CHAPTER SIX EXCHANGE AND RELATIONSHIP DEVELOPMENT AND MANAGEMENT

1. Explain the key role of relationship development and management in effective leadership and use the concepts in improving leadership effectiveness. 2. Discuss the Path-Goal Theory of leadership and explain the role of the leader in removing obstacles in followers ’ paths. 3. Understand the role of attribution in the relationship between leaders and followers and how it can be used to manage relationships. Learning Objectives

4. Present the Leader-Member Exchange Theory of leadership and clarify how the creation of in- groups and out-groups affects the leadership process. 5. Summarize the impact of leadership substitutes and identify situations in which the leader ’ s impact is decreased. Learning Objectives (cont’d)

Path-Goal Theory of Leadership Effectiveness: Employee satisfaction and motivation Leader structuring and consideration Situational contingencies:  Task structure  Employee need for autonomy Leader’s Actions: 3 Focus on obstacle removal 3 Become comfortable with both task and consideration behaviors 3Understand followers’ perception

Managerial Implications Based On Path-Goal Theory  Leaders must understand their followers’ perception of the task  Leaders must take their followers’ need for challenge and autonomy into account  When followers need challenge or the task is challenging, leaders must avoid being directive  When the task is routine, boring, or stressful, leaders must be supportive to motivate their followers

Attribution Theory Employees Are More Likely To Be Held Responsible When: à The consequences of their actions are severe à When they have a mediocre track record in other similar situations à When other employees are successful in similar situations

à When the employee is defensive à When the manager’s success depends on the employee’s good performance Attribution Theory Employees Are More Likely To Be Held Responsible When:

Leader-member Exchange Model FFollower In-Group F F F F F Out-group F F F F F F F Leader

Leader-Member Exchanges  Leaders develop relationships with each member of work group  High quality relationship member is part of “in-group”member is part of “in-group” more responsibility, higher satisfactionmore responsibility, higher satisfaction  Low quality relationship member is part of “out-group”member is part of “out-group” less responsibility, lower satisfactionless responsibility, lower satisfaction

Theoretical Overview of LMX  Relationships develop from series of exchanges or interactions  Phase 1: Role-taking member enters organizationmember enters organization leader assesses member’s abilities/talentsleader assesses member’s abilities/talents  Phase 2: Role-making informal, unstructured negotiation of roleinformal, unstructured negotiation of role  Phase 3: Role-routinization social exchange pattern emergessocial exchange pattern emerges becomes routinebecomes routine

Precursors of LMX  Member attributes influence relationship extroversionextroversion abilitiesabilities ingratiation behaviorsingratiation behaviors  Leader provides social support  Affective responses influence relationship perceived similarityperceived similarity attractionattraction  leads to increased interaction trusttrust

Outcomes of LMX  Job satisfaction  Organizational commitment  Moderated/affected by other factors type of task matterstype of task matters  level of challenge situational factorssituational factors  size of group  workload  financial resources

Gender/Fairness and LMX  Gender differences influence interactions  Mixed gender relationships supervisors rate performance lowersupervisors rate performance lower supervisors report liking subordinate lesssupervisors report liking subordinate less subordinates experience greater role ambiguitysubordinates experience greater role ambiguity  Opposite true in same gender relationships

Gender/Fairness and LMX Process Phases  1: Role-taking - mutual respect essential men and women define respect differentlymen and women define respect differently social categorizing and stereotypingsocial categorizing and stereotyping  2: Role-making - trust develops single violation may destroy relationshipsingle violation may destroy relationship violations reinforce negative stereotypesviolations reinforce negative stereotypes  3: Role-routinization - mutual obligation gender/fairness issues resolved by this phasegender/fairness issues resolved by this phase

Perspective-Taking  Ability to “read” leader or member important in LMX  Use role-taking skills to entertain the point of view of another  Associated with empathy, reasonableness, and sensitivity  Negatively associated with aggressiveness and sarcasm

Perspective-Taking I Questions  When you were drawing, did you draw toward yourself or toward your partner?  How do you think your score on the perspective-taking questionnaire might relate to your performance on this task?  How do you think one’s tendency or ability to take the perspective (i.e., point of view) of another might influence the ways in which leaders and subordinates interact?

Perspective-Taking II Questions  How difficult was it for you to imagine drawing from your partner’s perspective?  How do you think your score on the perspective-taking questionnaire might relate to your performance on this task?  How do you think one’s tendency or ability to take the perspective (i.e., point of view) of another might influence the ways in which leaders and subordinates interact?

Perspective-Taking Wrap-up  3 role-taking aspects related to perspective-taking accurate in ability to perceive how others understand and respond to worldaccurate in ability to perceive how others understand and respond to world can view situations from many perspectivescan view situations from many perspectives able to perceive other’s perspective in depthable to perceive other’s perspective in depth  Leaders and members high on these aspects may have higher quality LMX

Productive Use Of In-Groups In order to use in-groups effectively, leaders should: a Base in-group membership on current performance and/or future potential performance and/or future potential a Review criteria for in-group membership a Assign tasks to those with best skills a Set clear performance-related guidelines for in- group membership

a Avoid highly differentiated groups a Keep membership fluid and dynamic a Maintain different in-groups for different activities different activities a Consider culture in determining membership membership Productive Use Of In-Groups (cont’d)

Leadership Substitutes: Follower Characteristics à Experience and training substitute for leader structuring à Professionalism substitutes for leader consideration and structuring à Lack of value for goals neutralizes leader consideration and structuring leader consideration and structuring

à Unambiguous tasks substitute for leader structuring à Direct feedback from the task substitutes for leader consideration and structuring à Challenging task substitutes for leader consideration leader consideration Leadership Substitutes: Task Characteristics

à A cohesive team substitutes for leader consideration and structuring à Leader’s lack of power neutralizes leader consideration and structuring à Standardization and formalization substitute for leader structuring à Organizational rigidity neutralizes leader structuring à Physical distance neutralizes leader consideration and structuring Leadership Substitutes: Organizational Characteristics

 Company built on compassion and service to inside and outside constituents  Former President, Bill George, focused on balance  Provide employees with means to successfully balance their work and life Leading Change: The Medtronic Way

 Focus on removing obstacles for the crew  Willingness to listen and change  Use of participation as a way of getting the job done  Reliance on referent power rather than only legitimate and reward and punishment  Creates situations that serve as substitutes for leadership Leadership In Action: The Caring Navy Commander

 India is vertical collectivistic and ascriptive  Office manager acting in accordance with his culture  Carefully evaluate the consequences of not hiring the “cousin”  In-groups are formed differently in different cultures The Leadership Challenge