2. © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.16
chapter
Effective Leadership
McGraw-Hill/Irwin
Principles of Management
© The McGraw-Hill Companies, Inc., All Rights Reserved.

3. Learning Objectives
Explain why good leadership is critical for success as a manager.
Summarize the main theoretical approaches to leadership.
Identify the behaviors and skills that are commonly associated with effective leadership.
Explain how the right approach to leadership might be influenced by important contingencies.
Discuss the differences between transformational and transactional leadership.

4. Managing & Leading Leaders Managers “Doing the right things”
“Doing things
right”
Learning Objective 1: Explain why good leadership is critical for success as a manager.
See Text Page: 404
Focuses on preserving the status quo
Focus on vision, mission, and goals

5. CEO Pay
AVERAGE annual CEO pay is $10.5 million, 369 times average worker pay of $28,310. In 1970, before the big run-up, the multiple was 28:1, a ratio that would make today’s average worker pay $374,800.
Put another way: If CEO pay were frozen now, it would take workers 66 years of 4% annual raises to get back to 1/28th of what the boss makes.
Learning Objective 1: Explain why good leadership is critical for success as a manager.
CEO Pay
This slide shows the current average CEO pay as compared to the average employee pay.
The average pay of CEO’s has been on the rise in recent years, which makes the ratio of average worker pay to their boss rise as well.
Ask the students – do they believe the CEOs should get this level of pay? Are they worth it? Why or why not? (It comes down to the question of what value do they generate. Truly competent and effective leaders do command far more than the average pay cited here. This further drives the argument of pay for performance.)
Source: Business Week, October 30, 2006

6. Question
All manager are leaders and all leaders are managers. Do you agree? Explain.
See Learning Objective 1: Explain why good leadership is critical for success as a manager.
Question
Students should be able to distinguish the difference between a manager and a leader.

7. Organizational Challenges
The challenges facing organizations and leaders are becoming increasingly complex. An internet survey by the Center for Creative Leadership revealed the following:
Type of Challenge
Frequency Percentage
Technical Challenge
43%
Adaptive Challenge
37%
Critical Challenge
10%
Learning Objective 1: Explain why good leadership is critical for success as a manager.
Organizational Challenges
This slide presents the challenges faced by the organizations and their leaders, according to the research report by The Center for Creative Leadership.
Technical challenges are within our current problem solving expertise, adaptive challenges are those requiring new processes and perspectives found outside current knowledge and resources, and critical challenges are those resulting from an unexpected event requiring an immediate and often drastic organizational response.
Technical challenges require the leaders’ current knowledge base. Adaptive challenges require more broad, visionary, and new knowledge base and resources. Finally, the critical challenges are more crisis type situations requiring drastic and decisive actions on part of the leaders.
The report draws one overarching conclusion from the extensive research: Leadership is changing and the approaches focusing on flexibility, collaboration, crossing boundaries, and collective leadership are expected to become a high priority.
Source: Changing Nature of Leadership Research Report, The Center for Creative Leadership
Source: Changing Nature of Leadership Research Report, The Center for Creative Leadership

8. Perspectives on Leadership
Power-influence perspective
Trait (competency) perspective
Effective Leadership
Learning Objective 2: Summarize the main theoretical approaches to leadership.
See Text Page: 405
Contingency perspective
Behavior perspective
Transformational perspective

9. Perspectives of Leadership
Power-influence approach – attempts to explain leadership effectiveness in terms of the amount of power possessed by a leader.
Trait/competency perspective – identifies the traits and competencies of effective leaders
Behavior approach – asserts that certain behaviors are related to leadership effectiveness
Learning Objective 2: Summarize the main theoretical approaches to leadership.
See Text Page: 405

10. Perspectives of Leadership
Contingency perspective – argues that the appropriate behaviors for a leader to adopt depend on context, and that will work in some situations will not work in others
Transformational perspective – suggests that effective leaders “transform” organizations through their vision
Learning Objective 2: Summarize the main theoretical approaches to leadership.
See Text Page: 405

11. The Power-Influence Perspective
Effective leaders rely on:
the personal power that flows from expertise
a network of allies
individual attributes
power flowing from their position
Learning Objective 2: Summarize the main theoretical approaches to leadership.
See Text Page: 406

12. What Makes Leaders Great?
Self-awareness
Personal conviction
Courage
Creativity
Curiosity
Ability to inspire
Ability to listen
Ability to innovate
Eagerness to experience
Willingness to reflect
Learning Objective 2: Summarize the main theoretical approaches to leadership.
What Makes Leaders Great?
This slide presents the 10 aspects that makes leaders great, according to Peter Alduino, leadership development consultant and president of Bridge Group Communications.
Great leaders must know who they are and leadership stems from what they believe in.
Great leaders will always face resistance to change and therefore must have the courage to act on their beliefs despite the circumstances.
Have the ability to think on their feet.
Great leaders have an inherent curiosity that drives them to ask questions and try new things, just to see what happens.
It has been said that the difference between management and leadership is the difference between the status quo and innovating to drive change.
Leaders learn by reflecting on what they have done.
Source: Biz Ed, September/October, 2005
Source: Biz Ed, September/October, 2005

13. Skill Sets Required by Academic Leaders
Skill set % of Respondents indicating as Important
Selling, marketing, and public relations %
Global business understanding %
Human resource and staffing %
Risk, cost, and financial management %
Project management %
E-business and IT knowledge %
Negotiation and employment law %
Learning Objective 2: Summarize the main theoretical approaches to leadership.
Skill Sets Required by Academic Leaders
This slide presents the results of a survey of business school Deans and Associate Deans on skill sets required to be successful.
Before showing this slide, ask the students – how do they see the job of a Dean? What skills do they believe are required to be successful in this job?
The findings suggest that the skills of relationship-building, managing change, building effective teams, planning and forecasting, defining and communicating a vision, and fund raising would be required by the business Deans to succeed.
Source: Biz Ed, March/April, 2002
Source: Biz Ed, March/April, 2002

14. Competency Perspective
Traits that can be acquired through learning
Strategic Thinking
Emotional Intelligence
Achievement Motivation
Learning Objective 2: Summarize the main theoretical approaches to leadership.
See Text Pages:
Power Motivation
Charisma

15. Emotional Intelligence
Self-regulation
Self-awareness
Learning Objective 2: Summarize the main theoretical approaches to leadership.
See Text Page: 409
Motivation
Empathy
Social skills

16. Limitations & Implications of Competency Perspective
Not all of the traits are equally important
Not all great leaders demonstrate all traits
Importance of traits is context dependent
Learning Objective 2: Summarize the main theoretical approaches to leadership.
See Text Page: 410

17. Behavior Perspective
Assumption: Certain leadership behaviors result in greater commitment on the part of subordinates and hence higher performance in pursuit of organization goals
People-oriented behavior – A leadership style that includes showing mutual trust and respect for subordinates, demonstrating genuine concern for their needs
Task-oriented behavior – The style of leaders who assign employees to specific tasks, clarify their work duties and procedures, ensure that they follow company rules, and push them to reach their performance capacity
Learning Objective 3: Identify the behaviors and skills that are commonly associated with effective leadership.
See Text Pages:

18. Fiedler’s Leadership Theory
Contingencies *Leader-member relations *Task structure *Position power
Learning Objective 3: Identify the behaviors and skills that are commonly associated with effective leadership.
See Text Page: 412
Outcomes *Team, unit, or organization performance
Leadership style *People-oriented *Task-oriented

19. Predictions of Fiedler’s Theory
Task-oriented leaders
Good
Leadership effectiveness
People-oriented leaders
Learning Objective 3: Identify the behaviors and skills that are commonly associated with effective leadership.
See Text Page: 412
Poor
Favorable Moderately favorable Unfavorable Situation Situation Situation

20. Weaknesses of Fiedler’s Theory
Simplistic
Classification into two broad types seems an unwarranted generalization
Division into people-oriented and task-oriented ignores the fact that some leaders can exhibit both
Unrealistic to “reward” an effective leader by removing him
Assumes that leaders cannot change their style
Learning Objective 3: Identify the behaviors and skills that are commonly associated with effective leadership.
See Text Page: 413

21. Path-Goal Theory
Personal characteristics of subordinates *Skills *Needs *Motivations
Leadership styles *Directive *Supportive *Participative *Achievement-oriented
Nature of work environment *Task structure *Team dynamics *Formal power
Clarify path Clear path Offer rewards
Learning Objective 4: Explain how the right approach to leadership might be influenced by important contingencies.
See Text Page: 414
Outcomes (goal attainment)
Employee goals
Path to goal attainment

22. Question
As a manager, Caitlyn always sets high goals for her subordinates, has high expectations for their performance, and displays confidence in them, encouraging and helping them to take on greater responsibilities. According to the Path-Goal theory, Caitlyn exhibits which of these leadership styles?
Achievement-oriented leadership
Supportive leadership
Directive leadership
Participative
Learning Objective 4: Explain how the right approach to leadership might be influenced by important contingencies.
See Text Page: 414
Answer: A

23. Path-Goal Predictions
If followers lack confidence, supportive leadership will increase subordinates’ confidence that they can achieve goals, which raises performance
If the task of subordinates is ambiguous, directive leadership may be preferred because it helps clarify the path subordinates must follow, which again increases performance
Learning Objective 4: Explain how the right approach to leadership might be influenced by important contingencies.
See Text Page: 415

24. Path-Goal Predictions
If the task of subordinates is standardized and dull, achievement-oriented leadership can motivate subordinates by setting high goals and expressing confidence in their abilities
If the rewards offered to the employees are inappropriate, participative leadership may allow the leader to clarify the needs of subordinates and change rewards to improve performance
Learning Objective 4: Explain how the right approach to leadership might be influenced by important contingencies.
See Text Page: 415

25. Limitations of Path-Goal Theory
The implicit assumption that a leader can adopt only one style at a time seems simplistic
There is still no strong empirical consensus that path-goal theory does a good job of explaining what is required for effective leadership
It has a narrow definition of leadership effectiveness
Other potentially important factors of the leadership process are ignored
It provides only a partial definition
Learning Objective 4: Explain how the right approach to leadership might be influenced by important contingencies.
See Text Pages:

26. Behaviors of Transformational Leaders
Envisioning a new future
Communicating persistently
Creating an enduring organization
Modeling desired behaviors
Transformational Leadership
Learning Objective 5: Discuss the differences between transformational and transactional leadership.
See Text Page: 418
Empowering employees
Leading with integrity
Meaningful changes in strategy and organization

27. Gender Differences in Leadership
Women:
have more people-oriented, participative leadership
are more relationship-oriented, cooperative, nurturing, and emotional in their leadership roles
Generally, studies have shown that men and women do not differ in either task-oriented or people-oriented leadership
However, women do adopt a participative style more readily
Overall, subordinates have expectations from their leaders as to how they should act, and if the leader deviates from this belief negative evaluations may occur
Learning Objective 5: Discuss the differences between transformational and transactional leadership.
See Text Pages:

28. Glass Ceiling Proportion of Female CEO’s, 2000 to 2016: 0.06% 2% 4.90%
2006
2010 (est.)
2016 (est.)
0.06% 2%
4.90%
6.20%
Learning Objective 5: Discuss the differences between transformational and transactional leadership.
Glass Ceilings
This slide presents the dismal record of percent of female CEOs as compared to their male counterparts.
Despite advances in the corporate sphere, it’s still lonely at the top for female CEOs—and will be for at least another decade, predicts a study by Dartmouth’s Tuck School of Business and Loyola University Chicago.
Ask the students – what do they believe could be reasons? (Career breaks, glass ceiling, are some possible explanations.)
Source: Business Week, December 4, 2006