The three management skills that can be improved based on the results of the “Reflection on Leading” and “How Good are Your Management Skills?” Assessments results attached are *Giving Effective Feedback *Leading *Delegating Write a single space one-page explanation to explain why these skills would be chosen and how they might be improved for the future. References(Also see Assessment Results Attachment): Adkins, A. (2015). What Separates Great Managers from the Rest.Retrieved from https://www.gallup.com/workplace/236594/report-separates-great-managers-rest.aspx Bailey, S. (2014). Can Personality Predict Performance? Retrieved from https://www.forbes.com/sites/sebastianbailey/2014/07/08/can-personality-predict-performance/#4783a3545499 Harvard. (n.d.). What Great Mangers Do? Retrieved from https://hbr.org/video/5335748697001/what-great-managers-do The Saylor Foundation (2020). Ch. 12 Leading People Within Organizations. (See attached PDF Ch 12)This text was adapted by The Saylor Foundation under a Creative
Commons Attribution-NonCommercial-ShareAlike 3.0 License without
attribution as requested by the work’s original creator or licensee.
1
Chapter 12
Leading People Within Organizations
LEARNING OBJECTIVES
After reading this chapter, you should be able to do the following:
1. Define what leadership is and identify traits of effective leaders.
2. Describe behaviors that effective leaders demonstrate.
3. Specify the contexts in which various leadership styles are effective.
4. Explain the concepts of transformational, transactional, charismatic, servant, and
authentic leadership.
Opening Case: Indra Nooyi Takes the Pepsi Challenge
She is among the Top 100 most influential people in Time magazine’s 2008
list. She is also number 5 in Forbes’s (2007) most influential women in the
world, number 1 in Fortune’s 50 most powerful women (2006), and number
22 in Fortune’s 25 most powerful people in business (2007). The lists go on
and on. To those familiar with her work and style, this should come as no
surprise: Even before she became the CEO of PepsiCo Inc. in 2006, she was
one of the most powerful executives at Pepsi and one of the two candidates
being groomed for the coveted CEO position. Born in Chennai, India, Nooyi
graduated from Yale’s School of Management and worked in companies such
as the Boston Consulting Group Inc., Motorola Inc., and ABB Inc. She also led
an all-girls rock band in high school, but that is a different story.
What makes her one of the top leaders in the business world today? To start
with, she has a clear vision for Pepsi, which seems to be the right vision for the
company at this point in time. Her vision is framed under the term
“performance with purpose”, which is based on two key ideas: tackling the
2
obesity epidemic by improving the nutritional status of PepsiCo products and
making PepsiCo an environmentally sustainable company. She is an
inspirational speaker and rallies people around her vision for the company.
She has the track record to show that she means what she says. She was
instrumental in Pepsi’s acquisition of the food conglomerate Quaker Oats
Company and the juice maker Tropicana Products Inc., both of which have
healthy product lines. She is bent on reducing Pepsi’s reliance on high-sugar,
high-calorie beverages, and she made sure that Pepsi removed trans fats from
all its products before its competitors. On the environmental side, she is
striving for a net zero impact on the environment. Among her priorities are
plans to reduce the plastic used in beverage bottles and find biodegradable
packaging solutions for PepsiCo products. Her vision is long-term and could
be risky for short-term earnings, but it is also timely and important.
Those who work with her feel challenged by her high performance standards
and expectation of excellence. She is not afraid to give people negative
feedback, and with humor too. She pushes people until they come up with a
solution to a problem and does not take “I don’t know” for an answer. For
example, she insisted that her team find an alternative to the expensive palm
oil and did not stop urging them forward until the alternative arrived: rice
bran oil.
Nooyi is well liked and respected because she listens to those around her, even
when they disagree with her. Her background cuts across national boundaries,
which gives her a true appreciation for diversity, and she expects those around
her to bring their values to work. In fact, when she graduated from college, she
wore a sari to a job interview at Boston Consulting, where she got the job. She
is an unusually collaborative person in the top suite of a Fortune 500
company, and she seeks help and information when she needs it. She has
3
friendships with three ex-CEOs of PepsiCo who serve as her informal advisors,
and when she was selected to the top position at PepsiCo, she made sure that
her rival for the position got a pay raise and was given influence in the
company so she did not lose him. She says that the best advice she received
was from her father, who taught her to assume that people have good
intentions. She says that expecting people to have good intentions helps her
prevent misunderstandings and show empathy for them. It seems that she is a
role model to other business leaders around the world, and PepsiCo is well
positioned to tackle the challenges the future may bring.
Sources: Adapted from information in Birger, J., Chandler, C., Fortt, J.,
Gimbel, B., Gumbel, P., et al. (2008, May 12). The best advice I ever
got. Fortune, 157(10), 70–80; Brady, D. (2007, June 11). Keeping cool in hot
water. Business Week, 4038, 49; Compton, J. (2007, October 15). Performance
with purpose. Beverage World,126(10), 32; McKay, B. (2008, May 6). Pepsi to
cut plastic used in bottles. Wall Street Journal, Eastern edition, B2; Morris, B.,
& Neering, P. A. (2008, May 3). The Pepsi challenge: Can this snack and soda
giant go healthy? CEO Indra Nooyi says yes but cola wars and corn prices will
test her leadership. Fortune, 157(4), 54–66; Schultz, H. (2008, May 12). Indra
Nooyi. Time, 171(19), 116–117; Seldman, M. (2008, June). Elevating
aspirations at PepsiCo. T+D, 62(6), 36–38; The Pepsi challenge (2006, August
19). Economist, 380(8491), 51–52.
Leadership may be defined as the act of influencing others to work toward a
goal. Leaders exist at all levels of an organization. Some leaders hold a
position of authority and may utilize the power that comes from their position,
as well as their personal power to influence others. They are
called formal leaders. In contrast, informal leaders are without a formal
position of authority within the organization but demonstrate leadership by
4
influencing others through personal forms of power. One caveat is important
here: Leaders do not rely on the use of force to influence people. Instead,
people willingly adopt the leader’s goal as their own goal. If a person is relying
on force and punishment, the person is a dictator, not a leader.
What makes leaders effective? What distinguishes people who are perceived as
leaders from those who are not perceived as leaders? More importantly, how
do we train future leaders and improve our own leadership ability? These are
important questions that have attracted scholarly attention in the past several
decades. In this chapter, we will review the history of leadership studies and
summarize the major findings relating to these important questions. Around
the world, we view leaders as at least partly responsible for their team or
company’s success and failure. Company CEOs are paid millions of dollars in
salaries and stock options with the assumption that they hold their company’s
future in their hands. In politics, education, sports, profit and nonprofit
sectors, the influence of leaders over the behaviors of individuals and
organizations is rarely questioned. When people and organizations fail,
managers and CEOs are often viewed as responsible. Some people criticize the
assumption that leadership always matters and call this belief “the romance of
leadership.” However, research evidence pointing to the importance of leaders
for organizational success is accumulating. [1]
12.1 Who Is a Leader? Trait Approaches to Leadership
LEARNING OBJECTIVES
1. Learn the position of trait approaches in the history of leadership studies.
2. Explain the traits that are associated with leadership.
5
3. Discuss the limitations of trait approaches to leadership.
The earliest approach to the study of leadership sought to identify a set of
traits that distinguished leaders from nonleaders. What were the
personality characteristics and the physical and psychological attributes of
people who are viewed as leaders? Because of the problems in
measurement of personality traits at the time, different studies used
different measures. By 1940, researchers concluded that the search for
leadership-defining traits was futile. In recent years, though, after the
advances in personality literature such as the development of the Big Five
personality framework, researchers have had more success in identifying
traits that predict leadership. [1] Most importantly, charismatic leadership,
which is among the contemporary approaches to leadership, may be viewed
as an example of a trait approach.
The traits that show relatively strong relations with leadership are
discussed below. [2]
Intelligence
General mental ability, which psychologists refer to as “g” and which is
often called “IQ” in everyday language, has been related to a person’s
emerging as a leader within a group. Specifically, people who have high mental
abilities are more likely to be viewed as leaders in their environment.[4] We
should caution, though, that intelligence is a positive but modest predictor of
leadership, and when actual intelligence is measured with paper-and-pencil
tests, its relationship to leadership is a bit weaker compared to when
intelligence is defined as the perceived intelligence of a leader. [5] In addition
to having a high IQ, effective leaders tend to have high emotional intelligence
(EQ). People with high EQ demonstrate a high level of self awareness,
6
motivation, empathy, and social skills. The psychologist who coined the
term emotional intelligence, Daniel Goleman, believes that IQ is a threshold
quality: It matters for entry- to high-level management jobs, but once you get
there, it no longer helps leaders, because most leaders already have a high IQ.
According to Goleman, what differentiates effective leaders from ineffective
ones becomes their ability to control their own emotions and understand other
people’s emotions, their internal motivation, and their social skills. [6]
Big 5 Personality Traits
Psychologists have proposed various systems for categorizing the
characteristics that make up an individual’s unique personality; one of the
most widely accepted is the “Big Five” model, which rates an individual
according to Openness to experience, Conscientiousness, Extraversion,
Agreeableness, and Neuroticism. Several of the Big Five personality traits have
been related to leadership emergence (whether someone is viewed as a leader
by others) and effectiveness. [7]
Figure 12.3 Big Five Personality Traits
7
For example, extraversion is related to leadership. Extraverts are sociable,
assertive, and energetic people. They enjoy interacting with others in their
environment and demonstrate self-confidence. Because they are both
dominant and sociable in their environment, they emerge as leaders in a wide
variety of situations. Out of all personality traits, extraversion has the
strongest relationship with both leader emergence and leader effectiveness.
This is not to say that all effective leaders are extraverts, but you are more
likely to find extraverts in leadership positions. An example of an introverted
leader is Jim Buckmaster, the CEO of Craigslist. He is known as an introvert,
and he admits to not having meetings because he does not like
them. [8]Research shows that another personality trait related to leadership
is conscientiousness. Conscientious people are organized, take initiative, and
8
demonstrate persistence in their endeavors. Conscientious people are more
likely to emerge as leaders and be effective in that role. Finally, people who
have openness to experience—those who demonstrate originality, creativity,
and are open to trying new things—tend to emerge as leaders and also be quite
effective.
Self-Esteem
Self-esteem is not one of the Big Five personality traits, but it is an important
aspect of one’s personality. The degree to which a person is at peace with
oneself and has an overall positive assessment of one’s self worth and
capabilities seem to be relevant to whether someone is viewed as a leader.
Leaders with high self-esteem support their subordinates more and, when
punishment is administered, they punish more effectively. [9] It is possible that
those with high self-esteem have greater levels of self-confidence and this
affects their image in the eyes of their followers. Self-esteem may also explain
the relationship between some physical attributes and leader emergence. For
example, research shows a strong relationship between being tall and being
viewed as a leader (as well as one’s career success over life). It is proposed that
self-esteem may be the key mechanism linking height to being viewed as a
leader, because people who are taller are also found to have higher self-esteem
and therefore may project greater levels of charisma as well as confidence to
their followers. [10]
Integrity
Research also shows that people who are effective as leaders tend to have a
moral compass and demonstrate honesty and integrity. [11] Leaders whose
integrity is questioned lose their trustworthiness, and they hurt their
company’s business along the way. For example, when it was revealed that
Whole Foods Market CEO John Mackey was using a pseudonym to make
9
negative comments online about the company’s rival Wild Oats Markets Inc.,
his actions were heavily criticized, his leadership was questioned, and the
company’s reputation was affected. [12]
Figure 12.5 Key Traits Associated With Leadership
There are also some traits that are negatively related to leader emergence and
being successful in that position. For example, agreeable people who are
modest, good natured, and avoid conflict are less likely to be perceived as
leaders. [13]
Despite problems in trait approaches, these findings can still be useful to
managers and companies. For example, knowing about leader traits helps
organizations select the right people into positions of responsibility. The key to
benefiting from the findings of trait researchers is to be aware that not all
traits are equally effective in predicting leadership potential across all
circumstances. Some organizational situations allow leader traits to make a
greater difference. [14] For example, in small, entrepreneurial organizations
10
where leaders have a lot of leeway to determine their own behavior, the type of
traits leaders have may make a difference in leadership potential. In large,
bureaucratic, and rule-bound organizations such as the government and the
military, a leader’s traits may have less to do with how the person behaves and
whether the person is a successful leader. [15] Moreover, some traits become
relevant in specific circumstances. For example, bravery is likely to be a key
characteristic in military leaders, but not necessarily in business leaders.
Scholars now conclude that instead of trying to identify a few traits that
distinguish leaders from nonleaders, it is important to identify the conditions
under which different traits affect a leader’s performance, as well as whether a
person emerges as a leader. [16]
KEY TAKEAWAY
Many studies searched for a limited set of personal attributes, or traits, which would
make someone be viewed as a leader and be successful as a leader. Some traits that
are consistently related to leadership include intelligence (both mental ability and
emotional intelligence), personality (extraversion, conscientiousness, openness to
experience, self-esteem), and integrity. The main limitation of the trait approach was
that it ignored the situation in which leadership occurred. Therefore, it is more useful
to specify the conditions under which different traits are needed.
EXERCISES
1. Think of a leader you admire. What traits does this person have? Are they consistent
with the traits discussed in this chapter? If not, why is this person effective despite
the presence of different traits?
2. Can the findings of traits approaches be used to train potential leaders? Which traits
seem easier to teach? Which are more stable?
3. How can organizations identify future leaders with a given set of traits? Which
methods would be useful for this purpose?
4. What other traits can you think of that would be relevant to leadership?
11
12.2 What Do Leaders Do? Behavioral Approaches to
Leadership
LEARNING OBJECTIVES
1. Explain the behaviors that are associated with leadership.
2. Identify the three alternative decision-making styles leaders use and the conditions
under which they are more effective.
3. Discuss the limitations of behavioral approaches to leadership.
Leader Behaviors
When trait researchers became disillusioned in the 1940s, their attention
turned to studying leader behaviors. What did effective leaders actually do?
Which behaviors made them perceived as leaders? Which behaviors increased
their success? To answer these questions, researchers at Ohio State University
and the University of Michigan used many different techniques, such as
observing leaders in laboratory settings as well as surveying them. This
research stream led to the discovery of two broad categories of behaviors:
task-oriented behaviors (sometimes called initiating structure) and peopleoriented behaviors (also called consideration). Task-oriented leader
behaviors involve structuring the roles of subordinates, providing them with
instructions, and behaving in ways that will increase the performance of the
group. Task-oriented behaviors are directives given to employees to get things
done and to ensure that organizational goals are met. People-oriented leader
behaviors include showing concern for employee feelings and treating
employees with respect. People-oriented leaders genuinely care about the
well-being of their employees, and they demonstrate their concern in their
12
actions and decisions. At the time, researchers thought that these two
categories of behaviors were the keys to the puzzle of leadership. [1] However,
research did not support the argument that demonstrating both of these
behaviors would necessarily make leaders effective. [2]
When we look at the overall findings regarding these leader behaviors, it
seems that both types of behaviors, in the aggregate, are beneficial to
organizations, but for different purposes. For example, when leaders
demonstrate people-oriented behaviors, employees tend to be more satisfied
and react more positively. However, when leaders are task oriented,
productivity tends to be a bit higher. [3] Moreover, the situation in which these
behaviors are demonstrated seems to matter. In small companies, taskoriented behaviors were found to be more effective than in large
companies. [4] There is also some evidence that very high levels of leader taskoriented behaviors may cause burnout with employees. [5]
Leader Decision Making
Another question behavioral researchers focused on involved how leaders
actually make decisions and the influence of decision-making styles on leader
effectiveness and employee reactions. Three types of decision-making styles
were studied. In authoritarian decision making, leaders make the decision
alone without necessarily involving employees in the decision-making process.
When leaders use democratic decision making, employees participate in the
making of the decision. Finally, leaders using laissez-faire decision making
leave employees alone to make the decision. The leader provides minimum
guidance and involvement in the decision.
As with other lines of research on leadership, research did not identify one
decision-making style as the best. It seems that the effectiveness of the style
13
the leader is using depends on the circumstances. A review of the literature
shows that when leaders use more democratic or participative decisionmaking styles, employees tend to be more satisfied; however, the effects on
decision quality or employee productivity are weaker. Moreover, instead of
expecting to be involved in every single decision, employees seem to care more
about the overall participativeness of the organizational climate. [6] Different
types of employees may also expect different levels of involvement. In a
research organization, scientists viewed democratic leadership most favorably
and authoritarian leadership least favorably, [7] but employees working in large
groups where opportunities for member interaction was limited preferred
authoritarian leader decision making. [8]Finally, the effectiveness of each style
seems to depend on who is using it. There are examples of effective leaders
using both authoritarian and democratic styles. At Hyundai Motor America,
high-level managers use authoritarian decision-making styles, and the
company is performing very well. [9]
The track record of the laissez-faire decision-making style is more
problematic. Research shows that this style is negatively related to employee
satisfaction with leaders and leader effectiveness. [10] Laissez-faire leaders
create high levels of ambiguity about job expectations on the part of
employees, and employees also engage in higher levels of conflict when leaders
are using the laissez-faire style. [11]
Leadership Assumptions about Human Nature
Why do some managers believe that the only way to manage employees is to
force and coerce them to work while others adopt a more humane approach?
Douglas McGregor, an MIT Sloan School of Management professor, believed
that a manager’s actions toward employees were dictated by having one of two
basic sets of assumptions about employee attitudes. His two contrasting
14
categories, outlined in his 1960 book, The Human Side of Enterprise, are
known as Theory X and Theory Y.
According to McGregor, some managers subscribe to Theory X. The main
assumptions of Theory X managers are that employees are lazy, do not enjoy
working, and will avoid expending energy on work whenever possible. For a
manager, this theory suggests employees need to be forced to work through
any number of control mechanisms ranging from threats to actual
punishments. Because of the assumptions they make about human nature,
Theory X managers end up establishing rigid work environments. Theory X
also assumes employees completely lack ambition. As a result, managers must
take full responsibility for their subordinates’ actions, as these employees will
never take initiative outside of regular job duties to accomplish tasks.
In contrast, Theory Y paints a much more positive view of employees’ attitudes
and behaviors. Under Theory Y, employees are not lazy, can enjoy work, and
will put effort into furthering organizational goals. Because these managers
can assume that employees will act in the best interests of the organization
given the chance, Theory Y managers allow employees autonomy and help
them become committed to particular goals. They tend to adopt a more
supportive role, often focusing on maintaining a work environment in which
employees can be innovative and prosperous within their roles.
One way of improving our leadership style would be to become conscious
about our theories of human nature, and question the validity of our implicit
theories.
Source: McGregor, D. (1960). Human side of enterprise. New York: McGraw
Hill.
15
Limitations of Behavioral Approaches
Behavioral approaches, similar to trait approaches, fell out of favor because
they neglected the environment in which behaviors are demonstrated. The
hope of the researchers was that the identified behaviors would predict
leadership under all circumstances, but it may be unrealistic to expect that a
given set of behaviors would work under all circumstances. What makes a high
school principal effective on the job may be very different from what makes a
military leader effective, which would be different from behaviors creating
success in small or large business enterprises. It turns out that specifying the
conditions under which these behaviors are more effective may be a better
approach.
KEY TAKEAWAY
When researchers failed to identify a set of traits that would distinguish effective
from ineffective leaders, research attention turned to the study of leader behaviors.
Leaders may demonstrate task-oriented and people-oriented behaviors. Both seem
to be related to important outcomes, with task-oriented behaviors more strongly
relating to leader effectiveness and people-oriented behaviors leading to employee
satisfaction. Leaders can also make decisions using authoritarian, democratic, or
laissez-faire styles. While laissez-faire has certain downsides, there is no best style,
and the effectiveness of each style seems to vary across situations. Because of the
inconsistency of results, researchers realized the importance of the context in which
leadership occurs, which paved the way to contingency theories of leadership.
EXERCISES
1. Give an example of a leader you admire whose behavior is primarily task oriented,
and one whose behavior is primarily people oriented.
2. What are the limitations of authoritarian decision making? Under which conditions
do you think authoritarian style would be more effective?
16
3. What are the limitations of democratic decision making? Under which conditions do
you think democratic style would be more effective?
4. What are the limitations of laissez-faire decision making? Under which conditions do
you think laissez-faire style would be more effective?
5. Examine your own leadership style. Which behaviors are you more likely to
demonstrate? Which decision-making style are you more likely to use?
12.3 What Is the Role of the Context? Contingency
Approaches to Leadership
LEARNING OBJECTIVES
1. Learn about the major situational conditions that determine the effectiveness of
different leadership styles.
2. Identify the conditions under which highly task-oriented and highly people-oriented
leaders can be successful based on Fiedler’s contingency theory.
3. Describe the Path-Goal theory of leadership.
4. Describe a method by which leaders can decide how democratic or authoritarian
their decision making should be.
What is the best leadership style? By now, you must have realized that this
may not be the right question to ask. Instead, a better question might be:
Under which conditions are certain leadership styles more effective? After
the disappointing results of trait and behavioral approaches, several
scholars developed leadership theories that specifically incorporated the
role of the environment. Specifically, researchers started following a
contingency approach to leadership—rather than trying to identify traits or
behaviors that would be effective under all conditions, the attention moved
17
toward specifying the situations under which different styles would be
effective.
Fiedler’s Contingency Theory
The earliest and one of the most influential contingency theories was
developed by Frederick Fiedler. [1] According to the theory, a leader’s style is
measured by a scale called Least Preferred Coworker scale (LPC). People who
are filling out this survey are asked to think of a person who is their least
preferred coworker. Then, they rate this person in terms of how friendly, nice,
and cooperative this person is. Imagine someone you did not enjoy working
with. Can you describe this person in positive terms? In other words, if you
can say that the person you hated working with was still a nice person, you
would have a high LPC score. This means that you have a people-oriented
personality, and you can separate your liking of a person from your ability to
work with that person. On the other hand, if you think that the person you
hated working with was also someone you did not like on a personal level, you
would have a low LPC score. To you, being unable to work with someone
would mean that you also dislike that person. In other words, you are a taskoriented person.
According to Fiedler’s theory, different people can be effective in different
situations. The LPC score is akin to a personality trait and is not likely to
change. Instead, placing the right people in the right situation or changing the
situation to suit an individual is important to increase a leader’s effectiveness.
The theory predicts that in “favorable” and “unfavorable” situations, a low LPC
leader—one who has feelings of dislike for coworkers who are difficult to work
with—would be successful. When situational favorableness is medium, a high
LPC leader—one who is able to personally like coworkers who are difficult to
work with—is more likely to succeed.
18
How does Fiedler determine whether a situation is “favorable,” “medium,” or
“unfavorable”? There are three conditions creating situational favorableness:
leader-subordinate relations, position power, and task structure. If the leader
has a good relationship with most people and has high position power, and the
task at hand is structured, the situation is very favorable. When the leader has
low-quality relations with employees and has low position power, and the task
at hand it relatively unstructured, the situation is very unfavorable.
Figure 12.9 Situational Favorableness
Sources: Based on information in Fiedler, F. E. (1967). A theory of leadership
effectiveness. New York: McGraw-Hill; Fiedler, F. E. (1964). A contingency
model of leader effectiveness. In L. Berkowitz (Ed.), Advances in experimental
social psychology, vol. 1 (pp. 149–190). New York: Academic Press.
Research partially supports the predictions of Fiedler’s contingency theory. [2]
Specifically, there is more support for the theory’s predictions about when low
LPC leadership should be used, but the part about when high LPC leadership
would be more effective received less support. Even though the theory was not
supported in its entirety, it is a useful framework to think about when taskversus people-oriented leadership may be more effective. Moreover, the theory
19
is important because of its explicit recognition of the importance of the
context of leadership.
Situational Leadership
Another contingency approach to leadership is Kenneth Blanchard and Paul
Hersey’s Situational Leadership Theory (SLT) which argues that leaders must
use different leadership styles depending on their followers’ development
level. [3] According to this model, employee readiness (defined as a
combination of their competence and commitment levels) is the key factor
determining the proper leadership style. This approach has been highly
popular with 14 million managers across 42 countries undergoing SLT
training and 70% of Fortune 500 companies employing its use. [4]
The model summarizes the level of directive and supportive behaviors that
leaders may exhibit. The model argues that to be effective, leaders must use
the right style of behaviors at the right time in each employee’s development.
It is recognized that followers are key to a leader’s success. Employees who are
at the earliest stages of developing are seen as being highly committed but
with low competence for the tasks. Thus, leaders should be highly directive
and less supportive. As the employee becomes more competent, the leader
should engage in more coaching behaviors. Supportive behaviors are
recommended once the employee is at moderate to high levels of competence.
And finally, delegating is the recommended approach for leaders dealing with
employees who are both highly committed and highly competent. While the
SLT is popular with managers, relatively easy to understand and use, and has
endured for decades, research has been mixed in its support of the basic
assumptions of the model. [5] Therefore, while it can be a useful way to think
about matching behaviors to situations, overreliance on this model, at the
exclusion of other models, is premature.
20
Table 12.1
Follower
Readiness
Level
Competence
Competence Competence (Moderate to Competence
(Low)
(Low)
High)
(High)
Commitment Commitment Commitment Commitment
(High)
(Low)
(Variable)
(High)
Recommended Directing
Leader Style
Behavior
Coaching
Behavior
Supporting
Behavior
Delegating
Behavior
Situational Leadership Theory helps leaders match their style to follower
readiness levels.
Path-Goal Theory of Leadership
Robert House’s path-goal theory of leadership is based on the expectancy
theory of motivation. [6] The expectancy theory of motivation suggests that
employees are motivated when they believe—or expect—that (a) their effort
will lead to high performance, (b) their high performance will be rewarded,
and (c) the rewards they will receive are valuable to them. According to the
path-goal theory of leadership, the leader’s main job is to make sure that all
three of these conditions exist. Thus, leaders will create satisfied and highperforming employees by making sure that employee effort leads to
performance, and their performance is rewarded by desired rewards. The
leader removes roadblocks along the way and creates an environment that
subordinates find motivational.
The theory also makes specific predictions about what type of leader behavior
will be effective under which circumstances. [7] The theory identifies four
21
leadership styles. Each of these styles can be effective, depending on the
characteristics of employees (such as their ability level, preferences, locus of
control, and achievement motivation) and characteristics of the work
environment (such as the level of role ambiguity, the degree of stress present
in the environment, and the degree to which the tasks are unpleasant).
Four Leadership Styles
Directive leaders provide specific directions to their employees. They lead
employees by clarifying role expectations, setting schedules, and making sure
that employees know what to do on a given work day. The theory predicts that
the directive style will work well when employees are experiencing role
ambiguity on the job. If people are unclear about how to go about doing their
jobs, giving them specific directions will motivate them. On the other hand, if
employees already have role clarity, and if they are performing boring,
routine, and highly structured jobs, giving them direction does not help. In
fact, it may hurt them by creating an even more restricting atmosphere.
Directive leadership is also thought to be less effective when employees have
high levels of ability. When managing professional employees with high levels
of expertise and job-specific knowledge, telling them what to do may create a
low-empowerment environment, which impairs motivation.
Supportive leaders provide emotional support to employees. They treat
employees well, care about them on a personal level, and they are
encouraging. Supportive leadership is predicted to be effective when
employees are under a lot of stress or performing boring, repetitive jobs.
When employees know exactly how to perform their jobs but their jobs are
unpleasant, supportive leadership may be more effective.
22
Participative leaders make sure that employees are involved in the making of
important decisions. Participative leadership may be more effective when
employees have high levels of ability, and when the decisions to be made are
personally relevant to them. For employees with a high internal locus of
control (those who believe that they control their own destiny), participative
leadership is a way of indirectly controlling organizational decisions, which is
likely to be appreciated.
Achievement-oriented leaders set goals for employees and encourage them to
reach their goals. Their style challenges employees and focuses their attention
on work-related goals. This style is likely to be effective when employees have
both high levels of ability and high levels of achievement motivation.
The path-goal theory of leadership has received partial but encouraging levels
of support from researchers. Because the theory is highly complicated, it has
not been fully and adequately tested. [8] The theory’s biggest contribution may
be that it highlights the importance of a leader’s ability to change styles
depending on the circumstances. Unlike Fiedler’s contingency theory, in
which the leader’s style is assumed to be fixed and only the environment can
be changed, House’s path-goal theory underlines the importance of varying
one’s style depending on the situation.
Figure 12.10 Predictions of the Path-Goal Theory Approach to Leadership
23
Sources: Based on information presented in House, R. J. (1996). Path-goal
theory of leadership: Lessons, legacy, and a reformulated theory. Leadership
Quarterly, 7, 323–352; House, R. J., & Mitchell, T. R. (1974). Path-goal theory
of leadership. Journal of Contemporary Business, 3, 81–97.
Vroom and Yetton’s Normative Decision Model
Yale School of Management Professor Victor Vroom and his colleagues Philip
Yetton and Arthur Jago developed a decision-making tool to help leaders
determine how much involvement they should seek when making decisions. [9]
The model starts by having leaders answer several key questions and working
their way through a decision tree based on their responses. Let’s try it.
Imagine that you want to help your employees lower their stress so that you
can minimize employee absenteeism. There are a number of approaches you
could take to reduce employee stress, such as offering gym memberships,
providing employee assistance programs, a nap room, and so forth.
24
Let’s refer to the model and start with the first question. As you answer each
question as high (H) or low (L), follow the corresponding path down the
funnel.
1. Decision Significance. The decision has high significance, because the
approach chosen needs to be effective at reducing employee stress for
the insurance premiums to be lowered. In other words, there is a quality
requirement to the decision. Follow the path through H.
2. Importance of Commitment. Does the leader need employee
cooperation to implement the decision? In our example, the answer is
high, because employees may simply ignore the resources if they do not
like them. Follow the path through H.
3. Leader expertise. Does the leader have all the information needed to
make a high quality decision? In our example, leader expertise is low.
You do not have information regarding what your employees need or
what kinds of stress reduction resources they would prefer. Follow the
path through L.
4. Likelihood of commitment. If the leader makes the decision alone, what
is the likelihood that the employees would accept it? Let’s assume that
the answer is low. Based on the leader’s experience with this group, they
would likely ignore the decision if the leader makes it alone. Follow the
path from L.
5. Goal alignment. Are the employee goals aligned with organizational
goals? In this instance, employee and organizational goals may be
aligned because you both want to ensure that employees are healthier.
So let’s say the alignment is high, and follow H.
6. Group expertise. Does the group have expertise in this decision-making
area? The group in question has little information about which
alternatives are costlier, or more user friendly. We’ll say group expertise
is low. Follow the path from L.
25
7. Team competence. What is the ability of this particular team to solve the
problem? Let’s imagine that this is a new team that just got together and
they have little demonstrated expertise to work together effectively. We
will answer this as low or L.
Based on the answers to the questions we gave, the normative approach
recommends consulting employees as a group. In other words, the leader may
make the decision alone after gathering information from employees and is
not advised to delegate the decision to the team or to make the decision alone.
Decision-Making Styles

Decide. The leader makes the decision alone using available
information.

Consult Individually. The leader obtains additional information from
group members before making the decision alone.

Consult as a group. The leader shares the problem with group members
individually and makes the final decision alone.

Facilitate. The leader shares information about the problem with group
members collectively, and acts as a facilitator. The leader sets the
parameters of the decision.

Delegate. The leader lets the team make the decision.
Vroom and Yetton’s normative model is somewhat complicated, but research
results support the validity of the model. On average, leaders using the style
recommended by the model tend to make more effective decisions compared
to leaders using a style not recommended by the model. [10]
KEY TAKEAWAY
26
The contingency approaches to leadership describe the role the situation would have
in choosing the most effective leadership style. Fiedler’s contingency theory argued
that task-oriented leaders would be most effective when the situation was the most
and the least favorable, whereas people-oriented leaders would be effective when
situational favorableness was moderate. Situational Leadership Theory takes the
maturity level of followers into account. House’s path-goal theory states that the
leader’s job is to ensure that employees view their effort as leading to performance,
and to increase the belief that performance would be rewarded. For this purpose,
leaders would use directive-, supportive-, participative-, and achievement-oriented
leadership styles depending on what employees needed to feel motivated. Vroom
and Yetton’s normative model is a guide leaders can use to decide how participative
they should be given decision environment characteristics.
EXERCISES
1. Do you believe that the least preferred coworker technique is a valid method of
measuring someone’s leadership style? Why or why not?
2. Do you believe that leaders can vary their style to demonstrate directive-,
supportive-, achievement-, and participative-oriented styles with respect to different
employees? Or does each leader tend to have a personal style that he or she
regularly uses toward all employees?
3. What do you see as the limitations of the Vroom-Yetton leadership decision-making
approach?
4. Which of the leadership theories covered in this section do you think are most useful
and least useful to practicing managers? Why?
27
12.4 What’s New? Contemporary Approaches to
Leadership
LEARNING OBJECTIVES
1. Learn about the difference between transformational and transactional leaders.
2. Find out about the relationship between charismatic leadership and how it relates to
leader performance.
3. Learn how to be charismatic.
4. Describe how high-quality leader-subordinate relationships develop.
5. Define servant leadership and evaluate its potential for leadership effectiveness.
6. Define authentic leadership and evaluate its potential for leadership effectiveness.
What are the leadership theories that have the greatest contributions to
offer to today’s business environment? In this section, we will review the
most recent developments in the field of leadership.
Transformational Leadership
Transformational leadership theory is a recent addition to the literature, but
more research has been conducted on this theory than all the contingency
theories combined. The theory distinguishes transformational and
transactional leaders. Transformational leaders lead employees by aligning
employee goals with the leader’s goals. Thus, employees working for
transformational leaders start focusing on the company’s well-being rather
than on what is best for them as individual employees. On the other
hand, transactional leaders ensure that employees demonstrate the right
behaviors and provide resources in exchange. [1]
Transformational leaders have four tools in their possession, which they use to
influence employees and create commitment to the company goals. [2] First,
28
transformational leaders are charismatic. Charisma refers to behaviors leaders
demonstrate that create confidence in, commitment to, and admiration for the
leader. [3] Charismatic individuals have a “magnetic” personality that is
appealing to followers. Second, transformational leaders use inspirational
motivation, or come up with a vision that is inspiring to others. Third is the
use of intellectual stimulation, which means that they challenge organizational
norms and status quo, and they encourage employees to think creatively and
work harder. Finally, they use individualized consideration, which means that
they show personal care and concern for the well-being of their followers.
Examples of transformational leaders include Steve Jobs of Apple Inc.; Lee
Iaccoca, who transformed Chrysler Motors LLC in the 1980s; and Jack Welch,
who was the CEO of General Electric Company for 20 years. Each of these
leaders is charismatic and is held responsible for the turnarounds of their
companies.
While transformational leaders rely on their charisma, persuasiveness, and
personal appeal to change and inspire their companies, transactional leaders
use three different methods. Contingent rewards mean rewarding employees
for their accomplishments. Active management by exception involves leaving
employees to do their jobs without interference, but at the same time
proactively predicting potential problems and preventing them from
occurring. Passive management by exception is similar in that it involves
leaving employees alone, but in this method the manager waits until
something goes wrong before coming to the rescue.
Which leadership style do you think is more effective, transformational or
transactional? Research shows that transformational leadership is a very
powerful influence over leader effectiveness as well as employee
satisfaction. [4] In fact, transformational leaders increase the intrinsic
29
motivation of their followers, build more effective relationships with
employees, increase performance and creativity of their followers, increase
team performance, and create higher levels of commitment to organizational
change efforts. [5]However, except for passive management by exception, the
transactional leadership styles are also effective, and they also have positive
influences over leader performance as well as employee attitudes. [6] To
maximize their effectiveness, leaders are encouraged to demonstrate both
transformational and transactional styles. They should also monitor
themselves to avoid demonstrating passive management by exception, or
leaving employees to their own devices until problems arise.
Why is transformational leadership effective? The key factor may be trust.
Trust is the belief that the leader will show integrity, fairness, and
predictability in his or her dealings with others. Research shows that when
leaders demonstrate transformational leadership behaviors, followers are
more likely to trust the leader. The tendency to trust in transactional leaders is
substantially lower. Because transformational leaders express greater levels of
concern for people’s well-being and appeal to people’s values, followers are
more likely to believe that the leader has a trustworthy character. [7]
Is transformational leadership genetic? Some people assume that charisma is
something people are born with. You either have charisma, or you don’t.
However, research does not support this idea. We must acknowledge that
there is a connection between some personality traits and charisma.
Specifically, people who have a neurotic personality tend to demonstrate lower
levels of charisma, and people who are extraverted tend to have higher levels
of charisma. However, personality explains only around 10% of the variance in
charisma. [8] A large body of research has shown that it is possible to train
30
people to increase their charisma and increase their transformational
leadership. [9]
Even if charisma can be learned, a more fundamental question remains: Is it
really needed? Charisma is only one element of transformational leadership,
and leaders can be effective without charisma. In fact, charisma has a dark
side. For every charismatic hero such as Lee Iaccoca, Steve Jobs, and Virgin
Atlantic Airways Ltd.’s Sir Richard Branson, there are charismatic
personalities who harmed their organizations or nations, such as Adoph Hitler
of Germany and Jeff Skilling of Enron Corporation. Leadership experts warn
that when organizations are in a crisis, a board of directors or hiring manager
may turn to heroes who they hope will save the organization, and sometimes
hire people who have no particular qualifications other than being perceived
as charismatic. [10]
An interesting study shows that when companies have performed well, their
CEOs are perceived as charismatic, but CEO charisma has no relation to the
future performance of a company. [11] So, what we view as someone’s charisma
may be largely because of their association with a successful company, and the
success of a company depends on a large set of factors, including industry
effects and historical performance. While it is true that charismatic leaders
may sometimes achieve great results, the search for charismatic leaders under
all circumstances may be irrational.
OB Toolbox: Be Charismatic!

Have a vision around which people can gather. When framing requests or
addressing others, instead of emphasizing short-term goals, stress the
importance of the long-term vision. When giving a message, think about the
31
overarching purpose. What is the ultimate goal? Why should people care?
What are you trying to achieve?

Tie the vision to history. In addition to stressing the ideal future, charismatic
leaders also bring up the history and how the shared history ties to the future.

Watch your body language. Charismatic leaders are energetic and passionate
about their ideas. This involves truly believing in your own ideas. When
talking to others, be confident, look them in the eye, and express your belief in
your ideas.

Make sure that employees have confidence in themselves. You can achieve
this by showing that you believe in them and trust in their abilities. If they
have real reason to doubt their abilities, make sure that you address the
underlying issue, such as training and mentoring.

Challenge the status quo. Charismatic leaders solve current problems by
radically rethinking the way things are done and suggesting alternatives that
are risky, novel, and unconventional.
Sources: Adapted from ideas in Frese, M., Beimel, S., & Schoenborg, S.
(2003). Action training for charismatic leadership: Two evaluations of studies
of a commercial training module on inspirational communication of a
vision. Personnel Psychology, 56, 671–697; Shamir, B., House, R. J., & Arthur,
M. B. (1993). The motivational effects of charismatic leadership: A selfconcept based theory. Organization Science, 4, 577–594.
Leader-Member Exchange (LMX) Theory
Leader-member exchange (LMX) theory proposes that the type of relationship
leaders have with their followers (members of the organization) is the key to
understanding how leaders influence employees. Leaders form different types
of relationships with their employees. In high-quality LMX relationships, the
leader forms a trust-based relationship with the member. The leader and
32
member like each other, help each other when needed, and respect each other.
In these relationships, the leader and the member are each ready to go above
and beyond their job descriptions to promote the other’s ability to succeed. In
contrast, in low-quality LMX relationships, the leader and the member have
lower levels of trust, liking, and respect toward each other. These relationships
do not have to involve actively disliking each other, but the leader and
member do not go beyond their formal job descriptions in their exchanges. In
other words, the member does his job, the leader provides rewards and
punishments, and the relationship does not involve high levels of loyalty or
obligation toward each other. [12]
If you have work experience, you may have witnessed the different types of
relationships managers form with their employees. In fact, many leaders end
up developing differentiated relationships with their followers. Within the
same work group, they may have in-group members who are close to them,
and out-group members who are more distant. If you have ever been in a high
LMX relationship with your manager, you may attest to the advantages of the
relationship. Research shows that high LMX members are more satisfied with
their jobs, more committed to their companies, have higher levels of clarity
about what is expected of them, and perform at a higher level. [13] Employees’
high levels of performance may not be a surprise, since they receive higher
levels of resources and help from their managers as well as more information
and guidance. If they have questions, these employees feel more comfortable
seeking feedback or information. [14]Because of all the help, support, and
guidance they receive, employees who have a good relationship with the
manager are in a better position to perform well. Given all they receive, these
employees are motivated to reciprocate to the manager, and therefore they
demonstrate higher levels of citizenship behaviors such as helping the leader
and coworkers. [15] Being in a high LMX relationship is also advantageous
33
because a high-quality relationship is a buffer against many stressors, such as
being a misfit in a company, having personality traits that do not match job
demands, and having unmet expectations. [16] The list of the benefits high LMX
employees receive is long, and it is not surprising that these employees are less
likely to leave their jobs. [17]
The problem, of course, is that not all employees have a high-quality
relationship with their leader, and those who are in the leader’s out-group may
suffer as a result. But how do you develop a high-quality relationship with
your leader? It seems that this depends on many factors. Managers can help
develop such a meaningful and trust-based relationship by treating their
employees in a fair and dignified manner. [18] They can also test to see if the
employee is trustworthy by delegating certain tasks when the employee first
starts working with the manager. [19] Employees also have an active role in
developing the relationship. Employees can put forth effort into developing a
good relationship by seeking feedback to improve their performance, being
open to learning new things on the job, and engaging in political behaviors
such as the use of flattery. [20] Interestingly, high performance does not seem to
be enough to develop a high-quality exchange. Instead, interpersonal factors
such as the similarity of personalities and a mutual liking and respect are
more powerful influences over how the relationship develops. [21] Finally, the
relationship develops differently in different types of companies, and
corporate culture matters in how leaders develop these relationships. In
performance-oriented cultures, the relevant factor seems to be how the leader
distributes rewards, whereas in people-oriented cultures, the leader treating
people with dignity is more important. [22]
Self-Assessment: Rate Your LMX
34
Answer the following questions using 1 = not at all, 2 = somewhat, 3 = fully
agree.
1. _____ I like my supervisor very much as a person.
My supervisor is the kind of person one would like to have as a
2. _____ friend.
3. _____ My supervisor is a lot of fun to work with.
My supervisor defends my work actions to a superior, even
4. _____ without complete knowledge of the issue in question.
My supervisor would come to my defense if I were “attacked” by
5. _____ others.
My supervisor would defend me to others in the organization if I
6. _____ made an honest mistake.
I do work for my supervisor that goes beyond what is specified
7. _____ in my job description.
I am willing to apply extra efforts, beyond those normally
8. _____ required, to further the interests of my work group.
9.
_____ I do not mind working my hardest for my supervisor.
I am impressed with my supervisor’s knowledge of his or her
10. _____ job.
I respect my supervisor’s knowledge of and competence on
11. _____ the job.
12. _____ I admire my supervisor’s professional skills.
Scoring:
Add your score for 1, 2, 3 = _____ . This is your score on the Liking factor of
LMX.
A score of 3 to 4 indicates a low LMX in terms of liking. A score of 5 to 6
indicates an average LMX in terms of liking. A score of 7+ indicates a high LMX
in terms of liking.
35
Add your score for 4, 5, 6 = _____ . This is your score on the Loyalty factor of
LMX.
A score of 3 to 4 indicates a low LMX in terms of loyalty. A score of 5 to 6
indicates an average LMX in terms of loyalty. A score of 7+ indicates a high
LMX in terms of loyalty.
Add your score for 7, 8, 9 = _____ . This is your score on
the Contribution factor of LMX.
A score of 3 to 4 indicates a low LMX in terms of contribution. A score of 5 to 6
indicates an average LMX in terms of contribution. A score of 7+ indicates a
high LMX in terms of contribution.
Add your score for 10, 11, 12 = _____ . This is your score on the Professional
Respectfactor of LMX.
A score of 3 to 4 indicates a low LMX in terms of professional respect. A score of
5 to 6 indicates an average LMX in terms of professional respect. A score of 7+
indicates a high LMX in terms of professional respect.
Source: Adapted from Liden, R. C., & Maslyn, J. M. (1998).
Multidimensionality of leader-member exchange: An empirical assessment
through scale development. Journal of Management, 24, 43–72. Used by
permission of Sage Publications.
Should you worry if you do not have a high-quality relationship with your
manager? One problem in a low-quality exchange is that employees may not
have access to the positive work environment available to high LMX members.
Secondly, low LMX employees may feel that their situation is unfair. Even
when their objective performance does not warrant it, those who have a good
relationship with the leader tend to have positive performance
appraisals. [23] Moreover, they are more likely to be given the benefit of the
36
doubt. For example, when high LMX employees succeed, the manager is more
likely to think that they succeeded because they put forth a lot of effort and
had high abilities, whereas for low LMX members who perform objectively
well, the manager is less likely to make the same attribution. [24] In other
words, the leader may interpret the same situation differently, depending on
which employee is involved, and may reward low LMX employees less despite
equivalent performance. In short, those with a low-quality relationship with
their leader may experience a work environment that may not be supportive or
fair.
Despite its negative consequences, we cannot say that all employees want to
have a high-quality relationship with their leader. Some employees may
genuinely dislike the leader and may not value the rewards in the leader’s
possession. If the leader is not well liked in the company and is known as
abusive or unethical, being close to such a person may imply guilt by
association. For employees who have no interest in advancing their careers in
the current company (such as a student employee who is working in retail but
has no interest in retail as a career), having a low-quality exchange may afford
the opportunity to just do one’s job without having to go above and beyond the
job requirements. Finally, not all leaders are equally capable of influencing
their employees by having a good relationship with them: It also depends on
the power and influence of the leader in the company as a whole and how the
leader is treated within the organization. Leaders who are more powerful will
have more to share with their employees. [25]
What LMX theory implies for leaders is that one way of influencing employees
is through the types of relationships leaders form with their subordinates.
These relationships develop naturally through the work-related and personal
interactions between the manager and the employee. Because they occur
37
naturally, some leaders may not be aware of the power that lies in them. These
relationships have an important influence over employee attitudes and
behaviors. In the worst case, they have the potential to create an environment
characterized by favoritism and unfairness. Therefore, managers are advised
to be aware of how they build these relationships: Put forth effort in
cultivating these relationships consciously, be open to forming good
relationships with people from all backgrounds regardless of characteristics
such as sex, race, age, or disability status, and prevent these relationships
from leading to an unfair work environment.
OB Toolbox: Ideas for Improving Your Relationship With
Your Manager
Having a good relationship with your manager may substantially increase your
job satisfaction, improve your ability to communicate with your manager, and
help you be successful in your job. Here are some tips to developing a highquality exchange.

Create interaction opportunities with your manager. One way of doing this
would be seeking feedback from your manager with the intention of improving
your performance. Be careful though: If the manager believes that you are
seeking feedback for a different purpose, it will not help.

People are more attracted to those who are similar to them. So find out
where your similarities lie. What does your manager like that you also like? Do
you have similar working styles? Do you have any mutual experiences?
Bringing up your commonalities in conversations may help.

Utilize impression management tactics, but be tactful. If there are workrelated areas in which you can sincerely compliment your manager, do so. For
example, if your manager made a decision that you agree with, you may share
your support. Most people, including managers, appreciate positive feedback.
38
However, flattering your manager in non-work-related areas (such as
appearance) or using flattery in an insincere way (praising an action you do
not agree with) will only backfire and cause you to be labeled as a flatterer.

Be a reliable employee. Managers need people they can trust. By performing
at a high level, demonstrating predictable and consistent behavior, and by
volunteering for challenging assignments, you can prove your worth.

Be aware that relationships develop early (as early as the first week of your
working together). So be careful how you behave during the interview and
your very first days. If you rub your manager the wrong way early on, it will be
harder to recover the relationship.
Sources: Based on information presented in Colella, A., & Varma, A. (2001).
The impact of subordinate disability on leader-member exchange
relationships. Academy of Management Journal, 44, 304–315; Liden, R. C.,
Wayne, S. J., & Stilwell, D. (1993). A longitudinal study on the early
development of leader-member exchanges.Journal of Applied Psychology, 78,
662–674; Maslyn, J. M., & Uhl-Bien, M. (2001). Leader-member exchange
and its dimensions: Effects of self-effort and other’s effort on relationship
quality. Journal of Applied Psychology, 86, 697–708; Wing, L., Xu, H., &
Snape, E. (2007). Feedback-seeking behavior and leader-member exchange:
Do supervisor-attributed motives matter? Academy of Management
Journal, 50, 348–363.
Servant Leadership
The early 21st century has been marked by a series of highly publicized
corporate ethics scandals: Between 2000 and 2003 we witnessed the scandals
of Enron, WorldCom, Arthur Andersen LLP, Qwest Communications
International Inc., and Global Crossing Ltd. As corporate ethics scandals
shake investor confidence in corporations and leaders, the importance of
39
ethical leadership and keeping long-term interests of stakeholders in mind is
becoming more widely acknowledged.
Servant leadership is a leadership approach that defines the leader’s role as
serving the needs of others. According to this approach, the primary mission
of the leader is to develop employees and help them reach their goals. Servant
leaders put their employees first, understand their personal needs and desires,
empower them, and help them develop in their careers. Unlike mainstream
management approaches, the overriding objective in servant leadership is not
limited to getting employees to contribute to organizational goals. Instead,
servant leaders feel an obligation to their employees, customers, and the
external community. Employee happiness is seen as an end in itself, and
servant leaders sometimes sacrifice their own well-being to help employees
succeed. In addition to a clear focus on having a moral compass, servant
leaders are also interested in serving the community. In other words, their
efforts to help others are not restricted to company insiders, and they are
genuinely concerned about the broader community surrounding their
organization. [26] According to historian Doris Kearns Goodwin, Abraham
Lincoln was a servant leader because of his balance of social conscience,
empathy, and generosity. [27]
Even though servant leadership has some overlap with other leadership
approaches such as transformational leadership, its explicit focus on ethics,
community development, and self-sacrifice are distinct characteristics of this
leadership style. Research shows that servant leadership has a positive impact
on employee commitment, employee citizenship behaviors toward the
community (such as participating in community volunteering), and job
performance. [28] Leaders who follow the servant leadership approach create a
40
climate of fairness in their departments, which leads to higher levels of
interpersonal helping behavior. [29]
Servant leadership is a tough transition for many managers who are socialized
to put their own needs first, be driven by success, and tell people what to do.
In fact, many of today’s corporate leaders are not known for their humility!
However, leaders who have adopted this approach attest to its effectiveness.
David Wolfskehl, of Action Fast Print in New Jersey, founded his printing
company when he was 24 years old. He marks the day he started asking
employees what he can do for them as the beginning of his company’s new
culture. In the next 2 years, his company increased its productivity by 30%. [30]
OB Toolbox: Be a Servant Leader
One of the influential leadership paradigms involves leaders putting others
first. This could be a hard transition for an achievement-oriented and successdriven manager who rises to high levels. Here are some tips to achieve servant
leadership.

Don’t ask what your employees can do for you. Think of what you can do for
them. Your job as a leader is to be of service to them. How can you relieve
their stress? Protect them from undue pressure? Pitch in to help them? Think
about creative ways of helping ease their lives.

One of your key priorities should be to help employees reach their goals. This
involves getting to know them. Learn about who they are and what their
values and priorities are.

Be humble. You are not supposed to have all the answers and dictate others.
One way of achieving this humbleness may be to do volunteer work.

Be open with your employees. Ask them questions. Give them information so
that they understand what is going on in the company.
41

Find ways of helping the external community. Giving employees
opportunities to be involved in community volunteer projects or even thinking
and strategizing about making a positive impact on the greater community
would help.
Sources: Based on information presented in Buchanan, L. (2007, May). In
praise of selflessness: Why the best leaders are servants. Inc, 29(5), 33–35;
Douglas, M. E. (2005, March). Service to others. Supervision, 66(3), 6–9;
Ramsey, R. D. (2005, October). The new buzz word. Supervision, 66(10), 3–5.
Authentic Leadership
Leaders have to be a lot of things to a lot of people. They operate within
different structures, work with different types of people, and they have to be
adaptable. At times, it may seem that a leader’s smartest strategy would be to
act as a social chameleon, changing his or her style whenever doing so seems
advantageous. But this would lose sight of the fact that effective leaders have
to stay true to themselves. The authentic leadership approach embraces this
value: Its key advice is “be yourself.” Think about it: We all have different
backgrounds, different life experiences, and different role models. These
trigger events over the course of our lifetime that shape our values,
preferences, and priorities. Instead of trying to fit into societal expectations
about what a leader should be, act like, or look like, authentic leaders derive
their strength from their own past experiences. Thus, one key characteristic of
authentic leaders is that they are self aware. They are introspective,
understand where they are coming from, and have a thorough understanding
of their own values and priorities. Secondly, they are not afraid to act the way
they are. In other words, they have high levels of personal integrity. They say
what they think. They behave in a way consistent with their values. As a result,
42
they remain true to themselves. Instead of trying to imitate other great
leaders, they find their own style in their personality and life experiences. [31]
One example of an authentic leader is Howard Schultz, the founder of
Starbucks Corporation coffeehouses. As a child, Schultz witnessed the jobrelated difficulties his father experienced as a result of medical problems.
Even though he had no idea he would have his own business one day, the
desire to protect people was shaped in those years and became one of his
foremost values. When he founded Starbucks, he became an industry pioneer
by providing health insurance and retirement coverage to part-time as well as
full-time employees. [32]
Authentic leadership requires understanding oneself. Therefore, in addition to
self reflection, feedback from others is needed to gain a true understanding of
one’s behavior and its impact on others. Authentic leadership is viewed as a
potentially influential style, because employees are more likely to trust such a
leader. Moreover, working for an authentic leader is likely to lead to greater
levels of satisfaction, performance, and overall well-being on the part of
employees. [33]
KEY TAKEAWAY
Contemporary approaches to leadership include transformational leadership, leadermember exchange, servant leadership, and authentic leadership. The
transformational leadership approach highlights the importance of leader charisma,
inspirational motivation, intellectual stimulation, and individualized consideration as
methods of influence. Its counterpart is the transactional leadership approach, in
which the leader focuses on getting employees to achieve organizational goals.
According to the leader-member exchange (LMX) approach, the unique, trust-based
relationships leaders develop with employees are the key to leadership
43
effectiveness. Recently, leadership scholars started to emphasize the importance of
serving others and adopting a customer-oriented view of leadership; another recent
focus is on the importance of being true to oneself as a leader. While each leadership
approach focuses on a different element of leadership, effective leaders will need to
change their style based on the demands of the situation, as well as utilizing their
own values and moral compass.
EXERCISES
1. What are the characteristics of transformational leaders? Are transformational
leaders more effective than transactional leaders?
2. What is charisma? What are the advantages and disadvantages of charismatic
leadership? Should organizations look for charismatic leaders when selecting
managers?
3. What are the differences (if any) between a leader having a high-quality exchange
with employees and being friends with employees?
4. What does it mean to be a servant leader? Do you know any leaders whose style
resembles servant leaders? What are the advantages of adopting such a leadership
style?
5. What does it mean to be an authentic leader? How would such a style be
developed?
12.5 The Role of Ethics and National Culture
LEARNING OBJECTIVES
1. Consider the role of leadership for ethical behavior.
2. Consider the role of national culture on leadership.
44
Leadership and Ethics
As some organizations suffer the consequences of ethical crises that put them
out of business or damage their reputations, the role of leadership as a driver
of ethical behavior is receiving a lot of scholarly attention as well as
acknowledgement in the popular press. Ethical decisions are complex and,
even to people who are motivated to do the right thing, the moral component
of a decision may not be obvious. Therefore, employees often look to role
models, influential people, and their managers for guidance in how to behave.
Unfortunately, research shows that people tend to follow leaders or other
authority figures even when doing so can put others at risk. The famous
Milgram experiments support this point. Milgram conducted experiments in
which experimental subjects were greeted by someone in a lab coat and asked
to administer electric shocks to other people who gave the wrong answer in a
learning task. In fact, the shocks were not real and the learners were actors
who expressed pain when shocks were administered. Around two-thirds of the
experimental subjects went along with the requests and administered the
shocks even after they reached what the subjects thought were dangerous
levels. In other words, people in positions of authority are influential in
driving others to ethical or unethical behaviors.[1]
It seems that when evaluating whether someone is an effective leader,
subordinates pay attention to the level of ethical behaviors the leader
demonstrates. In fact, one study indicated that the perception of being ethical
explained 10% of the variance in whether an individual was also perceived as a
leader. The level of ethical leadership was related to job satisfaction,
dedication to the leader, and a willingness to report job-related problems to
the leader. [2]
45
Leaders influence the level of ethical behaviors demonstrated in a company by
setting the tone of the organizational climate. Leaders who have high levels of
moral development create a more ethical organizational climate. [3] By acting
as a role model for ethical behavior, rewarding ethical behaviors, publicly
punishing unethical behaviors, and setting high expectations for the level of
ethics, leaders play a key role in encouraging ethical behaviors in the
workplace.
The more contemporary leadership approaches are more explicit in their
recognition that ethics is an important part of effective leadership. Servant
leadership emphasizes the importance of a large group of stakeholders,
including the external community surrounding a business. On the other hand,
authentic leaders have a moral compass, they know what is right and what is
wrong, and they have the courage to follow their convictions. Research shows
that transformational leaders tend to have higher levels of moral reasoning,
even though it is not part of the transformational leadership theory. [4] It seems
that ethical behavior is more likely to happen when (a) leaders are ethical
themselves, and (b) they create an organizational climate in which employees
understand that ethical behaviors are desired, valued, and expected.
Leadership Around the Globe
Is leadership universal? This is a critical question given the amount of
international activity in the world. Companies that have branches in different
countries often send expatriates to manage the operations. These expatriates
are people who have demonstrated leadership skills at home, but will these
same skills work in the host country? Unfortunately, this question has not yet
been fully answered. All the leadership theories that we describe in this
chapter are U.S.-based. Moreover, around 98% of all leadership research has
46
been conducted in the United States and other western nations. Thus, these
leadership theories may have underlying cultural assumptions. The United
States is an individualistic, performance-oriented culture, and the leadership
theories suitable for this culture may not necessarily be suitable to other
cultures.
People who are perceived as leaders in one society may have different traits
compared to people perceived as leaders in a different culture, because each
society has a concept of ideal leader prototypes. When we see certain
characteristics in a person, we make the attribution that this person is a
leader. For example, someone who is confident, caring, and charismatic may
be viewed as a leader because we feel that these characteristics are related to
being a leader. These leadership prototypes are societally driven and may have
a lot to do with a country’s history and its heroes.
Recently, a large group of researchers from 62 countries came together to
form a project group called Global Leadership and Organizational Behavior
Effectiveness or GLOBE. [5]This group is one of the first to examine leadership
differences around the world. Their results are encouraging, because, in
addition to identifying differences, they found similarities in leadership styles
as well. Specifically, certain leader traits seem to be universal. Around the
world, people feel that honesty, decisiveness, being trustworthy, and being fair
are related to leadership effectiveness. There is also universal agreement in
characteristics viewed as undesirable in leaders: being irritable, egocentric,
and a loner.[6] Visionary and charismatic leaders were found to be the most
influential leaders around the world, followed by team-oriented and
participative leaders. In other words, there seems to be a substantial
generalizability in some leadership styles.
47
Even though certain leader behaviors such as charismatic or supportive
leadership appear to be universal, what makes someone charismatic or
supportive may vary across nations. For example, when leaders fit the
leadership prototype, they tend to be viewed as charismatic, but in Turkey, if
they are successful but did not fit the prototype, they were still viewed as
charismatic. [7] In Western and Latin cultures, people who speak in an
emotional and excited manner may be viewed as charismatic. In Asian
cultures such as China and Japan, speaking in a monotonous voice may be
more impressive because it shows that the leader can control emotions.
Similarly, how leaders build relationships or act supportively is culturally
determined. In collectivist cultures such as Turkey or Mexico, a manager is
expected to show personal interest in employees’ lives. Visiting an employee’s
sick mother at the hospital may be a good way of showing concern. Such
behavior would be viewed as intrusive or strange in the United States or the
Netherlands. Instead, managers may show concern verbally or by lightening
the workload of the employee. [8]
There were also many leader characteristics that vary across cultures. [9] Traits
such as being autonomous, conflict avoidant, status conscious, and ambitious
were culturally dependent. For example, in France, employees do not expect
their leaders to demonstrate empathy. Leaders demonstrating self-sacrifice
are also viewed negatively, suggesting that servant leadership would be an
improper style there. In Middle Eastern cultures such as Egypt, leaders are
expected to be superior to lay people. They are supposed to have all the
answers, be confident, and authoritarian. In fact, leading like a benevolent
autocrat (someone who cares about people but acts alone) may be an
appropriate style. [10] Even within the same geography, researchers identified
substantial cultural differences. For example, in Europe, there were five
48
clusters of cultures. Directness in interpersonal relationships was viewed
positively in Nordic cultures such as Finland, but negatively in Near Eastern
cultures such as Turkey. Similarly, leaders who are autonomous were viewed
positively in Germanic cultures such as Austria, but negatively in Latin
European cultures such as Portugal. [11] Finally, in some cultures, good leaders
are paternalistic. These leaders act like a parent to employees, give advice,
care for them, and get obedience and loyalty in return. [12]
Given all these differences, effective leaders should develop a sensitivity to
cultural differences and adapt their style when they work in different societies
or with people from different cultural backgrounds. It seems that flexibility is
an important trait for global leaders.
KEY TAKEAWAY
People get their cues for ethical behaviors from leaders. Therefore, leadership
characteristics and style will influence the level of ethical behaviors employees
demonstrate. Being ethical is related to being perceived as a leader, and ethical
leaders create a more satisfied workforce. More contemporary approaches such as
servant leadership and authentic leadership explicitly recognize the importance of
ethics for leadership effectiveness. Some leadership traits seem to be universal.
Visionary, team-oriented, and to a lesser extent participative leadership seem to be
the preferred styles around the world. However, traits such as how confident leaders
should be and whether they should sacrifice themselves for the good of employees
and many others are culturally dependent. Even for universal styles such as
charismatic and supportive leadership, how leaders achieve charisma and
supportiveness seems to be culturally dependent.
EXERCISES
1. What is the connection between leadership and ethical behaviors?
2. Do you believe that ethical leaders are more successful in organizations?
49
3. Which of the leadership theories seem to be most applicable to other cultures?
Which ones are culturally dependent?
12.6 Conclusion
In this chapter we have reviewed the most influential leadership theories.
Trait approaches identify the characteristics required to be perceived as a
leader and to be successful in the role. Intelligence, extraversion,
conscientiousness, openness to experience, and integrity seem to be
leadership traits. Behavioral approaches identify the types of behaviors leaders
demonstrate. Both trait and behavioral approaches suffered from a failure to
pay attention to the context in which leadership occurs, which led to the
development of contingency approaches. Recently, ethics became an explicit
focus of leadership theories such as servant leadership and authentic
leadership. It seems that being conscious of one’s style and making sure that
leaders demonstrate the behaviors that address employee, organizational, and
stakeholder needs are important and require flexibility on the part of leaders.
12.7 Exercises
ETHICAL DILEMMA
You are currently a department manager and Jim is your “trusted assistant.” You
have very similar working styles, and you went to the same college and worked in
the insurance industry for several years. Before working in this company, you both
worked at a different company and you have this shared history with him. You can
trust him to come to your aid, support you in your decisions, and be loyal to you.
50
Because of your trust in him, you do not supervise his work closely, and you give him
a lot of leeway in how he structures his work. He sometimes chooses to work from
home, and he has flexibility in his work hours, which is unusual in the department.
Now you decided to promote him to be the assistant department manager.
However, when you shared this opinion with someone else in the department, you
realized that this could be a problem. Apparently, Jim is not liked by his colleagues in
the department and is known as an “impression manager.” Others view him as a
slacker when you are not around, and the fact that he gets the first pick in schedules
and gets the choice assignments causes a lot of frustration on the part of others.
They feel that you are playing favorites.
Discussion Questions:
1. What would you do?
2. Would you still promote him?
3. How would you address this unpleasant situation within your department?
INDIVIDUAL EXERCISE
Ideas for Developing Yourself as an Authentic Leader
Authentic leaders have high levels of self-awareness, and their behavior is driven by
their core personal values. This leadership approach recognizes the importance of
self-reflection and understanding one’s life history. Answer the following questions
while you are alone to gain a better understanding of your own core values and
authentic leadership style.

Understand Your History

Review your life history. What are the major events in your life? How did these
events make you the person you are right now?

Think about your role models. Who were your role models as you were growing up?
What did you learn from your role models?

Take Stock of Who You Are Now
51

Describe your personality. How does your personality affect your life?

Know your strengths and weaknesses. What are they and how can you continue to
improve yourself?

Reflect on Your Successes and Challenges

Keep a journal. Research shows that journaling is an effective tool for self-reflection.
Write down challenges you face and solutions you used to check your progress.

Make Integrity a Priority

Understand your core values. What are your core values? Name three of your most
important values.

Do an ethics check. Are you being consistent with your core values? If not, how can
you get back on track?

Understand the Power of Words

Words shape reality. Keep in mind that the words you use to describe people and
situations matter. For example, how might the daily reality be different if you refer
to those you manage as associates or team members rather than employees or
subordinates?
In view of your answers to the questions above, what kind of a leader would you be
if you truly acted out your values? How would people working with you respond to
such a leadership style?
GROUP EXERCISE
You are charged with hiring a manager for a fast-food restaurant. The operations
within the store are highly standardized, and employees have very specific job
descriptions. The person will be in charge of managing around 30 employees. There
is a high degree of turnover among employees, so retention will be an important
priority. Most employees who work in the restaurant are young with low levels of
52
work experience, and few of them view the restaurant business as a full-time career.
The atmosphere in the restaurant has a fast pace. In this company, managers are
often promoted from within, and this position is an exception. Therefore, the
incoming manager may not expect a warm welcome from employees who were
passed over for a promotion, as well as their colleagues. Finally, the position power
of the manager will be somewhat limited because employees are unionized.
Therefore, the manager will have limited opportunities for distributing pay raises or
bonuses.
Discussion Questions
1. Identify the leadership traits and behaviors that are desirable for this position.
2. Design an approach to selecting this person. Which methods of employee selection
would you use? Why?
3. Develop interview questions to be used in hiring this manager. Your questions
should be aimed at predicting the leadership capabilities of the person in question.
53
Reflection on Leading
How emotionally intelligent are you?
Researchers and business experts agree that people with high emotional
intelligence (or EQ) are consistently the top-performers in organizations. They’re
more resilient and adaptable when things go wrong, and as a result, they’re held in
the highest regard by their bosses, co-workers, employees and others. In fact,
studies show that your EQ is a better predictor of your professional success than
either your IQ or your technical skills. Take this self-assessment to gain an insight into
your EQ level.
> Click here to take the self-assessment
Retrieved from https://www.turningmanagersintoleaders.com/Quizzes/emotionalintelligence.htm
RESULTS: How emotionally intelligent are you?
Total score: 32.
Evaluation:
Your results indicate an above-average score on emotional intelligence. People with a
better than average score on emotional intelligence tend to be good at interpreting,
understanding, and acting upon emotions. They are usually quite good at dealing with social
or emotional conflicts, expressing their feelings, and dealing with emotional situations. You
are likely someone who feels more contented and self-fulfilled than the average person and
you strive to find meaning and passion in the work you do. It’s important to remember that
no matter how good your score is, there is always room to improve your emotional
intelligence. Consider areas where you are not as strong and think of ways that you can
learn and grow. Take stock of your strong points and find ways to continue to enhance and
apply these skills.
What is your Coaching IQ?
Winning teams, whether on the playing field or in the workplace, don’t just happen!
It takes a skilled coach to capitalize on the potential of each member of a team. If
you are a leader who wants exceptional results from your workplace team, then
recognize that your department’s success is directly proportional to your coaching
mindset and ability. Take this self-assessment to gain an insight into your coaching
IQ.
> Click here to take the self-assessment
What is Your Coaching IQ? Retrieved from
https://www.turningmanagersintoleaders.com/Quizzes/coachingiq.htm
RESULTS: What is Your Coaching IQ?
You have made 1 error.
Evaluation:
140+ Your Coaching IQ is considered high!
Good for you. You are well on your way to
being an exceptional coach. Strengthen your natural coaching instincts by consciously and
deliberately seeking to further develop your leadership skills.
Do you give effective feedback?
It’s no secret that those who have mastered the art of giving feedback are hugely
successful as leaders in the workplace. Whether you’re working with employees or
co-workers, and no matter if your remarks are positive or negative, the information
you share can be incredibly helpful to others … IF you know how to deliver your
message in a way that is constructive, heard and acted upon. Find out how
effective you are in giving feedback to others.
> Click here to take the self-assessment
Do You Give Effective Feedback? Retrieved from
https://www.turningmanagersintoleaders.com/Quizzes/givingfeedback.htm
RESULTS: Do You Give Effective Feedback?
You have made 3 errors.
Evaluation:
Good work, you are well on your way to mastering the art of giving effective feedback to
your employees and co-workers. This is a critical skill in leadership, so don’t stop now – take
your learning to the next level.
Are you cut out for supervision?
If you’re like most people, moving into a supervisory role will require that you
significantly change the way you think. The transition from non-management to
management is easier if you are mentally “ready” to take on this demanding, yet
immensely satisfying, job. Find out how “ready” you are!
> Click here to take the self-assessment
Are you cut out for supervision? Retrieved from:
https://www.turningmanagersintoleaders.com/Quizzes/transitiontoleadership.htm
Results: Are you cut out for supervision?
You have made 3 errors.
Evaluation:
Good job, you’re definitely on your way to leadership success. Moving into a
position of formal leadership requires you to realize that the behavior and actions
that led you to success in the past are not necessarily the behavior and actions that
will make you successful in the future. You’ve figured most of it out, but don’t stop
yet. Continue to seek out ways to set yourself up for even greater success.
How well do you delegate?
If you are a manager or supervisor then you are entrusted with getting things done.
And as a leader, that means getting things done through other people. Your
challenge: other people don’t always do things the way you would. Your dilemma:
you can’t achieve leadership success unless you achieve delegation success. Find
out whether you have mastered the attitudes and beliefs to be a successful
delegator.
> Click here to take the self-assessment
How well do you delegate? Retrieved from
https://www.turningmanagersintoleaders.com/Quizzes/delegation.htm
RESULTS: How well do you delegate?
Total score: 4.
Evaluation:
Good work! You have clearly put some energy into learning how to be an effective
delegator, and you’ve no doubt seen the many positive outcomes of your efforts. Now focus
on refining your skills. Identify a role model within or outside your organization, and
observe to see what behaviors you should emulate in order to become even better at
delegation.

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