1. Williams
Chapter 17
Leadership
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2. What Would You Do? Leadership: Dealing with Tragedy
Williams
What Would You Do? Leadership: Dealing with Tragedy
Sandler O’Neill & Partners, L.P. is Investment banking firm located in World Trade Center on September 11
Top leaders are lost in the tragedy
Can new leadership help the firm survive this catastrophic event?
When the World Trade Center Towers were attacked by terrorists, Jimmy Dunne, a leading partner in the investment banking firm of Sandler O’Neill, was on the sixth hole of the Bedford Golf and Tennis Club in Westchester, New York. He made it to the clubhouse just in time to see both buildings collapse on TV.
170 people worked at Sandler O’Neill, and Dunne had no way of knowing who got out and who survived, including the other two key managers of the firm, Herman Sandler, founder, and Chris Quakenbush, head of investment banking and Dunne’s long-time friend.
As he raced to the seen of the attacks, several questions were spinning around in his head: How many people didn’t get out? How will we take care of their families? And with our offices gone, how do we keep the business running? If Sandler and Quakenbush didn’t get out, that means you’re in charge. Do you have what it takes to be in charge? You’ve always played the tough guy. But that’s not what’s needed now. Can you change to provide the right kind of leadership?
If you were the surviving partner of Sandler O’Neill on September 11, 2001, what would you do?
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3. Learning Objectives What Is Leadership?
Williams
Learning Objectives What Is Leadership?
After discussing this section, you should be able to:
explain what leadership is
describe who leaders are and what effective leaders do
Leadership is the process of influencing others to achieve group or organizational goals.
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4. Leadership Leaders versus Managers Substitutes for Leadership Williams
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5. Managers versus Leaders
Williams
Managers versus Leaders
Managers
Leaders
Do things right
Status quo
Short-term
Means
Builders
Problem solving
Do the right thing
Change
Long-term
Ends
Architects
Inspiring & motivating
Leaders are concerned with doing the right thing, while managers are concerned with doing things right. Managers are more concerned with means, how to get things done, while leaders are more concerned with ends, what gets done. Leaders focus on visions, missions, goals, and objectives, while managers focus solely on productivity and efficiency. Managers see themselves as preservers of the status quo, while leaders see themselves as promoters of change, as challengers of the status quo in that they encourage creativity and risk taking. Managers are concerned with control and limiting the choices of others, while leaders are more concerned with expanding peoples' choices and options. Finally, managers solve problems so that others can do their work, while leaders and managers inspire and motivate others to find their own solutions.
While leaders are different from managers, in practice, organizations need them both. Managers are critical to getting out the day-to-day work and leaders are critical to inspiring employees and setting the organization's long-term direction. The key issue is the extent to which organizations are properly led or properly managed. Warren Bennis summed up the difference between leaders and managers by noting that "American organizations (and probably those in much of the rest of the industrialized world) are underled and overmanaged. They do not pay enough attention to doing the right thing, while they pay too much attention to doing things right."
Adapted from Exhibit 17.1
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6. Substitutes for Leadership: Do Leaders Always Matter?
Williams
Substitutes for Leadership: Do Leaders Always Matter?
Leadership substitutes
subordinate, task, or organizational characteristics that make leaders redundant or unnecessary
professional orientation, intrinsically satisfying work, cohesive work group, etc.
Leadership neutralizers
subordinate, task, or organizational characteristics that interfere with a leader’s actions
subordinate skills, abilities, unambiguous and routing tasks, intrinsically satisfying work, rewards not controlled by supervisor, etc.
Leaders don’t always matter
However, there are situations and circumstances in which leadership isn't necessary, or is unlikely to make much of a difference, or where leaders aren't to blame for poor performance. These are known as leadership substitutes and leadership neutralizers.
Leadership substitutes are subordinate, task, or organizational characteristics that make leaders redundant or unnecessary.
Leadership neutralizers are subordinate, task, or organizational characteristics that can interfere with a leader’s actions or make it impossible for a leader to influence followers’ performance. Unlike substitutes which simply take the place of leaders, leadership neutralizers create an "influence vacuum." In other words, leadership neutralizers create a need for leadership by ironically preventing leadership from working.
So do leaders always matter? Leadership substitutes and neutralizers indicate that sometimes they don't. However, this doesn't mean that leaders don't matter at all. Quite the opposite. Leaders do matter, but they're not superhuman. They can't do it all by themselves. And they can't fix every situation. In short, leadership is very important. But poor leadership isn't the cause of every organizational crisis and changing leaders isn't the solution to every company problem.
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7. Leadership Substitutes & Neutralizers
Williams
Leadership Substitutes & Neutralizers
For instance, when leadership substitutes such as ability and performance feedback are present, task-related leader behavior that specifies goals, task assignments, and how to do the job aren't likely to improve a subordinate's work performance. Think about it. Workers already have the capability to do their jobs. And, the job itself provides enough information to let them know how well they're doing their jobs or what they might do to correct performance problems. In situations like this, where leadership substitutes are strong, leaders don't need to tell workers what to do or how to do their jobs.
For example, when a subordinate is indifferent toward organizational rewards, there may be nothing that a leader can do to reward them for good performance. Likewise, union contracts that specify that all employees be paid the same, organizational policies that reward employees by seniority, and salary and raise processes that don't give leaders enough money to substantially reward good performers effectively neutralize the ability of leaders to reward workers. Spatial distance (an organizational characteristic) can also neutralize leadership. Spatial distance is a situation in which supervisors and subordinates don't work in the same place, such as with telecommuters or people working thousands of miles away in overseas offices. Spatial distance typically means infrequent feedback, little or no face-to-face contact, and being "out of sight and out of mind," all of which make it very difficult for leaders to lead. In fact, some companies find telecommuting to be so disruptive to leadership processes that they require their telecommuters to come into the office at least once or twice a week.
Adapted from Exhibit 17.2
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8. Who Leaders Are and What Leaders Do
Williams
Who Leaders Are and What Leaders Do
Leadership
Behavior
Leadership
Traits
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9. Leadership Traits Drive Desire to Lead Self- confidence Honesty/
Williams
Leadership Traits
Drive
Desire to
Lead
Self-
confidence
Honesty/
Integrity
Knowledge
of the
Business
Emotional
Stability
Trait theory says that effective leaders possess a similar set of traits or characteristics. Traits are relatively stable characteristics, such as abilities, psychological motives, or consistent patterns of behavior. For example, according to trait theory, leaders were commonly thought to be taller, more confident, and have greater physical stamina (i.e., higher energy levels). Trait theory is also known as the "great person" theory, because early versions of trait theory stated that leaders were born, not made. In other words, you either had the "right stuff" to be a leader, or you didn't. And if you didn't, there was no way to get "it."
Until recently, studies indicated that trait theory was wrong, that there were no consistent trait differences between leaders and nonleaders, or between effective and ineffective leaders. However, more recent evidence shows that "successful leaders are not like other people," that successful leaders are indeed different from the rest of us.
Drive refers to high levels of effort and is characterized by achievement, motivation, ambition, energy, tenacity, and initiative. Successful leaders also have a stronger desire to lead. They want to be in charge and think about ways to influence or convince others about what should or shouldn't be done. Honesty/integrity is also important to leaders. Honesty, that is, being truthful with others, is a cornerstone of leadership. Integrity is the extent to which leaders do what they said they would do. Leaders may be honest and have good intentions, but if they don't consistently deliver on what they promise, they won't be trusted.
Self-confidence, believing in one's abilities, also distinguishes leaders from nonleaders. Self-confidence is critical to leadership. This also means that leaders have emotional stability. Even when things go wrong, they remain even-tempered and consistent in their outlook and the way in which they treat others. Leaders who have a good knowledge of the business understand the key technological decisions and concerns facing their companies. More often than not, studies indicate that effective leaders have long, extensive experience in their industries.
Cognitive
Ability
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10. What Really Works? Traits & Perceptions of Leadership Effectiveness
Williams
What Really Works?
Traits & Perceptions of Leadership Effectiveness
Intelligence
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
75%
Dominance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
57%
For decades, researchers assumed that leadership traits, such as drive, emotional stability, cognitive ability, and charisma were not related to effective leadership. However, more recent evidence shows that there are reliable trait differences between leaders and nonleaders. In fact, 54 studies based on more than 6,000 people clearly indicate that in terms of leadership traits, "successful leaders are not like other people."
Traits and Perceptions of Leadership Effectiveness
Several leadership models argue that successful leaders will be viewed by their followers as good leaders. (This is completely different from determining whether leaders actually improve organizational performance.) Consequently, one test of trait theory is whether leaders with particular traits are viewed as more or less effective leaders by their followers.
Extroversion
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
63%
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11. What Really Works? (cont’d)
Williams
What Really Works? (cont’d)
Charisma & Leadership Effectiveness
Performance & Charisma
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
72%
Charisma & Perceived Leader Effectiveness
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
89%
Charisma and Leadership Effectiveness
As discussed at the end of the chapter, charismatic leadership is the set of behavioral tendencies and personal characteristics of leaders that creates an exceptionally strong relationship between leaders and their followers. More specifically, charismatic leaders articulate a clear vision for the future that is based on strongly held values or morals, model those values by acting in a way consistent with the vision, communicate high performance expectations to followers, and display confidence in followers' abilities to achieve the vision.
Charisma & Leader Satisfaction
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
90%
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12. Leadership Behaviors Initiating structure Consideration
Williams
Leadership Behaviors
Initiating structure
clarifies follower roles and duties
job-centered or concern for production
Consideration
creating a supportive environment
employee-centered or concern for people
Initiating structure is the degree to which a leader structures the roles of followers by setting goals, giving directions, setting deadlines, and assigning tasks. A leader's ability to initiate structure primarily affects subordinates' job performance.
Consideration is the extent to which a leader is friendly, approachable, supportive, and shows concern for employees. Consideration primarily affects subordinates' job satisfaction.
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13. Blake/Mouton Leadership Grid1 2 3 4 5 6 7 8 9
1,9
Country Club Management
9,9
Team Management
5,5
Middle of the
Road
Concern for People
1,1
Impoverished Management
9,1
Authority-Compliance 1 2 3 4 5 6 7 8 9
Concern for Production
Adapted from Exhibit 17.4

14. Learning Objectives Situational Leadership
Williams
Learning Objectives Situational Leadership
After discussing this section, you should be able to:
explain Fiedler’s contingency theory.
describe how path-goal theory works.
explain the normative decision theory
After leader traits and behaviors, situational leadership is the third major approach to the study of leadership. The four major situational leadership theories—Fiedler's contingency theory, path-goal theory, Hersey and Blanchard's situational theory, and Vroom and Yetton's normative decision model—all assume that the effectiveness of any leadership style, the way a leader generally behaves toward followers, depends on the situation. Accordingly, there is no one "best" leadership style. However, these theories differ in one significant way. Fiedler's contingency theory assumes that leadership styles are consistent and difficult to change. Therefore, leaders must be placed in or "matched" to a situation that fits their leadership style. However, the other three situational theories all assume that leaders are capable of adapting and adjusting their leadership styles to fit the demands of different situations.
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15. Putting Leaders in the Right Situation: Fiedler’s Contingency Theory
Williams
Putting Leaders in the Right Situation: Fiedler’s Contingency Theory
Leadership Style:
Least Preferred
Co-worker
Situational
Favorableness
Matching Leadership
Styles to
Situations
Fiedler's contingency theory states that in order to maximize work group performance, leaders must be matched to the right leadership situation. More specifically, as shown in the next slide, the first basic assumption of Fiedler's theory is that leaders are effective when the work groups they lead perform well. So instead of judging leader effectiveness by what a leader does (i.e., initiating structure and consideration) or who the leader is (i.e., trait theory), Fiedler assesses leaders by the conduct and performance of the people they supervise. Second, Fiedler assumes that leaders are generally unable to change their leadership styles and that leaders will be more effective when their leadership styles are matched to the proper situation. The third assumption is that the favorableness of a situation for a leader depends on the degree to which the situation permits the leader to influence the behavior of group members. Thus, Fiedler's third assumption is consistent with our definition of leadership, which is the process of influencing others to achieve group or organizational goals.
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16. Fiedler’s Contingency Theory
Williams
Fiedler’s Contingency Theory
Group
Performance
Situational
Favorableness =
Leadership Style
Adapted from Exhibit 17.5
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17. Leadership Style: Least Preferred Co-Worker
Williams
Leadership Style: Least Preferred Co-Worker
Leadership style is the way a leader generally behaves toward followers
seen as stable and difficult to change
Style is measured by the Least Preferred Co-worker scale (LPC)
relationship-oriented
task-oriented
When Fiedler uses the term leadership style, he means the way in which a leader generally behaves toward followers. However, Fiedler also assumes that leadership styles are tied to leaders' underlying needs and personality. And since personality and needs are relatively stable, he assumes that leaders are generally incapable of changing their leadership styles.
Fiedler uses a questionnaire called the Least Preferred Co-worker scale (LPC) to measure leadership style. When completing the LPC scale, people are instructed to consider all of the people with whom they have ever worked and then to choose the one person with whom they "least preferred" to work. Take a second yourself to identify your LPC. It's usually someone you had a big disagreement with, or, for whatever reason, you couldn't get along with or didn't like.
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18. Situational Favorableness
Williams
Situational Favorableness
How a particular situation affects a leader’s ability to lead
Three factors
Leader-member relations
Task structure
Position power
Fiedler assumes that leaders will be more effective when their leadership styles are matched to the proper situation. More specifically, Fiedler defines situational favorableness as the degree to which a particular situation either permits or denies a leader the chance to influence the behavior of group members. In highly favorable situations, leaders find that their actions influence followers. However, in highly unfavorable situations, leaders have little or no success influencing them.
Three situational factors determine the favorability of a situation: leader-member relations, task structure, and position power. Leader-member relations, which is the most important situational factor, is how well followers respect, trust, and like their leaders. When leader-member relations are good, followers trust the leader and there is a friendly work atmosphere. Task structure is the degree to which the requirements of a subordinate's tasks are clearly specified. With highly structured tasks, employees have clear job responsibilities, goals, and procedures. Position power is the degree to which leaders are able to hire, fire, reward, and punish workers. The more influence leaders have over hiring, firing, rewards, and punishments, the greater their power.
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19. Situational Favorableness
Williams
Situational Favorableness
Adapted From Exhibit 17.7
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20. Matching Leadership Styles to Situations
Williams
Matching Leadership Styles to Situations
Task-
Oriented
Leaders
Good
Relationship-
Oriented
Leaders
Poor
After studying thousands of leaders and followers in hundreds of different situations, Fiedler found that the performance of relationship- and task-oriented leaders followed the pattern displayed in this slide. Relationship-oriented leaders with high LPC scores were better leaders (i.e., their groups performed more effectively) under moderately favorable situations. In moderately favorable situations, the leader may be liked somewhat, tasks may be somewhat structured, and the leader may have some position power. In this situation, a relationship-oriented leader improves leader-member relations, which is the most important of the three situational factors. In turn, morale and performance improve. By contrast, task-oriented leaders with low LPC scores were better leaders in highly favorable and unfavorable situations. Task-oriented leaders do well in favorable situations where leaders are liked, tasks are structured, and the leader has the power to hire, fire, reward, and punish. In these favorable situations, task-oriented leaders effectively step on the gas of a highly tuned car that's in perfect running condition. Their focus on performance sets the goal for the group, that then charges forward to meet it. But task-oriented leaders also do well in unfavorable situations where leaders are disliked, tasks are unstructured, and the leader doesn't have the power to hire, fire, reward, and punish. In these unfavorable situations, the task-oriented leader sets goals, which focuses attention on performance, and clarifies what needs to be done, thus overcoming low task structure. This is enough to jump-start performance, even if workers don't like or trust the leader.
Adapted From Exhibit 17.8
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21. Adapting Leader Behavior: Path-Goal Theory
Williams
Adapting Leader Behavior: Path-Goal Theory
Four Leadership
Styles
Subordinate
and
Environmental
Contingencies
Just as its name suggests, path-goal theory states that leaders can increase subordinate satisfaction and performance by clarifying and clearing the paths to goals and by increasing the number and kinds of rewards available for goal attainment. Said another way, leaders need to make clear how followers can achieve organizational goals, take care of problems that prevent followers from achieving goals, and then find more and varied rewards to motivate followers who achieve those goals.
However, leaders must meet two conditions in order for path clarification, path clearing, and rewards to increase followers' motivation and effort. First, leader behavior must be an immediate or future source of satisfaction for followers. Therefore, the things you do as a leader must please your followers today or lead to future activities or rewards that will satisfy them in the future. Second, while providing the coaching, guidance, support, and rewards necessary for effective work performance, leader behaviors must complement and not duplicate the characteristics of followers' work environments. Thus, leader behaviors must offer something unique and valuable to followers beyond what they're already experiencing as they do their jobs or beyond that which they can already do for themselves.
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22. Path-Goal Theory Subordinate Contingencies Leadership Styles Outcomes
Williams
Path-Goal Theory
Environmental Contingencies
Task Structure
Formal Authority System
Primary Work Group
Subordinate Contingencies
Perceived Ability
Locus of Control
Experience
Leadership Styles
Directive
Supportive
Participative
Achievement-Oriented
Outcomes
Subordinate Satisfaction
Subordinate Performance
In contrast to Fiedler's contingency theory, path-goal theory assumes that leaders can change and adapt their leadership styles. Figure 17.7 illustrates this process, showing that leaders change and adapt their leadership styles contingent on the subordinate they are leading or the environment in which that subordinate works.
Adapted From Figure 17.10
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23. Leadership Styles Directive Supportive Participative
Williams
Leadership Styles
Directive
clarifying expectations and guidelines
Supportive
being friendly and approachable
Participative
allowing input on decisions
Achievement-Oriented
setting challenging goals
Directive leadership involves letting employees know precisely what is expected of them, giving them specific guidelines for performing tasks, scheduling work, setting standards of performance, and making sure that people follow standard rules and regulations.
Supportive leadership involves being friendly and approachable to employees, showing concern for them and their welfare, treating them as equals, and creating a friendly climate. Supportive leadership is very similar to considerate leader behavior. Supportive leadership often results in employee job satisfaction and satisfaction with leaders. This leadership style may also result in improved performance when it increases employee confidence, lowers employee job stress, or improves relations and trust between employees and leaders.
Participative leadership involves consulting employees for their suggestions and input before making decisions. Participation in decision making should help followers understand which goals are most important and clarify the paths to accomplishing them. Furthermore, when people participate in decisions, they become more committed to making them work.
Achievement-oriented leadership means setting challenging goals, having high expectations of employees, and displaying confidence that employees will assume responsibility and put forth extraordinary effort.
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24. Subordinate & Environmental Contingencies
Williams
Subordinate & Environmental Contingencies
Subordinate
Perceived ability
Locus of control
Experience
Environmental
Task structure
Formal authority system
Primary work group
Perceived ability is simply how much ability subordinates believe they have for doing their jobs well. Subordinates who perceive that they have a great deal of ability will be dissatisfied with directive leader behaviors. Experienced employees are likely to react in a similar way. Since they already know how to do their jobs (or perceive that they do), they don't need or want close supervision. By contrast, subordinates with little experience or little perceived ability will welcome directive leadership. Locus of control is a personality measure that indicates the extent to which people believe that they have control over what happens to them in life. Internals believe that what happens to them, good or bad, is largely a result of their choices and actions. Externals, on the other hand, believe that what happens to them is caused by external forces outside of their control.
As in Fiedler's contingency theory, task structure is the degree to which the requirements of a subordinate's tasks are clearly specified. When task structure is low and tasks are unclear, directive leadership should be used, because it complements the work environment. However, when task structure is high and tasks are clear, directive leadership duplicates what task structure provides and is not needed. Alternatively, when tasks are stressful, frustrating, or dissatisfying, leaders should respond with supportive leadership.
The formal authority system is an organization's set of procedures, rules, and policies. When the formal authority system is unclear, directive leadership complements the situation by reducing uncertainty and increasing clarity. But when the formal authority system is clear, directive leadership is redundant and should not be used.
Primary work group refers to the amount of work-oriented participation or emotional support that is provided by an employee's immediate work group.
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25. When to Use Each of the Four Leadership Styles
Williams
When to Use Each of the Four Leadership Styles
Adapted from Exhibit 17.11
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26. Adapting Leader Behavior: Normative Decision Theory
Williams
Adapting Leader Behavior: Normative Decision Theory
Decision
Styles
Decision
Quality and
Acceptance
Many people believe that making tough decisions is at the heart of leadership. However, experienced leaders will tell you that deciding how to make decisions is just as important. The normative decision theory (also known as the Vroom-Yetton-Jago Model) helps leaders decide how much employee participation (from none to letting employees make the entire decision) should be used when making decisions.
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27. Decision Styles Style Explanation
Williams
Decision Styles
Style Explanation
AI - Autocratic Solve the problem yourself using the information you have.
AII - Less autocratic Obtain the needed information from workers; then solve the problem yourself. Workers provide information but not alternatives.
C1- Consultative Share the problem with workers individually
(but not as a group), seeking suggestions &
possible alternatives. Solve the problem yourself.
CII - More consultative Share the problem with workers as a group, seeking suggestions & possible alternatives. Solve yourself.
GII - Group decision Share the problem with workers as a group,
seeking suggestions & possible alternatives.
Attempt to reach a consensus & be willing to
accept & implement the workers’ solution.
While nearly all of the other leadership theories in this chapter have specified leadership styles, that is, the way a leader generally behaves toward followers, the normative decision theory instead specifies five different decision styles or ways of making decisions. As shown in this slide, those styles vary from autocratic decisions (AI or AII), in which leaders make the decisions by themselves, to consultative decisions (CI or CII), in which leaders share problems with subordinates but still make the decisions themselves, to group decisions (GII), in which leaders share the problems with subordinates and then have the group make the decisions.
Adapted from Exhibit 17.12
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28. Decision Quality and Acceptance
Williams
Decision Quality and Acceptance
Using the right amount of employee participation:
improves decision quality
improves acceptance
Decision tree helps leader identify optimal level of participation
According to the normative decision theory, using the right degree of employee participation improves the quality of decisions and the extent to which employees accept and are committed to decisions.
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29. Decision Rules to Increase Decision Quality
Williams
Decision Rules to Increase Decision Quality
Quality Rule
If the quality of the decision is important, then don't use an autocratic decision style
Leader Information Rule
If the quality of the decision is important, and if the leader doesn't have enough information to make the decision on his or her own, then don't use an autocratic decision style
Subordinate Information Rule
If the quality of the decision is important, and if the subordinates don't have enough information to make the decision themselves, then don't use a group decision style
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30. Decision Rules to Increase Decision Quality (cont’d)
Williams
Decision Rules to Increase Decision Quality (cont’d)
Goal Congruence Rule
If the quality of the decision is important, and subordinates' goals are different from the organization's goals, then don't use a group decision style
Problem Structure Rule
If the quality of the decision is important, the leader doesn't have enough information to make the decision on his or her own, and the problem is unstructured, then don't use an autocratic decision style
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31. Decision Rules to Increase Decision Acceptance
Williams
Decision Rules to Increase Decision Acceptance
Commitment Probability Rule
If having subordinates accept and commit to the decision is important, then don't use an autocratic decision style
Subordinate Conflict Rule
If having subordinates accept the decision is important and critical to successful implementation and subordinates are likely to disagree or end up in conflict over the decision, then don't use an autocratic or consultative decision style
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32. Decision Rules to Increase Decision Acceptance (cont’d)
Williams
Decision Rules to Increase Decision Acceptance (cont’d)
Commitment Requirement Rule
If having subordinates accept the decision is absolutely required for successful implementation and subordinates share the organization's goals, then don't use an autocratic or consultative style
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33. Learning Objectives Strategic Leadership
Williams
Learning Objectives Strategic Leadership
After discussing this section, you should be able to:
explain how visionary leadership (i.e. charismatic and transformational leadership) helps leaders achieve strategic leadership.
Strategic leadership is the ability to anticipate, envision, maintain flexibility, think strategically, and work with others to initiate changes that will create a positive future for an organization. For example, General Electric's CEO, Jack Welch, is one of the most successful CEOs ever, having increased GE's stock market value from $12 billion when he took over in 1981 to more than $300 billion today. From the start, Welch imparted strategic leadership by making it clear that every GE business (there are more than a dozen) needed to be "#1 or #2 in it's industry." For two decades, he has reinforced GE's strategic leadership by holding half-day "classes" with more than 15,000 GE managers and executives at GE's executive center in Crotonville, New York. Every week, Welch also uses surprise visits to GE plants and offices to maintain connections with GE's lower- and middle-level managers. Brian Nailor, a GE marketing manager, said, "We're pebbles in an ocean, but he knows about us."
Thus, strategic leadership captures how leaders inspire their followers to change and to give extraordinary effort to accomplish organizational goals.
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34. Visionary Leadership Charismatic Leadership Transformational
Williams
Visionary Leadership
Charismatic
Leadership
Transformational
Leadership
Visionary leadership creates a positive image of the future that motivates organizational members and provides direction for future planning and goal setting.
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35. Charismatic Leadership
Williams
Charismatic Leadership
Creates an exceptionally strong relationship between leader and follower
Lead by:
articulating a clear vision, based on values
role modeling values
communicating high performance expectations
displaying confidence in followers
Charisma is a Greek word meaning “gift from God.” The Greeks saw people with charisma as divinely inspired and capable of incredible accomplishments. German sociologist Max Weber viewed charisma as a special bond between leaders and followers.
Charismatic leaders have strong, confident, dynamic personalities that attract followers and enable them to create strong bonds between themselves and their followers. Followers trust charismatic leaders, are loyal to them, and are inspired to work toward the accomplishment of the leader’s vision. Because of these qualities, followers become devoted to charismatic leaders and may go to extraordinary lengths to please them. Therefore, we can define charismatic leadership as the behavioral tendencies and personal characteristics of leaders that create an exceptionally strong relationship between them and their followers. Charismatic leaders also:
articulate a clear vision for the future that is based on strongly held values or morals,
model those values by acting in a way consistent with the vision,
communicate high performance expectations to followers, and display confidence in followers' abilities to achieve the vision.
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36. Been There, Done That Content employees produce happy customers
Williams
Been There, Done That
Richard Branson: Charisma without Hot Air
Content employees produce happy customers
Keeps offices at 50 people
Encourages and rewards risk taking and creativity
Richard Branson CEO and founder of the Virgin Group, which owns Virgin Atlantic Airways, Virgin Cola, and Virgin Mega stores, as well as hotels, video game and book publishing, and radio and television production, is one of the most charismatic business leaders of our time. Besides his highly publicized attempts at flying a hot-air balloon around the world, Branson is known for his sense of humor, his openness to ideas, and the large amount of freedom that he grants to the people who runs various parts of the Virgin "empire."
If your employees are happy and smiling and enjoying their work, they will perform well. Consequently, the customers will enjoy their experience with your company. If your employees are sad and miserable and not having a good time, the customers will be equally miserable. My philosophy was always that if there were 50 people in a building, I would go there and ask to see the deputy managing director, the deputy sales manager, and the deputy marketing manager. I would say: "You are now the managing director, the sales manager, the marketing manager, or the press officer of a new company." And I would put them into a new building. Then again, when that company got to a certain size, say 50 people, I would do the same thing again. So we actually set up about 25 or 30 small record companies. Cumulatively, they became the biggest independent record company in the world. Yes, I suppose that we have made maybe 15 or 20 multimillionaires through this structure. We like to reward our key performers for their creative contribution.
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37. Types of Charismatic Leaders
Williams
Types of Charismatic Leaders
Ethical Charismatics
provide developmental opportunities
open to positive and negative feedback
recognize others’ contributions
share information
concerned with the interests of the group
Unethical Charismatics
control and manipulate followers
only want positive feedback
motivated by self-interest
In general, there are two kinds of charismatic leaders, ethical charismatics and unethical charismatics. Ethical charismatics provide developmental opportunities for followers, are open to positive and negative feedback, recognize others' contributions, share information, and have moral standards that emphasize the larger interests of the group, organization, or society. Ethical charismatics produce stronger commitment, higher satisfaction, more effort, better performance, and greater trust.
By contrast, unethical charismatics pose a tremendous risk for companies. Followers can be just as supportive and committed to unethical charismatics as they are to ethical charismatics. However, unethical charismatics control and manipulate followers, do what is best for themselves instead of their organizations, only want to hear positive feedback, only share information that is beneficial to themselves, and have moral standards that put their interests before everyone else's. John Thompson, a management consultant, said, "Often what begins as a mission becomes an obsession. Leaders can cut corners on values and become driven by self-interest. Then they may abuse anyone who makes a mistake."
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38. Ethical and Unethical Charismatics
Charismatic Leader Behaviors
Ethical Charismatics
Exercising Power
Power is used to serve others
Creating the vision
Followers help develop the vision
Communicating with followers
Two-way communication
Accepting feedback
Open to feedback
Want followers to think and to questions the status quo
Stimulating followers
Developing followers
Focus on developing followers
Living by moral standards
Three virtues: courage, sense of fairness, integrity

39. Ethical and Unethical Charismatics
Charismatic Leader Behaviors
Unethical Charismatics
Exercising Power
Power is used to dominate others
Creating the vision
Vision comes solely from the leader
Communicating with followers
One-way communication, not open to input from others
Accepting feedback
Prefer yes-men, punish candid feedback
Don’t want followers to think, prefer uncritical acceptance of own ideas
Stimulating followers
Developing followers
Insensitive to followers’ needs
Living by moral standards
Follow standards only if they satisfy immediate self interests

40. Transformational Leadership
Williams
Transformational Leadership
Generates awareness and acceptance of group’s purpose and mission
Gets employees to see beyond their own needs and self-interest
Goes beyond charismatic leadership
Different than transactional leadership
While charismatic leaders are able to articulate a clear vision, model values consistent with that vision, communicate high performance expectations, and establish very strong relationships between themselves and their followers, transformational leadership goes further by generating awareness and acceptance of a group's purpose and mission and by getting employees to see beyond their own needs and self-interest for the good of the group. Transformational leaders, like charismatic leaders, are visionary. However, transformational leaders transform their organizations by getting their followers to accomplish more than they intended and even more than they thought possible. Transformational leaders are able to make their followers feel as if they are a vital part of the organization and can help them see how their jobs fit with the organization’s vision. By linking individual and organizational interests, transformational leaders encourage followers to make sacrifices for the organization, because they know that they will prosper when the organization prospers. There are four components of transformational leadership: charismatic leadership or idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration.
Finally, a distinction needs to be drawn between transformational leadership and transactional leadership. While transformational leaders use visionary and inspirational appeals to influence followers, transactional leadership is based on an exchange process, in which followers are rewarded for good performance and punished for poor performance. When leaders administer rewards fairly and offer followers the rewards that they want, followers will often reciprocate with effort. However, transactional leaders often over-rely on discipline or threats to bring performance up to standards. While this may work in the short run, it's much less effective in the long run.
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41. Transformational Leadership Components
Williams
Transformational Leadership Components
Charismatic leadership/idealized influence
Inspirational motivation
Intellectual stimulation
Individualized consideration
Charismatic leadership or idealized influence means that transformational leaders act as role models for their followers. Because transformational leaders put others' needs ahead of their own and share risks with followers, they are admired, respected, and trusted, and followers want to emulate them. Thus, in contrast to purely charismatic leaders (especially unethical charismatics), transformational leaders can be counted on to do the right thing and maintain high standards for ethical and personal conduct.
Inspirational motivation means that transformational leaders motivate and inspire followers by providing meaning and challenge to their work. By clearly communicating expectations and demonstrating commitment to goals, transformational leaders help followers envision future states, such as the organizational vision. In turn, this leads to greater enthusiasm and optimism about the future.
Intellectual stimulation means that transformational leaders encourage followers to be creative and innovative, to question assumptions, and to look at problems and situations in new ways, even if they are different from the leader's ideas.
Individualized consideration means that transformational leaders pay special attention to followers' individual needs by creating learning opportunities, accepting and tolerating individual differences, encouraging two-way communication and being a good listener.
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42. What Really Happened? Leadership: Dealing with Tragedy
Williams
What Really Happened? Leadership: Dealing with Tragedy
Deceased employees’ families
given pay check for the rest of the year
insurance coverage for five years
Jimmy Dunne became manager and provided leadership that led to strong financial recovery
developed new skills in negoti- ation, calmness, patience, sup- port, while maintaining strong business focus
Leaders generally use two key behaviors to achieve group and organizational goals, consideration and initiating structure, the latter of which will be discussed in the answer to the next question. Consideration is the extent to which leaders are friendly, approachable, supportive, and show concern for employees. Under Jimmy Dunne’s leadership, the company immediately hired grief counselors, organized a center to help families go about the grisly task of recovering remains, and established a charity fund for them. Each deceased employee’s family received a check paying their salary through the end of the year, plus a five-year extension of their health benefits. The company pledged to pay families the sales commissions and year-end bonuses that their loved ones would have collected had they lived. In the end, the company paid families more than 30 percent of its capital.
Initiating structure is the degree to which a leader structures the roles of followers by setting goals, giving directions, setting deadlines, and assigning tasks. Dunne directed everyone to do everything they could, to call in every favor, to make sure that the company would complete all the major bond issues it was scheduled to complete before September 11th. Employees put their pride aside and took offers of assistance from competitors. By November, the company had staffed two dozen positions with relative ease due to recent Wall Street layoffs.
In the end, Jimmy Dunne did a remarkable job of leading Sandler O’Neill’s dedicated managers and employees. By the end of 2001, the company ended up having a better financial year than the year before.
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