03.001

Morrison, E. W., & Milliken, F. J. (2000). Organizational silence: A barrier to change and development in a pluralistic world. Academy of Management Review, 25(4), 706-725. https://doi.org/10.5465/amr.2000.3707697

Walumbwa, F. O., Avolio, B. J., Gardner, W. L., Wernsing, T. S., & Peterson, S. J. (2008). Authentic leadership: Development and validation of a theory-based measure. Journal of Management, 34(1), 89-126. https://doi.org/10.1177/0149206307308913