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OVERVIEW OF THE CHAPTER Leadership is a key ingredient for managerial success in organizations both large and small. When leaders are effective, their subordinates are highly motivated, committed, and high performing. When leaders are ineffective, chances are good that their subordinates do not perform to the level of their capabilities, lack motivation, and may be dissatisfied. This chapter describes what leadership is and examines major leadership models that have been developed by various researchers. It also describes how managers engaging in transformational leadership can have a dramatic impact upon their organization and discusses the impact of gender on leadership. LEARNING OBJECTIVES 1. Describe what leadership is, when leaders are effective and ineffective, and the sources of power that enable managers to be effective leaders. 2. Identify the traits that show the strongest relationship to leadership, the behaviors in which leaders engage, and the limitations of the trait and behavior models of leadership. 3. Explain how contingency models of leadership enhance our understanding of effective leadership and management in organization. 4. Describe what transformational leadership is and explain how managers can engage in it. 5. Characterize the relationship between gender and leadership. A MANAGERS CHALLENGE: STEVE BALLMER REINVENTS MICROSOFT Because of the overarching need for integration across units, Microsoft has always been managed in a very centralized fashion from its earliest days through the 1990s. Coordination is essential to the development of the integrated technologies required to achieve Microsofts vision of seamless computing, and Gates feared that giving unit managers autonomy would result in a lack of coordination across units. When Steve Ballmer took over as CEO in 2004, he implemented sweeping changes. He divided the company into seven operating divisions and empowered managers to make decisions formerly reserved for the CEO. Integration across divisions is achieved by a matrix-kind of organization called Integrated Innovation. Getting employees motivated to rally around his vision has always been a top priority for Ballmer. He is described as the quintessential, larger-than-life, rah-rah leader and the perfect foil for his geeky and erudite best buddy, Bill Gates. As a leader who walks the talk, Ballmer was once seen on his hands and knees plugging in monitors at the headquarters of customer General Motors, attempting to fix a screen resolution problem for automobile design engineers. GMs CIO observed Ballmers efforts and said, That shows me that Steve Ballmer cares.
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LECTURE OUTLINE I. THE NATURE OF LEADERSHIP
Leadership is the process by which a person exerts influence over other people and inspires, motivates, and directs their activities to help achieve group or organizational goals. When leaders are effective, the influence they exert helps a group achieve its performance goals. When leaders are ineffective, their influence does not contribute to, and often detracts from, goal attainment. Effective leadership increases an organizations ability to meet all challenges, including the need to obtain a competitive advantage, the need to foster ethical behavior, and the need to manage a diverse workforce fairly and equitably.
Ethics in Action: John Mackeys Personal Leadership Style John Mackey co-founded Whole Foods Market in 1980 with two former partners and is its current CEO and president. Today, with 150 stores and 29,500 employees, it is number 508 on the Fortune 500 list. Mackey is causal and informal but also blunt and direct. He combines his eye for the bottom with spirituality and ethical values. His opinionated and direct nature carries over into the ethical values he promotes at Whole Foods. The retailers mission statement, called the Declaration of Interdependence, emphasizes interdependence between multiple stakeholders, including customers, team members, shareholders, communities, the natural environment and business partners. High quality, customer satisfaction, open and honest communication, team member happiness and fulfillment, embracing diversity, community involvement, and active support of environmental sustainability are prominent themes in the Declaration. Mackeys passion to pursue what he believes in has never been questioned. Leadership Styles Across Cultures Some evidence suggests that leadership styles vary not only among individuals, but also among countries and cultures. Some research suggests that European managers tend to be more humanistic than both Japanese and American managers. Japans collectivistic culture places its primary emphasis on the group rather than the individual, so the importance of the individuals needs, desires, and personality is minimized. In the United States, organizations tend to be very profit oriented and thus downplay the needs and desires of individual employees.
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Another noted cross-cultural difference is in time horizons. U.S. managers tend to have a personal style that reflects the short-run profit orientation of their companies, while Japanese managers tend to have personal styles that reflect a long-run growth orientation. Managers in Europes large international firms have a philosophy that lies in between the long term approach of the Japanese and the short term approach of the Americans. Research on the global aspects of leadership is in its infancy. As it continues, more cultural differences in managers leadership styles may be discovered.
Power: The Key to Leadership A key component of effective leadership is found in the power the leader has to affect other peoples behavior and get them to act in certain ways. There are several types of power. Effective leaders take steps to ensure that they have sufficient levels of each type and that they use their power in beneficial ways. Legitimate power is the authority a manager has by virtue of his or her position in an organizations hierarchy. Reward power is the ability of a manager to give or withhold tangible rewards such as pay raises, bonuses, and choice job assignments, as well as intangible rewards such as verbal praise, a pat on back, or respect. Effective managers use their reward power so that subordinates understand that their receipt is sign that they are doing a good job. Ineffective managers use rewards in a more controlling manner that signals to subordinates that the manager has the upper hand. Coercive power is the ability of a manager to punish others. Punishment may include verbal reprimands, reductions in pay, or actual dismissal. Managers who rely heavily on coercive power tend to be ineffective as leaders sometimes even get themselves fired. Expert power is based in the special knowledge, skills, and expertise that a leader possesses. The nature of expert power varies, depending on the leaders level in the hierarchy. Effective leaders take steps to ensure that they have an adequate amount of expert power to perform their leadership roles. Expert power tends to be best used in a guiding or coaching manner rather than in an arrogant, high-handed manner. Referent power stems from subordinates and coworkers respect, admiration, and loyalty to and for their leader. Leaders who are likable and whom subordinates admire are likely to possess referent power. Because referent power is a function of the personal characteristics of a leader, managers can increase their referent power by taking time to get to know their subordinates and showing interest in them.
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Empowerment: An Ingredient in Modern Management Empowerment is the process of giving employees at all levels in the organization the authority to make decisions, be responsible for their outcomes, improve quality, and cut costs. It is becoming increasingly popular in organizations and can contribute to effective leadership for several reasons: It increases a managers ability to get things done. It often increases workers involvement, motivation, and commitment. It gives managers more time to concentrate on their pressing concerns because they less time on day-to-day supervisory responsibilities. The personal leadership style of managers who empower subordinates often entails developing their ability to make good decisions as well as being subordinates guide, coach, and source of inspiration. TRAIT AND BEHAVIOR MODELS OF LEADERSHIP
II.
Because leading is such an important process in all organizations, it has been researched for decades. Early approaches to leadership, called the trait model and the behavior model, sought to determine what effective leaders are like as people and what they do that makes them so effective. The Trait Model The trait model of leadership focused on identifying the personal characteristics that are responsible for effective leadership. Decades of research indicate that certain personal characteristics do appear to be associated with effective leadership. However, traits alone are not the key to understanding leader effectiveness. Some effective leaders do not possess all of the traits identified in this model, and some leaders who do possess them are not effective in their leadership roles. This lack of a consistent relationship between leader traits and leader effectiveness led researchers to shift their attention away from what leaders are like (their traits) to what effective managers actually do, i.e., their behaviors.
The Behavior Model
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Researchers at Ohio State University in the 1940s and 1950s identified two basic kinds of leader behaviors that many managers engaged in to influence their subordinates: consideration and initiating structure. Consideration Leaders engage in consideration when they show their subordinates that they trust, respect, and care about them. Managers who truly look out for the well-being of their subordinates and do what they can to help subordinates feel good and enjoy their work perform consideration behaviors. Initiating Structure Leaders engage in initiating structure when they make sure that work gets done, and the organization is effective and efficient. Assigning tasks to individuals or work groups, making schedules, encouraging adherence to rules are examples of initiating structure. Initiating structure and consideration are independent leader behavior. Leaders can be high on both, low on both, or high on one and low on the other.
Managing Globally: Toyota is On a Roll Toyota is close to becoming the third largest automobile manufacturer in the U.S. Its sales exceed $140 billion and its profit margins are better than General Motors, Ford and DaimlerChrysler. Toyotas president, Fujio Cho, emphasizes consideration in his modest, cheerful approach to being on top of every problem and issue that his company faces. He is down-to-earth and congenial. His concern for people shows through in his smile and affable manner in dealing with employees. He also engages in initiating structure as he leads Toyota toward the goal of having 15% of total global automobile sales by 2010. Cho is driven by speed and flexibility. Cost efficient and flexible production lines that can switch between multiple car models are his mantra. Chos consideration and initiating structure are helping transform Toyota into a company to be reckoned with. Researchers at the University of Michigan identified two categories of leadership behaviors, employee-centered behaviors and job-oriented behaviors, that roughly correspond to consideration and initiating structure, respectively. Paul Hersey and Kenneth Blanchards model focuses on supportive behaviors (similar to consideration) and task-oriented behaviors (similar to initiating structure). According to these researchers, leaders need to consider the nature of their subordinates when trying to determine the extent to which they should perform these two behaviors. Research has found that the relationship between performance of consideration and initiating structure behaviors and leader effectiveness is not clear. Some leaders are
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effective even though they do not perform consideration or initiating structure behavior, while other leaders who perform both are ineffective. III. CONTINGENCY MODELS OF LEADERSHIP Contingency models of leadership take into account the situation or context within which leadership occurs. They propose that whether or not a manager is an effective leader is the result of the interplay between what the manager is like, what he or she does, and the situation in which leadership takes place. Three prominent contingency models are discussed: Fiedlers contingency model, Houses path-goal theory, and the leader substitutes model. Fiedlers Contingency Model Fiedlers contingency model helps explain why a manager may be an effective leader in one situation and ineffective in another. It also suggests which kinds of managers are likely to be most effective in which situations. Leader Style Fiedler hypothesized that personal characteristics can influence leader effectiveness. He uses the term leader style to refer to a managers approach characteristic to leadership and identified two basic leader styles: relationship-oriented and task-oriented. All managers can be described as having one style or the other. Relationship-oriented leaders are primarily concerned with developing good relationships with their subordinates and being liked by them. They get the job done while focusing on maintaining high-quality interpersonal relationships with subordinates. Task-oriented leaders are primarily concerned with ensuring that subordinates perform at a high level. Task-oriented managers focus on task accomplishment and making sure the job gets done. According Fielder, leadership style is an enduring characteristic. Managers cannot change their style, nor can they adopt different styles in different kinds of situations.
Situational Characteristics Fielder identified three situational characteristics that are important determinants of how favorable a situation is for leading. They are: leader-member relations, task structure, and position power. According to Fielder, if a situation is favorable for leading, it is relatively easy for a manager to influence subordinates so that they perform at a high level. In a situation that is unfavorable for leading, it is much more difficult for a manager to exert influence.
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Leader-member relations is the extent to which followers like, trust, and are loyal to their leader. Situations are more favorable for leading when leader-member relationships are good. Task structure is the extent to which the work to be performed is clear-cut so that the leaders subordinates know what needs to be accomplished and how to go about doing it. When task structure is high, situations are favorable for leading. When task structure is low, the situation is unfavorable for leading. Position power is the amount of legitimate, reward, and coercive power a leader has by virtue of his or her position in an organization. Leadership situations are more favorable for leading when position power is strong.
Combining Leader Style and the Situation By taking all possible combinations of these factors, Fiedler identified eight leadership situations which vary in their favorability for leading. Based on extensive research, he determined that relationship-oriented leaders are most effective in moderately favorable situations and task-oriented leaders are most effective in very favorable or very unfavorable situations. Putting the Contingency Model into Practice According to Fiedler, managers must be placed in leadership situations that fit their style or the situation must need to be changed to suit the managers style, if he or she is to be effective. Research studies support some aspects of Fiedlers model but also suggest that it needs some modifications.
Houses Path-Goal Theory In his path-goal theory, researcher Robert House focused on what leaders can do to motivate their subordinates to achieve group or organizational goals. The premise is that effective leaders motivate subordinates to achieve goals by: Clearly identifying the outcomes that subordinates are trying to obtain in the workplace, Rewarding subordinates with these outcomes for high performance and the attainment of work goals, and Clarifying for subordinates the paths leading to the attainment of work goals.
Based on the expectancy theory of motivation, path-goal theory provides managers with three guidelines to follow to be effective leaders:
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Find out what outcomes your subordinates are trying to obtain from their jobs and the organization. Reward subordinates for high performance and goal attainment with the outcomes they desire. Clarify the paths to goal attainment for subordinates, remove any obstacles to high performance, and express confidence in subordintes capabilities.
Path-goal theory identifies four kinds of behaviors that leaders can engage in to motivate subordinates. Which behaviors managers should use to lead effectively depends upon the nature of the subordinates and the kind of work they do. The behaviors are: Directive behaviors, which are similar to initiating structure and include showing subordinates how to complete tasks, Supportive behaviors, which are similar to consideration and include looking out for subordinates' best interest, Participative behaviors, which give subordinates a say in matters and decisions that affect them, and Achievement-oriented behaviors, which motivate subordinates to perform at the highest level possible by setting very challenging goals and believing in subordinates capabilities.
Management Insight: Supporting Creativity Effectively leading workers who are engaged in creative activities can be a challenge. Too much initiating structure can inhibit worker creativity. Symphony conductor Roger Nieremberg recognizes this. Rather than attempting to control musicians, he emphasizes supportive behaviors. Nierembergs supportive style can also be applied to more traditional corporate work settings. In the leadership classes taught at major corporations, he coaches managers on how to commit to a course of action and direct their subordinates in a supportive, uncritical manner. This approach works well in other countries, also. Chris Bangle, who heads BMWs global design efforts in Munich, Germany takes great pains to shield creative designers from criticism or negative feedback from others in his organization. Bangle sees this kind of encouraging and supportive leadership as key to maintenance of BMWs competitive advantage. The Leader Substitutes Model This model suggests that leadership is sometimes unnecessary because substitutes for leadership are present. A leadership substitute is something that acts in place of the influence of a leader and makes leadership unnecessary. Characteristics of subordinates, such as their skills, abilities, experience, knowledge, and motivation, can be substitutes for leadership.
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Characteristics of the situation or context, such as the extent to which the work is interesting, can also be substitutes. When managers empower their subordinates or use self-managed teams, the need for leadership influence is decreased because team members manage themselves. Substitutes for leadership can increase organizational efficiency and effectiveness because they free up some of the leaders valuable time.
Bringing It All Together The three contingency models help managers hone in on the necessary ingredients for effective leadership. They are complementary, since each one looks at the leadership question from a different angle. IV. TRANSFORMATIONAL LEADERSHIP Transformational leadership occurs when managers change their subordinates in three important ways. When managers engage in transformational leadership, subordinates trust the manager and are highly motivated, which helps the organization achieve its goals. Transformational managers make subordinates aware of how important their jobs are to the organization and how important it is that they perform those jobs as best they can, so that the organization can attain its goals. Transformational managers make their subordinates aware of their own needs for personal growth, development, and accomplishment. Transformational managers motivate their subordinates to work for the good of the organization as a whole, not just for their own personal gain.
Managers and other transformational leaders can influence their followers in three ways: by being a charismatic leader, by intellectually stimulating subordinates, and by engaging in developmental consideration. Being a Charismatic Leader Transformational managers are charismatic leaders. They have a vision of how good things could be in their groups and organizations that is in contrast with the status quo. Their vision usually includes dramatic improvements in both group and organizational performance. Charismatic leaders are excited and enthusiastic about their vision and clearly communicate it to their subordinates. The essence of charisma is having a vision and enthusiastically communicating it to others.
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Stimulating Subordinates Intellectually Transformational managers openly share information so that subordinates are aware of problems and the need for change. They help subordinates to view problems from a different perspective that is consistent with the managers vision. They engage and empower subordinates to take personal responsibility for helping to solve problems.
Engaging in Developmental Consideration When a manager engages in developmental consideration, they go out of their way to support and encourage subordinates, giving them opportunities to enhance their skills and excel on the job. They must go one step further than merely demonstrating true concern for the well-being of subordinates. The Distinction Between Transformational and Transactional Leadership Transformational leadership is often contrasted with transactional leadership. Transactional leadership involves managers using their reward and coercive power to encourage high performance. When managers reward high performers, reprimand low performers, and motivate by reinforcing desired behaviors, they are engaging in transactional leadership. Many transformational leaders engage in transactional leadership, but at the same time have their eyes on the bigger picture of how much better things could be in their organizations. Research has found that when leaders engage in transformational leadership, subordinates tend to have higher levels of job satisfaction and performance. Also, they are more likely to trust their leaders, trust their organizations, and feel that they are being treated fairly. This, in turn, may positively influence their motivation level.
V. GENDER AND LEADERSHIP Although there are relatively more women in management positions today than ten years ago, there are relatively few women in top management, and in some organizations, even in middle management. When women do advance to top management positions, special attention is often focused on the fact that they are women.
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A widespread stereotype of women in management is that they are nurturing, supportive, and concerned with interpersonal relations. Such stereotypes suggest that women tend to be more relationship oriented as managers and engage in more consideration behaviors, whereas men are more task oriented and engage in more initiating structure behaviors. However, research suggests that that male and female managers in leadership positions behave in similar ways. Women do not engage in more consideration than men, and men do not engage in more initiating structure than women. However, research does suggest that men and women may differ in leadership style. Women tend to be more participative than men, involving subordinates in decision making and seeking input. Also, research suggests that men tend to be harsher when they punish their subordinates than women. There are at least two reasons why women leaders are more participative than male leaders. First, women must sometimes work harder to overcome resistance to their leadership and engender subordinate trust and respect. Second, they sometimes possess stronger interpersonal skills. The key finding from research is that male and female managers do not differ significantly in their propensities to perform different leader behaviors, and that across different kinds of organizational settings, male and female managers tend to be equally effective as leaders.
Focus on Diversity: Kathleen Ligocki Leads Tower Automotive Kathleen Ligocki occupies perhaps one of the highest leadership positions in the automotive industry. As CEO and a director of Tower Automotive, she leads an automobile components firm that supplies car parts to every major auto maker and operates in 13 different countries around the world. When Ligocki finished college, she had no plans for a career in the automotive industry. She took a job as a foreman at General Motors to earn money for graduate school. Much to her surprise, she enjoyed her work. She progressed through various positions at GM, later moved to Ford Motor Company, and also earned an MBA from the University of Pennsylvania. When Ligocki discussed her decision to leave Ford and become CEO at Tower with her colleagues at Ford, they tried to convince her to stay but also appreciated the opportunity awaiting her. She assumed her new position in August 2003. Under Ligockis leadership Tower projects annual revenues in excess of $2.2 billion by 2006.
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VI. EMOTIONAL INTELLIGENCE AND LEADERSHIP
Preliminary research suggests that emotions and moods of leaders at work influence their behavior and effectiveness as leaders. A leaders level of emotional intelligence may play a strong role in leadership effectiveness. Also, emotional intelligence plays a crucial role in how leaders relate to and deal with their followers, particularly when it comes to encouraging followers to be creative.
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