chapter 16 Effective Leadership McGraw-Hill/Irwin Principles of Management © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Learning Objectives 1.Explain why good leadership is critical for success as a manager. 2.Summarize the main theoretical approaches to leadership. 3.Identify the behaviors and skills that are commonly associated with effective leadership. 4.Explain how the right approach to leadership might be influenced by important contingencies. 5.Discuss the differences between transformational and transactional leadership.

Managing & Leading Leaders Managers “Doing the right things” “Doing things right” Focuses on preserving the status quo Focus on vision, mission, and goals

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

CEO Pay AVERAGE annual CEO pay is $10.5 million, 369 times average worker pay of $28,310. In 1970, before the big run-up, the multiple was 28:1, a ratio that would make today’s average worker pay $374,800. Put another way: If CEO pay were frozen now, it would take workers 66 years of 4% annual raises to get back to 1/28 th of what the boss makes. Source: Business Week, October 30, 2006

Organizational Challenges The challenges facing organizations and leaders are becoming increasingly complex. An internet survey by the Center for Creative Leadership revealed the following: Type of ChallengeFrequency Percentage Technical Challenge43% Adaptive Challenge37% Critical Challenge10% Source: Changing Nature of Leadership Research Report, The Center for Creative Leadership

Perspectives on Leadership Effective Leadership Power- influence perspective Trait (competency) perspective Behavior perspective Contingency perspective Transformational perspective

Perspectives of Leadership Power-influence approachPower-influence approach – attempts to explain leadership effectiveness in terms of the amount of power possessed by a leader. Trait/competency perspectiveTrait/competency perspective – identifies the traits and competencies of effective leaders Behavior approachBehavior approach – asserts that certain behaviors are related to leadership effectiveness

Perspectives of Leadership Contingency perspectiveContingency perspective – argues that the appropriate behaviors for a leader to adopt depend on context, and that will work in some situations will not work in others Transformational perspectiveTransformational perspective – suggests that effective leaders “transform” organizations through their vision

The Power-Influence Perspective Effective leaders rely on: -the personal power that flows from expertise -a network of allies -individual attributes -power flowing from their position

What Makes Leaders Great? 1.Self-awareness 2.Personal conviction 3.Courage 4.Creativity 5.Curiosity 6.Ability to inspire 7.Ability to listen 8.Ability to innovate 9.Eagerness to experience 10.Willingness to reflect Source: Biz Ed, September/October, 2005

Skill Sets Required by Academic Leaders Source: Biz Ed, March/April, 2002 Selling, marketing, and public relations 69% Global business understanding 67% Human resource and staffing 57% Risk, cost, and financial management 51% Project management 48% E-business and IT knowledge 42% Negotiation and employment law 27% Skill set % of Respondents indicating as Important

Competency Perspective Traits that can be acquired through learning…? Strategic Thinking Emotional Intelligence Charisma Power Motivation Achievement Motivation

Emotional Intelligence Self-awareness Self-regulation Motivation Empathy Social skills

Limitations & Implications of Competency Perspective Not all of the traits are equally important Not all great leaders demonstrate all traits Importance of traits is context dependent

Behavior Perspective Assumption:Assumption: Certain leadership behaviors result in greater commitment on the part of subordinates and hence higher performance in pursuit of organization goals People-oriented behaviorPeople-oriented behavior – A leadership style that includes showing mutual trust and respect for subordinates, demonstrating genuine concern for their needs Task-oriented behaviorTask-oriented behavior – The style of leaders who assign employees to specific tasks, clarify their work duties and procedures, ensure that they follow company rules, and push them to reach their performance capacity

Fiedler’s Leadership Theory Leadership style *People-oriented *Task-oriented Outcomes *Team, unit, or organization performance Contingencies *Leader-member relations *Task structure *Position power

Predictions of Fiedler’s Theory Good Poor Leadership effectiveness Favorable Moderately favorable Unfavorable Situation Situation Situation Task-oriented leaders People-oriented leaders

Weaknesses of Fiedler’s Theory Simplistic Classification into two broad types seems an unwarranted generalization Division into people-oriented and task- oriented ignores the fact that some leaders can exhibit both Unrealistic to “reward” an effective leader by removing him Assumes that leaders cannot change their style

Path-Goal Theory Clarify path Clear path Offer rewards Leadership styles *Directive *Supportive *Participative *Achievement-oriented Nature of work environment *Task structure *Team dynamics *Formal power Personal characteristics of subordinates *Skills *Needs *Motivations Employee goals Path to goal attainment Outcomes (goal attainment)

Question As a manager, Caitlyn always sets high goals for her subordinates, has high expectations for their performance, and displays confidence in them, encouraging and helping them to take on greater responsibilities. According to the Path-Goal theory, Caitlyn exhibits which of these leadership styles? a.Achievement-oriented leadership b.Supportive leadership c.Directive leadership d.Participative

Path-Goal Predictions If followers lack confidence, supportive leadership will increase subordinates’ confidence that they can achieve goals, which raises performance If the task of subordinates is ambiguous, directive leadership may be preferred because it helps clarify the path subordinates must follow, which again increases performance

Path-Goal Predictions If the task of subordinates is standardized and dull, achievement-oriented leadership can motivate subordinates by setting high goals and expressing confidence in their abilities If the rewards offered to the employees are inappropriate, participative leadership may allow the leader to clarify the needs of subordinates and change rewards to improve performance

Limitations of Path-Goal Theory The implicit assumption that a leader can adopt only one style at a time seems simplistic There is still no strong empirical consensus that path- goal theory does a good job of explaining what is required for effective leadership It has a narrow definition of leadership effectiveness Other potentially important factors of the leadership process are ignored It provides only a partial definition

Behaviors of Transformational Leaders Transformational Leadership Creating an enduring organization Modeling desired behaviors Empowering employees Leading with integrity Meaningful changes in strategy and organization Envisioning a new future Communicating persistently

Gender Differences in Leadership Women: - have more people-oriented, participative leadership -are more relationship-oriented, cooperative, nurturing, and emotional in their leadership roles Generally, studies have shown that men and women do not differ in either task-oriented or people-oriented leadership However, women do adopt a participative style more readily Overall, subordinates have expectations from their leaders as to how they should act, and if the leader deviates from this belief negative evaluations may occur

Glass Ceiling Proportion of Female CEO’s, 2000 to 2016: (est.)2016 (est.) 0.06%2%4.90%6.20% Source: Business Week, December 4, 2006