1. Chapter Ten Leadership in Organizations

2. Copyright © 2007 by Nelson, a division of Thomson Canada Limited2 Objectives After reading and studying this chapter, you should be able to: 1. Differentiate between leadership & management. 2. Describe key leadership traits, styles & behaviours. 3. Explain the basics of four different contingency theories of leadership. 4. Present an overview of transformational and charismatic leadership. 5. Identify forces that can sometimes decrease the importance of leadership.

3. Copyright © 2007 by Nelson, a division of Thomson Canada Limited3 The Nature of Leadership Leadership is defined as the ability to inspire confidence and support among the people on whose competence and commitment performance depends. Leadership is defined as the ability to inspire confidence and support among the people on whose competence and commitment performance depends.

4. Copyright © 2007 by Nelson, a division of Thomson Canada Limited4 Leaders and Managers Leaders: Leaders: Cope with change Cope with change Formulate a vision for the future & then persuade, inspire, motivate others to create that vision Formulate a vision for the future & then persuade, inspire, motivate others to create that vision Managers: Managers: Cope with complexity Preserve order & consistency Develop & maintain a smoothly functioning workplace

5. Copyright © 2007 by Nelson, a division of Thomson Canada Limited5 Leaders versus Managers LEADER Visionary Passionate Creative Flexible Inspiring Innovative Courageous Imaginative Experimental Independent MANAGER Rational Consulting Persistent Problem-solving Tough-minded Analytical Structured Deliberate Authoritative Stabilizing Source: Exhibit 10.2 “Leaders versus Managers” pg. 199 Management Review by Capowski, Genevieve. Copyright 1994 by AM MGMT ASSN (J).

6. Copyright © 2007 by Nelson, a division of Thomson Canada Limited6 Both Leaders and Managers Needed Research shows incompetent managers responsible for loss of billions of lost productivity each year Research shows incompetent managers responsible for loss of billions of lost productivity each year Presence of charismatic leader can contribute to firm’s net profit margin Presence of charismatic leader can contribute to firm’s net profit margin

7. Copyright © 2007 by Nelson, a division of Thomson Canada Limited7 Leadership Traits and Characteristics Cognitive skills Mental abilities and knowledge Mental abilities and knowledge Problem-solving skills Problem-solving skills Imagination,creativity, and a willingness to experiment Imagination,creativity, and a willingness to experiment Technical and profession competence (knowledge of the business) Technical and profession competence (knowledge of the business)Personality/Motives Self-awareness Self-confidence Trustworthiness Emotional intelligence Needs for power and achievement Five Factor research: Low neuroticism, extraversion, openness, conscientiousness

8. Copyright © 2007 by Nelson, a division of Thomson Canada Limited8 Behavioural Approaches to Leadership Assuming leaders show consistent pattern of behaviour Assuming leaders show consistent pattern of behaviour Looking for style distinguishing effective leaders Looking for style distinguishing effective leaders Includes: Includes: Ohio State studies Ohio State studies University of Michigan studies University of Michigan studies Leadership Grid Leadership Grid

9. Copyright © 2007 by Nelson, a division of Thomson Canada Limited9 Ohio State Studies Yielded two leadership dimensions: Yielded two leadership dimensions: Initiating structure Initiating structure The degree to which the leader establishes structure for group members: assigning task, specifying procedures, scheduling work, and clarifying expectations. The degree to which the leader establishes structure for group members: assigning task, specifying procedures, scheduling work, and clarifying expectations. Consideration Consideration The degree to which the leader creates an environment of emotional support, warmth, friendliness, and trust. The degree to which the leader creates an environment of emotional support, warmth, friendliness, and trust. Research findings: Research findings: High consideration in leaders was associated with low turnover and high job satisfaction. High consideration in leaders was associated with low turnover and high job satisfaction. Leaders high on initiating structure were rated highly by their superiors and had higher-producing work groups. Leaders high on initiating structure were rated highly by their superiors and had higher-producing work groups.

10. Copyright © 2007 by Nelson, a division of Thomson Canada Limited10 University of Michigan Studies Yielded two leadership dimensions: Yielded two leadership dimensions: Production-centered managers Production-centered managers Set tight work standards, organized tasks carefully, prescribed work methods, and supervised closely. Set tight work standards, organized tasks carefully, prescribed work methods, and supervised closely. Employee-centered managers Employee-centered managers Encouraged participative goal setting and decision-making, fostered high performance by engendering trust and mutual respect. Encouraged participative goal setting and decision-making, fostered high performance by engendering trust and mutual respect. Research findings: Research findings: Employee-centered managers had most productive work groups. Employee-centered managers had most productive work groups. The most effective leaders had supportive relationships with employees, used group decision making and encouraged employee goal setting. The most effective leaders had supportive relationships with employees, used group decision making and encouraged employee goal setting.

11. Copyright © 2007 by Nelson, a division of Thomson Canada Limited11 Managing Polarities Peter Koestenbaum on leadership Peter Koestenbaum on leadership The central attribute of leadership is the ability to manage polarity - extremes of positions and interests. The central attribute of leadership is the ability to manage polarity - extremes of positions and interests.

12. Copyright © 2007 by Nelson, a division of Thomson Canada Limited12 Leadership Grid ® Describes leadership style as combinations of concerns (attitudes) Describes leadership style as combinations of concerns (attitudes) Concern for production includes results, bottom- line performance, profits, and mission. Concern for production includes results, bottom- line performance, profits, and mission. Concern for people includes group members and coworkers. Concern for people includes group members and coworkers. Claims best style is team management — at 9,9 on the Grid (high concern for both production and people). Claims best style is team management — at 9,9 on the Grid (high concern for both production and people).

13. Copyright © 2007 by Nelson, a division of Thomson Canada Limited13 Leader-Member Exchange Model Leaders develop unique working relationships with each group member. Leaders develop unique working relationships with each group member. In-groups (chosen largely on basis of initial impression of competence) are given additional rewards, responsibilities, and trust in exchange for their loyalty and performance. In-groups (chosen largely on basis of initial impression of competence) are given additional rewards, responsibilities, and trust in exchange for their loyalty and performance. Out-groups have a more formal (traditional) superior-subordinate relationship with the leader. Out-groups have a more formal (traditional) superior-subordinate relationship with the leader.

14. Copyright © 2007 by Nelson, a division of Thomson Canada Limited14 Leader-Member Exchange Model Research findings: Research findings: In-group membership is beneficial to its members; facilitates higher productivity & satisfaction, lower turnover In-group membership is beneficial to its members; facilitates higher productivity & satisfaction, lower turnover High-quality leader-member exchanges improve delegation. High-quality leader-member exchanges improve delegation. Supervisors can overcome biases to make objective performance appraisals Supervisors can overcome biases to make objective performance appraisals

15. Copyright © 2007 by Nelson, a division of Thomson Canada Limited15 Contingency Theories of Leadership Look for conditions under which different leadership styles lead to best results: Look for conditions under which different leadership styles lead to best results: Fiedler’s Contingency Theory Fiedler’s Contingency Theory The Path-Goal Theory of Leadership The Path-Goal Theory of Leadership The Situational Leadership Model The Situational Leadership Model The Normative Decision Model The Normative Decision Model

16. Copyright © 2007 by Nelson, a division of Thomson Canada Limited16 Fiedler’s Contingency Theory of Leadership Specifies conditions under which leaders should use task- and relationship-motivated styles; depends on situational control Specifies conditions under which leaders should use task- and relationship-motivated styles; depends on situational control Measures style with LPC scale Measures style with LPC scale Leader’s situational control based on: Leader’s situational control based on: 1. Leader-member relations 2. Task structure 3. Position power

17. Copyright © 2007 by Nelson, a division of Thomson Canada Limited17 Exhibit 10-3: Summary of Findings from Fiedler’s Contingency Theory

18. Copyright © 2007 by Nelson, a division of Thomson Canada Limited18 Fiedler’s Contingency Theory of Leadership Research suggests task-motivated style yields best results when leader has high or low control; relationship-motivated style best when moderate control Research suggests task-motivated style yields best results when leader has high or low control; relationship-motivated style best when moderate control Suggests leader can look for ways to alter elements of control to make situation more favourable Suggests leader can look for ways to alter elements of control to make situation more favourable

19. Copyright © 2007 by Nelson, a division of Thomson Canada Limited19 Path-Goal Theory of Leadership Focus on helping employees find correct path to goal attainment Focus on helping employees find correct path to goal attainment Based on expectancy model of motivation: Based on expectancy model of motivation: Leaders perform a motivational function by increasing payoffs for achieving work objectives and by making the path to payoffs smoother Leaders perform a motivational function by increasing payoffs for achieving work objectives and by making the path to payoffs smoother Choose amongst four styles depending on demands of situation: Choose amongst four styles depending on demands of situation: Directive Directive Supportive Supportive Participative Participative Achievement-oriented Achievement-oriented Contingencies refer to characteristics of group members & demands of the task Contingencies refer to characteristics of group members & demands of the task

20. Copyright © 2007 by Nelson, a division of Thomson Canada Limited20 Exhibit 10-4: Path-Goal Theory of Leadership

21. Copyright © 2007 by Nelson, a division of Thomson Canada Limited21 Exhibit 10-5 Contingency Relationships in Path-Goal Leadership

22. Copyright © 2007 by Nelson, a division of Thomson Canada Limited22 Situational Leadership Model Explains how a leader can choose a leadership style that is appropriate to the readiness of group members. Explains how a leader can choose a leadership style that is appropriate to the readiness of group members. Readiness: the extent to which a group member has the ability and willingness or confidence to accomplish a task. Readiness: the extent to which a group member has the ability and willingness or confidence to accomplish a task. As the readiness of group members increases, a leader should rely more on relationship-related leadership behaviours and less on task-related leadership behaviours. As the readiness of group members increases, a leader should rely more on relationship-related leadership behaviours and less on task-related leadership behaviours.

23. Copyright © 2007 by Nelson, a division of Thomson Canada Limited23 The Normative Decision Model Views leadership as a decision-making process in which the leader must examine situational factors to choose the most effective decision-making style Views leadership as a decision-making process in which the leader must examine situational factors to choose the most effective decision-making style Five styles of decision-making: Five styles of decision-making: Decide (manager alone) Decide (manager alone) Consult (members individually) Consult (members individually) Consult (group advises) Consult (group advises) Facilitate (decide together) Facilitate (decide together) Delegate (group decides) Delegate (group decides)

24. Copyright © 2007 by Nelson, a division of Thomson Canada Limited24 The Normative Decision Model (cont.) Model provides matrix through which leader can diagnose situation, considering seven variables: Model provides matrix through which leader can diagnose situation, considering seven variables: Decision significance to the success of the project. Decision significance to the success of the project. Importance of commitment of team members. Importance of commitment of team members. Leader’s expertise in relation to the problem. Leader’s expertise in relation to the problem. Likelihood of commitment by team to a solo decision. Likelihood of commitment by team to a solo decision. Group support (team) for the organization’s objectives. Group support (team) for the organization’s objectives. Group expertise in relation to the problem. Group expertise in relation to the problem. Team competence in working together to solve the problem. Team competence in working together to solve the problem.

25. Copyright © 2007 by Nelson, a division of Thomson Canada Limited25 Exhibit 10-7: Time-Driven Model

26. Copyright © 2007 by Nelson, a division of Thomson Canada Limited26 The Normative Decision Model (cont.) Research shows: Research shows: Managers who follow these procedures are likely to increase their decision-making effectiveness Managers who follow these procedures are likely to increase their decision-making effectiveness Managers who make decisions consistent with model are perceived as effective managers Managers who make decisions consistent with model are perceived as effective managers

27. Copyright © 2007 by Nelson, a division of Thomson Canada Limited27 Transformational Leadership Transformational leader helps people & the organization make substantial changes Transformational leader helps people & the organization make substantial changes More influence than transactional leader More influence than transactional leader

28. Copyright © 2007 by Nelson, a division of Thomson Canada Limited28 Transformational Leadership Creates transformation through: Creates transformation through: Raising people’s level of consciousness. Raising people’s level of consciousness. Getting people to transcend their self-interests. Getting people to transcend their self-interests. Focusing people on the quest for self-fulfillment. Focusing people on the quest for self-fulfillment. Helping to develop a long-range perspective. Helping to develop a long-range perspective. Helping people understand the need for change. Helping people understand the need for change. Investing managers with a sense of urgency. Investing managers with a sense of urgency. Committing to greatness. Committing to greatness. Research shows transformational leadership critical to successful implementation of change Research shows transformational leadership critical to successful implementation of change

29. Copyright © 2007 by Nelson, a division of Thomson Canada Limited29 Exhibit 10-8 Dimensions and Corresponding Behaviours of Transformational Leadership Vision: Vision: Communicates a clear and positive vision of the future Communicates a clear and positive vision of the future Staff Development : Staff Development : Treats staff as individuals; supports and encourages their development Treats staff as individuals; supports and encourages their development Supportive leadership: Supportive leadership: Gives encouragement and recognition to staff Gives encouragement and recognition to staff Empowerment: Empowerment: Fosters trust, involvement, and cooperation among team members Fosters trust, involvement, and cooperation among team members Innovative Thinking: Innovative Thinking: Encourages thinking about problems in new ways and questions assumptions Lead by Example: Lead by Example: Is clear about his or her values, and practises what he or she preaches Charisma: Charisma: Instills pride and respect in others and inspires me by being highly competent

30. Copyright © 2007 by Nelson, a division of Thomson Canada Limited30 Charismatic Leadership Charisma is ability to lead others based on personal charm, magnetism, inspiration, emotion Major factor in success of transformational leaders Major factor in success of transformational leaders Problem if use for personal gain (evil charismatics) Problem if use for personal gain (evil charismatics) Key characteristics of charismatic leaders: Key characteristics of charismatic leaders: They have vision. They have vision. They are masterful communicators. They are masterful communicators. They inspire trust. They inspire trust. They are energetic. They are energetic. They manage their impressions. They manage their impressions.

31. Copyright © 2007 by Nelson, a division of Thomson Canada Limited31 Substitutes for Leadership Some factors in work environment can provide guidance and incentives to perform well, negating or reducing the need for a leader Some factors in work environment can provide guidance and incentives to perform well, negating or reducing the need for a leader Group member characteristics Group member characteristics Highly capable persons or groups can function with less leadership. Highly capable persons or groups can function with less leadership. Experience, training, & professional orientation mean people can self-manage Experience, training, & professional orientation mean people can self-manage

32. Copyright © 2007 by Nelson, a division of Thomson Canada Limited32 Substitutes for Leadership (cont.) Task Characteristics Task Characteristics Highly standardized tasks that provide feedback and are intrinsically satisfying can substitute for leadership. Highly standardized tasks that provide feedback and are intrinsically satisfying can substitute for leadership. Organizational factors Organizational factors Explicit plans with well-defined goals that are carried out by cohesive groups reduce the need for leadership. Explicit plans with well-defined goals that are carried out by cohesive groups reduce the need for leadership.

33. Copyright © 2007 by Nelson, a division of Thomson Canada Limited33 Choosing An Appropriate Leadership Model 1. Carefully diagnose the situation. 2. Choose a leadership approach that best fits the situational deficiencies or opportunities. 3. Observe the people to be led; come to understand their interests, goals, and concerns. 4. Apply the chosen leadership approach.