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C h a p t e r o u t l i n e ➜ The nature of leadership ➜ Contemporary leadership

Level 5 leadership Servant leadership Authentic leadership Gender differences

➜ From management to leadership Leadership traits Behavioural approaches Task versus people The Leadership Grid

➜ Contingency approaches The situational model of

leadership Fiedler’s contingency theory

➜ Situational substitutes for leadership

➜ Charismatic and transformational leadership

Charismatic leadership Transformational versus

transactional leadership

➜ Followership ➜ Power and influence

Position power Personal power Other sources of power Interpersonal influence

tactics ➜ Contemporary leaders ➜ Leadership of sustainable

development

1 Define leadership and explain its importance for organisations.

2 Describe how leadership is changing in today’s organisations, including Level 5 leadership, servant leadership and authentic leadership.

3 Discuss how women’s style of leading is typically different from men’s.

4 Identify personal characteristics associated with effective leaders.

5 Define task-oriented behaviour and people-oriented behaviour and explain how these categories are used to evaluate and adapt leadership style.

6 Describe the situational model of leadership and its application to subordinate participation.

7 Discuss how leadership fits the organisational situation and how organisational characteristics can substitute for leadership behaviours.

8 Describe transformational leadership and when it should be used.

9 Explain how followership is related to effective leadership.

10 Identify sources of leader power and the tactics that

leaders use to influence others.

l e a r n i n g o b j e C t i v e s After studying this chApter, you should be Able to:

C h a p t e r 15

L E A D I N G I N O R G A N I S A T I O N S

Samson, Danny, and Richard L. Daft. <i>Management : Asia Pacific</i>, Cengage Learning Australia, 2014. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/latrobe/detail.action?docID=1991004. Created from latrobe on 2019-10-08 23:00:43.

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new Manager self-test

W h AT ’ S y O u R p E R S O N A L S T y L E ?

Ideas about effective leadership change over time. To understand your approach to leadership, think about your personal style towards others or towards a student group to which you belong, and then answer each item below as Mostly true or Mostly false for you.

Mostly true Mostly false

1 I am a modest, unassuming person.

2 When a part of a group, I am more concerned about how the group does than how I do.

3 I prefer to lead with quiet modesty rather than personal assertiveness.

4 I feel personally responsible if the team does poorly.

5 I act with quiet determination.

6 I resolve to do whatever needs doing to produce the best result for the group.

7 I am proactive to help the group succeed.

8 I facilitate high standards for my group’s performance.

scoring and interpretation: A recent view of leadership called Level 5 Leadership says that the most successful leaders have two prominent qualities: humility and will. Give yourself one point for each item marked Mostly true.

Humility: Items 1, 2, 3, 4

Will: Items 5, 6, 7, 8. Humility means a quiet, modest, self-effacing manner. A humble person puts

group or organisational success ahead of one’s personal success. Will means a quiet but fierce resolve to stay the course to achieve the group’s desired outcome and to help the group succeed. The traits of humility and will are opposite the traditional idea of leadership as loud and self-centred. If you scored 3 or 4 on either humility or will, you are on track to level 5 leadership, which says that ordinary people often make excellent leaders.

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In the prevIous chapter, we explored differences in attitudes and personality that affect behaviour. Some of the most important attitudes for the organisation’s success are those of its leaders, because leader attitudes and behaviours play a critical role in shaping employee attitudes, such as job satisfaction and organisational commitment.

Yet there are as many variations among leaders as there are among other individuals, and many different styles of leadership can be effective. Different leaders behave in different ways depending on their individual differences as well as their followers’ needs and the organisational situation. Consider the differing styles of Pat McGovern, founder and chair of IDG, a technology publishing and research firm that owns magazines such as CIO, PC World and Computerworld, and Tom Siebel, founder and former CEO of software company Siebel Systems. McGovern treats each employee to lunch at the Ritz on his or her tenth anniversary with IDG to tell them how important they are to the success of the company. He personally thanks almost every person in every business unit once a year, which takes about a month of his time. Managers provide him with a list of accomplishments for all their direct reports, which McGovern memorises the night before his visit so he can congratulate people on specific accomplishments. In addition to appreciating and caring about employees, McGovern also shows that he believes in them by decentralising decision making so that people have the autonomy to make their own decisions about how best to accomplish organisational goals.

Tom Siebel, in contrast, was known as a disciplined and dispassionate manager who remained somewhat aloof from his employees and maintained strict control over every aspect of the business. At Siebel he enforced a dress code, set tough goals and standards, and held people strictly

When Jess Moore took over the role of general site manager at the ICI Australia (now Orica) site at Botany in Sydney, he knew he was in for a major challenge. The site was infamous in Australia as an ‘industrial relations nightmare’. In essence, the interests of the company managers and the plant employees (the operators and the tradesmen) had totally diverged. Employee relations at the site had been poor for decades, with many employees doing little work during regular work hours, leading to the creation of lots of overtime. This was a prevalent approach in Australian industrial organisations during the twentieth century, especially in the oil and gas, brewing and many other manufacturing sectors. The Botany site had a poor safety record, with numerous severe injuries and deaths on the site. When Jess first came to the site, he wanted to do what had made him a successful leader elsewhere within ICI: spend a few weeks walking the site, simply talking to everybody about the problems the site faced and discussing the way forward. From a business perspective, the whole Botany site was threatened with closure due to lack of competitiveness. Things were so bad that when Jess wanted to go into a control room to talk to the plant operators, the shop stewards who represented the unionised workforce

barred him from entering and communicating with shop floor operators, saying that all communications had to be done with the union, who would then pass the messages on to operators and tradesmen. Jess knew that he could not lead the site away from the precipice it was about to topple over while the interests of management and workers seemed so far apart. Time was of the essence, so Jess had to move quickly to turn things around and revitalise the site. Customers were dissatisfied with service levels and costs were too high, while employees were taking home very large pay packets based on the overtime they generated for themselves. Further, the site had major safety and environmental problems, having previously had a poor record of ‘health safety and environment’ stemming from poor management–worker relationships. Jess’s many challenges included turning around the whole psychology of the workplace.

Question

How does a leader such as Jess Moore inspire employees to give their best to the organisation? What leadership style would you recommend Jess Moore use to turn complacent workers into a team of productive employees pulling together to serve the customer?

ManageMent challenge

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accountable. ‘We go to work to realise our professional ambitions, not to have a good time,’ Siebel has said.1 Both Siebel and McGovern have been successful as leaders, even though their styles are quite different.

This chapter explores one of the most widely discussed and researched topics in management: leadership. Here we define leadership and explore how managers develop leadership qualities. We look at some important leadership approaches for contemporary organisations; examine trait, behavioural and contingency theories of leadership effectiveness; discuss charismatic and transformational leadership; explore the role of followership; and consider how leaders use power and influence to get things done. The final section of the chapter discusses servant leadership and moral leadership, two enduring approaches that have received renewed emphasis in recent years. Chapters 16 to 18 will look in detail at many of the functions of leadership, including employee motivation, communication and encouraging teamwork.

The naTure of leadership In most situations, a team, military unit, department or volunteer group is only as good as its leader. So, what does it mean to be a leader? Among all the ideas and writings about leadership, three aspects stand out: people, influence and goals. Leadership occurs among people, involves the use of influence and is used to attain goals.2 Influence means that the relationship among people is not passive. Moreover, influence is designed to achieve some end or goal. Thus, leadership as defined here is the ability to influence people towards the attainment of goals. This definition captures the idea that leaders are involved with other people in the achievement of goals. Leadership is reciprocal, occurring among people.3 Leadership is a ‘people’ activity, distinct from administrative paperwork or problem-solving activities.

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Bob Geldof might seem like an unlikely multinational leader, but he was one of the first to mobilise global musical forces, and in doing so he created musical history. In 1984, as lead singer with the Boomtown Rats, Geldof joined Ultravox lead singer Midge Ure to write a song to raise money for famine relief, and persuaded colleagues to donate their services to record it. Geldof later organised Live Aid, a concert that raised some £40 million for famine relief and long-term development in underdeveloped countries. Geldof joined with Nelson Mandela to champion the cause of poverty alleviation in 2005. That series of events in July 2005 was known as Live 8, which sought to influence the wealthy countries of the world to work harder to ‘Make Poverty History’.

leadership The ability to influence people towards the attainment of organisational goals.

➜ The attitudes and behaviours of leaders shape the conditions that determine how well employees can do their jobs; thus, leaders play a

tremendous role in the organisation’s success.

➜ Many different styles of leadership can be effective.

➜ Leadership is the ability to influence people towards the attainment of organisational goals.

reMeMber this

ConTemporary leadership The concept of leadership evolves as the needs of organisations change. That is, the environmental context in which leadership is practised influences which approach might be most effective, as well as what kinds of leaders are most admired by society. The technology, economic conditions, labour conditions

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and social and cultural mores of the times all play a role. A significant influence on leadership styles in recent years is the turbulence and uncertainty of the environment. Ethical and economic difficulties, corporate governance concerns, globalisation, changes in technology, new ways of working, shifting employee expectations and significant social transitions have contributed to a shift in how we think about and practise leadership. Four approaches that are in tune with leadership for today’s turbulent times are Level 5 leadership, servant leadership, authentic leadership and interactive leadership, which has been associated with women’s style of leading.

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L ev

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Builds excellence

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Stimulates high

standards; champions dedication to vision

Manages team members

and assets to reach set objectivesContributes

individually; works well

in group Contributes

talent, skills,

knowledge

LeveL 5 LeadershIp A study conducted by Jim Collins and his research associates identified the critical importance of what Collins calls Level 5 leadership in transforming companies from merely good to truly great organisations.4 As described in his book Good to Great: Why Some Companies Make the Leap . . . and Others Don’t, Level 5 leadership refers to the highest level in a hierarchy of manager capabilities, as illustrated in Exhibit 15.1.

As reflected in the exhibit, a key characteristic of Level 5 leaders is an almost complete lack of ego (humility) coupled with a fierce resolve to do what is best for the organisation (will). humility means being unpretentious and modest rather than arrogant and prideful. In contrast to the view of great leaders as larger-than-life personalities with strong egos and big ambitions, Level 5 leaders often seem shy and self-effacing. Although they accept full responsibility for mistakes, poor results or failures, Level 5 leaders give credit for successes to other people. Level 5 leaders build organisations based on solid values that go far beyond just making money, with an unwavering resolve to do whatever is needed to make the company successful over the long term.5

One leader who demonstrates Level 5 leadership qualities is Qi Lu of Microsoft.

exhibit 15.1 Level 5 hierarchy

humility Being unpretentious and modest rather than arrogant and prideful.

Source: Based on Jim Collins, Good to Great: Why Some Companies Make the Leap . . . and Others Don’t (New York: HarperCollins, 2001), p. 20.

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Level 5 leaders like Qi Lu are extremely ambitious for their companies rather than for themselves. As another example, consider Darwin Smith, CEO of Kimberly-Clark from 1971 to 1991. Over those 20 years, Smith transformed Kimberly-Clark from a stodgy paper company with falling stock prices into the leading consumer paper products company in the world. The company generated cumulative shareholder returns that were 4.1 times greater than those of the general market. Yet few people have ever heard of Smith. He shunned the spotlight and was never featured in splashy articles in Fortune magazine or The Wall Street Journal. He was ambitious for the company, not for himself.6

This attitude becomes highly evident in the area of succession planning. Level 5 leaders develop a solid core of leaders throughout the organisation, so that when they leave, the company can continue to thrive and grow even stronger. Egocentric leaders, by contrast, often set their successors up for failure because it will be a testament to their own greatness if the company doesn’t perform well without them. Rather than building an organisation around ‘a genius with a thousand helpers’, Level 5 leaders want everyone to develop to their fullest potential.

servant LeadershIp When Jack Welch, longtime CEO of General Electric (GE), speaks to MBA students, he reminds them that ‘any time you are managing people, your job is not about you, it’s about them. It starts out about you as . . . an individual in a company’, Welch says. ‘But once you get a leadership job, it moves very quickly to being about them.’7 Some leaders operate from the assumption that work exists for the development of the worker as much as the worker exists to do the work.8 The concept of servant leadership, first described by Robert Greenleaf in 1970, has gained renewed interest in recent years as companies recover from ethical scandals and compete to attract and retain the best human talent.9

A servant leader transcends self-interest to serve others, the organisation and society.10 Marilyn Nelson, joint owner and former CEO of the Carlson Companies (Radisson Hotels, TGI Fridays), says being a true leader means you ‘have to subordinate your own emotions, your own desires, even make decisions on behalf of the whole that might conflict with what you would do on an individual basis’.11 A stunning example of this occurred in the spring of 2009 when a US-flagged cargo ship, the Maersk

LEvEL 5 LEADERShIp AT WORk InnovatIve

Way

Qi Lu grew up in a rural village in China with no electricity or running water. Today, he is Executive Vice President, Applications and Services Group at Microsoft, having previously been president of Microsoft’s Online Services division. How did he get there? Not from personal ambition, say former colleagues at Yahoo!. ‘He shunned the limelight,’ said Tim Cadogan, now CEO of OpenX, ‘but he was considered one of the stars.’

Lu rose through the ranks at Yahoo!, and he got the job at Microsoft based not on aggressiveness and pursuit of personal

advancement, but rather because of his sheer intellectual abilities and his commitment to go above and beyond the call of duty to accomplish organisational goals. Lu feels a strong sense of duty and loyalty, pouring his heart and soul into the mission rather than spending his energies promoting himself. On his last day of work at Yahoo!, a problem came up with a database. Rather than leaving the problem for others, Lu worked side by side with his former employees to try to fix it. He finally left at midnight, when his network access was automatically cut off.

Source: Miguel Helft. (31 August 2009). A Hired Gun for Microsoft, in Dogged Pursuit of Google. The New York Times, http://www.nytimes.com/2009/08/31/technology/internet/31search.html (accessed 31 August 2009).

servant leadership occurs when a leader transcends self-interest to serve others, the organisation and society.

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Alabama, was seized and raided by Somali pirates. Captain Richard Phillips ordered crew members of the unarmed ship not to fight and gave himself up as a hostage to free the ship and crew. (A big-budget Hollywood film about this incident, called Captain Phillips, was released in 2013.) Contrast his behaviour with that of Costa Concordia captain Francesco Schettino, who allegedly abandoned his ship while passengers were still aboard after the luxury cruise liner hit a rock and sank off the coast of Italy, killing at least 30 people. Schettino has been charged with manslaughter, shipwreck and abandoning ship.12

In organisations, servant leaders operate on two levels: for the fulfilment of their subordinates’ goals and needs and for the realisation of the larger purpose or mission of their organisation. Servant leaders give things away – power, ideas, information, recognition, credit for accomplishments, even money. Servant leaders often work in the non-profit world because it offers a natural way to apply their leadership drive and skills to serve others. But servant leaders also succeed in business. Fred Keller has built a US$250 million plastics manufacturing company, Cascade Engineering, by continuously asking one question: What good can we do? Keller started the business 40 years ago with six employees. Today, it has 1000 employees in 15 business divisions. Keller has made social responsibility a cornerstone of the business. The company offers jobs to welfare recipients. Keller has also donated large amounts to various philanthropic causes, both as an individual and through Cascade.13

authentIC LeadershIp Another popular concept in leadership today is the idea of authentic leadership, which refers to individuals who know and understand themselves, who espouse and act consistently with higher-order ethical values, and who empower and inspire others with their openness and authenticity. To be authentic means to be real, to stay true to one’s values and beliefs, and to act based on one’s true self rather than emulate what others do. Authentic leaders inspire trust and commitment because they respect diverse viewpoints, encourage collaboration and help others to learn, grow and develop as leaders. Exhibit 15.2 outlines the key characteristics of authentic leaders, and each is discussed below.14

●● Authentic leaders pursue their purpose with passion. Leaders who lead without a purpose can fall prey to greed and the desires of the ego. When leaders demonstrate a high level of passion and commitment to a purpose, they inspire commitment from followers.

●● Authentic leaders practise solid values. Authentic leaders have values that are shaped by their personal beliefs, and they stay true to them even under pressure. People come to know what the leader stands for, which inspires trust.

●● Authentic leaders lead with their hearts as well as their heads. All leaders sometimes have to make tough choices, but authentic leaders maintain a compassion for others as well as the courage to make difficult decisions.

●● Authentic leaders establish connected relationships. Authentic leaders build positive and enduring relationships, which makes followers want to do their best. In addition, authentic leaders surround themselves with good people and work to help others grow and develop.

●● Authentic leaders demonstrate self-discipline. A high degree of self-control and self-discipline keeps leaders from taking excessive or unethical risks that could harm others and the organisation.

authentic leadership Individuals who know and understand themselves, who espouse and act consistently with higher- order ethical values and who empower and inspire others with their openness and authenticity.

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Gender dIfferenCes Some of the general characteristics associated with Level 5 leaders and authentic leaders are also hallmarks of interactive leadership, which has been found to be associated with female leaders. interactive leadership means that the leader favours a consensual and collaborative process, and influence derives from relationships rather than position power and formal authority.15

Although both men and women can practise interactive leadership, research indicates that women’s style of leadership is typically different from that of most men, and is particularly suited to today’s organisations.16 Using data from actual performance evaluations, one study found that when rated by peers, subordinates and bosses, female managers scored significantly higher than men on abilities such as motivating others, fostering communication and listening.17 Another study of leaders and their followers in businesses, universities and government agencies found that women were rated higher on social and emotional skills, which are crucial for interactive leadership.18 Indeed, in a study already mentioned in Chapter 13 that reviewed more than 7000 360-degree performance evaluations, it was discovered that women outshone men in almost every leadership dimension measured, even some considered typically masculine qualities, such as driving for results. The exception was that women were typically rated lower on developing a strategic perspective, which some researchers believe hinders female managers’ career advancement despite their exceptional ratings on other leadership dimensions.19 Exhibit 15.3 shows results for five of the 16 dimensions measured by the study.

One good example of an interactive leader is Cindy Szadokierski, who started as a reservations agent for United Airlines and today is vice president in charge of operations for United’s largest hub at O’Hare International Airport. As she oversees 4000 employees and 600 flights a day, her favourite times are the weekly afternoon walkabouts on the O’Hare ramp and the weekly morning strolls through the terminal, where she can connect with employees and customers. Pete McDonald, chief operating officer of United’s parent, UAL Corporation, says there were serious operations problems at O’Hare, so they put ‘the most communicative person’ in the job. Szadokierski’s approach to leadership is more collaborative than autocratic or ‘command and control’.20

Pursues purpose

with passion

Practises solid

values

Leads with the

heart as well as

the head

Demonstrates

self-discipline

Connects with

others

The authentic

leader

exhibit 15.2 Components of authentic leadership

interactive leadership The focus on minimising personal ambition and developing others.

Source: Based on Bill George, Authentic Leadership: Rediscovering the Secrets to Lasting Value (San Francisco: Jossey-Bass, 2003).

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Men can be interactive leaders as well, as illustrated above by the example of Pat McGovern. McGovern believes that having personal contact with employees and letting them know they’re appreciated is a primary responsibility of leaders.21 The characteristics associated with interactive leadership are emerging as valuable qualities for both male and female leaders in today’s workplace. Values associated with interactive leadership include personal humility, inclusion, relationship building and caring.

exhibit 15.3 Gender differences in leadership behaviours

leadership ability Who does it best?

Develops others (Women rated higher)

Drives for results (Women rated higher)

Inspires and motivates others (Women rated higher)

Innovates (Women and men rated about equally)

Builds relationships (Women rated higher)

Technical or professional expertise (Women and men rated about equally)

Source: Data from Zenger Folkman, Inc., reported in Jack Zenger and Joseph Folkman. (15 March 2012). Are Women Better Leaders than Men? HBR Blog Network, Harvard Business Review, http://blogs.hbr.org/cs/2012/03/a_study_in_leadership_women_do.html (accessed 12 September 2012).

➜ A significant influence on leadership styles in recent years is the turbulence and uncertainty of the environment.

➜ One effective approach in today’s environment is Level 5 leadership, which is characterised by an almost complete lack of ego (humility), coupled with a fierce resolve to do what is best for the organisation (will).

➜ Humility means being unpretentious and modest rather than arrogant and prideful.

➜ A servant leader is a leader who serves others by working to fulfil followers’ needs and goals, as well as to achieve the organisation’s larger mission.

➜ Authentic leadership refers to leadership by individuals who know and understand themselves, who espouse and act consistently with higher-order ethical values, and who empower and inspire others with their openness and authenticity.

➜ Women leaders typically score significantly higher than men on abilities such as motivating others,

building relationships and developing others – skills that are based on humility and authenticity and are particularly suited to today’s organisations.

➜ Interactive leadership is a leadership style characterised by values such as inclusion, collaboration, relationship building and caring.

➜ Although interactive leadership is associated with women’s style of leading, both men and women can be effective interactive leaders.

reMeMber this

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from managemenT To leadership Hundreds of books and articles have been written in recent years about the differences between management and leadership. As we know, good management is essential in organisations, yet managers have to be leaders, too, because distinctive qualities are associated with management and leadership that provide different strengths for the organisation. A good metaphor for the distinction between management and leadership is to say that management organises the production and supply of fish to people, whereas leadership teaches and motivates people to fish. Organisations need both types of skills.22

As shown in Exhibit 15.4, management and leadership reflect two different sets of qualities and skills that frequently overlap within a single individual. A person might have more of one set of qualities than the other, but ideally, a manager develops a balance of both manager and leader qualities.23 A primary distinction between management and leadership is that management promotes stability and order within the existing organisational structure and systems. This ensures that suppliers are paid, customers invoiced, products and services produced on time, and so forth. Leadership, on the other hand, promotes vision and change. Leadership means questioning the status quo and being willing to take reasonable risks so that outdated, unproductive or socially irresponsible norms can be replaced to meet new challenges.

Consider how Alan Mulally has applied both management and leadership to revive Ford Motor Company. Ford was losing $83 million a day in 2008. Three years later, the company had a net profit of $20 billion. Ford was the only one of the Big Three automakers that didn’t accept a bailout from the US government. Mulally needed excellent management skills to root out operating inefficiencies, cut costs, streamline the structure and improve quality. Yet the turnaround of Ford also depended on consummate leadership. Mulally inspired people with a vision of saving a storied American company and transforming it to meet the challenges of the twenty-first century. He shifted the culture from one of ego-driven infighting to one of cooperation, accountability and commitment. And he motivated thousands of employees to embrace change and execute the vision and strategy. Mulally ate in the company cafeteria rather than the executive dining room so that he could talk with people at all levels of the company, occasionally popped into meetings to offer encouragement and support, and personally answered emails from employees.24

Leadership cannot replace management; it should be in addition to management. Good management is needed to help the organisation meet current commitments, while good leadership is needed to move the organisation into the future. Leadership’s power comes from being built on the foundation of a well- managed organisation.

➜ Leadership and management reflect two different sets of qualities and skills that provide different benefits for the organisation.

➜ Management promotes stability and efficient organising to meet current commitments, whereas leadership often inspires engagement and

organisational change to meet new conditions.

➜ Both leadership and management are important to organisations, and people can learn to be good leaders as well as good managers.

reMeMber this

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LeadershIp traIts Early efforts to understand leadership success focused on the leader’s traits. traits are the distinguishing personal characteristics of a leader, such as intelligence, honesty, self-confidence and even appearance. The early research looked at leaders who had achieved a level of greatness, and hence was referred to as the ‘Great Man’ approach. The idea was relatively simple: find out what made these people great and select future leaders who already exhibited the same traits or could be trained to develop them. Generally, early research found only a weak relationship between personal traits and leader success.25

In recent years, interest in examining leadership traits has re-emerged. In addition to personality traits, physical, social and work- related characteristics of leaders have been studied.26 Exhibit 15.5 summarises the physical, social and personal leadership characteristics that have received the greatest research support. However, these

characteristics do not stand alone. The appropriateness of a trait or set of traits depends on the leadership situation. For example, sport coaches Sir Alex Ferguson of Manchester United, Bob Fulton (who successfully coached Manly and Australia in rugby league) and Kevin Sheedy (former long-time Australian Football League coach of Essendon Football Club) have different personality traits, but all have been successful leaders of their football teams.

Effective leaders typically possess varied traits, and no single leader can have a complete set of characteristics that is appropriate for handling any problem, challenge or opportunity that comes along. In addition, traits that are typically considered positive can sometimes have negative consequences, and traits sometimes considered negative can have positive consequences. For example, optimism is a highly desirable trait for a leader.

As described in the previous chapter, studies have shown that optimism is the single characteristic most common to top executives.27 Leaders need to be able to see possibilities where others see problems and instil in others a sense of hope for a better future. However, optimism can also lull leaders into laziness and overconfidence, causing them to miss danger signals and underestimate risks. The global financial crisis can be blamed partly on leaders who grew overconfident and led their organisations astray. Optimism has to be paired with ‘reality testing’ and conscientiousness, another trait common to successful leaders, as shown in Exhibit 15.5.28

Therefore, rather than just understanding their traits, the best leaders recognise and hone their strengths.29 strengths are natural talents and abilities that have been supported and reinforced with learned knowledge and skills and provide each individual with his or her best tools for accomplishment and satisfaction.30 Every manager has a limited capacity; those who become good leaders are the ones who tap into their key strengths that can make a difference. Effective leadership isn’t about having the ‘right’ traits, but rather about finding the strengths that one can best exemplify and apply as a leader.

Focus on the organisation

Rational

Maintains stability

Assigns tasks

Organises

Analyses

Position power

Focus on people

Visionary

Promotes change

Defines purpose

Nurtures

Innovates

Personal power

Leader QualitiesManager Qualities

exhibit 15.4 Leader and manager qualities

traits The distinguishing personal characteristics of a leader, such as intelligence, honesty, self-confidence and even appearance.

strengths Natural talents and abilities that have been supported and reinforced with learned knowledge and skills.

Sources: Based on ‘What Is the Difference Between Management and Leadership?’, The Wall Street Journal Online, http://guides.wsj.com/ management/developing- a-leadership-style/what-is- the-difference-between- management-and-leadership (accessed 28 June 2009); and Genevieve Capowski. (March 1994). Anatomy of a Leader: Where Are the Leaders of Tomorrow? Management Review, 12.

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exhibit 15.5 Personal characteristics of leaders

physical characteristics personality Work-related characteristics

Energy Physical stamina

Self-confidence Honesty and integrity Optimism Desire to lead Independence

Achievement drive, desire to excel Conscientiousness in pursuit of goals Persistence against obstacles, tenacity

intelligence and ability social characteristics social background

Intelligence, cognitive ability Knowledge Judgement, decisiveness

Sociability, interpersonal skills Cooperativeness Ability to enlist cooperation Tact, diplomacy

Education Mobility

Sources: Based on Bernard M. Bass, Bass & Stogdill’s Handbook of Leadership: Theory, Research, and Managerial Applications, 3rd edn (New York: The Free Press, 1990), pp. 80–1; and S. A. Kirkpatrick and E. A. Locke. (1991). Leadership:

Do Traits Matter? Academy of Management Executive, 5:2, 48–60.

➜ Traits are distinguishing personal characteristics, such as intelligence, self-confidence, energy and independence.

➜ Strengths are natural talents and abilities that have been supported and reinforced with learned knowledge and skills.

reMeMber this

BehavIouraL approaChes The inability to define effective leadership based solely on traits led to an interest in looking at the behaviour of leaders and how it might contribute to leadership success or failure. Two basic leadership behaviours identified as important for leadership are attention to tasks and attention to people.

task versus peopLe Two types of behaviour that have been identified as applicable to effective leadership in a variety of situations and time periods are task-oriented behaviour and people-oriented behaviour.31 Although they are not the only important leadership behaviours, concern for tasks and concern for people must be shown at some reasonable level. Thus, many approaches to understanding leadership use these metacategories, or broadly defined behaviour categories, as a basis for study and comparison.

Important early research programs on leadership were conducted at the Ohio State University and the University of Michigan.32 Ohio State researchers identified two major behaviours they called consideration and initiating structure. consideration falls in the category of people-oriented behaviour, and is the extent to which the leader is mindful of subordinates, respects their ideas and feelings, and establishes mutual trust. initiating structure is the degree of task behaviour; that is, the extent to which the leader is task oriented and directs subordinate work activities towards goal attainment. Studies suggest that effective leaders may be high on consideration and low on initiating structure or low on consideration and high on initiating structure, depending on the situation.33

consideration The extent to which the leader is mindful of subordinates, respects their ideas and feelings, and establishes mutual trust.

initiating structure The degree of task behaviour; the extent to which the leader is task oriented and directs subordinate work activities towards goal alignment.

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Research at the University of Michigan at about the same time also considered task- and people- oriented behaviours by comparing the behaviour of effective and ineffective supervisors.34 The most effective supervisors were those who established high performance goals and displayed supportive behaviour towards subordinates. These were referred to as employee-centred leaders. The less effective leaders were called job-centred leaders; these leaders tended to be less concerned with goal achievement and human needs in favour of meeting schedules, keeping costs low, and achieving production efficiency.

the LeadershIp GrId Building on the work of the Ohio State and Michigan studies, Blake and Mouton of the University of Texas proposed a two-dimensional theory called the Managerial Grid®, which was later restated by Blake and McCanse as the leadership grid®.35 The model and five of its major management styles are depicted in Exhibit 15.6. Each axis on the grid is a nine-point scale, with 1 meaning low concern and 9 meaning high concern.

Team management (9, 9) often is considered the most effective style and is recommended for leaders because organisation members work together to accomplish tasks. Country club management (1, 9) occurs when primary emphasis is given to people rather than to work outputs. Authority compliance management (9, 1) occurs when efficiency in operations is the dominant orientation. Middle-of-the-road management (5, 5) reflects a moderate amount of concern for both people and production. Impoverished management (1, 1) means the absence of a management philosophy; managers exert little effort towards interpersonal relationships or work accomplishment.

leadership grid A two-dimensional leadership theory that measures the leader’s concern for people and for production.

Low

Concern for production HighLow

High

C on

ce rn

f or

p eo

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2 3 4 5 6 7 8 9 ®

1,9 Country club management Thoughtful attention to the needs of people for satisfying relationships leads to a comfortable, friendly organisation atmosphere and work tempo.

9,9 Team management Work accomplishment is from committed people; interdependence through a common stake in organisation purpose leads to relationships of trust and respect.

5,5 Middle-of-the-road management Adequate organisation performance is possible through balancing the necessity to get out work with maintaining morale of people at a satisfactory level.

Authority-compliance Efficiency in operations results from arranging conditions of work in such a way that human elements interfere to a minimum degree. 9,1

Impoverished management Exertion of minimum effort to get required work done is appropriate to sustain organisation membership. 1,1

exhibit 15.6 The Leadership Grid figure

Source: The Leadership Grid figure, Paternalism figure and Opportunism figure from Robert R. Blake and Anne Adams McCanse, Leadership Dilemmas–Grid Solutions (formerly the Managerial Grid by Robert R. Blake and Jane S. Mouton) (Houston: Gulf Publishing Company, 1991), Grid figure, p. 29; Paternalism figure, p. 30; Opportunism figure, p. 31. Copyright © 1991 by Blake and Mouton, and Scientific Methods, Inc. Reproduced by permission of the owners.

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reMeMber this

➜ Two basic leadership behaviours identified as important for leadership are attention to tasks and attention to people.

➜ Consideration is the term used by researchers at Ohio State University to describe the extent to which a leader is sensitive to subordinates,

respects their ideas and feelings, and establishes mutual trust.

➜ Initiating structure is the term that describes the extent to which a leader is task oriented and directs subordinates’ work activities towards goal accomplishment.

➜ Researchers at the University of Michigan used the terms

employee-centred leaders and job-centred leaders to describe the same two basic leadership behaviours.

➜ The Leadership Grid is a two- dimensional leadership model that measures the leader’s concern for people and concern for production to categorise the leader in one of five different leadership styles.

NEWS CORPORATION News Corporation has certainly come a long way since its humble beginnings in Adelaide. Today, its founder, Chairman and CEO Rupert Murdoch makes multibillion-dollar deals in television, media and Internet-based industries all over the world. However, not all of these deals bear fruit immediately. For example, Star TV lost approximately A$80 million on sales of A$140 million in Asia, and News has appointed Gareth Chang to try and revitalise its Asian operations. This particularly means focusing efforts on establishing Star TV’s reach into the huge potential markets of India and China. Chang is well connected to a number of political leaders across Asia, and these relationships are important to getting the access to marketplaces and the licences that are critical to distribute media and television signals. Rupert Murdoch has been a successful leader by any measure, building from an Australian base of newspaper publishing to take News Corporation to become an A$85 billion corporate giant that includes Fox film studios and TV network, satellite TV in most major regions of the world, and ownership of major sporting teams and newspapers all over the world. Forbes ranked Murdoch the 33rd most powerful person in the world in 2013, and he has a net personal worth of $13.4 billion.

While Murdoch is positioning his children to succeed him in running this business, he is also building satellite TV capacity in China and

other growth markets. He is without doubt a strong and successful leader. However, in mid- 2011, News Corporation and Mr Murdoch had to move into crisis management mode as the UK phone hacking scandal severely challenged their ethics and corporate reputation.

In another bold move and an attempt to regain shareholder confidence News Corp was divided into two businesses in 2013, one made up of the TV and film empire (21st Century Fox) and the other a smaller, less profitable business consisting of the newspaper and book publishing enterprises (retaining the name News Corp). Murdoch, who is now in his 80s, serves as chairman of both businesses and is CEO of 21st Century Fox. It was hoped that the split would allow both arms of the media and publishing businesses to focus on building value, and also distance the more profitable parts of the company from the UK newspaper hacking scandal. The publishing arm faces greater challenges than the entertainment arm, as the declining profitability of newspapers continues to test leadership decisions and future strategic choices. Since breaking into two, the share price for 21st Century Fox has remained close to its opening price of A$34; however, News Corp hit a low of A$14.50 soon after the split occurred, slowly recovering to around A$18.00 but it still faces heavy financial losses.

Sources: Forbes ‘Most Powerful People’. http://www. forbes.com/profile/rupert-murdoch/ (accessed

18 November 2013); Durie, J. and Kitney, D. (29 June 2012). News Corporation Split Will Unlock Value. The

Australian, http://www.theaustralian.com.au/media/ local-news-assets-to-stay-together-as-directors- approve-historic-split-of-the-global-media-giant/

story-e6frg996-1226411572734 (accessed 18 November 2013); Investor Relations 21st Century Fox,

http://www.21cf.com/Investor_Relations/ (accessed 18 November 2013); Investor Relations News

Corporation, http://investors.newscorp.com/stockquote. cfm (accessed 18 November 2013) and Rushton, K. (11 November 2013). News Corp Expected to Post

$12m Loss. The Telegraph, http://uk.finance.yahoo.com/ news/news-corp-expected-post-12m-203151634.html

(accessed 18 November 2013).

Case sTudy

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Rupert Murdoch and News Corporation have created a global high technology communications network.

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ConTingenCy approaChes Steven Sinofsky led a team of Microsoft software engineers working on the next generation of Windows operating system software. At Apple, Bertrand Serlet led a team to try to make sure the new Macintosh operating system is better. Although they held the same type of job, Sinofsky and Serlet were widely different in their approaches to leadership. Sinofsky is a meticulous planner and likes to run a tight ship. ‘Under Sinofsky,’ one engineer said, ‘you plan and you stick to the plan.’ Serlet, on the other hand, prefers things to be a little chaotic. He isn’t a stickler for rules and procedures, emphasising a more flexible, laid-back style. A programmer who has worked under both leaders compared Sinofsky’s style to that of a martial marching band, while Serlet’s was compared to an improvisational jazz group.36

How can two people with widely different styles both be effective leaders? The answer lies in understanding contingency approaches to leadership, which explore how the organisational situation influences leader effectiveness. Contingency approaches include the situational model based on the work of Hersey and Blanchard, the leadership model developed by Fiedler and his associates, and the substitutes-for-leadership concept.

the sItuatIonaL modeL of LeadershIp The situational model of leadership, which originated with Hersey and Blanchard, is an interesting extension of the behavioural theories summarised in the Leadership Grid (see Exhibit 15.6). This approach focuses a great deal of attention on the characteristics of followers in determining appropriate leadership behaviour. The point of the situational model is that subordinates vary in readiness, which is determined by the degree of willingness and ability a subordinate demonstrates while performing a specific task. Willingness refers to a combination of confidence, commitment and motivation, and a follower may be high or low on any of the three variables. Ability refers to the amount of knowledge, experience and demonstrated skill a subordinate brings to the task. Effective leaders adapt their style according to the readiness level of the people they are managing. People low in readiness – because of little ability or training or insecurity – need a different leadership style than those who are high in readiness and have good ability, skills, confidence and willingness to work.37

According to the situational model, a leader can adopt one of four leadership styles, as shown in Exhibit 15.7. The directing style is a highly dictating style and involves giving explicit directions about how tasks should be accomplished. The coaching style is one where the leader explains decisions and gives subordinates a chance to ask questions and gain clarity and understanding about work tasks. The supporting style is one where the leader shares ideas with subordinates, gives them a chance to participate and facilitates decision making. The fourth style, the entrusting style, provides little direction and little support because the leader turns over responsibility for decisions and their implementation to subordinates.

Exhibit 15.7 summarises the situational relationship between leader style and follower readiness. The directing style has the highest probability of successfully influencing low readiness followers who are unable or unwilling – because of poor ability and skills, little experience or insecurity – to take responsibility for their own task behaviour. The leader is specific, directing people exactly what to do, how to do it and when. The coaching and supporting styles work for followers at moderate readiness levels.

contingency approach A model of leadership that describes the relationship between leadership styles and specific organisational situations.

situational model A contingency approach to leadership that links the leader’s behavioural style with the task readiness of employees.

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For example, followers might lack some education and experience for the job but have high confidence, interest and willingness to learn. As shown in the exhibit, the coaching style is effective in this situation because it involves giving direction but also includes seeking input from others and clarifying tasks rather than simply instructing that they be performed. When followers have the necessary skills and experience but are somewhat insecure in their abilities or lack high willingness, the supporting style enables the leader to guide followers’ development and act as a resource for advice and assistance. When followers demonstrate high readiness, that is, they have high levels of education, experience and readiness to accept responsibility for their own task behaviour, the entrusting style can effectively be used. Because of the high readiness level of followers, the leader can delegate responsibility for decisions and their implementation to subordinates who have the skills, abilities and positive attitudes to follow through. The leader provides a general goal and sufficient authority to do the task as followers see fit.

To apply the situational model, the leader diagnoses the readiness level of followers and adopts the appropriate style – directing, coaching, supporting or entrusting. For example, Jo Newton, an impulse import category leadership manager at Mars’ Slough office near London, uses primarily a supporting style. Most members of Newton’s team are at moderate to high readiness levels, so Newton advises them of the results the company wants and then steps back, providing guidance and support as needed. ‘I like people to come up with their own way of doing things. . . .’ she says. ‘I like to support people as opposed to directing them to do things.’38 A leader taking over a new team of inexperienced or uncertain members would likely have to provide more direction with either a directing or coaching style. On the other hand, Warren Buffett uses a primarily entrusting style. The octogenarian CEO of Berkshire Hathaway is considered one of the world’s best managers, but he isn’t closely involved in the day-to-day management of all the businesses Berkshire owns. He trusts the managers of the various units, who are highly skilled professionals able and willing to take responsibility for their own task behaviour.39 An entrusting leader style is not always appropriate, but all managers need to be able to delegate some tasks and decisions for the organisation to work smoothly. The Shoptalk discusses techniques for effective delegation.

F oc

u s

on t

as k

n ee

d s

Focus on people needs High

High

Low

2. Coaching style

Dual-focus leader provides both task instruction and personal support as needed. Use this style when followers have moderate readiness because of confidence to proceed but lack ability.

Engaging leader encourages, supports, consults with and develops followers’ skills and confidence. Use this style when followers have moderate readiness because of ability but lack confidence and need personal support.

3. Supporting style

1. Directing style

Authoritative leader provides detailed goals and tasks, closely monitors operations and performance. Use this style when followers have low readiness, low ability and lack confidence.

Delegating leader who displays little focus on either task or people needs. Use this style when followers have high readiness because of ability and confidence to perform tasks themselves.

4. Entrusting style

exhibit 15.7 The situational model of leadership

Source: Based on Gary Yukl, Angela Gordon and Tom Taber. A Hierarchical Taxonomy of Leadership Behavior: Integrating a Half Century of Behavior Research. Journal of Leadership and Organization Studies, 9:1, 15–32, and Paul Hersey, Kenneth Blanchard and Dewey Johnson, Management of Organizational Behavior: Utilizing Human Resources, 7th edn (Upper Saddle River, NJ: Prentice Hall, 1996).

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new Manager self-test

TA S k v E R S u S p E O p L E O R I E N TAT I O N

instructions: Responding to the statements below can help you diagnose your approach to dealing with others when you are in a leadership role. If you have been a leader at work with people reporting to you, think back to that experience. Or you can think about how you usually behave as a leader in a group to get an assignment completed. Please answer honestly about how frequently you display each behaviour.

Mostly true

Mostly false

1 I intentionally try to make people’s work on the job more pleasant.

2 I focus more on execution than on being pleasant with people.

3 I go out of my way to help others.

4 I personally hold people accountable for their performance.

5 I work hard to maintain a friendly atmosphere on the team.

6 I clearly tell people what I expect of them

7 I think a lot about people’s personal welfare.

8 I check up on people to know how they are doing.

9 I am concerned more with relationships than with results.

10 I assign people to specific roles and tasks.

11 I focus more on being pleasant with people than on execution of tasks.

12 I am concerned more with results than with people’s feelings.

scoring and interpretation: Give yourself 2 points for each Mostly true and 1 point for each Mostly false.

People Orientation: Sum your points for the odd-numbered questions: ______________________________________________.

Task Orientation: Sum your points for the even-numbered questions: ______________________________________________.

Your People Orientation score reveals your orientation towards people and relationships as described in the chapter. A score of 10 or higher suggests that you may be ‘high’ on people behaviour. A score of 9 or below suggests that you may be ‘low’ on people orientation. Your Task Orientation score reveals your orientation towards tasks and outcomes. A score of 10 or higher suggests that you may be ‘high’ on task- oriented behaviour. A score of 9 or below suggests that you may be ‘low’ on task orientation.

What is your primary leadership orientation? Which of the following best represents your leadership style (check one)? Look at Exhibit 15.7 on page 617 to see the quadrant in which you fit.

______Low Task, Low People 5 Entrusting style

______Low Task, High People 5 Supporting style

______High Task, Low People 5 Directing style

______High Task, High People 5 Coaching style Does your quadrant seem correct based on your

experience? Compare your scores to other students’ scores.

fIedLer’s ContInGenCy theory Whereas the situational model focused on the characteristics of followers, Fiedler and his associates looked at some other elements of the organisational situation to assess when one leadership style is more effective than another.40 The starting point for Fiedler’s theory is the extent to which the leader’s

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style is task oriented or relationship (people) oriented as referred to above. Fiedler considered a person’s leadership style to be relatively fixed and difficult to change; therefore, the basic idea is to match the leader’s style with the situation most favourable for his or her effectiveness. By diagnosing leadership style and the organisational situation, the correct fit can be arranged.

sItuatIon: favouraBLe or unfavouraBLe? The suitability of a person’s leadership style is determined by whether the situation is favourable or unfavourable to the leader. The favourability of a leadership situation can be analysed in terms of three elements: the quality of relationships between leader and followers, the degree of task structure (meaning the extent to which processes can be formally defined or standardised) and the extent to which the leader has formal authority over followers.41 A situation would be considered highly favourable to the leader when leader–member relationships are positive, tasks are highly structured and the leader has formal authority over followers. In this situation, followers trust, respect and have confidence in the leader. The group’s tasks are clearly defined, involve specific procedures and have clear, explicit goals. In addition, the leader has formal authority to direct and evaluate followers, along with the power to reward or punish. A situation would be considered highly unfavourable to the leader when leader–member relationships are poor, tasks are highly unstructured and the leader has little formal authority. In a highly unfavourable situation, followers have little respect for or confidence and trust in the leader. Tasks are vague and ill-defined and lack clear-cut procedures and guidelines. The leader has little formal authority to direct subordinates and does not have the power to issue rewards or punishments.

matChInG Leader styLe to the sItuatIon When Fiedler examined the relationships among leadership style and situational favourability, he found the pattern shown in Exhibit 15.8. Task-oriented leaders are more effective when the situation is either highly favourable or highly unfavourable. Relationship-oriented leaders are more effective in situations of moderate favourability. The task-oriented leader excels in the favourable situation because everyone gets along, the task is clear and the leader has power; all that is needed is for someone to lead the charge and provide direction. Similarly, if the situation is highly unfavourable to the leader, a great deal of structure and task direction is needed. A strong leader will define task structure and establish strong authority. Because leader–member relations are poor anyway, a strong task orientation will make no difference in the leader’s popularity.

Task-oriented leader

Relationship- oriented leader

P er

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Low

High

Situation very unfavourable to leader

Situation very favourable to leader

Situation intermediately favourable to leader

exhibit 15.8 How leader style fits the situation

Source: Based on Fred E. Fiedler. The Effects of Leadership Training and Experience: A Contingency Model Interpretation. (1972). Administrative Science Quarterly, 17, 455.

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hOW TO DELEGATE management in pr actice

Sometimes, managers cling too tightly to their decision- making and task responsibilities. Failure to delegate occurs for a number of reasons: managers are most comfortable making familiar decisions; they feel they will lose personal status by delegating tasks; they believe they can do a better job themselves; or they have an aversion to risk – they will not take a chance on delegating because performance responsibility ultimately rests with them.

Yet delegating tasks and decision making offers an organisation many advantages. Decisions are made at the right level, lower-level employees are motivated, and employees have the opportunity to develop decision-making skills. The following approach can help you to delegate more effectively as a manager:

●➜ delegate the whole task. A manager should delegate an entire task to one person rather than dividing it among several people. This type of delegation gives the individual complete responsibility and increases his or her initiative while giving the manager some control over the results.

●➜ select the right person. Not all employees have the same capabilities and degrees of motivation. If delegation is to be effective, managers must match talent to task. They should identify subordinates who made independent decisions in the past and show a desire for more responsibility.

●➜ ensure that authority equals responsibility. Merely assigning a task is not effective delegation. Managers often load subordinates with increased responsibility, but do not extend their decision-making range. In addition to having responsibility for completing a task, the worker must be given the authority to make decisions about how best to do the job.

●➜ give thorough instruction. Successful delegation includes information on what, when, why, where, who and how.

The subordinate must clearly understand the task and the expected results. It is a good idea to write down all provisions discussed, including required resources and when and how the results will be reported.

●➜ Maintain feedback. Feedback means keeping open lines of communication with the subordinate to answer questions and provide advice, but without exerting too much control. Open lines of communication make it easier to trust subordinates. Feedback keeps the subordinate on the right track.

●➜ evaluate and reward performance. Once the task is completed, the manager should evaluate results, not methods. When results do not meet expectations, the manager must assess the consequences. When they do meet expectations, the manager should reward employees for a job well done with praise, financial rewards when appropriate and delegation of future assignments.

ARE yOu A pOSITIvE DELEGATOR? Do you help or hinder the decentralisation process? If you answer yes to more than three of the following questions, you may have a problem delegating:

●➜ I tend to be a perfectionist.

●➜ My boss expects me to know all the details of my job.

●➜ I don’t have the time to explain clearly and concisely how a task should be accomplished.

●➜ I often end up doing tasks myself.

●➜ My subordinates typically are not as committed as I am.

●➜ I get upset when other people don’t do the task right.

●➜ I really enjoy doing the details of my job to the best of my ability.

●➜ I like to be in control of task outcomes.

Sources: Thomas R. Horton. (September 1992). Delegation and Team Building: No Solo Acts Please. Management Review, 58–61; Andrew E. Schwartz. (June 1987). The Why, What, and to Whom of Delegation. Management Solutions, 31–8; Delegation. (June 1986).

Small Business Report, 38–43; and Russell Wild. (May 2000). Clone Yourself. Working Woman, 79–80.

An example of matching style to situation is to consider what type of leadership is best suited to organisations which are underperforming. Researchers at the University of Chicago who looked at CEOs in turnaround situations – where companies typically have high debt loads and a need to improve results in a hurry – found that tough-minded, task-focused characteristics such as analytical skills, a focus on efficiency and setting high standards were more valuable leader qualities than relationship skills such as good communication, listening and teamwork.42

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The relationship-oriented leader performs better in situations of intermediate favourability because human relations skills are important in achieving high group performance. In these situations, the leader may be moderately well-liked, have some power and supervise jobs that contain some ambiguity. A leader with good interpersonal skills can create a positive group atmosphere that will improve relationships, clarify task structure and establish position power.

A leader, then, needs to know two things to use Fiedler’s contingency theory. First, the leader should know whether he or she has a relationship- or task-oriented style. Second, the leader should diagnose the situation and determine whether leader–member relations, task structure and position power are favourable or unfavourable. Fiedler believed that fitting leader style to the situation can yield big dividends in profits and efficiency.43 On the other hand, Fiedler’s model has also been criticised.44 Some researchers have challenged the idea that leaders cannot adjust their styles as situational characteristics change. Despite these criticisms, though, Fiedler’s model has continued to influence leadership studies. Fiedler’s research called attention to the importance of finding the correct fit between leadership style and situation.

siTuaTional subsTiTuTes for leadership The contingency leadership approaches considered so far focus on the leader’s style, the subordinates’ natures and the situation’s characteristics. The final contingency approach suggests that situational variables can be so powerful that they actually substitute for or neutralise the need for leadership.45 This approach outlines those organisational settings in which a leadership style is unimportant or unnecessary.

Exhibit 15.9 shows the situational variables that tend to substitute for or neutralise leadership characteristics. A substitute for leadership makes the leadership style unnecessary or redundant. For example, highly professional subordinates who know how to do their tasks do not need a leader who initiates structure for them and tells them what to do. A neutraliser counteracts the leadership style and prevents the leader from displaying certain behaviours. For example, if a leader has absolutely no position power or is physically removed from subordinates, the leader’s ability to give directions to subordinates is greatly reduced.

Situational variables in Exhibit 15.9 include characteristics of the group, the task and the organisation itself. When followers are highly professional and experienced, both leadership styles are less important. People do not need much direction or consideration. With respect to task characteristics, highly structured tasks substitute for a task-oriented style, and a satisfying task substitutes for a people-oriented style. With respect to the organisation itself, group cohesiveness substitutes for both leader styles. Formalised rules and procedures substitute for leader task orientation. Physical separation of leader and subordinate neutralises both leadership styles.

The value of the situations described in Exhibit 15.9 is that they help leaders to avoid leadership overkill. Leaders should adopt a style that complements the organisational situation. Consider the work situation for bank tellers. A bank teller performs highly structured tasks, follows clearly written rules and procedures, and has little flexibility in terms of how to do the work. The head teller should not adopt a task- oriented style, because the organisation already provides structure and direction. The head teller should concentrate on a people-oriented style to provide a more pleasant work environment for the other tellers. In other organisations, if group cohesiveness or intrinsic satisfaction meets employees’ social needs, the leader is free to concentrate on task-oriented behaviours. The leader can adopt a style complementary to the organisational situation to ensure that both task needs and people needs of the work group will be met.

substitute for leadership A situational variable that makes a leadership style redundant or unnecessary.

neutraliser A situational variable that counteracts a leadership style and prevents the leader from displaying certain behaviours.

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exhibit 15.9 Substitutes and neutralisers for leadership

Variable task-oriented leadership people-oriented leadership

Organisational variables

Group cohesiveness Substitutes for Substitutes for Formalisation Substitutes for No effect on Inflexibility Neutralises No effect on Low position power Neutralises Neutralises Physical separation Neutralises Neutralises

Task characteristics Highly structured task Substitutes for No effect on Automatic feedback Substitutes for No effect on Intrinsic satisfaction No effect on Substitutes for

Group characteristics Professionalism Substitutes for Substitutes for Training/experience Substitutes for No effect on

reMeMber this

➜ A contingency approach is a model of leadership that describes the relationship between leadership styles and specific situations.

➜ One contingency approach is the situational model, which links the leader’s behavioural style with the readiness level of followers.

➜ In general, a task-oriented leader style fits a low-readiness follower,

and a relationship leader style fits a higher-readiness follower.

➜ In Fiedler’s contingency theory, the suitability of a leader’s style is determined by whether the situation is considered favourable or unfavourable to the leader.

➜ Task-oriented leaders are considered to perform better in either highly favourable or highly unfavourable situations.

➜ Relationship-oriented leaders are considered to perform better in situations of intermediate favourability.

➜ A substitute for leadership is a situational variable that makes a leadership style redundant or unnecessary.

➜ A neutraliser is a situational variable that counteracts a leadership style and prevents the leader from displaying certain behaviours.

Patricia Neden is the Chief Executive Officer of Innovation and Business Skills Australia (IBSA). IBSA is one of 11 Industry Skills Councils (ISCs), not-for-profit companies funded by the Australian Government. Previously, Patricia was Deputy Secretary in the Victorian Department of Innovation, Industry and Regional Development and responsible for Skills Victoria.

Patricia’s experience covers policy, intergovernmental negotiations, national

systems implementation and purchasing arrangements. She previously held senior positions in other Victorian Government departments, including Industry and Labour. Patricia commenced her career in the private sector, working predominantly in information technology and manufacturing in Victoria and overseas, and in the mining industry in Western Australia.

Patricia is a Director of TVET Australia, and a member of the National Quality Council’s Quality of Assessment Action Group. She is a member of the Australian Government’s Contributions Review Panel for international education

Austr AliAn mAnAger profile pATRIcIA NEDEN

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CharismaTiC and TransformaTional leadership Research has also looked at how leadership can inspire and motivate people beyond their normal levels of performance. Some leadership approaches are more effective than others for bringing about high levels of commitment and enthusiasm. Two types of leadership with a substantial impact are charismatic and transformational.

providers and on the Board of the Victorian Registration and Qualifications Authority.

Challenges facing managers today include aligning people with company objectives and driving change through the development of innovative products, processes and ways of doing things internally. Patricia believes that developing a culture of ‘can do’ energises people and results in goals being achieved. Another contemporary challenge is the mix of generations in the workforce and their varied expectations about both the nature of work and conditions. Providing work that mines the experience of older people and allows for the

development of younger ones is critical. It is also important to accommodate the different working conditions various age groups require, ranging from flexible arrangements to accommodate creche pick-up times at one end of the spectrum, to part-time arrangements to ensure grandchildren are looked after or other pursuits are factored in at the other end.

In 2008, the Institute of Public Administration awarded Patricia a Victorian Fellowship in recognition of her outstanding contribution to public administration and exemplary service to the Victorian community.

Source: Courtesy Patricia Neden.

ARE yOu A chARISmATIc LEADER?

If you were the head of a major department in a company, how important would each of the following activities be to you? Answer yes or no to indicate whether you would strive to perform each activity.

1. Help employees clarify goals and how to reach them.

2. Give people a sense of mission and overall purpose.

3. Help get jobs out on time.

4. Look for new product or service opportunities.

5. Use policies and procedures as guides for problem solving.

6. Promote unconventional beliefs and values.

7. Give monetary rewards in exchange for high performance from employees.

8. Command respect from everyone in the department.

9. Work alone to accomplish important tasks.

10. Suggest new and unique ways of doing things.

11. Give credit to people who do their jobs well.

12. Inspire loyalty to yourself and to the organisation.

13. Establish procedures to help the department operate smoothly.

14. Use ideas to motivate others.

15. Set reasonable limits on new approaches.

16. Demonstrate social nonconformity. The even-numbered items represent behaviour and

activities of charismatic leaders. Charismatic leaders are personally involved in shaping ideas, goals and direction of change. They use an intuitive approach to develop fresh ideas for old problems and seek new directions for the department or organisation. The odd-numbered items are considered more traditional management activities, or what would be called transactional leadership. Managers respond to organisational problems in an impersonal way, make rational decisions, and coordinate and facilitate the work of others. If you answered yes to more even-numbered than odd-numbered items, you may be a potential charismatic leader.

Sources: Based on Bass, B. M. (1985). Leadership and Performance Beyond Expectations (Free Press: New York); Burns, L. R. and Becker, S. W. Leadership and Management. In S. Shortell and A. Caluzny (eds) (1986). Health Care Management (Wiley: New York).

management in pr actice

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CharIsmatIC LeadershIp Charisma has been referred to as ‘a fire that ignites followers’ energy and commitment, producing results above and beyond the call of duty’.46 The charismatic leader has the ability to inspire and motivate people to do more than they would normally do, despite obstacles and personal sacrifice. Followers are willing to put aside their own interests for the sake of the team, department or organisation. The impact of charismatic leaders normally comes from (1) stating a lofty vision of an imagined future that employees identify with; (2) displaying an ability to understand and empathise with followers; and (3) empowering and trusting subordinates to accomplish results.47 Charismatic leaders tend to be less predictable because they create an atmosphere of change, and they may be obsessed by visionary ideas that excite, stimulate and drive other people to work hard. One of the best-known charismatic leaders in the business world of recent decades was the late Apple co-founder and CEO Steve Jobs.

charismatic leader A leader who has the ability to motivate employees to transcend their expected performance.

chARISmATIc LEADERShIp InnovatIve

Way

Steve Jobs was a legend long before he died in October 2011. His creativity and obsession with innovative product design, combined with the force of his personality, made Apple what it is today. Since his death, managers have been reading books and articles that describe his leadership style to try to tap into some of the Steve Jobs magic. Part of that magic relied on Jobs’s charisma.

Jobs commanded a rock-star-like following. The tale of how he dropped out of college, co-founded Apple, got fired from his own company, returned years later to save it, and then transformed it by creating a whole new business with the iPod, iPhone and iPad is the stuff of legend. Jobs provided the pizzazz for Apple employees, business partners and the public. His charismatic personality played an important role in persuading media companies to make their content available on Apple products. ‘When Steve talks, people listen,’ a Harvard Business School professor said a few months before Jobs’s

death. Jobs’s passion and commitment inspired and motivated millions of employees and customers. However, his quick, unpredictable temper, driven, wilful personality, impatience, relentless demands and hypercritical attitude sometimes undermined performance.

Jobs challenged and inspired teams to reach beyond the possible, yet he could easily dismiss a promising idea or effort as ‘a piece of crap’, contributing to disillusionment and the loss of potential. Despite this, many people – even some he mistreated – admired and respected (some have even said worshipped) Steve Jobs. They tell their ‘Steve-Jobs-yelled-in- my-face’ stories with pride. His energising personality and refusal to ‘sell out’ made people want to be around him, and want to be like him. Indeed, one magazine article commented that the amazing staff loyalty he inspired turned Apple into ‘Steve Jobs with a thousand lives’.

Source: Jon Katzenbach. (Summer 2012). The Steve Jobs Way. Strategy + Business, http://www.strategy-business.com/article/00109?gko=d331b (accessed 11 June 2012); Steve Moore. (March 2009). Not Bad for a Hippie Dropout. Management Today, 27; Connie Guglielmo. (17 May 2008). What Makes Steve Jobs Run? National Post, FW–8;

(18 January 2009). Editorial: Apple – and U.S. – Need Steve Jobs. McClatchy-Tribune Business News; Leslie Kwoh and Emma Silverman. (31 March 2012). Bio as Bible: Managers Imitate Steve Jobs. The Wall Street Journal, B1; and Miguel Helft and Claire Cain Miller. (17 January 2011). A Deep Bench of Leadership at Apple.

The New York Times, http://www.nytimes.com/2011/01/18/technology/18cook.html?_r=0 (accessed 18 January 2011).

As the example of Steve Jobs illustrates, there can be both positive and negative aspects of charisma. Other charismatic leaders include Mother Teresa, Sam Walton, Alexander the Great, Oprah Winfrey and Martin Luther King, Jr. Charisma can be used for positive outcomes that benefit the group, but it can also be used for self-serving purposes that lead to the deception, manipulation and exploitation of others. When charismatic leaders respond to organisational problems in terms of the needs of the entire group rather than their own emotional needs, they can have a powerful, positive influence on organisational performance.48 At Apple, Steve Jobs’s personal identity was so closely aligned with his company that

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serving Apple and serving his own emotional needs were likely one and the same! As with the Level 5 and authentic leadership approaches discussed earlier in this chapter, humility typically plays an important part in distinguishing whether a charismatic leader will work to benefit the larger organisation or use his or her gifts for ego-building and personal gain.49

Charismatic leaders are skilled in the art of visionary leadership. A vision is an attractive, ideal future organisational state or outcome that is credible yet not readily attainable. Vision is an important component of both charismatic and transformational leadership. Visionary leaders, who concentrate on formulating and communicating the organisation’s longer term ‘big picture’, speak to the hearts of employees, letting them feel that they are part of something bigger than themselves. Where others see obstacles or failures, visionary leaders see possibility and hope. Charismatic leaders typically have a strong vision for the future, almost an obsession, and they can motivate others to help realise it.50 These leaders have an emotional impact on subordinates because they strongly believe in the vision and can communicate it to others in a way that makes the vision real, personal and meaningful.

vision An attractive, ideal future organisational state or outcome that is credible yet not readily attainable.

IN THE HANDS OF A MATADOR It was, by any standard, a bold move. Taking the leadership reins in 2004 as CEO and president of Spain-based Acciona, one of Europe’s most profitable real estate and construction businesses, José Manuel Entrecanales envisioned a future in which businesses would balance economic gain with environmental standards. Entrecanales convinced his board to address climate change and promote renewable energy

development. The company wasted no time making a public announcement of its long- term sustainability plans and undertaking new strategies led by a Sustainability Committee. Over the next six years, Acciona managers made investments in sustainability including wind generators. By 2009, Acciona had risen to third in the world in wind energy production. In less than a decade, Acciona has established a green reputation, and it was

the leadership of Entrecanales, undertaken with the precise timing and calculated moves of a great matador, that envisioned the new spheres of action.

Sources: Daniel Arenas, Jeremie Fosse and Matthew Murphy. (2011). Acciona: a Process of Transformation

Towards Sustainability. The Journal of Management Development, 30:10, 1027–48; and Patricia McCormick. (11 March 1963). A Brave Matador Explains the Bullfight.

Sports Illustrated, http://sportsillustrated.cnn.com/vault/ article/magazine/MAG1074594/2/index.htm (accessed

4 August 2012).

Case sTudy

transformatIonaL versus transaCtIonaL LeadershIp transformational leaders are similar to charismatic leaders, but are distinguished by their special ability to bring about innovation and change by recognising their followers’ needs and concerns, providing meaning, challenging people to look at old problems in new ways and acting as role models for new values and behaviours. Transformational leaders inspire followers not only to believe in the leader personally, but also to believe in their own potential to imagine and create a better future for the organisation. Transformational leaders create significant change in both their followers and the organisation.51

Transformational leadership can be better understood when considered in comparison to transactional leadership.52 transactional leaders clarify the role and task requirements of subordinates, initiate structure, provide appropriate rewards, and try to be considerate and meet the social needs of subordinates. The transactional leader’s ability to satisfy subordinates may improve productivity. Transactional leaders excel at management functions. They are hardworking, tolerant and fair minded. They take pride in keeping things running smoothly and efficiently. Transactional leaders often stress the impersonal aspects of

transformational leaders

transformational leader A leader distinguished by a special ability to bring about innovation and change.

transactional leader A leader who clarifies employees’ role and task requirements, initiates structure, provides rewards and displays consideration for employees.

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performance, such as plans, schedules and budgets. They have a sense of commitment to the organisation and conform to organisational norms and values. Transactional leadership is important to all organisations, but leading change requires a different approach.

Transformational leaders have the ability to lead changes in the organisation’s mission, strategy, structure and culture, as well as to promote innovation in products and technologies. Transformational leaders do not rely solely on tangible rules and incentives to control specific transactions with followers. They focus on intangible qualities such as vision, shared values and ideas to build relationships, give larger meaning to diverse activities, and find common ground to enlist followers in the change process.53

ASEA BROWN BOvERI Percy Barnevik is a transformational leader who transformed two rather sleepy engineering firms (ASEA, a Swedish engineering group, and Brown Boveri, a Swiss competitor) into one of the world’s top engineering giants. Barnevik had a vision of a new type of organisation for a new Europe without boundaries. He wanted Asea Brown Boveri (ABB) to be a transnational company operating freely across borders, one that combined global scale and world-class technology with small company dynamism and deep roots in the local community. Barnevik pushed authority, responsibility and accountability down to the lowest levels of the organisation and empowered employees throughout the company to help him achieve his vision for the new ABB. New CEO Ulrich Spiesshofer leads

this $40 billion company, which achieved a healthy 10 per cent profit margin in 2012, in a highly decentralised manner. The company employs 146 000 staff and owns many thousands of patents, using technology to build sustainable solutions for its customers worldwide. ABB has a strong business culture: ‘The key to success lies in how well all of us understand and apply the business principles – demonstrating personal, professional and corporate responsibility, showing respect for the views and needs of others and applying our shared determination to win.’ ABB has strongly embraced sustainability principles and practices, and is regarded as a sustainability leader in its industries. It is a clear example that an old, well established company, working in traditional ‘smokestack’ industries does

not have to be conservative, but can indeed be successful through embracing modern practices of staff empowerment, sustainability, knowledge management and decentralised decision making, to its great benefit. These approaches are so strongly ingrained in ABB’s ‘DNA’ that even though a few CEOs have come and gone since the foundations were laid by Barnevik, the ABB way of working has endured, matured and been prosperous, even through the difficult period of the global financial crisis.

Sources: Vries, M. F. R. (Winter 1998). Charisma in Action: The Transformational Abilities of Virgin’s

Richard Branson and ABB’s Percy Barnevik. Organizational Dynamics, 7–21; ABB Group Annual

Report 2012, p. 10, http://www.abb.com/; http://www.abbaustralia.com.au/cawp/seitp202/

8986869d0a190b74c1257be7004db946.aspx; http://www400.abbext.com/2012/ar/servicepages/

filelibrary/files/collection.php.

Ca se

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Studies show that transformational leadership has a positive impact on follower development and follower performance.54 Moreover, transformational leadership skills can be learned, and are not ingrained personality characteristics. However, some personality traits may make it easier for a leader to display transformational leadership behaviours. For example, studies of transformational leadership have found that the trait of agreeableness, as discussed in the previous chapter, is often associated with transformational leaders.55 In addition, transformational leaders are typically emotionally stable and positively engaged with the world around them, and they have a strong ability to recognise and understand others’ emotions.56 These characteristics are not surprising, considering that these leaders accomplish change by building networks of positive relationships.

CONCEPT ExTENSION

Self-test

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followership No discussion of leadership is complete without a consideration of followership. Leadership matters, but without effective followers, no organisation can survive. People have different expectations of what constitutes a good follower versus a good leader, as illustrated by the results of studies asking people to rank the desired characteristics of leaders and followers. The top five qualities desired in each are as listed in Exhibit 15.10.57

There may be some differences, but overall, many of the qualities that define a good follower are the same as those possessed by a good leader. Leaders can develop an understanding of their followers and create the conditions that help them to be most effective.58 One model of followership is illustrated in Exhibit 15.11. Robert E. Kelley conducted extensive interviews with managers and their subordinates and came up with five follower styles, which are categorised according to two dimensions.59

➜ A charismatic leader is a leader who has the ability to inspire and motivate people to transcend their expected performance, even to the point of personal sacrifice.

➜ Both charismatic and transformational leaders provide followers with an inspiring vision, an attractive, ideal future that is credible yet not readily attainable.

➜ A transformational leader is distinguished by a special ability to bring about innovation and

change by creating an inspiring vision, shaping values, building relationships and providing meaning for followers.

➜ A transactional leader clarifies subordinates’ roles and task requirements, initiates structure, provides rewards and displays consideration for followers.

reMeMber this

exhibit 15.10 The top five qualities of leaders and followers

leader folloWer

Honest Honest Competent Competent Forward-looking Dependable Inspiring Cooperative Intelligent Loyal

exhibit 15.11 Styles of followership

Source: Based on Robert E. Kelley, The Power of Followership (New York: Doubleday, 1992).

PassiveActive

Dependent, uncritical thinking

Independent, critical thinking

Passive

AlienatedEffective

Pragmatic survivor

Conformist

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The first dimension is the quality of independent, critical thinking versus dependent, uncritical thinking. Independent critical thinkers are mindful of the effects of their own and others’ behaviour on achieving organisational goals. They can weigh the impact of their boss’s and their own decisions and offer constructive criticism, creativity and innovation. Conversely, a dependent, uncritical thinker does not consider possibilities beyond what he or she is told, does not contribute to the cultivation of the organisation and accepts the supervisor’s ideas without thinking.

The second dimension of follower style is active versus passive behaviour. An active follower participates fully in the organisation, engages in behaviour that is beyond the limits of the job, demonstrates a sense of ownership and initiates problem solving and decision making. A passive follower, by contrast, is characterised by a need for constant supervision and prodding by superiors. Passivity is often regarded as laziness; a passive person does nothing that is not required and avoids added responsibility.

The extent to which an individual is active or passive and is an independent, critical thinker or a dependent, uncritical thinker determines whether the person will be an alienated follower, a passive follower, a conformist, a pragmatic survivor or an effective follower, as illustrated in Exhibit 15.11.

●● The alienated follower is a passive, yet independent, critical thinker. Alienated employees are often effective followers who have experienced setbacks and obstacles, perhaps promises broken by their superiors. Thus, they are capable, but focus exclusively on the shortcomings of their boss. Often cynical, alienated followers are able to think independently, but they do not participate in developing solutions to the problems or deficiencies that they see. These people waste valuable time complaining about their boss without offering constructive feedback.

●● The conformist participates actively in a relationship with their boss, but doesn’t use critical thinking skills. In other words, a conformist typically carries out any and all orders, regardless of the nature of the request. The conformist participates willingly, but without considering the consequences of what he or she is being asked to do – even at the risk of contributing to a harmful endeavour. A conformist is concerned only with avoiding conflict. This follower style might reflect an individual’s over-dependent attitude towards authority, yet it can also result from rigid rules and authoritarian environments that create a culture of conformity.

●● The pragmatic survivor has qualities of all four extremes – depending on which style fits with the prevalent situation. This type of person uses whatever style best benefits his or her own position and minimises risk. Pragmatic survivors often emerge when an organisation is going through desperate times, and individuals find themselves doing whatever is needed to get through the difficulty. Within any given company, some 25 to 35 per cent of people tend to be pragmatic survivors, avoiding risks and fostering the status quo.60

●● The passive follower exhibits neither critical, independent thinking nor active participation. Being passive and uncritical, these people show neither initiative nor a sense of responsibility. Their activity is limited to what they are told to do, and they accomplish things only with a great deal of supervision. Passive followers leave the thinking to the boss. Often, this style is the result of a micromanaging boss who encourages passive behaviour. People learn that to show initiative, accept responsibility, or think creatively is not rewarded and may even be punished by the boss, so they grow increasingly passive.

critical thinking Thinking independently and being mindful of the effect of one’s behaviour on achieving goals.

uncritical thinking Failing to consider the possibilities beyond what one is told; accepting others’ ideas without thinking.

alienated follower A person who is an independent, critical thinker but is passive in the organisation.

conformist A follower who participates actively in the organisation but does not use critical thinking skills.

pragmatic survivor A follower who has qualities of all four follower styles, depending on which fits the prevalent situation.

passive follower A person who exhibits neither critical independent thinking nor active participation.

CONCEPT ExTENSION

Case project 15.2

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●● The effective follower is both a critical, independent thinker and active in the organisation. Effective followers behave the same towards everyone, regardless of their position in the organisation. They develop an equitable relationship with their leaders and do not try to avoid risk or conflict. These people are capable of self-management, discern strengths and weaknesses in themselves and their bosses, are committed to something bigger than themselves, and work towards competency, solutions and positive impact.

Consider the effective followership of the night cleaner at FAVI, a French copper-alloy foundry. While she was cleaning one night, the phone rang, and she answered it to discover that an important visitor to the company had been delayed and was now waiting at the airport without the promised lift to his hotel. (FAVI’s CEO had left the airport when the visitor didn’t arrive as expected.) What did the cleaner do? She simply took the keys to one of the company cars, drove 90 minutes to pick up the visitor and deliver him to his hotel, then went back to finish the cleaning that she had stopped three hours earlier.61

Effective followers recognise that they have power in their relationships with superiors; thus, they have the courage to manage upward, to initiate change and to put themselves at risk or in conflict with the boss if they believe that it serves the best interest of the team or organisation.

effective follower A critical, independent thinker who actively participates in the organisation.

➜ Leaders can accomplish nothing without effective followers.

➜ Critical thinking means thinking independently and being mindful of the effect of one’s behaviour on achieving goals.

➜ Uncritical thinking means failing to consider the possibilities beyond what

one is told, accepting others’ ideas without thinking.

➜ An effective follower is a critical, independent thinker who actively participates in the organisation.

➜ An alienated follower is a person who is an independent, critical thinker but is passive in the organisation.

➜ A conformist is a follower who participates actively in the

organisation but does not use critical thinking skills.

➜ A passive follower is one who exhibits neither critical independent thinking nor active participation.

➜ A follower who has qualities of all four follower styles, depending on which fits the prevalent situation, is called a pragmatic survivor.

reMeMber this

power and influenCe Both followers and leaders use power and influence to get things done in organisations. Sometimes the terms power and influence are used synonymously, but there are distinctions between the two. power is the potential ability to influence the behaviour of others.62 influence is the effect that a person’s actions have on the attitudes, values, beliefs or behaviour of others. Whereas power is the capacity to cause a change in a person, influence may be thought of as the degree of actual change.

Most discussions of power include five types that are available to leaders,63 and these can be categorised as either hard power or soft power. Hard power is power that stems largely from a person’s position of authority, and includes legitimate, reward and coercive power. Soft power includes expert power and referent power, which are based on personal characteristics and interpersonal relationships more than on a position of authority.

power

power The potential ability to influence the behaviour of others.

influence The effect that a person’s actions have on the attitudes, values, beliefs or behaviour of others.

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posItIon power The traditional manager’s power comes from the organisation (hard power). The manager’s position gives him or her the power to reward or punish subordinates to influence their behaviour. Legitimate power, reward power and coercive power are all forms of position power used by managers to change employee behaviour.

LeGItImate power Power coming from a formal management position in an organisation and the authority granted to it is called legitimate power. Once a person has been selected as a supervisor, most employees understand that they are obligated to follow his or her direction with respect to work activities. Subordinates accept this source of power as legitimate, which is why they comply with directives given by the supervisor or manager.

reward power Another kind of power, reward power, stems from the authority to bestow rewards on other people. Managers may have access to formal rewards, such as pay increases or promotions. They also have at their disposal informal rewards such as praise, attention and recognition. Managers can use rewards to influence subordinates’ behaviour.

CoerCIve power The opposite of reward power is coercive power. It refers to the authority to punish or recommend punishment. Managers have coercive power when they have the right to fire or demote employees, criticise them or withhold pay increases. If an employee does not perform as expected, the manager has the coercive power to reprimand the employee, put a negative letter in the employee’s file, deny the employee a raise and hurt the employee’s chances for a promotion.

personaL power Effective leaders don’t rely solely on the hard power of their formal position to influence

others. Jeff Immelt, CEO of GE, considers himself a failure if he exercises his formal authority more than seven or eight times a year. The rest of the time, he is using softer means to persuade and influence others and to resolve conflicting ideas and opinions.64 In contrast to the external sources of position power, personal power most often comes from internal sources, such as an individual’s special knowledge or personal characteristics. Personal power is the primary tool of the leader, and it is becoming

increasingly important as more businesses are run by teams of workers who are less tolerant of authoritarian management.65 Two types of personal power are expert power and

referent power.

expert power Power resulting from a person’s special knowledge or skill regarding the tasks being performed is referred to as expert power. When someone is a true expert, others go along with their recommendations because of his or her superior knowledge. Followers as well as leaders can possess expert power. For example, some managers lead teams in which members have expertise that the leader lacks. Some

legitimate power Power that stems from a formal position in an organisation and the authority granted to it.

reward power Power that results from the authority to reward others.

coercive power Power that stems from the authority to punish or recommend punishment.

take a MoMent

As a new manager, you may not have a lot of position power. Build

your personal power by strengthening your knowledge and skills and by developing positive relationships.

Interpersonal influence tactics will serve you well throughout your

career, even as your position power increases.

expert power Power that stems from special knowledge or skill in tasks performed by employees.

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referent power Power that results from the characteristics that command employees’ identification, respect and admiration, so that they wish to emulate the leader.

leaders at top management levels may lack expert power because subordinates know more about technical details than they do.

referent power referent power comes from an individual’s personal characteristics that command others’ identification, respect and admiration, meaning that others wish to emulate that individual. Referent power does not depend on a formal title or position. When employees admire a supervisor because of the way that he or she deals with them, the influence is based on referent power. Referent power is most visible in the area of charismatic leadership. In social and religious movements, we often see charismatic leaders who emerge and gain a tremendous following based solely on their personal power.

other sourCes of power There are additional sources of power that are not linked to a particular person or position, but rather to the role an individual plays in the overall functioning of the organisation. These important sources include personal effort, relationships with others and information.

personaL effort People who show initiative, work beyond what is expected of them, take on undesirable but important projects, and show interest in learning about the organisation and industry often gain power as a result. Stephen Holmes says he got his start towards the CEO’s office at Wyndham Worldwide because of personal effort. As a young internal auditor at a private-equity firm in the early 1980s, Holmes was spending his evenings trying to learn a new spreadsheet program. Noted investor Henry Silverman noticed him night after night and, intrigued by the young auditor’s efforts, stopped by to see what he was doing. Silverman asked Holmes to move with him to future companies, including Blackstone, HMS and eventually Wyndham. ‘I was a kid,’ Holmes says, ‘[but he] put me into positions that no one else my age was getting to do.’66

network of reLatIonshIps People who are enmeshed in a network of relationships have greater power. A leader or employee with many relationships knows what’s going on in the organisation and industry, whereas one who has few interpersonal connections is often in the dark about important activities or changes. Developing positive associations with superiors or other powerful people is a good way to gain power, but people with the greatest power are those who cultivate relationships with individuals at all levels, both inside and outside the organisation.

InformatIon Information is a primary business resource, and people who have access to information and control over how and to whom it is distributed are typically powerful. To some extent, access to information is determined by a person’s position in the organisation. Top managers typically have access to more information than middle managers, who in turn have access to more information than lower-level supervisors or front-line employees. Both leaders and followers can tap into these additional sources of power. Leaders succeed when they take the time to build relationships both inside and outside the organisation and to talk informally about important projects and priorities. Jack Griffin was forced out

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as CEO of Time Inc. after less than six months on the job, largely because he failed to develop positive relationships. Griffin tried to use the hard power of his position to make necessary changes at Time without building the soft power connections needed to implement the changes. Board members began to realise that Griffin had become so unpopular that the company was likely to lose valuable employees if he stayed on as CEO.67 Many political commentators have observed that previous Australian Prime Minister Kevin Rudd exhibited similar leadership behaviours to Jack Griffin at Time Inc. – and Mr Rudd suffered the same fate. Mr Rudd was rejected by his parliamentary party and stood down from his leadership role because of his overuse of position power and lack of personal power and goodwill with his colleagues.

new Manager self-test

I N T E R p E R S O N A L pAT T E R N S

The majority of a new manager’s work is accomplished through interpersonal relationships. To understand your relationship pattern, consider the following verbs. These 20 verbs describe some of the ways people feel and act from time to time. Think about your behaviour in groups. How do you feel and act in groups? Check the five verbs that best describe your behaviour in groups as you see it.

___acquiesce___coordinate___lead

___advise___criticise___oblige

___agree___direct___relinquish

___analyse___disapprove___resist

___assist___evade___retreat

___concede___initiate___withdraw

___concur___judge Two underlying patterns of interpersonal behaviour

are represented in the preceding list: dominance (authority or control) and sociability (intimacy or friendliness). Most individuals tend either to like to control things (high dominance) or to let others control things (low dominance). Similarly, most persons tend either to be warm and personal (high sociability) or to be somewhat distant and impersonal (low sociability). In the following diagram, circle the five verbs in the list that you used to describe yourself. The set of

10 verbs in either horizontal row (sociability dimension) or vertical column (dominance dimension) in which three or more are circled represents your tendency in interpersonal behaviour.

high doMinance loW doMinance

High sociability advises acquiesces coordinates agrees directs assists initiates concurs leads obliges

Low sociability analyses concedes criticises evades disapproves relinquishes judges retreats resists withdraws

Your behaviour pattern suggested in the diagram is a clue to your interpersonal style as a new manager. Which of the four quadrants provides the best description of you? Is that the type of leader you aspire to become? Generally speaking the high sociability and high dominance pattern reflects the type of leader to which many new managers aspire.

Source: Johnson, D. W. and Johnson, F. P. (2003), Joining Together: Group Theory and Group Skills, 8th edn, New York: Allyn and Bacon, 189–90.

InterpersonaL InfLuenCe taCtICs Leaders often use a combination of influence strategies, and people who are perceived as having greater power and influence typically are those who use a wider variety of tactics. One survey of a few hundred leaders identified more than 4000 different techniques that these people used to influence others.68

However, these tactics fall into basic categories that rely on understanding the principles that cause people to change their behaviour and attitudes. Exhibit 15.12 lists six principles for asserting influence.

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Notice that most of these involve the use of personal power rather than relying solely on position power or the use of rewards and punishments.69

1 Use rational persuasion. The most frequently used influence strategy is to use facts, data and logical argument to persuade others that a proposed idea, request or decision is appropriate. Using rational persuasion can often be highly effective because most people have faith in facts and analysis.70 Rational persuasion is most successful when a leader has technical knowledge and expertise related to the issue at hand (expert power), although referent power is also used. That is, in addition to facts and figures, people have to believe in the leader’s credibility.

1. Use rational persuasion.

2. Help people like you.

3. Rely on the rule of reciprocity.

Greater influence

4. Develop allies.

5. Be assertive – ask for what you want.

6. Make use of higher authority.

Leader

2 Help people to like you. People would rather say yes to someone they like than to someone they don’t. Effective leaders strive to create goodwill and favourable impressions. When a leader shows consideration and respect, treats people fairly and demonstrates trust in others, people are more likely to want to help and support the leader by doing what he or she asks. In addition, most people like a leader who makes them feel good about themselves, so leaders should never underestimate the power of praise.

3 Rely on the rule of reciprocity. Leaders can influence others through the exchange of benefits and favours. Leaders share what they have – whether it is time, resources, services or emotional support. The feeling among people is nearly universal that others should be paid back for what they do, in one form or another. This unwritten ‘rule of reciprocity’ means that leaders who do favours for others can expect that others will do favours for them in return.71

4 Develop allies. Effective leaders develop networks of allies – people who can help the leader accomplish his or her goals. Leaders talk with followers and others outside of formal meetings to understand their

exhibit 15.12 Six interpersonal influence tactics for leaders

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needs and concerns as well as to explain problems and describe the leader’s point of view. They strive to reach a meeting of minds with others about the best approach to a problem or decision.72

5 Ask for what you want. Another way to influence others is to make a direct and personal request. Leaders have to be explicit about what they want, or they aren’t likely to get it. An explicit proposal is sometimes accepted simply because others have no better alternative. Also, a clear proposal or alternative will often receive support if other options are less well defined.

6 Make use of higher authority. Sometimes to get things done leaders have to use their formal authority, as well as gain the support of people at higher levels to back them up. However, research has found that the key to successful use of formal authority is to be knowledgeable, credible and trustworthy – that is, to demonstrate expert and referent power as well as legitimate power. Managers who become known for their expertise, who are honest and straightforward with others, and who inspire trust can exert greater influence than those who simply issue orders.73

Research indicates that people rate leaders as ‘more effective’ when they are perceived to use a variety of influence tactics. But not all managers use influence in the same way. Studies have found that leaders in human resources, for example, tend to use softer, more subtle approaches such as building goodwill, using favours and developing allies, whereas those in finance are inclined to use harder, more direct tactics such as formal authority and assertiveness.74

➜ Power is the potential ability to influence the behaviour of others.

➜ All leaders use power to influence people and accomplish organisational goals.

➜ Influence is the effect a person’s actions have on the attitudes, values, beliefs or behaviour of others.

➜ Legitimate power is power that stems from a manager’s formal position in an organisation and the authority granted by that position.

➜ Reward power results from the authority to bestow rewards.

➜ Coercive power stems from the authority to punish or recommend punishment.

➜ Expert power is power that results from a leader’s special knowledge or skill in the tasks performed by subordinates.

➜ Referent power results from characteristics that command subordinates’ identification with,

respect and admiration for, and desire to emulate the leader.

➜ Both leaders and followers can tap into other sources of power, including personal effort, networks of relationships and access to or control over information.

➜ Leaders use a wide range of interpersonal influence tactics, and people who use a wider variety of tactics are typically perceived as having greater power.

reMeMber this

ConTemporary leaders Local leaders in Australia, New Zealand and Asia are not dissimilar from those in Europe and North America. In the US, great leaders include Jack Welch, who has been referred to at various points in this textbook. Welch powered the global giant GE from being a solid and sound manufacturing company into a dynamic and extremely productive and profitable company. The company has diversified, taking its capabilities and disciplines from manufacturing businesses into GE Financial Services. This group is now GE Money, one of the world’s most successful credit card and financial services operators. Welch was a massively successful but older-style leader, and is now retired from the stable company (GE) that he ran.

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Contrast that with a new group of much younger leaders, such as Google executive chairman and former CEO Eric Schmidt, who knows that speed and change are the essence of the company’s success. Google has been massively successful since its IPO (Initial Public Offering, meaning its launch on the share market) in mid 2004, with its stock price essentially doubling, and revenue growth that is dazzling. Against longer-established giant competitors such as Microsoft, Yahoo! and Amazon, Google is winning the Internet search and related advertising game. When they founded Google, Larry Page and Sergey Brin were both in their early thirties, and realised they needed experience to bring the company to a large and successful scale, so they brought in the then 48-year-old Schmidt. From its beginning in a Stanford University dormitory room, only six years before its huge float, Google has achieved great fame, and now has a substantial revenue stream from advertising. Google employs over 46 000 people worldwide, including some 4900 ‘techies’.75 The leadership task is substantial. Google provides its employees with three free meals each day and free laundry and banking services, which is unheard of in most companies. Page, Brin and Schmidt have brought together just the right combination of technological ‘edge’ with business acumen and a culture of high quality and entrepreneurial innovation.76 In December 2004, Google was worth US$45 billion in total; by December 2013, this figure had grown to a market capitalisation of US$345 billion:77 not bad from an idea started by a couple of university students! Google’s empire includes YouTube, DoubleClick, On2 Technologies, Motorola Mobility, Google Voice and AdMob, among others. Facebook, also started by a university student (Mark Zuckerberg), was recently valued at $120 billion.78

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ro The ‘new breed’ of leader in Australian industry includes Denise Goldsworthy (Rio Tinto at left) and Tanya Monro (IPAS).

New CEOs in the past several years have included:

●● Sally MacDonald, who successfully assumed the top job as CEO of Oroton Group for seven years, beginning at age 37, and is now the Managing Director and founder of Antipodean Group. With a Commerce degree from the University of Melbourne and a Harvard MBA, Sally moved from management consulting to a career in consumer goods leadership.

●● Stuart Crosby, of Computershare, who worked extensively in this and other businesses in New Zealand, Hong Kong and Australia.

●● Denise Goldsworthy, Rio Tinto, Managing Director of two of Rio Tinto’s subsidiary companies, Dampier Salt (DSL) and HIsmelt, is responsible for more than 500 employees and a large global customer base. Since Denise’s appointment to DSL, the world’s leading exporter of solar salt, record earnings of US$129 million were posted in 2009. In her role as MD of HIsmelt, she is responsible for

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the marketing of HIsmelt iron-making technology. Denise attributes her success to her style of leading and motivating her management team (see http://www.telstrabusinesswomensawards.com/ award-winners/past-winners/2010/national-238.aspx).

●● Inaki Berroeta, CEO of Vodafone Australia, who was formerly chief executive of Vodafone Romania and before that head of Vodafone Malta.79

●● Nicole Hollows, who moved to the position of CEO of Macarthur Coal at age 36, entering as CEO into a previously ‘man’s world’ of mining at a very young age. She has since moved on to become Managing Director of AMCI Australia and SE Asia.

●● Marius Kloppers of BHP Billiton, who, at age 45, began running the world’s biggest mining company, stepping down from the role in 2013 to be replaced by Scottish businessman Andrew Mackenzie.

●● Mike Smith, appointed at age 50 to the top job at ANZ Bank, who as CEO needed to fill the big shoes of John McFarlane who retired from a very successful period of culture revitalisation of that bank.80

●● Paul Zahra of David Jones, appointed with the task of rebuilding the company’s image after it was tainted by the resignation of the previous CEO in distasteful circumstances (accusations of sexual harassment of an employee).

●● Howard Goldberg, CEO of Country Road, aiming to drive growth into this lifestyle brand and reinvigorate its market offerings (http://www.countryroad.com.au).

●● Tanya Monro, Director of the Institute for Photonics & Advanced Sensing (IPAS), is a recognised leader of the international scientific community who has been responsible for breakthroughs in optical fibre research. In 2005 she founded the Centre of Expertise in

Photonics as a collaborative venture between the University of Adelaide and DSTO, and the success of this centre led to the creation of the Institute for Photonics & Advanced Sensing (IPAS), which brings together 130 physicists, chemists and biologists to tackle the big questions in sensing technologies (see http://www.telstrabusinesswomensawards.com/award-winners/ past-winners/2010/national-238.aspx).

These CEOs have one major new factor in common that may not have been present in previous generations, and it is essentially a prerequisite for such a high level leadership job these days: substantial international experience and a global orientation.81 In all markets and supply chains, any CEO who is not constantly taking a global view of challenges and opportunities is doomed to fail, and executive search firms and boards see international business management experience as a necessary requirement for a CEO these days.

Rosabeth Moss Kanter’s book on leadership points to the confluence of factors that make for success in both sporting teams and business teams, citing the factors of accountability, collaboration and initiative, as well as acting on mistakes and being able to deal effectively with adversity – as have all the above-mentioned chief executives.82 To this we would add the characteristics that make for a great leader of being able to:

●● set vision and strategy

●● communicate/inspire

Maile Carnegie was appointed Managing

Director of Google Australia and New Zealand

in July 2013. Carnegie had previously been with

Procter & Gamble for 21 years. She joined P&G

straight out of university and spent three years as its Australian managing

director and many years as marketing and commercial

director in the US head office. Carnegie has

described how she learned from mistakes made early

in her leadership career and has realised that

exceptional leaders manage both short- and long-term

results. As a leader, she has focused on change

innovation in Australia.

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●● have complete integrity

●● be tough and performance oriented

●● be and act humble: the leader as servant

●● care personally and be empathetic (for example, for staff)

●● be knowledge focused

●● use energy and passion

●● be smart (IQ), meaning be able to deal with complexity

●● be agile/flexible

●● always be customer oriented/focused.

Leadership is a set of behaviours that can be demonstrated at any level in an organisation in any industry or profession, and not just by the chief executive, but hopefully as encouraged by him or her in each and every employee.

Janine Allis is founder and Managing Director of Boost Juice, which she built from a start-up idea in her home. A true entrepreneur, she has achieved remarkable growth in this health- oriented business, at a profit, on an international basis, while also managing to raise a family of four children. Her recent new business venture is in healthy Mexican food, called Salsa’s Fresh Mex Grill.

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new Manager self-test

W h AT I S T h E I m pA c T O f L E A D E R S h I p ?

What are your beliefs and understandings about how top leaders influence organisational performance. To learn about your beliefs, please answer whether each item below is Mostly true or Mostly false based on your personal beliefs.

Mostly true Mostly false

1 The quality of leadership is the most important influence on the performance of an organisation. 2 People in top-level leadership positions have the power to make or break an organisation. 3 Most activities in an organisation have little to do with the decisions or activities of the top leaders. 4 Even in a bad economy, a good leader can prevent a company from doing poorly. 5 A company cannot do well unless it has high quality leadership at the top. 6 High-quality versus low-quality leadership has a bigger impact on a firm’s performance than does

the business environment. 7 Poor organisational performance is often due to factors beyond the control of even the best leaders. 8 Eventually, bad leadership at the top will trigger poor organisational performance. 9 Leaders typically should not be held responsible for a firm’s poor performance.

interpretation: This scale is about the ‘romance’ of leadership, which is the romantic view that leaders are very responsible for organisational performance, while ignoring other factors such as economic conditions. Company performance is difficult to control and is an outcome of complex forces. Attributing too much responsibility to leaders is a simplification shaped by our own mental construction more than by the reality and complexity of organisational performance. Top leaders are not heroes, but they are important as one of several key factors that can shape organisational performance.

scoring: Give yourself 1 point for each item 1, 2, 4, 5, 6 and 8 marked as Mostly true and each item 3, 7 and 9 marked as Mostly false. A score of 7 or higher suggests a belief in the romance of leadership – that leaders have more control over performance outcomes than is actually the case. If you scored 3 or less, you may underestimate the impact of top leaders, a somewhat sceptical view. A score of 4 to 6 suggests a balanced view of leadership.

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leadership of susTainable developmenT If there is one thing that will stop a new initiative or approach stone cold, it is if senior leaders in an organisation do not ‘talk the talk’ and ‘walk the walk’. The energy, enthusiasm, role modelling and some resources to get things going are necessary for essentially any new initiative, including sustainable development. All staff at some point look to their ‘bosses’ to get guidance as to what behaviours and procedures are and are not to be implemented. People will be encouraged to save water, paper and energy if they see their organisation’s leaders doing so, and will be immediately ‘turned off’ if they see leaders not role modelling these activities.

In respect of external stakeholder relationships and the empowerment of those stakeholders, only senior leaders such as board members, chief executives and general managers can usually initiate and authorise such activities. Moreover, the cultural aspects of sustainable development, meaning the sustainability orientation (see Chapter 5), becomes a state of mind that is set in place by the organisation’s leaders, and will not take hold or remain if it is not so led.

The strategic aspect of sustainable development, namely the intent to pursue sustainability strategy and the work to broaden the vision and measures of success for the organisation, needs to be authorised from the top of the organisation. Leaders then can use these tools of management, meaning goals, measures, objectives and plans, to do the leadership work of influencing their staff and external stakeholders to move up the ‘sustainability maturity’ curve.

Coca-Cola has embraced sustainable development through a CEO-led set of initiatives. The company has set in place stringent improvement initiatives in almost all of its functions and activities. This includes in improving the environmental impact of the materials it uses, recycling packaging, and in its community relations and support activities. Similarly, Toyota has taken the global lead in improving fuel efficiency of motoring by offering its hybrid Synergy Drive engines, which are approximately twice as fuel efficient as conventional engines, through much of its vehicle range. These companies invest large amounts of resources in such initiatives, and are led by people who believe such strategies are good business. These leaders are taking a long-term view on their business and the environment in which they operate. They recognise that stakeholder engagement – achieved by advances in ‘doing the right thing’ – is ultimately of critical importance. Such leadership comes from the application of moral and servant leadership concepts.

in class: Sit with a student partner and explain your scores to each other. What are your beliefs about leadership? What is the basis for your beliefs? The instructor can ask for a show of hands concerning the number of high, medium and low scores on the questionnaire. Discuss the following questions: Do you believe that presidents, top executives and heads of non-profit organisations act alone and hence are largely responsible for

performance? What is the evidence for this belief? What other forces will affect an organisation? What is a realistic view of top leader influence in a large organisation?

Source: Adapted from Birgit Schyns, James R. Meindl and Marcel A. Croon. (2007). The Romance of Leadership Scale: Cross-Cultural Testing and Refinement.

Leadership, 3:1, 29–46.

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Jess Moore, who was introduced earlier in this chapter, showed very strong leadership in his efforts to turn around the ICI Botany site from one where employees were totally misaligned with the business needs and goals to one in which common goals and strategies were implemented. He started with a high level of communication about the imperative to improve the plant’s performance, and of the benefits to all of doing this. At one point, he invited all the plant operators to move from their award-based wage system to become staff members on salary. This structural change removed the incentive for plant operators to create overtime, as salaries were fixed and had reasonable overtime allowances built in. Productivity and service levels to customers started to improve. There was a great deal of resistance to these major changes, and Jess had to weather a six-week-long strike at the plant, including acts of violence and even death threats. During this difficult time of change, support from his head office waned at times, and Jess and his management team needed to have and display large amounts of personal courage to stay the course of their convictions and revitalise the whole culture and way of working at Botany. The outcome was a tremendous achievement in turning a troubled and unproductive workplace into a competitive and positive

culture. The very same workers who used to spend their time looking to do the minimum possible during their work shift so as to maximise the opportunity for overtime (which sometimes meant letting plants and equipment get into mechanical trouble) became proud champions of the performance improvements. Some plants, such as the polythene (plastic sheet) plant, achieved productivity improvements of more than 500 per cent once the system and attitudes of the workforce were turned around. Jess Moore and his small team of managers were breakthrough leaders in the way that they combated fierce tradition and resistance, achieving benefits for all stakeholders, including workers, customers, managers and the company’s shareholders. The biggest challenge ultimately proved to be environmental: the ongoing cost of cleaning up the environmental disaster that came from decades of previously poor leadership and management, when toxic chemicals were poured into the ground and into drains, is proving to be monumental. ICI who operated this site, now called Orica, is spending hundreds of millions of dollars, cleaning up the sins of its past. The company now has a highly enlightened leadership and ‘top shelf’ approach to all aspects of sustainability, but is still somewhat burdened by the legacy of its (distant) past poor leadership record.

response to the

ManageMent challenge

1 Suggest some personal traits that you believe would be useful to

a business leader today. Are these traits more valuable in some

situations than in others? How do you think traits differ from

strengths?

2 In studies where people were asked what they wanted from leaders

versus followers, people have indicated they wanted a higher maturity

level for followers. What might account for this?

3 If a male manager changes his behaviours to incorporate elements of

interactive leadership more common to female managers, can he still

be an ‘authentic’ leader? Discuss.

4 Suggest the sources of power that would be available to a leader of

a university’s student organisation. What sources of power may not

be available? To be effective, should student leaders keep power to

themselves or delegate power to other students?

5 What skills and abilities does a manager need to lead effectively in

a virtual environment? Do you believe a leader with a consideration

style or an initiating-structure style would be more successful as a

virtual leader? Explain your answer.

6 What is transformational leadership?

Give examples of organisational

situations that would call for transformational,

transactional or charismatic leadership.

7 How does Level 5 leadership differ from the concept of

servant leadership? Do you believe anyone has the potential

to become a Level 5 leader? Discuss.

8 Why do you think so little attention is given to followership compared

to leadership in organisations? Discuss how the role of an effective

follower is similar to that of a leader.

9 Do you think leadership is more important or less important in today’s

flatter, team-based organisations?

10 Are some leadership styles better suited to such organisations as

opposed to traditional hierarchical organisations? Explain.

11 Consider the leadership position of a senior partner in a law firm.

What task, subordinate, and organisational factors might serve as

substitutes for leadership in this situation?

DisCussion questions

639

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Paula Smith has just been offered the

opportunity of a lifetime. The chairman of

the board of Resitronic Company has called to

ask her to take the job as director of the troubled

audio equipment manufacturing subsidiary. The first

question Smith asked was: ‘Will the board give me the

autonomy to turn this company around?’ The answer was yes.

Resitronic’s problems were so severe that the board was desperate for

change and ready to give Smith whatever it took to save the company.

Smith knows that cost cutting is the first place she needs

to focus. Labour expenses are too high, and product quality and

production times are below industry standards. She sees that labour

and management at Resitronic are two armed camps, but she needs

cooperation at all levels to achieve a turnaround. Smith is energised.

She knows she finally has the autonomy to try out her theories about

an empowered workforce. Smith knows she must ask managers and

workers to take a serious pay cut, with the promise of incentives to

share in any improvements they might make. She also knows that

everyone will be looking at her own salary as an indication of whether

she walks her talk.

Smith is torn. She realises she faces a year or two of complete hell,

with long hours, little time for her family or outside interests, bitter

resistance in employees and no guarantees of success. Even if she comes

in at the current director’s salary, she will be taking a cut in pay. But if

she takes a bigger cut coming in, with the promise of bonuses and share

options tied to her own performance, she sends a strong message to the

entire subsidiary that they rise or fall together. She wonders what might

happen if she fails. Many influences on the audio equipment subsidiary

are beyond her control. Resitronic itself is in trouble. From her current

vantage point, Smith believes she can turn things around, but what will

she discover when she gets inside? What if the board undercuts her?

Doesn’t she owe it to herself and her family to be compensated at the

highest possible level for the stress and risk they will be enduring? Can

she afford to risk her own security to send a message of commitment to

the plan she is asking others to follow?

WhAt do you do?

1 Take the same salary as the current director for one year. Circulate the

information that although you are taking a cut to come to Resitronic,

you are confident that you can make a difference. Build in pay

incentive bonuses for the following years if the subsidiary succeeds.

2 Take a bigger cut in pay with generous incentive bonuses. Ask the

board and the entire workforce to do the same. Open the books and let

the whole company know exactly where they stand.

3 Ask for the same salary you are making now. You know you are

going to be worth it, and you don’t want to ask your family to suffer

monetarily as well as in their quality of life during this transition.

d o e s wa g e r e f o r m s Ta r T aT T h e T o p ? ethiCal

Challenge

step 1. Think about one situation in which

a leader was effective at motivating people, and

another situation in which a leader was ineffective,

perhaps demotivating people. When you have these

situations firmly in mind, answer the following questions:

1 What source or type of power was used by the effective

leader? The ineffective leader?

2 Did the effective leader emphasise a task-oriented or relationship-

oriented style? Explain your rating. What about the ineffective leader?

3 Did the effective leader come across as a humble person serving

others or something larger than him- or herself, or did the leader

seem ego-centred and self-serving? What about the ineffective

leader?

step 2. Divide into groups of three to five students. Compare your

answers and look for patterns that distinguish effective from ineffective

leaders across your group members’ experiences. What patterns do

you find?

step 3. Each group member should describe the leadership situation,

with respect to its ‘favourability’ or ‘readiness of followers’. What

relationship do you observe between the leadership situations and the

style that the leader used?

step 4. Prepare to present your findings to the class and to participate

in a discussion led by your instructor.

w h i C h l e a d e r s h i p s T y l e s a r e m o r e e f f e C T i v e ? group

Challenge

When DGL International, a manufacturer

of refinery equipment, brought in John

Terrill to manage its technical services division,

company executives informed him of the urgent

situation. Technical services, with 20 engineers, was the

highest-paid, best-educated and least productive division

in the company. The instruction to Terrill: turn it around. Terrill called

a meeting of the engineers. He showed great concern for their personal

welfare and asked point blank: ‘What’s the problem? Why can’t we

produce? Why does this division have such turnover?’

Without hesitation, employees launched a hail of complaints. ‘I was

hired as an engineer, not a pencil pusher’, and ‘We spend over half our

d g l i n T e r n aT i o n a l Case for Cr itiCal analysis

Case for Cr itiCal analysis

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1 5 : L EAD ING IN ORGAN ISAT IONS 641

time writing asinine reports in triplicate for top management, and no one

reads the reports’.

After a two-hour discussion, Terrill concluded he had to get top

management off the engineers’ backs. He promised the engineers, ‘My

job is to stay out of your way so you can do your work, and I’ll try to keep

top management off your backs, too.’ He called for the day’s reports

and issued an order effective immediately that the originals be turned in

daily to his office rather than mailed to headquarters. For three weeks,

technical reports piled up on his desk. By month’s end, the stack was

nearly a metre high. During that time no one called for the reports. When

other managers entered his office and saw the stack, they usually asked,

‘What’s all this?’ Terrill answered: ‘Technical reports’. No one asked to

read them.

Finally, at month’s end, a secretary from finance called and asked for

the monthly travel and expense report. Terrill responded, ‘Meet me in the

president’s office tomorrow morning.’

The next morning the engineers cheered as Terrill walked through

the department pushing a cart loaded with the enormous stack of reports.

They knew the showdown had come.

Terrill entered the CEO’s office and placed the stack of reports on his

desk. The CEO and the other senior executives looked bewildered.

‘This,’ Terrill announced, ‘is the reason for the lack of productivity

in the technical services division. These are the reports you people

require every month. The fact that they sat on my desk all month

shows that no one reads this material. I suggest that the engineers’

time could be used in a more productive manner, and that one

brief monthly report from my office will satisfy the needs of other

departments.’

Questions

1 What leadership style did John Terrill use? What do you think was his

primary source of power?

2 Based on the Hersey–Blanchard theory, described on p. 616 of this

chapter, should Terrill have been less participative? Should he have

initiated more task structure for the engineers? Explain.

3 What leadership approach would you have taken in this situation?

Questions

1 Does Camp Bow Wow CEO Heidi Ganahl possess qualities associated

with contemporary leadership?

2 In what way is Ganahl’s leadership charismatic and visionary? Give

examples.

3 Where does Ganahl’s leadership fall on the Leadership

Grid discussed in the chapter and illustrated in Exhibit 15.6?

Explain.

on the job viDeo Case

C a m p b o w w o w : l e a d e r s h i p

1 Buchanan, L. (April 2004). Pat McGovern . . . For Knowing the Power of Respect. 25 Entrepreneurs We Love. Inc Magazine, 110–47; Warner, M. (4 September 2000). Confessions of a Control Freak. Fortune, 130–40.

2 Gary Yukl. (1989). Managerial Leadership: A Review of Theory and Research. Journal of Management 15, 251–89.

3 James M. Kouzes and Barry Z. Posner. (January 1990). The Credibility Factor: What Followers Expect from Their Leaders. Management Review, 29–33.

4 Jim Collins. (January 2001). Level 5 Leadership: The Triumph of Humility and Fierce Resolve. Harvard Business Review, 67–76; Jim Collins. (October 2001). Good to Great. Fast Company, 90–104; A. J. Vogl. (September– October 2001). Onward and Upward (an interview with Jim Collins). Across the Board, 29–34; and Jerry Useem. (19 February 2001). Conquering Vertical Limits. Fortune, 84–96.

5 Jim Collins. (January 2011). Enduring Greatness. Leadership Excellence, 8. 6 Collins. Level 5 Leadership. 7 Quoted in William J. Holstein. (8 May 2005). The View’s Still Great from

the Corner Office. The New York Times. 8 Richard L. Daft and Robert H. Lengel. (1998). Fusion Leadership: Unlocking

the Subtle Forces That Change People and Organizations (San Francisco: Berrett-Koehler).

9 Leigh Buchanan. (May 2007). In Praise of Selflessness: Why the Best Leaders Are Servants. Inc., 33–5.

10 Robert K. Greenleaf. (1977). Servant Leadership: A Journey into the Nature of Legitimate Power and Greatness (Mahwah, NJ: Paulist Press).

11 (30 October 2006). Not Her Father’s Chief Executive (an interview with Marilyn Carlson Nelson). U.S. News & World Report, 64–5.

12 (16 April 2009). Maersk Alabama Crew Recalls Pirate Attack. USA Today, http://www.usatoday.com/news/nation/2009-04-16-pirates_N.htm (accessed 30 April 2009); Stacy Meichtry, Arian Campo-Flores and Leslie Scism. (17 January 2012). Cruise Company Blames Captain. The Wall Street Journal, http://online.wsj.com/article/SB1000142405297020373530457716 5290656739300.html (accessed 20 January 2012); (23 March 2012). Death Toll of Italy’s Costa Concordia Wreck Rises to 30. Philippine Star, http:// www.philstar.com/article.aspx?articleid=790169&publicationsubcategory id=200 (accessed 14 September 2012).

13 Adam Bluestein. (May 2011). Start a Company. Change the World. Inc., 71–80.

enDnotes

For a real-world application of the management theories described in this chapter, log on to CourseMate to watch the On the

Job video and answer the following questions.

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14 Bill George. (2003). Authentic Leadership: Rediscovering the Secrets to Lasting Value (San Francisco: Jossey-Bass); Bill George. (22 October 2006). Truly Authentic Leadership. Special Report: America’s Best Leaders. U.S. News & World Report, http://www.usnews.com/usnews/news/ articles/061022/30authentic.htm (accessed 5 October 2010).

15 Judy B. Rosener. (1995). America’s Competitive Secret: Utilizing Women as a Management Strategy (New York: Oxford University Press), pp. 129–35.

16 Alice H. Eagly and Linda L. Carli. (2003). The Female Leadership Advantage: An Evaluation of the Evidence. The Leadership Quarterly, 14, 807–34; Rosener, America’s Competitive Secret; Judy B. Rosener. (November–December 1990). Ways Women Lead. Harvard Business Review, 119–25; Sally Helgesen. (1990). The Female Advantage: Women’s Ways of Leadership (New York: Currency/Doubleday); Bernard M. Bass and Bruce J. Avolio. (Winter 1994). Shatter the Glass Ceiling: Women May Make Better Managers. Human Resource Management, 33:4, 549–60; and Carol Kinsey Goman. (10 August 2011). What Men Can Learn from Women about Leadership in the 21st Century. The Washington Post, http://www .washingtonpost.com/national/on-leadership/what-men-can-learn-from- womenabout-leadership/2011/08/10/gIQA4J9n6I_story.html (accessed 12 September 2012).

17 Rochelle Sharpe. (20 November 2000). As Leaders, Women Rule. BusinessWeek, 75–84.

18 Kevin S. Groves. (2005). Gender Differences in Social and Emotional Skills and Charismatic Leadership. Journal of Leadership and Organizational Studies, 11:3, 30ff.

19 Jack Zenger and Joseph Folkman. (15 March 2012). Are Women Better Leaders Than Men? HBR Blog Network. Harvard Business Review, http://blogs.hbr.org/cs/2012/03/a_study_in_leadership_women_do.html (accessed 12 September 2012); and Herminia Ibarra and Otilia Obodaru. (January 2009). Women and the Vision Thing. Harvard Business Review, 62–70.

20 Susan Carey. (14 August 2007). More Women Take Flight in Airline Operations. The Wall Street Journal, B1; and Ann Therese Palmer. (24 December 2006). Teacher Learns All About Airline; United VP Began as Reservations Clerk, Rose Through Ranks. Chicago Tribune, 3.

21 Leigh Buchanan. (April 2004). Pat McGovern . . . For Knowing the Power of Respect. Segment in 25 Entrepreneurs We Love. Inc., 110–47.

22 This analogy is from Gordon P. Rabey. (2010). Leadership Is Response: A Paper for Discussion. Industrial and Commercial Training, 42:2, 87–92.

23 This discussion is based on Philip A. Dover and Udo Dierk. (2010). The Ambidextrous Organization: Integrating Managers, Entrepreneurs, and Leaders. Journal of Business Strategy, 31:5, 49–58; Gary Yukl and Richard Lepsinger. (2005). Why Integrating the Leading and Managing Roles Is Essential for Organizational Effectiveness. Organizational Dynamics, 34:4, 361–75; and Henry Mintzberg. (2009). Managing (San Francisco: Berrett-Kohler Publishers).

24 Nancy F. Koehn. (1 April 2012). The Driver in Ford’s Amazing Race. The New York Times, BU.1.

25 G. A. Yukl. (1981). Leadership in Organizations (Englewood Cliffs, NJ: Prentice Hall); and S. C. Kohs and K. W. Irle. (1920). Prophesying Army Promotion. Journal of Applied Psychology, 4, 73–87.

26 R. Albanese and D. D. Van Fleet. (1983). Organizational Behavior: A Managerial Viewpoint (Hinsdale, IL: The Dryden Press); and S. A. Kirkpatrick and E. A. Locke. (1991). Leadership: Do Traits Matter? Academy of Management Executive, 5:2, 48–60.

27 A summary of various studies and surveys is reported in Del Jones. (15 December 2005) Optimism Puts Rose-Colored Tint in Glasses of Top Execs. USA Today.

28 Annie Murphy Paul. (November–December 2011). The Uses and Abuses of Optimism (and Pessimism). Psychology Today, 56–63.

29 Tom Rath and Barry Conchie. (2009). Strengths Based Leadership (Gallup Press); Marcus Buckingham and Donald O. Clifton. (2001). Now, Discover Your Strengths (New York: The Free Press), p. 12.

30 Buckingham and Clifton, Now, Discover Your Strengths. 31 Gary Yukl, Angela Gordon and Tom Taber. (2002). A Hierarchical Taxonomy

of Leadership Behavior: Integrating a Half Century of Behavior Research. Journal of Leadership and Organizational Studies, 9:1, 13–32.

32 C. A. Schriesheim and B. J. Bird. (1979). Contributions of the Ohio State Studies to the Field of Leadership. Journal of Management, 5, 135–45; C. L. Shartle. (1979). Early Years of the Ohio State University Leadership Studies. Journal of Management, 5, 126–34; and R. Likert. (1979). From Production- and Employee-Centeredness to Systems 1–4. Journal of Management, 5, 147–56.

33 P. C. Nystrom. (1978). Managers and the High-High Leader Myth. Academy of Management Journal, 21, 325–31; and L. L. Larson, J. G. Hunt and Richard N. Osborn. (1976). The Great High-High Leader Behavior Myth: A Lesson from Occam’s Razor. Academy of Management Journal, 19, 628–41.

34 R. Likert. From Production- and Employee-Centeredness to Systems 1–4. 35 Robert R. Blake and Jane S. Mouton. (1985). The Managerial Grid III

(Houston, TX: Gulf). 36 John Markoff. (5 June 2007). Competing as Software Goes to Web. The

New York Times, C1, C5. 37 This discussion is based on Paul Hersey and Ken Blanchard. (January 1996).

Revisiting the Life-Cycle Theory of Leadership. In Great Ideas Revisited. Training & Development, 42–7; Kenneth H. Blanchard and Paul Hersey. (January 1996). Life-Cycle Theory of Leadership. In Great Ideas Revisited. Training & Development, 42–7; Paul Hersey. (February 2009). Situational Leaders: Use the Model in Your Work. Leadership Excellence, 12; and Paul Hersey and Kenneth H. Blanchard, (1982). Management of Organizational Behavior: Utilizing Human Resources, 4th edn (Englewood Cliffs, NJ: Prentice Hall). The concept of readiness comes from Hersey. Situational Leaders.

38 Jennifer Robison. (10 January 2008). Many Paths to Engagement: How Very Different Management Styles Get the Same Great Results at Mars Incorporated. Gallup Management Journal, http://gmj.gallup.com/ content/103513/Many-Paths-Engagement.aspx (accessed 31 July 2010).

39 Andrew Ross Sorkin. Warren Buffett, Delegator in Chief. The New York Times, http://www.nytimes.com/2011/04/24/weekinreview/24buffett.html (accessed 14 September 2012).

40 Fred E. Fiedler. (1954). Assumed Similarity Measures as Predictors of Team Effectiveness. Journal of Abnormal and Social Psychology, 49, 381–88; F. E. Fiedler. (1958). Leader Attitudes and Group Effectiveness (Urbana, IL: University of Illinois Press); and F. E. Fiedler. (1967). A Theory of Leadership Effectiveness (New York: McGraw-Hill).

41 Fred E. Fiedler and M. M. Chemers. (1974). Leadership and Effective Management (Glenview, IL: Scott, Foresman).

42 Reported in George Anders. (19 November 2007). Theory & Practice: Tough CEOs Often Most Successful, a Study Finds. The Wall Street Journal.

43 Fred E. Fiedler. (1965). Engineer the Job to Fit the Manager. Harvard Business Review, 43, 115–22; and F. E. Fiedler, M. M. Chemers and L. Mahar. (1976). Improving Leadership Effectiveness: The Leader Match Concept (New York: Wiley).

44 R. Singh. (1983). Leadership Style and Reward Allocation: Does Least Preferred Coworker Scale Measure Tasks and Relation Orientation? Organizational Behavior and Human Performance, 27, 178–97; and D. Hosking. (1981). A Critical Evaluation of Fiedler’s Contingency Hypotheses. Progress in Applied Psychology, 1, 103–54.

45 S. Kerr and J. M. Jermier. (1978). Substitutes for Leadership: Their Meaning and Measurement. Organizational Behavior and Human Performance, 22, 375–403; and Jon P. Howell and Peter W. Dorfman. (1986). Leadership

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