LEADERSHIP AND CHANGE Dynamics of Organizational Behavior Virginia Tech MBA Program Andrew Watson

Agenda Types of Organization Leadership: Ch. 12 Video: Art Ryan at Prudential Break Organizational Change: Ch. 18 Looking forward

Types of Organization For-profit Privately held, e.g., Fidelity Investments Publicly traded, e.g., General Electric Benefit corporation, e.g., Kickstarter Government Nonprofit (NPO), e.g. US Catholic Church, one of the US’s largest organizations Leadership and Change not only relevant to for-profits

Defining Leadership and Leaders Leadership: influence by one member over others to help the group/organization achieve its goals Note the importance of the word influence Leader: a person who can do this Formal leader: member given authority by the organization to influence… Informal leader: member who isn’t given authority who nevertheless…

Early Approaches Leader trait Leader behavior Consideration and initiating structure Complementary but independent Leader rewards or punishes In response to subordinate behavior What’s missing? Situation (c.f. environment in organizational design)

Fiedler’s Contingency Theory Two leadership styles Relationship-oriented and task-oriented Measured using least preferred co-employee (LPC) scale Situation: how favorable is the situation for leading? Measured in terms of three characteristics Leader-member relations Task structure Position power Prescription Relationship-oriented style in moderately favorable situations Task-oriented style in extreme situations Very favorable or very unfavorable

Other Contingency Theories Path-goal (House): motivate followers to achieve goals by choosing appropriate behavior(s) from: Directive Supportive Participative Achievement-oriented Level of subordinate participation in decision-making (Vroom- Yetton): selection from the following styles: Autocratic Consultative Group Delegated

Other Approaches Leader-member exchange Focus on the leader-follower dyad Some, but not all, subordinates are in the in-group Questioning the effect of leadership Leadership substitutes Leadership neutralizers The romance of leadership: we may perceive “leaders” to be more important than they really are Multiple established biases may drive this Charismatic, transformational, transactional,… Ethical: leaders as ethical role models? Demographics and leadership

Art Ryan at Prudential Questions What changes did AR make? What are your impressions of AR as a leader? What other OB issues does the video raise, or relate to? What further questions will I ask after the video? Timeline 1942: AR born in Brooklyn 1972: joined Chase Manhattan Bank 1990: appointed Chairman, COO, #2 to mentor Thomas G. Labrecque 1994: joined Prudential Insurance as Chairman and CEO 2001: September : CEO Exchange featuring AR broadcast in February

Organizational Change Definition The movement of an organization away from its present state Toward some future desired state To increase its effectiveness Note that there are many ways an organization can change without corresponding to the above definition e.g., via turnover initiated by employees Forces for and against The two columns of the next slide show a selection of forces Based on exhibit 18.1 Comments?

Some Forces For Change—and Against Competition Economy Political forces e.g., regulation Society Org’l impediments: Culture Functional orientations Group impediments: Norms Cohesiveness Individual: Habit Uncertainly and insecurity

Two Cases of Change—and Resistance? Catholic Church Economist describes Pope Francis as turnaround CEO Economist describes Don’t believe every detail: corporate raider Lou Siffer? What changes has Pope Francis made? What resistance might Francis expect? World Bank NPR describes actions of President Jim Yong Kim NPR describes Took office in July 2012 New strategic goals Reorganization and budget cuts to take effect by July 2014 What resistance might Jim expect?

Evolutionary vs. Revolutionary Change TQM Continuous improvement of processes Sociotechnical theory Jointly optimize the human and task systems Reengineering Fundamental rethinking of processes Restructuring Strategic change

Managing Change Understanding and Managing OB Textbook’s title Textbook may lean more toward understanding than managing Ch 18 is one of chapters that leans most toward managing Desired future state is part of its definition of organizational change We’ve already discussed TQM and reengineering Last two sections even more explicitly about managing change Action research: a “strategy” or method Organizational development: a toolkit

Action Research A five-step process Diagnose the organization What are the problems? What are the causes? Determine desired future state Implement action, itself a three-step process Impediments: identify and manage Change agents: external (consultants) and/or internal? Top-down or bottom-up? Evaluate Institutionalize action research What’s the next desired future state? To what extent should the organization “refreeze”?

Organizational Development Toolkit, or “series of techniques and methods” Tools to deal with resistance to change Education, communication, participation, empowerment,… Politics and negotiation Coercion, including (threat of) termination Tools to promote change, at various levels Individual, e.g., counseling Group Intergroup Organizational, e.g., organizational confrontation meeting

Looking Forward Next week Skim Ch. 5 & 15 (Learning & Decision Making) Paper 2 due the following Monday (May 2) On material from Ch. 13 or 18 Exam 2 in class on May 4 On Ch. 5, 8-12, Answer 3 questions Out of (at least) 5 Bring laptop Standard Closing