chapter 16Effective

Leadership

McGraw-Hill/IrwinPrinciples of Management

© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

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Learning Objectives

1. Explain why good leadership is critical for success as a manager.

2. Summarize the main theoretical approaches to leadership.

3. Identify the behaviors and skills that are commonly associated with effective leadership.

4. Explain how the right approach to leadership might be influenced by important contingencies.

5. Discuss the differences between transformational and transactional leadership.

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Managing & Leading

Leaders Managers

“Doing the right things”

“Doing things right”

Focuses on preserving the

status quo

Focus on vision, mission, and goals

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Question

All manager are leaders and all leaders are managers. Do you agree? Explain.

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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.

Source: Business Week, October 30, 2006

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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%

Source: Changing Nature of Leadership Research Report, The Center for Creative Leadership

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Perspectives on Leadership

Effective Leadership

Power-influence

perspective

Trait (competency) perspective

Behavior perspective

Contingency perspective Transformational

perspective

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Perspectives of Leadership

• Power-influence approachPower-influence approach – attempts to explain leadership effectiveness in terms of the amount of power possessed by a leader.

• Trait/competency perspectiveTrait/competency perspective – identifies the traits and competencies of effective leaders

• Behavior approachBehavior approach – asserts that certain behaviors are related to leadership effectiveness

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Perspectives of Leadership

• Contingency perspectiveContingency 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 perspectiveTransformational perspective – suggests that effective leaders “transform” organizations through their vision

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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

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What Makes Leaders Great?

1. Self-awareness

2. Personal conviction

3. Courage

4. Creativity

5. Curiosity

6. Ability to inspire

7. Ability to listen

8. Ability to innovate

9. Eagerness to experience

10.Willingness to reflect

Source: Biz Ed, September/October, 2005

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Skill Sets Required by Academic Leaders

Source: Biz Ed, March/April, 2002

Selling, marketing, and public relations 69%

Global business understanding 67%

Human resource and staffing 57%

Risk, cost, and financial management 51%

Project management 48%

E-business and IT knowledge 42%

Negotiation and employment law 27%

Skill set % of Respondents indicating as Important

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Competency Perspective

Traits that can be acquired through learning…?

Strategic ThinkingEmotional

Intelligence

Charisma Power Motivation

Achievement Motivation

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Emotional Intelligence

Self-awareness Self-regulation

MotivationEmpathy

Social skills

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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

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Behavior Perspective

• Assumption:Assumption: Certain leadership behaviors result in greater commitment on the part of subordinates and hence higher performance in pursuit of organization goals

• People-oriented behaviorPeople-oriented behavior – A leadership style that includes showing mutual trust and respect for subordinates, demonstrating genuine concern for their needs

• Task-oriented behaviorTask-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

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Fiedler’s Leadership Theory

Leadership style *People-oriented *Task-oriented

Outcomes *Team, unit, or organization performance

Contingencies *Leader-member relations *Task structure *Position power

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Predictions of Fiedler’s Theory

Good

Poor Lea

ders

hip

effe

ctiv

enes

s

Favorable Moderately favorable Unfavorable Situation Situation Situation

Task-oriented leaders

People-oriented leaders

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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

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Path-Goal Theory

Clarify path Clear

path Offer rewards

Leadership styles *Directive *Supportive *Participative *Achievement-oriented

Nature of work environment *Task structure *Team dynamics *Formal power

Personal characteristics of subordinates *Skills *Needs *Motivations

Employee goals Path to goal attainmentOutcomes

(goal attainment)

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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?a. Achievement-oriented leadership

b. Supportive leadership

c. Directive leadership

d. Participative

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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

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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

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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

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Behaviors of Transformational Leaders

Transformational Leadership

Creating an enduring

organizationModeling desired

behaviors

Empowering employees

Leading with integrity

Meaningful changes in strategy and organization

Envisioning a new future

Communicating persistently

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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

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Glass Ceiling

Proportion of Female CEO’s, 2000 to 2016:

2000 2006 2010 (est.) 2016 (est.)

0.06% 2% 4.90% 6.20%

Source: Business Week, December 4, 2006