Chapter 12 - Leadership



Chapter 11 - Leadership

Leaders can make a difference! One study, for example, tracked the relationship between net profit and leadership in 167 companies from 13 industries. It also covered a time span of 20 years. Higher net profits were earned by companies with effective leaders. A more recent study examined the relationship between leadership and performance within major-league baseball teams. The sample consisted of all managers who directed a major-league baseball team during any season from 1945 to 1965. The researchers then tracked the performance of their teams up to the year the manager retired. Using a sophisticated measure of managerial effectiveness, results demonstrated that effective managers won more games with player performance held constant than did less effective managers. Leadership makes a difference!

Leadership means vision, cheerleading, enthusiasm, love, trust, verve, passion, obsession, consistency, the use of symbols, paying attention as illustrated by the content of one's calendar, out-and-out drama (and the management thereof), creating heroes at all levels, coaching, effectively wandering around, and numerous other things.

Leadership: A Working Definition

1. Leadership is the process of influencing others in a group.

2. It primarily deals with influencing behavior, attitudes, or actions of others.

3. It also entails using influence for a purpose.

4. It is a two-way street. As leaders influence subordinates, so subordinates influence leaders.

Leaders versus Managers: A Key Distinction - at Least in Theory

• A leader creates mission and strategy.

• A manager implements that mission and strategy.

• These distinctions are sometimes blurred in practice. Some managers are leaders; there just isn't a clear linkage between the two roles.

LEADERSHIP THEORIES

The Trait Approach: Having the "Right Stuff"

Early researchers formulated the great person theory--that leaders possess key traits that make them different from other people. The key elements are:

• key distinguishing traits.

• the traits are stable over time.

• it is true across time and groups.

The concept fit informal experience, but no research would verify the theory.

Stogdill's and Mann's Findings

Based on his review, Stogdill concluded that five traits tended to differentiate leaders from average followers. They were (1) intelligence, (2) dominance, (3) self-confidence, (4) level of energy and activity, and (5) task-relevant knowledge. However, these five traits did not accurately predict which individuals became leaders in organizations. People with these traits often remained followers.

Mann's review was similarly disappointing for the trait theorists. Among the seven categories of personality traits he examined, Mann found intelligence was the best predictor of leadership. However, Mann warned that all observed positive relationships between traits and leadership were weak (correlation's averaged about 0.15).

B. Behavioral Styles Theory (Type II)

This phase of leadership research began during World War II as part of an effort to develop better military leaders. It was an outgrowth of two events: the seeming inability of trait theory to explain leadership effectiveness and the human relations movement, an outgrowth of the Hawthorne Studies. The thrust of early behavioral leadership theory was to focus on leader behavior, instead of on personality traits. It was believed that leader behavior directly affected work group effectiveness. This led researchers to identify patterns of behavior (called leadership styles) that enabled leaders to effectively influence others.

The Ohio State Studies

Researchers at Ohio State University began by generating a list of behaviors exhibited by leaders. At one point, the list contained 1,800 statements that described nine categories of leader behavior. Ultimately, the Ohio State researchers concluded there were only two independent dimensions of leader behavior: consideration and initiating structure. Consideration involves leader behavior associated with creating mutual respect or trust and focuses on a concern for group members' needs and desires. Researchers believe a lack of consideration does not foster job satisfaction and employee loyalty.

Derivatives of the Ohio State Studies

Behavioral styles theory spawned a lot of research and generated many prescriptive models. Perhaps the most widely known behavioral styles model of leadership is the Managerial Grid« (renamed the Leadership Grid in 1991). This model is based on the premise that there is one best style of leadership. This model prescribes that leaders should demonstrate a high concern for people and a high concern for production. Situational leadership theory is another well-known prescriptive theory. According to the theory, appropriate leadership style is found by cross referencing an employee's readiness, which is defined as the extent to which an employee possesses the ability and willingness to complete a task, with one of four leadership styles. Although both of these theories are extensively used in the training community, neither one is clearly supported by empirical research.

Behavioral Styles Theory in Perspective

By emphasizing leader behavior, something that is learned, the behavioral style approach makes it clear that leaders are made. not born. This is the opposite of the trait theorists' traditional assumption. Given what we know about behavior shaping and model-based training, leader behaviors can be systematically improved and developed. For example, a recent study demonstrated that employee creativity was increased when leaders were trained to (1) help employees identify problems and (2) enhance employees feelings of self-efficacy.

Behavioral styles research also revealed that there is no one best style of leadership. The effectiveness of a particular leadership style depends on the situation at hand. For instance, employees prefer structure over consideration when faced with role ambiguity. We now consider alternative situational theories of leadership.

Participative versus Autocratic Leadership Behaviors

1. Most recognize that autocratic and permissive styles are two separate dimensions:

• the extent to which leaders permit subordinates participate in decisions, this is the autocratic-democratic dimension.

• the extent to which leaders direct the activities of subordinates, this is the permissive-directive dimension.

2. This results in four possible patterns of behavior.

Directive autocrat - makes decisions without consulting subordinates and supervises workers closely.

Permissive autocrat - makes decisions without consulting subordinates, but gives workers a high degree of freedom in their work.

Directive democrat - makes decisions with input from subordinates, but supervises workers closely.

Permissive democrat- makes decisions with input from subordinates and gives them a great deal of freedom in their work.

Each style works best in certain environments with certain types of work. The key is matching the style to the situation.

Person-Oriented versus Production-Oriented Leaders

Grid Training

The process begins by taking an instrument that determines where participants stand in relationship to their concern for production and their concern for people.

Impoverished management is low in concern for production and low in concern for people.

Task management is high in concern for production and low in concern for people.

Country club management is low in concern for production and high in concern for people.

Middle of the road management is moderate in concern for production and moderate in concern for people.

Situational Theories/Contingency Theories of Leader Effectiveness

The complexity of leadership leads some to a contingency model, adapting leadership behavior to the immediate situation. The different theories all tie to two things, a) adjusting to the context, and b) a concern for leader effectiveness.

LPC Contingency Theory: Matching Leaders and Tasks

The theory comes from Fiedler. In the essentials of the theory, there is a recognition that leadership takes place in a context. Success is determined both by the leader's traits and the elements of the situation.

The characteristics of the leader include:

• "esteem liking" for the least-preferred co-workers (LPC). The key element, it is the leader's tendency to evaluate favorably or unfavorably the person with which it is most difficult to work.

• the degree of leader's control over 1) his/her relationship with the group, 2) the degree of structure of the task to be performed, and 3) the leader's position power.

Predicted success of the leader.

• Low LPC (task-oriented) leaders do best in high or low control situations.

• High LPC (relations-oriented) leaders do best in moderate control situations.

Research provides moderate support. Results both support and contradict the theory. The theory has been criticized for its ambiguity in classifying situations and for the instrument used to collect data on it.

Application of the theory has proved promising despite the mixed research results. Using the questionnaire, leaders have been matched with what appears to be more appropriate situations with promising results.

Path-Goal Theory: Leaders as Guides to Valued Goals

This theory contends that followers will react favorably to the extent they perceive the leader as helping them to attain goals by clarifying paths and rewards.

Leaders can adopt one of four basic styles in accomplishing this task.

• Instrumental style is directive, provides guidance, and establishes work schedules and rules.

• Supportive style establishes good relations with subordinates and satisfies subordinates' needs.

• Participative style has the leader consulting with subordinates and has subordinates participate in decisions.

• Achievement-oriented style sets challenging goals and seeks improvements in performance.

Which style is best. It depends on:

• the characteristics of the subordinates.

• the work environment.

Leaders and Followers

The Leader-Member Exchange (LMX) Model: The Importance of Being in the "In-Group"

Leaders treat their subordinates differently. Graen and his associates developed the LMX Model to explain this behavior.

The In-group:

• are favored by leader.

• receive more attention and resources from leader.

• are expected to perform jobs better.

• hold a more positive attitude toward the job.

Those in the Out-group are disfavored, and therefore receive less time and resources from leader.

These groups are formed by the leader on minimal information. Members are added to the in-group for various reasons.

• Perceived similarity with respect to personal characteristics.

• Belief an individual is especially competent.

Charismatic Leaders: That "Something Special"

History has many examples of individuals who seem to possess unusual and special skills that equip them for leading others.

Charismatic Leader Behavior

The first set of charismatic leader behavior involves establishing a common vision of the future. A vision is "a realistic, credible, attractive future for your organization." According to Burt Nanus, a leadership expert, the "fight" vision unleashes human potential because it serves as a beacon of hope and common purpose. It does this by attracting commitment, energizing workers, creating meaning in employees' lives, establishing a standard of excellence, promoting high ideals, and bridging the gap between an organization's present problems and its future goals and aspirations. In contrast, the "wrong" vision can be very damaging to an organization.

The second set of leader behaviors involves two key components.

1. Charismatic leaders set high performance expectations and standards because they know challenging, attainable goals lead to greater productivity.

2. Charismatic leaders need to publicly express confidence in the followers' ability to meet high performance expectations. This is essential because employees are more likely to pursue difficult goals when they believe they can accomplish what is being asked of them.

The third and final set of leader behaviors involves being a role model. Through their actions, charismatic leaders model the desired values, traits, beliefs, and behaviors needed to realize the vision.

Effects on Follower Self-Concepts

Charismatic leadership affects three aspects of a follower's self-concept.

1. It enhances follower motivation, achievement motivation, and goal pursuit.

2. It increases the extent to which followers identify with the leader's values, goals, and aspirations and with the collective interests of all employees.

3. Follower self-esteem and self-efficacy are heightened by charismatic leader behavior.

Charismatic leadership positively affects employee motivation. One way in which this occurs is by increasing the intrinsic value of an employee's effort and goals. Leaders do this by emphasizing the symbolic value of effort; that is, charismatic leaders convey the message that effort reflects important organizational values and collective interests. Followers come to learn that their level of effort represents a moral statement. For example, high effort represents commitment to the organization's vision and values, whereas low effort reflects a lack of commitment.

Charismatic leadership also increases employees' effort > performance expectancies by positively contributing to followers' self- esteem and self-efficacy. Leaders also increase the intrinsic value of goal accomplishment by explaining the organization's vision and goals in terms of the personal values they represent. This helps employees to personally connect with the organization's vision. Charismatic leaders further increase the meaningfunless of actions aimed toward goal accomplishment by showing how goals move the organization toward its positive vision, which then gives followers a sense of "growth and development," both of which are important contributors to a positive self-concept.

Research and Managerial Implications

A recent review of research identified 35 empirical studies spanning a diversity of samples and organizations. Results indicated that charismatic leaders received higher performance ratings, were viewed as more effective leaders by both supervisors and followers, and had more satisfied and productive followers than non-charismatic leaders. Charismatic leaders also had higher project quality and budget/schedule performance ratings and were identified as more effective role models. Finally, a study of 31 presidents of the United States indicated that charisma significantly predicted presidential performancer.

These results underscore four important managerial implications. First, the best leaders are not just charismatic, they are both transactional and charismatic. Leaders should attempt these two types of leadership while avoiding a "laissez-faire" or "wait-and-see" style. Laissez-faire leadership is the most ineffective leadership style.

Second, charismatic leadership is not applicable in all organizational situations. According to a team of experts, charismatic leadership is most likely to be effective when

1. The situation offers opportunities for "moral" involvement.

2. Performance goals cannot be easily established and measured.

3. Extrinsic rewards cannot be clearly linked to individual performance.

4. There are few situational cues or constraints to guide behavior.

5. Exceptional effort, behavior, sacrifices, and performance are required of both leaders and followers.

Third, employees at any level in an organization can be trained to be more transactional and charismatic. This reinforces the organizational value of developing and rolling out a combination of transactional and charismatic leadership training for all employees. Fourth, charismatic leaders can be ethical or unethical. Whereas ethical charismatic leaders enable employees to enhance their self-concepts, unethical ones select or produce obedient, dependent, and compliant followers. Top management can create and maintain ethical charismatic leadership by

1. Creating and enforcing a clearly stated code of ethics.

2. Recruiting, selecting, and promoting people with high morals and standards.

3. Developing performance expectations around the treatment of employees these expectations can then be assessed in the performance appraisal process.

4. Training employees to value diversity.

5. Identifying, rewarding, and publicly praising employees who exemplify high moral conduct.

Transformational Leadership: Beyond Charisma

Transformational leaders have the charisma of the charismatic leader, but other qualities as well.

• They articulate a vision.

• They provide intellectual stimulation.

• They provide individual consideration.

• They provide inspirational motivation.

• They arouse strong emotions and identification with themselves.

• They transform their followers by teaching them.

The Bases of Social Power

There are many different ways to research power and its effects. However, before doing so, we must first recognize that power comes from several different sources. A popular classification scheme for social power traces back more than 40 years to the work of John French and Bertram Raven. This reading is truly a classic in management theory. The ideas proposed here have achieved almost universal acceptance and every textbook in management refers to their work. French and Raven proposed that power arises from five different bases: reward power, coercive power, legitimate power, expert power, and referent power. Each involves a different approach to influencing others. Below, I have given a simple example of each type of power

1. Reward power: A manager has reward power to the extent that he or she obtains compliance by promising or granting rewards. On-the-job behavior modification, for example, relies heavily on reward power. Managers give bonuses and promotions to employees that follow their directions.

2. Coercive power: Threats of punishment and actual punishment give an individual coercive power. A sales manager who threatens to fire any salesperson who uses a company car for family vacations is relying on coercive power.

3. Legitimate power: This base of power is anchored to one's formal position or authority. Thus, individuals who obtain compliance primarily because of their formal authority to make decisions have legitimate power. Legitimate power may express itself in either a positive or negative manner in managing people. Positive legitimate power focuses constructively on job performance. Negative legitimate power tends to be threatening and demeaning to those being influenced. Its main purpose is to build the power holder's ego.

4. Referent power: Also called charisma, referent power comes into play when one's personality becomes the reason for compliance. Role models have referent power over those who identify closely with them. Employees who work under charismatic individuals such as Herb Kelleher at Southwest Airlines will go to great lengths to please leader.

5. Expert power: Valued knowledge or information gives an individual expert power over those who need such knowledge or information. The power of supervisors is enhanced because they know about work schedules and assignments before their subordinates do. In much the same way, employees with many years of experience in their field or who have received special recognition for their accomplishments are able to influence the opinions of others because of perceived expertise.

In the section on expert power, French and Raven mention the "sleeper effect." According to the authors, individuals may be influenced by the message of an un-influential referent because we tend to forget the identify of the communicator before we forget the message. This accounts for the influence of Presidents and other political leaders - even though we don't agree with them at the time, their words still impact how we view the world.

Update on French and Raven's Article

A reanalysis of 18 field studies that measured French and Raven's five bases of power uncovered "severe methodological shortcomings." After correcting for these problems, the researchers identified the following relationships between power bases and work outcomes such as job performance, job satisfaction, and turnover:

• Expert and referent power had a generally positive impact.

• Reward and legitimate power had a slightly positive impact.

• Coercive power had a slightly negative impact.

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