Managing Business Relationships Leadership Dr. Vesselin Blagoev

Managerial Roles & Activities Informational- monitoring (scanning for) information, disseminating and acting as spokesperson. Decisional…. allocating resources (ie budgets and schedules), handling disturbances (pressures and crises) and negotiating. Interpersonal…leader, liaison and figurehead In the last category we have the relationship dimension.

Management and Leadership

Leadership “ A vital and, some argue, increasingly dominant, aspect of organisation is the role of management and leadership. Research and academic and practitioner interest in management and leadership has (sic) blossomed during the latter part of the twentieth century. As interest in and concern about organisational change has grown, the role of leadership has been emphasised”. Brooks 2003 p.146.

T.J.Watson 2002 p.3 ( reproducing a conversation between Watson and a ‘real life’ manager): “So the problem is..”? “It’s the people management thing. It’s handling the people who work for me. They are a constant headache. I’ve tried to read the books and I’ve been on people management courses. I didn’t miss one of the OB classes on my MBA course. But I still despair at the difficulty I have with managing people in my function”……. “Why is this do you think”? “Perhaps it’s because they are marketing people. We often say that managing marketing people is like herding cats. Can you imagine trying to herd cats? It’s a powerful image isn’t it”?

Does leadership matter? Impact of ex- New York mayor Giuliani after the events of September 11th 2001. “In the weeks that followed, Giuliani provided the leadership that the public so craved. Day after day, his mastery of the details of rescue and recovery plus his calm explanations of awful news helped to reassure a traumatised city that the crisis was under control. He found just the right balance between being a hardnosed administrator and a caring and emotional leader”. MBR (2004) p.72.

Leadership The ability to influence a group toward the achievement of goals

“Leaders…aim to influence and guide others into pursuing particular objectives or visions of the future and to stimulate them into wanting to follow” Brooks 2003 p.150.

Management and Leadership Management is about the efficiency Leadership is about inspiration

Theories about Leadership Trait theories Behavioral theories Contingency theories

Leadership Trait theories

Leadership Trait theories Theories that consider personal qualities and characteristics that differentiate leaders from non-leaders The leaders are born Often described as charismatic, enthusiastic and courageous

Leadership Trait theories Research in the 60s - over 80 traits 5 are considered The Big Five

Trait theories The Big Five Extroverted – enjoy being with people, full of energy, positive emotions, able to assert themselves Agreeable – cooperation and social harmony, value the others Conscientiousness – disciplined, keep commitments they make

Trait theories The Big Five Emotional Intelligence (or inversely Emotional Stability) – tendency to manage/experience negative feelings: anxiety, anger, depression, emotionally reactive Openness to Experience – intellectually curious, creative and flexible

Leadership Trait theories Six traits on which leaders tend to differ from non-leaders: Ambition and energy Desire to lead Honesty and integrity Self-confidence Emotional Intelligence Job-relevant knowledge

Trait approach…. personal qualities or characteristics … Trait approach….personal qualities or characteristics ….self-evidently a factor to some extent but : “the search for what leaders had in common only managed to establish the range of variation possible in leaders, from the short balding French Emperor to the handsome gay Macedonian one”. P. Thompson & D. McHugh 2002 p.267.

Leadership Behavioral theories

Leadership Behavioral theories Specific behaviors differentiate leaders from non-leaders. If there are such behaviors we can teach leaders

Leadership Behavioral theories Ohio State Studies University of Michigan Studies The Managerial Grid Scandinavian Studies

Leadership Behavioral theories Ohio State Studies (late 40s) Initiating structure – define and structure his/her role, behavior that attempts to organize the work, goals, work relationships to achieve these goals Consideration – the extent to which the person is willing to base the relationships on mutual trust, respect for employees’ ideas, regard for their feelings

Leadership Behavioral theories University of Michigan Studies Employee-oriented leader – Emphasizing interpersonal relations; taking a personal interest in the needs of employees and accepting individual differences among members Production-oriented – Emphasizing technical or task aspects of the job

Leadership Behavioral theories Blake & Mouton (1964) Managerial Grid – A 9x9 matrix outlining 81 different leadership styles. Concern for people (1.1-1.9; laissez-faire/easy going) and Concern for production (9.1-9.9; 9.1 is authoritarian type)

Leadership Behavioral theories Scandinavian Studies (40-60s) Development-oriented leader – One who values experimentation, seeks new ideas, and generates and implements change In the changing world effective leaders would use/show development-oriented behavior

Leadership Contingency theories

Leadership Contingency theories Fiedler Contingency Model: Favorability of leadership situation Hersey & Blanchard’s Situational Theory (Maturity of followers) Vroom & Yetton: Leader-Participation (Quality and acceptance of leader’s decisions) House and Dressler: Path-goal theory Leader-Member Exchange Theory

Leadership Contingency theories Fiedler contingency model : Effective groups depend on a proper match between a leader’s style of interacting with subordinates and the degree to which the situation gives control and influence to the leader. Identifying leadership style : LPC questionnaire -> Least Preferred Coworker, 16 contrasting adjectives: pleasant-unpleasant, efficient-inefficient. If you describe your LPC with favorable terms - you are “relationship-oriented”. Otherwise – “task-oriented”

Leadership Contingency theories LPC – Least preferred co-worker questionnaire/scale : Rating given by leaders about the person with whom they could work least well Up to 20 questions: pleasant/unpleasant, friendly/unfriendly; helpful/frustrating, distant/close, co-operative/non-…, open/guarded, boring/interesting The LPC score is the sum of all marks  Pleasant Unpleasant 8 7 6 5 4 3 2 1

Leadership Contingency theories Interpretation: the leader with a high LPC score derives most satisfaction from interpersonal relationships and if needed he/she is motivated to act in a supportive, considerate manner The leader with low LPC score derives most satisfaction from a performance of a task and achieving objectives

Leadership Contingency theories Favorability of the leadership situation (Fiedler) – 3 major variables which determine the favorability of the situation and which affect the leader’s role and influence 

Leadership Contingency theories Defining the situation : Leader-member relations: The degree of confidence, trust and respect members have in their leader and their willingness to follow him Task structure: degree to which the task is clearly defined, assignments are procedurised Position power: degree of influence for hiring, firing, promotions, salary increase

Leadership Contingency theories Fiedler constructs 8 combinations of group-task situations from these 3 variables: When the situation is : Very favourable (good L-member relations, structured task, strong position power) or Very unfavourable (poor L-member relations, unstructured task, weak position power)  Then a task-oriented leader (low LPC score) with a directive, controlling style will be more effective

Leadership Contingency theories When the situation is : moderately favourable and the variables are mixed Then a leader with an interpersonal relationship orientation (high LPC score) with a participative approach will be more effective

Leadership Contingency theories Cognitive Resource Fiedler & Garcia: Cognitive resource theory : states that stress unfavorably affects a situation and that intelligence (low pressure) and experience (high pressure) can lessen the influence of stress on the leader

Leadership Contingency theories Situational Theory (SLT) Hersey & Blanchard Readiness–Ability and Willingness of people to perform a specific task: R1: Low follower Readiness – both unable and unwilling R2: Low to moderate follower R – unable but willing, lack ability but motivated R3: Moderate to high follower Readiness – able but unwilling, able but insecure R4: Able and willing – ability + commitment

Telling Participating Selling Delegating Leader behavior High relat S3 Share ideas & facilitate in making decisions S2 Explain your decisions and provide opportunity for clarification Selling Participating Hi task Hi rel Hi task Lo rel Relationship (supportive) behavior Lo task Lo rel High task Lo rel Telling S4 Turn over responsibi-lity for decisions and imple-mentation Delegating S1 Provide specific instructions and control Low relat Low task High task Task behavior

Leadership Contingency theories Situational Theory (SLT) Task and Relationship behaviour  4 leadership styles: S1: Telling – high amount of guidance but limited supportive behavior – best for R1 S2: Selling – high amount of guidance and supportive behavior – best for R2 S3: Participating – low amount of guidance but extensive supportive behavior – best for R3 S4: Delegating – little amount of guidance and supportive behavior – best for R4

Telling Participating Selling Delegating Leader behavior High relat S3 Share ideas & facilitate in making decisions S2 Explain your decisions and provide opportunity for clarification Selling Participating Hi task Hi rel Hi task Lo rel Relationship (supportive) behavior Lo task Lo rel High task Lo rel Telling S4 Turn over responsibi-lity for decisions and imple-mentation Delegating S1 Provide specific instructions and control Low relat Low task High task Task behavior

Leadership Contingency theories LMX Theory Leader-Member Exchange Theory: Leaders create in-groups and out-groups. Subordinates with in-group status will have higher performance ratings, less turnover, and greater job satisfaction

Leadership Contingency theories Path-Goal Theory Path-goal theory (House, Dessler): it is the leaders job to assist followers in attaining their goals and to provide the necessary direction and/or support to ensure that their goals are compatible with the overall objectives of the group or organization

Leadership Contingency theories Path-Goal Theory House  4 types of leadership behaviour: Directive Supportive Participative – consulting with subordinates, evaluation of their opinion before decisions Achievement-oriented – setting challenging goals for the subordinates, asking for improvements in their performance, etc The leader can practice different behaviors depending on the task and situation

Leadership Contingency theories Path-Goal Theory Leader-ship beha-viour Directive Supportive Participa-tive Achieve-ment-oriented Personal characteristics of subordinates (how they react to Mgr’s behavior) Goal clarity: improved job performance and satisfaction Subordinates’ perceptions and motivation Nature of the task (routine and structured or non-r and unstructured)

Leadership Contingency theories Leader-Participation Model Vroom & Yetton Leader-participation Model: 2 aspects of the leaders decision: Decision quality, or rationality, is the effect that the decision has on group performance Decision acceptance refers to the motivation and commitment of group members in implementing the decision The 3rd consideration is the amount of time required to make the decision

Leadership Contingency theories Leader-Participation Model Vroom & Yetton: 5 main mgmt decision styles: Autocratic A.1: Leader solves/makes decisions alone A.2: Leader gets information from subordinates but makes the decisions alone Consultative C.1: problem is shared individually with relevant subordinates. Then L makes the decision C.2: problem is shared with subordinates as a group, then L makes the decision Group – the problem is shared with sub as a group. L acts as Chair, not as advocate. All make the decision

Leadership Contingency theories Leader-Participation Model Vroom & Jago contingency model: 12 contingency variables leading to 5 styles: Quality requirements Commitment requirements Leader information Problem structure and time constraints Commitment probability Goal congruence and geographical dispersion Subordinate conflict and information Motivation time and development

Leadership Contingency theories Task and Relationship behaviour: Task behavior – the extent to which the leader provides directions for the actions of the subordinates, sets goals for them, defines their roles and how to perform Relationship behavior is the extent to which L engages in two-way communication with subordinates, listens to them and provides support and encouragement

Leaders as Shapers of Meaning

Leaders as Shapers of Meaning The leaders frame the future in a way which is understandable and acceptable by the others Framing is a way to use the language to manage meaning Framing has a double meaning: framing = targeting (what to see) framing = positioning (how to see it)

Leaders as Shapers of Meaning Charismatic leadership : Followers make attributions of heroic or extraordinary leadership abilities when they observe certain behaviors The charismatic leaders have 5 important characteristics: vision and articulation, personal risk, environmental sensitivity, sensitivity to follower needs, unconventional behavior

Leaders as Shapers of Meaning Visions and articulation: The leader has a vision – expressed as an idealized goal – that proposes a future better than the status quo. It is able to clarify the importance of the vision in terms that are understandable to others

Leaders as Shapers of Meaning Personal risk: The leader is willing to take on high personal risk, incur high costs, and engage in self-sacrifice to achieve the vision Environmental sensitivity: Able to make realistic assessments of the environmental constraints and resources needed to bring about change

Leaders as Shapers of Meaning Sensitivity to follower needs: The leaders are perceptive of others’ abilities and responsive to their needs and feelings Unconventional behavior: Engages in behaviors that are perceived as novel and counter to norms

Leaders as Shapers of Meaning When Charisma is a Liability : Charisma appears to be most appropriate when the follower’s task has an ideological component or when the environment involves a high degree of stress and uncertainty. The charismatic leaders are mostly in politics, religion, wartime, or crisis in the business.

Transactional and Transformational Leadership Transactional leaders: who guide or motivate their followers in the direction of established goals by clarifying role and task requirements Transformational leaders: who inspire followers to transcend their own self-interests and who are capable of having a profound and extraordinary effect on followers

Leaders as Shapers of Meaning – Transformational Leadership Transformational leadership is built up on the top of transactional leadership. The transactional leader may want followers to adopt the charismatic’s world view and go no further, while the transformational leader will want them to question the established view + even his own ideas

Leaders as Shapers of Meaning – Transformational Leadership Characteristics of the Transactional leader : Contingent Reward: Promotes exchange of rewards for efforts, promises rewards for good performance, recognizes accomplishments Management by Exceptions (active): Looks for deviations from rules, takes corrective actions Management by Exceptions (passive): Intervenes only if standards are not met Laissez-Faire: Avoids making decisions

Leaders as Shapers of Meaning – Transformational Leadership Characteristics of the Transformational leader : Charisma: Provides vision and sense of mission, instills pride, gains respect and trust Inspiration: Communicates high expectations, uses symbols to focus efforts, expresses important purposes in simple ways Intellectual situation : Promotes intelligence, rationality, and careful problem solving Individualized Consideration : Gives personal attention, treats each employee individually, couches, advises

Leaders as Shapers of Meaning – Visionary Leadership Visionary Leadership : the ability to create and articulate a realistic, credible, attractive vision of the future for an organization or organizational unit that grows out of and improves upon the present Quality of a Vision: inspirational possibilities that are value centered, realizable, with superior imagery and articulation. Visions have to create inspirational and unique possibilities

Leaders as Shapers of Meaning – Visionary Leadership Qualities of the Visionary Leader : Ability to explain the vision to others: The vision has to be clear in terms of required actions Ability to express the vision through the leader’s behavior Ability to extend the vision to different leadership contexts : The vision has to be clear in every office of the company – marketing or other, Sofia and Portsmouth

Emotional Intelligence and Leadership Effectiveness Emotional Intelligence (EI) is a better predictor who’ll become a leader than IQ expertise or any other single factor EI has 5 components : Self-awareness Self-management Self-motivation Empathy Social skills

Emotional Intelligence and Leadership Effectiveness Self-awareness : Exhibited by self-confidence, realistic self-assessment, and self-deprecating sense of humor Self-management : Exhibited by trustworthiness and integrity, comfort with ambiguity, and openness to change Self-motivation : Strong drive to achieve, optimism, and high organizational commitment

Emotional Intelligence and Leadership Effectiveness Empathy : Exhibited by expertise in building and retaining talent, cross-cultural sensitivity, and service to clients and customers Social skills : Exhibited by ability to lead change, persuasiveness, and expertise in building and leading teams

Contemporary Leadership Roles The leaders are: Liaisons with external constituencies, i.e. upper management, other leaders, suppliers, customers Troubleshooters. Set meetings to solve the problems Conflict managers – they help to process the conflicts Coaches for the team members

Contemporary Leadership Roles Mentoring Mentor is a senior employee who sponsors and supports a less experienced employee

Attribution Theory of Leadership Leadership is merely an attribution that people make about other individuals Example: George H. Bush lost the second term elections after saying “Read my lips. No new taxes.”

Moral Leadership The means used by the leaders – paying to the participants in riots – good or bad ? Using leader’s charisma to benefit from follower’s full support – religious fights Leadership is not value free